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EXHIBIT 10.22
AMENDED AND RESTATED
MOTOR VEHICLE INSTALLMENT
CONTRACT LOAN AND SECURITY AGREEMENT
Dated as of November 30,1998
by and between
CPS FUNDING CORPORATION
as Borrower
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Lender
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AMENDED AND RESTATED MOTOR VEHICLE
INSTALLMENT CONTRACT LOAN AND SECURITY AGREEMENT
This Amended and Restated Motor Vehicle Installment Contract Loan and Security
Agreement ("Agreement") is entered into by and between CPS Funding Corporation,
a California corporation (together with its successors and assigns, "Borrower"),
and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation (together with
its successors and assigns hereinafter referred to as "Lender").
RECITALS
WHEREAS, Borrower is a financial organization primarily engaged in the
business of acquiring installment sale contracts for motor vehicles;
WHEREAS, Lender has agreed to provide the loan on the terms and
conditions set forth in this Agreement to Borrower; and
WHEREAS, Borrower and Lender desire to amend and restate the Receivables
Funding And Servicing Agreement ("Prior Agreement") dated as of June 1, 1995
which was entered into by Borrower and Redwood Receivables Corporation and later
assigned by Redwood Receivables Corporation to Lender. Borrower and Lender agree
that (1) this Agreement is not a novation, refinancing or satisfaction of any
existing loan under the Prior Agreement, nor is it a release or substitution of
collateral thereunder, (2) the existing loan and security interest continue
uninterrupted and are not diminished in any manner by the execution of this
Agreement, and (3) this Agreement modifies the terms and conditions contained in
the Prior Agreement to the terms and conditions contained in this Agreement.
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, Borrower and Lender agree as follows:
ARTICLE I - DEFINITIONS
Section 1.0 Defined Terms. Whenever used in this Agreement with such
upper case letters as are shown below, the following terms shall have the
respective meanings set forth below. When the terms are used in the plural, the
plural forms of the meanings shall apply.
Accounting Period: means a calendar month, beginning with the month
during which this Agreement is executed and ending with the calendar month
during which the Indebtedness has been paid in full following termination of
this Agreement.
Actual Payment: means, with respect to any Contracts all payments
received by, from or for the account of the related Contract Debtor on such
Contract.
Advance: means each of the Loan advances described in Article III of
this Agreement.
Affiliate: means CPS and any Person, now or in the future (i) directly
or indirectly owned or controlled in whole or in part by Borrower or CPS, or
(ii) under common ownership or control with Borrower. For the purpose of this
definition, "control" shall mean the power to direct, or cause the direction of,
management or policies, whether through the ownership of voting securities, by
contract or otherwise. For the purpose of this definition, "owned" shall mean at
least 10% ownership.
Average Charged-Off Losses: means the Accounting Period average of the
Charged-Off Losses for any three consecutive Accounting Periods for Pledged
Contracts; provided that, until the first three Accounting Periods have expired,
the Average Charged-Off Losses shall be the Accounting Period average of the
Charged-Off Losses for the Accounting Periods which have expired.
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Bankruptcy Code: means the Bankruptcy Reform Act of 1978, as amended, as
the same may be further amended, and any other applicable state or federal law
with respect to bankruptcy liquidation, insolvency or reorganization.
Borrowing Base: As of the date of its computation, an amount equal to
the lesser of (a) 88% of the aggregate Gross Balance of Eligible Contracts minus
the Unearned Interest Amount with respect to such Contracts, and (b) 91% of
Borrower's aggregate net investment in Eligible Contracts. For the purpose of
this calculation, Borrower's net investment in a Contract shall be equal to the
net amount Borrower paid to purchase the Contract, which shall in no event be
more than the Gross Balance minus the sum of (a) the Unearned Interest Amount,
(b) any discounts, (c) any refundable reserves, (d) any boarding fees, and (e)
any other fees or amounts Borrower is entitled to in connection with the
purchase of the Contract.
Business Day: means any day other than (i) a Saturday or Sunday, or (ii)
a day on which banking institutions in the State of New York are required by law
to be closed.
Certificate of Title: means with respect to each Financed Vehicle, the
certificate of title (or other evidence of ownership) issued by the department
of motor vehicles, or other appropriate governmental body, of the state in which
the Financed Vehicle is to be registered showing the Contract Debtor as owner,
with either notation of Borrower's first lien or such other status indicated
thereon which is necessary to perfect Borrower's security interest in the
Financed Vehicle as a first priority interest, and showing no other actual or
possible lien interest in the Financed Vehicle.
Charged-Off Contract: means a Contract for which (i) all or part of more
than five (5) Scheduled Payments are due and unpaid, (ii) the Financed Vehicle
has been surrendered, or repossessed, and any proceeds from the sale thereof
have been received, (iii) a settlement has been made for less than the Gross
Balance minus the Unearned Interest Amount, or (iv) a Skip Loss Investigation
has been pending for more than one hundred and fifty (150) days.
Charged-Off Losses: means as of the end of an Accounting Period, the
Gross Balance minus the Unearned Interest Amount of Charged-Off Contracts which
become Charged-Off Contracts during the Accounting Period minus amounts received
by Borrower during the Accounting Period and applied to Charged-Off Contracts
which became Charged-Off Contracts during a previous Accounting Period, divided
by the Gross Balance minus the Unearned Interest Amount of all Contracts owned
by Borrower which are not Charged-Off Contracts; expressed as a percentage.
Closing Date: means the date on which the first Advance is made.
Collateral: means any and all real and personal, tangible and
intangible, property in which Lender is granted a security interest now or
hereafter, in this Agreement or otherwise, to secure Borrower's obligations to
Lender.
Collection Account: means a bank account in the name of the Lender at a
bank designated by the Lender.
Collections: means, with respect to any Receivable, all cash collections
and other Proceeds of such Receivable (including late charges, fees and interest
arising thereon and all recoveries with respect to Receivables that have been
written off as uncollectible).
Commitment Termination Date: means the earlier of (a) the date so
designated pursuant to Article 15 as a result of an Event of Default, and (b)
the Final Maturity Date.
Contract: means an installment or conditional sale contract, with any
amendments, owned or acquired by Borrower pursuant to which a Contract Debtor
has: (i) purchased a new or used Motor Vehicle, (ii) granted a security interest
in the Motor Vehicle to secure the Contract Debtor's payment obligations, and
(iii) agreed to pay the unpaid purchase price and a finance charge in periodic
installments no less frequently than monthly.
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Contract Debtor: means the Person that has executed a Contract as a
purchaser, and any guarantor, co-signer or other Person obligated to make
payments under the Contract.
Contract Debtor Documents: means, with respect to each Contract Debtor:
(a) the original Certificate of Title or equivalent title
documents issued by the relevant state motor vehicle authority, if
applicable;
(b) the original executed Contract;
(c) hereafter, on new Financed Vehicles a copy of the Dealer
Invoice and invoices for any additional equipment included in the
Contract;
(d) a copy of the original credit application;
(e) copies of, but with respect to portfolio purchase of
Contracts, only if such are available to Borrower from the seller of the
portfolio purchase Contracts:
(i) the credit bureau reports,
(ii) the completed credit investigation form,
(iii) the completed verification of employment and
income forms, and
(iv) the Contract Debtor's references;
(f) verification of Required Contract Debtor Insurance showing
Borrower as loss payee, additional insured, or lienholder at the time of
Borrower's purchase of the Contract, but with respect to portfolio
purchases of Contracts, only if such are available to Borrower from the
seller of the Contracts;
(g) a certificate for each type of Optional Contract Debtor
Insurance purchased by the Contract Debtor; and
(h) Borrower's loan process or "deal structure" sheet.
Contract Delivery Documents: means the original Certificate of Title, if
available, or a copy of the application for the Certificate of Title, and the
original executed Contract with original Contract Debtor and Dealer signatures.
Contract Rights: means with respect to Pledged Contracts, (i) Borrower's
interest in the Financed Vehicle; (ii) all rights of Borrower regarding the
Contract and Financed Vehicle, including, but not limited to, rights to
electronic funds transfers and rights under all dealer agreements and purchase
agreements pursuant to which the Contract was acquired by Borrower; (iii) all
rights of Borrower with respect to Optional Contract Debtor Insurance, Required
Contract Debtor Insurance, VSI Insurance and any other policies of fire, theft
or comprehensive insurance, collision insurance, public liability insurance or
property damage insurance maintained with respect to the Financed Vehicle, the
Contract, or the Contract Debtor; (iv) all rights of Borrower, if any, to
prepaid dealer rate participation in connection with the Contract; (v)
Remittances; and (vi) all rights of Borrower to the originals of all books,
records (including electronic data), reports, files and documents relating to
the Contracts, including, but not limited to, Contract Debtor Documents,
financial statements of Contract Debtors, and all payment reports or records
relating to the Contracts.
Contract Rights Payors: means Persons, other than Contract Debtors,
against whom Contract Rights can be asserted.
CPS: means Consumer Portfolio Services, Inc., a California corporation.
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Credit and Collection Policies: means the credit, collection, customer
relations and service policies of CPS and Borrower in effect as of the date
hereof, as set forth in writing and delivered to Lender, and, as such policies
may hereafter be amended, modified or supplemented from time to time with the
written consent of Lender.
Dealer: means the seller of the Financed Vehicle to the Contract Debtor.
Dealer Invoice: means as to new Financed Vehicles, the Invoice prepared
by the manufacturer showing the net cost; and, as to used Financed Vehicles, the
NADA Used Car Guide trade-in value, or for the West Coast, the ▇▇▇▇▇▇ Wholesale
Blue Book Wholesale Value, or for the Northeast, the Black Book Average Value.
Delinquency Measurement: means as of the end of an Accounting Period,
the sum of the Gross Balance of all Delinquency Measurement Contracts for which
at least two (2) due Scheduled Payments are less than ninety percent (90%) paid,
divided by the monetary sum of all Scheduled Payments, whether or not due which
have not been paid in full for all Delinquency Measurement Contracts, expressed
as a percentage.
Delinquency Measurement Contracts: means all Pledged Contracts which are
not Charged-Off Contracts, not paid in full or for which the Motor Vehicle has
been secured in a repossession.
Eligible Contract: means each Contract which is listed on a List of
Contracts delivered to Lender at the same time, and which in Lender's sole
determination satisfies each of the following requirements (at the time of
delivery and thereafter except to the extent expressly stated below to apply
only at delivery or only thereafter):
(A) All of the representations and warranties in Section 10.0 are true
with respect to, and all conditions precedent in Section 9.1 have been and
continue to be met with respect to, the Contract, Financed Vehicle, Contract
Debtor, Required Contract Debtor Insurance, and Optional Contract Debtor
Insurance.
(B) The first Scheduled Payment is due within forty five (45) days after
the date of the Contract and the Contract Date is within one (1) day of the
delivery of the Financed Vehicle.
(C) The Contract has a fixed APR and the Finance Charge was computed
using a fixed rate.
(D) The initial term of the Contract does not exceed sixty (60) months
(except for the Super Alpha program Contracts) and the Schedule of Payments has
equal monthly payments except for the final payment which may be less than the
other equal payments, the payment obligation is in Dollars, and at the time the
Contract was delivered to the Lender, there were at least twenty (20) remaining
Scheduled Payments.
(E) The Contract is for the absolute sale of the Financed Vehicle to the
Contract Debtor, and the Financed Vehicle is not on approval or subject to any
agreement between the Contract Debtor and the Dealer for the repurchase or
return of the Financed Vehicle.
(F) The Contract does not present a credit, collateral or documentation
risk which is material and unacceptable to the Lender.
(G) The Dealer has been paid all amounts due for the purchase of the
Contract from the Dealer.
(H) The Contract Debtor is an Eligible Contract Debtor.
(I) The Contract contains the original signature of the Contract Debtor
and the Dealer.
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(J) The Contract is the only unsatisfied original executed Contract for
the purchase of the Financed Vehicle and accurately reflects all of the actual
terms and conditions of the Contract Debtor's purchase of the Financed Vehicle.
(K) Neither Borrower nor an Affiliate has made any agreement with the
Contract Debtor to reduce the amount owed on the Contract.
(L) Neither Borrower nor an Affiliate is required to perform any
additional service for, or perform or incur any additional obligation to, the
Contract Debtor in order for Borrower to enforce the Contract.
(M) The Contract, at the time Borrower purchased it, materially complied
with the Credit and Collection Policies; or the Lender approved any material
deviation from the Credit and Collection Policies for that Contract in writing.
(N) The Contract Debtor's obligations under the Contract are secured by
a validly perfected first priority security interest in the Financed Vehicle in
favor of Borrower or Lender as secured party.
(O) The Contract has not been, nor is it designated to be, terminated,
satisfied, canceled, subordinated or rescinded in whole or in part; nor has the
Financed Vehicle been released, or designated for release, from the security
interest granted by the Contract; and all of the holder's obligations under the
Contract have been performed except those which arise subsequent to the delivery
to Lender.
(P) No provision of the Contract has been waived, extended, altered or
modified in any respect except in accordance with the Credit and Collection
Policies.
(Q) The day of the month that Scheduled Payments are due has not been
changed from the original Schedule of Payments except for no more than one
change which did not change the due date in a manner such that there was more
than a thirty (30) day period for which no Scheduled Payment was due.
(R) No claims of rescission, setoff, counterclaim, defense or other
material disputes have been asserted with respect to the Contract or Financed
Vehicle.
(S) There are no unsatisfied liens or claims for taxes, labor,
materials, fines, confiscation, or replevin relating to the Contract or Financed
Vehicle. There is no unsatisfied claim against the Contract Debtor based on the
operation or use of the Financed Vehicle. All taxes due for the purchase, use
and ownership of the Financed Vehicle have been paid. All taxes due on the
transfer of the Contract to Borrower and Lender have been paid.
(T) The Contract requires Required Contract Debtor Insurance and
Borrower or CPS is a loss payee or insured under the Required Contract Debtor
Insurance.
(U) The Company has not repossessed the Vehicle or commenced a replevin
action or other lawsuit against the Contract Debtor or Financed Vehicle.
(V) The model year of the Financed Vehicle is not more than seven (7)
years earlier than the model year in effect at the time the Contract is
delivered to Lender.
(W) The obligation of the original Contract Debtor has not been released
or assumed by another Person unless the release or assumption was properly
documented and the Lender consents in writing to it for purposes of the Contract
being an Eligible Contract.
(X) The Contract Debtor Documents exist.
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(Y) Not more than two (2) Scheduled Payments are due and unpaid in whole
or in part.
(Z) The cash down payment has been paid in full by the Contract Debtor
and not loaned to the Contract Debtor by Borrower or an Affiliate, and any
trade-in has been delivered to the Dealer with an endorsed Certificate of Title.
(AA) The Contract was purchased from a Dealer in the ordinary course of
the Dealer's business within 60 days after the Contract Date.
(BB) The first or second Scheduled Payments are not paid more than
forty-five (45) days past the scheduled due date.
(CC) The Amount Financed does not exceed one hundred fifty percent
(150%) of the net cost or value if applicable, shown on the Dealer Invoice.
(DD) The Amount Financed on the Contract Date does not exceed $30,000
and the Vehicle has no more than 85,000 miles on its odometer on the Contract
Date.
(EE) Not more than 360 days have elapsed since the date the Contract was
pledged to Lender hereunder.
(FF) On or before the date which is 120 days after the Contract Date,
the original Certificate of Title or equivalent title documents issued by the
relevant state motor vehicle authority, if applicable, shall have been delivered
to the Lender.
(GG) The inclusion of the Contract as an Eligible Contract will not
cause (1) the average of the down payment ratios (down payment as % of the sales
price of the Financed Vehicle) for the Pledged Contracts to be less than10%, (2)
the average of the income ratios (Scheduled Payment as % of the Contract
Debtor's monthly income) for the Pledged Contracts to exceed 20%, (3) the
average of the debt ratios (total monthly debt, including the Contract, as a %
of the Contract Debtor's monthly income) for the Pledged Contracts to exceed
45%, or (4) the number of Pledged Contracts approved under Borrower's Delta
program plus the number of Pledged Contracts approved under Borrower's First
Time Buyer program to exceed 15 % of the total number of Pledged Contracts.
Event of Default: has the meaning provided in Section 15.0 of this
Agreement.
Final Maturity Date: means December 31, 1998 unless Borrower activates
Article IV in the CPS Secured Guaranty Agreement before December 31, 1998 in
which case the Final Maturity Date means November 30, 1999.
Financed Vehicle: means the new or used Motor Vehicle purchased by a
Contract Debtor pursuant to a Contract, or any substituted vehicle which is
properly documented and approved by Lender.
Governmental Authority: means the United States of America, any state,
local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions thereof
or pertaining thereto.
Gross Balance: means, with respect to any Contract, an amount equal to
the number of remaining Scheduled Payments multiplied by the amount of each
Scheduled Payment minus any Prepayments or other payments applied to reduce the
unpaid principal balance of such Contract.
Indebtedness: means the Loan and all other amounts, including but not
limited to interest, that Borrower owes Lender in connection with this
Agreement.
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Interest Coverage: means the sum of Borrower's year-to-date pre-tax
income plus Borrower's year to date interest expense, compared to Borrower's
year-do-date interest expense.
LIBOR Rate: means the average of the "three month" London Interbank
Offered Rates ("LIBOR") published in the Money Rates column of the Wall Street
Journal during the calendar month immediately preceding the calendar month for
which interest is being calculated, or published in such other publication as
Lender may designate.
List of Contracts: means the list delivered to Lender by Borrower with
each Contract or group of Contracts which: (i) identifies each Contract being
delivered by account number, the name of the Contract Debtor, the Gross Balance,
and the year, make, model, and VIN of the Financed Vehicle, and (ii) shows the
total number of Contracts and the total of the Gross Balances.
Loan: means the outstanding principal amount of the Advances, plus all
other amounts advanced, expended or applied by Lender under this Agreement to or
for the benefit of Borrower or to perform or enforce Borrower's covenants in
this Agreement.
Loan Availability: means the amount by which the Borrowing Base exceeds
the Loan.
Loan Documents: means this Agreement, the Note, and the Supplemental
Documentation.
Lockbox: means the arrangement established by the Lender at a bank or
financial institution for the receipt and identification of Remittances.
Motor Vehicle: means a passenger motor vehicle, van, or light duty truck
which is not manufactured for a particular commercial purpose and which can be
registered for use on public highways and is not a "grey market" vehicle.
Non-Utilization Fee: means the fee calculated by multiplying the
Non-Utilization Rate times the amount by which $100,000,000 (one hundred million
and no/100) exceeds the average balance of the Loan for the appropriate
Accounting Period. If the Loan balance for any day is less than zero, such Loan
balance shall be assumed to be positive for purposes of the average balance
calculation.
Non-Utilization Rate: means a monthly percentage rate equal to .02083%
or an annual percentage rate equal to one quarter of one percent (.25%).
Note: means the promissory note issued by Borrower to Lender
substantially in the form of Exhibit A hereto.
Optional Contract Debtor Insurance: any insurance, other than Required
Contract Debtor Insurance which insures a Financed Vehicle or a Contract
Debtor's obligations under a Contract, including but not limited to credit life,
credit health, credit disability, unemployment insurance; and any service
contract, mechanical breakdown coverage, warranty, or extended warranty for a
Financed Vehicle.
Person: means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, entity, party, or government (including, any instrumentality or
division thereof).
Pledged Contract: means any Contract owned on the Closing Date or in the
future by Borrower unless it has been, to the extent allowed by this Agreement,
pledged to a Person other than Lender or sold.
Pre-Default Event: means an event which with the passage of time, the
giving of notice, or both, would constitute an Event of Default if Lender gave
any notice required by this Agreement for the event to be an Event of Default,
or if the event continued past the end of any period specifically allowed by
this Agreement for the event to continue before it becomes an Event of Default.
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Prepayment: means, with respect to a Contract on any day of
determination, the amount, if any, by which the Actual Payment exceeds the
Scheduled Payment.
Proceeds: means, with respect to any Collateral, whatever is receivable
or received when such Collateral is sold, collected, exchanged or otherwise
disposed of, whether such disposition is voluntary or involuntary, and includes
all rights to payment, including returned premiums, with respect to any
insurance relating to such Collateral.
Records: means all Contracts and other documents, books, records and
other information (including, without limitation, computer programs, tapes,
disks, data processing software and related property and rights) prepared and
maintained by Borrower with respect to Receivables and the related Contract
Debtors.
Remittances: means all payments made with respect to Pledged Contracts,
including, but not limited to, Scheduled Payments, full and partial prepayments,
liquidation proceeds, insurance proceeds and refunds, late charges, fees
(including but not limited to NSF fees and extension fees), and payments from
Contract Rights Payors.
Required Contract Debtor Insurance: means insurance for physical damage
to, and theft or loss of, the Financed Vehicle, having a deductible no higher
than $500 and providing coverage at least equal to the actual cash value of the
Financed Vehicle.
Rolling Average Delinquency: means the average of the Delinquency
Measurements for any three consecutive Accounting Periods for Pledged Contracts;
provided that, until the first three Accounting Periods have expired, the
Rolling Average Delinquency shall be the average of the Delinquency Measurements
for the Accounting Periods which have expired.
Schedule of Payments: means the schedule of payments disclosed on a
Contract.
Scheduled Payment: means the periodic installment payment amount
disclosed in the Schedule of Payments for the Contract.
Skip Loss Investigation: means an investigation initiated by Borrower of
the whereabouts of a Financed Vehicle or a Contract Debtor.
Statement of Borrowing Base: means a statement issued by lender which
contains the amount of the Borrowing Base, the amount of the Loan or
Indebtedness, and either the amount available for Advances or the amount by
which the Loan or Indebtedness exceeds the Borrowing Base.
Supplemental Documentation: means all agreements, instruments,
documents, certificates of title, financing statements, notices of assignment,
Lists of Contracts, chattel mortgages, powers of attorney, subordination
agreements, and other written matter necessary or reasonably requested by Lender
to perfect and maintain perfected Lender's security interest in the Collateral
or to consummate the transactions contemplated by this Agreement.
UCC: means the Uniform Commercial Code of the applicable state.
Unearned Interest Amount: means, with respect to any Contract, the
aggregate amount of the unearned interest on such Contract calculated in
accordance with the constant yield method, as shown on the books of the
Borrower.
Year 2000 Compliant: means:
(A) The operating systems for Borrower's computers, all software
applications that run on Borrower's computers, all Borrower's facilities,
machinery and equipment and Borrower's products and services (collectively,
"Products and Services) accurately process, provide and or receive date/time
data
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(including without limitation events and data in the twentieth and twenty-first
centuries and the years 1999 and 2000) including leap year calculations, and
(B) Neither the performance nor the functionality of Borrower, nor
Borrower's supply of Products and Services will be affected adversely by
dates/times prior to, on, after, or spanning January 1, 2000. In particular, but
without limitations, the design and performance of the Products and Services
shall include, without limitations, proper date/time data century recognition,
proper recognition of April 9, 1999, September 9, 1999, December 31, 1999,
January 1, 2000, January 3, 2000, January 10, 2000, January 31, 2000, February
29, 2000, March 31, 2000, October 31, 2000, January 1, 2001 and December 31,
2001, and proper recognition of Leap Years calculation, proper same century and
multi-century formulae and date/time values before, on, after, and spanning
January 1, 2000, and date/time data interface values that properly reflect the
century, 1999 and 2000; and
(C) No value for date/time will cause any error, interpretation, or
decreased performance in or for such Products and Services; and
(D) All manipulations of date and time related data (including but not
limited to, calculating, comparing, sequencing, processing, and outputting) will
produce correct results for all valid dates and times, including when used in
combination with other products, services, and/or items; and
(E) Date /time elements in interfaces and data storage will specify the
century and date/time data so as to eliminate date ambiguity without human
intervention, including Leap Year calculations/date, where any date is
represented without a century, the correct century will be unambiguous for all
manipulations involving that element; and
(F) Authorizations codes, passwords, and purge functions shall operate
normally and in the same manner in which they function with respect to
expiration dates and CPU serial numbers; and
(G) Neither Borrower's supply of Products and Services, Borrower's
business, Borrower's operations nor Borrower's financial condition will be
interrupted, delayed, decreased, or otherwise adversely affected by dates prior
too, on, after, or spanning January 1, 2000."
Section 1.1 Other Terms: All terms not defined in this Agreement shall,
unless the context indicates otherwise, have the meanings provided in the UCC to
the extent the same are defined therein.
Section 1.2 Accounting Terms. Any accounting terms used in this
Agreement which are not specifically defined shall have the meanings customarily
given them in accordance with generally accepted accounting principles.
ARTICLE II - LOAN; GENERAL TERMS
Section 2.0 Revolving Credit; Loan Amount. Subject to all of the terms
and conditions of this Agreement, the Lender agrees to loan funds to Borrower
against Eligible Contracts from time to time in a series of Advances during the
term of this Agreement. Funds may be borrowed, repaid and reborrowed on a
revolving basis subject to the terms and conditions set forth in this Agreement,
provided that the Loan shall not at any time exceed the lesser of the Borrowing
Base or $100,000,000. Borrower's obligation to pay the Loan is evidenced by this
Agreement and the Note. Borrower is obligated to pay Lender as provided in this
Agreement whether or not Borrower has executed a promissory note. Any promissory
note executed by Borrower is adequate, but not required, proof of the
Indebtedness when so used by Lender. The actual amount Borrower is obligated to
pay Lender shall be determined by this Agreement and the records of Lender,
regardless of the terms of any promissory note. Any promissory notes executed in
connection with the Indebtedness need not be amended to reflect changes made to
this Agreement. The records of Lender shall, absent manifest error, be
conclusive evidence at any time as to the amount of the Loan, the interest due
thereon, and all other amounts owed in connection with this Agreement.
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Section 2.1 Loan Purpose. Borrower shall use the Advances for the legal
and proper corporate working capital needs of Borrower.
Section 2.2 Single Loan. All Advances by Lender to Borrower shall
constitute one loan and all indebtedness and obligations of Borrower to Lender
under the Loan Documents shall constitute an obligation secured by Lender's
security interest in all of the Collateral.
Section 2.3 General Interest Rate. Except as modified by Sections 2.5
and 15.1, the Loan shall bear interest, calculated daily on the basis of a
365-day year, at a per annum rate equal to three and one-half percent (3.50%)
plus the LIBOR Rate.
Section 2.4 Loan Term; Right to Terminate. Unless sooner terminated as
hereinafter provided, this Agreement shall expire on the Commitment Termination
Date. The prepayment in full of all Advances is a termination of this Agreement.
In addition, if an Event of Default has occurred, Lender may without prior
notice to Borrower, immediately terminate this Agreement. Notwithstanding
termination of this Agreement, the Indebtedness shall be payable in accordance
with this Agreement, and all rights and remedies granted to Lender hereunder or
pursuant to applicable law shall continue until all obligations of Borrower to
Lender have been fully paid and performed.
Section 2.5 Maximum Lawful Rate.
(A) Interest Rate. Notwithstanding any provision in this Agreement, or
in any other document, if at any time before the payment in full of the
Indebtedness, any of the rates of interest specified in this Agreement (the
"Stated Rates") exceeds the highest rate of interest permissible under any law
which a court of competent jurisdiction shall, in a final determination, deem
applicable hereto (the "Maximum Lawful Rate"), then in such event and so long as
the Maximum Lawful Rate would be so exceeded, the rate of interest payable shall
be equal to the Maximum Lawful Rate; provided, however, that if at any time
thereafter the Stated Rates shall be less than the Maximum Lawful Rate, then,
subject to (B) below, Borrower shall continue to pay interest at the Maximum
Lawful Rate until such time as the total interest received by Lender is equal to
the total interest which Lender would have received had the Stated Rates been
(but for the operation of this Section 2.5(A)) the interest rates payable;
thereafter, the interest rates payable shall be the Stated Rates unless and
until any of the Stated Rates shall again exceed the Maximum Lawful Rate, in
which event this Section 2.5(A) shall again apply. In the event interest payable
hereunder is calculated at the Maximum Lawful Rate, such interest shall be
calculated at a daily rate equal to the Maximum Lawful Rate divided by the
number of days in the year in which such calculation is made.
(B) Amount of Interest. In no event shall the total interest contracted
for, charged, received or owed pursuant to the terms of this Agreement exceed
the amount which Lender may lawfully receive. In the event that a court of
competent jurisdiction, notwithstanding the provisions of this Section 2.5,
shall make a final determination that Lender has received, charged, collected,
or contracted for interest hereunder in excess of the amount which Lender could
lawfully have, Lender shall, to the extent permitted by law, promptly apply such
excess first to any interest due (calculated at the Maximum Lawful Rate if
applicable) and not yet paid, then to the prepayment of principal, and any
excess remaining thereafter and after application to any other amounts Borrower
owes Lender shall be refunded to Borrower. In determining whether the interest
exceeds the Maximum Lawful Rate or the maximum amount which Lender could
lawfully have received, the total amount of interest shall, to the extent
allowed by law, be spread over the term of the Loan. Any provisions of this
Agreement regarding the time during which interest accrues on Advances are only
elements of the formula for calculating interest on the total Loan and are not
intended to cause interest to be applied to specific Advances for usury
determination purposes.
ARTICLE III - LOAN DISBURSEMENTS
Section 3.0 Loan - Borrowing Base. Provided that (i) there does not then
exist an Event of Default or a Pre-Default Event, and (ii) Lender has not taken
over all or some of the administration of the Contracts, Lender shall, upon
written request of Borrower and subject to all of the terms and conditions of
this Agreement, make Advances to Borrower pursuant to Section 3.2.
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Section 3.1 Eligible Contracts. No less frequently than every other
Business Day, Borrower shall deliver to Lender all Eligible Contracts which
Borrower owns and has not previously delivered to Lender. Along with the
Contracts Borrower shall also deliver a List of Contracts. An Eligible Contract
shall be included in the Borrowing Base only when and for so long as, in
Lender's sole determination, each of the requirements in the definition of
Eligible Contracts continues to be satisfied. If a Contract is determined by
Lender to be, or is treated by Lender as, an Eligible Contract, Lender reserves
the right to change its determination or treatment and to remove the Contract
from the Borrowing Base if it later determines that the Contract is not or was
not an Eligible Contract. A determination by Lender that a Contract is an
Eligible Contract is not a waiver by Lender of, or an admission by Lender of the
truth of, any of Borrower's representations and warranties in this Agreement. If
Lender intentionally includes a Contract in the Borrowing Base even though the
Contract does not satisfy all of the requirements for being an Eligible
Contract, Lender does not waive the right to exclude any similar Contract
delivered to Lender before or after the included Contract.
Section 3.2 Procedure for Borrowing.
(A) The first Advance shall not exceed the Borrowing Base. Subsequent
Advances shall not be made more frequently than every other business day. Each
subsequent Advance shall not exceed the Loan Availability determined at Lender's
election either as of the day of the Advance request , the end of the most
recent Accounting Period for which Lender has received the monthly reports
required by Section 5.1 (C), or, as of such other date thereafter designated by
Lender. Lender is not obligated to make an Advance if the amount available or
requested is less than One Hundred Thousand Dollars ($100,000.00). Lender is not
obligated to make an Advance unless Borrower provides Lender with sufficient
information to calculate the Loan Availability. Lenders use of the information
provided by Borrower to determine the amount available for Advances is not an
admission by Lender as to the accuracy of the information, and Lender reserves
the right to verify the information and redetermine the amount available for
Advances.
(B) Lender shall disburse each Advance requested by Borrower within one
(1) Business Day after receipt of Borrower's written request for the Advance.
Lender shall disburse each Advance requested by Borrower by wire transfer to
Borrower.
ARTICLE IV - LOANS: PAYMENTS
Section 4.0 Payments by Borrower.
(A) All payments by Borrower to Lender shall be in a form payable to
Lender and shall be sent to: GE Capital, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention: Manager - Asset Based Financing, or shall be sent to
such other location that Lender notifies Borrower to send payments. Borrower
shall make all payments to Lender by either an electronic fund transfer method
acceptable to Lender or ACH (Automated Clearing House).
(B) Whenever Lender shall notify Borrower, with a Statement of Borrowing
Base or otherwise, that the Loan exceeds the Borrowing Base, Borrower shall
within one (1) Business Day after receipt of such notice, either pay down the
Loan by the amount of such excess, or, if Lender consents, deliver additional
Eligible Contracts to Lender which are sufficient to increase the Borrowing Base
above the Loan.
(C) On the Commitment Termination Date, Borrower shall pay to Lender the
entire Indebtedness. If there is an Event of Default, Borrower shall pay the
entire Indebtedness on demand if the Indebtedness is accelerated pursuant to
Section 15.2.
(D) Interest shall accrue on the Loan daily and be paid from the
Remittances as provided in Section 4.2. If at the end of an Accounting Period
there is more than one Business Day of accrued unpaid interest, Borrower shall
pay the more-than-one-day accrued interest to Lender within one (1) Business Day
after the end of the Accounting Period. Accrued interest shall not be added to
the Loan balance and bear interest, unless the
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interest is past due and paid with an Advance requested by Borrower and approved
by Lender; provided that, such an approval by Lender shall not constitute a
waiver of the Event of Default consisting of the failure to pay the interest
except to the extent provided in Section 16.9.
(E) The payment of all elements of the Indebtedness not covered by the
foregoing Subsections (B), (C), or (D) shall be payable by Borrower to Lender as
and when provided in the Loan Documents, and, if not specified, then on demand.
(F) Borrower has the right to prepay the Loan in full or in part at any
time without penalty.
(G) The Non-Utilization Fee shall be payable monthly in arrears within
fifteen (15) days after the end of an Accounting Period for which a
Non-Utilization Fee is due.
(H) Borrower shall immediately pay to Lender the balance of any Advance
for any Pledged Contract upon the sale or other disposition of such Pledged
Contract.
(I) Borrower shall have paid Lender a line fee of $250,000 on or before
November 30, 1998.
Section 4.1 Contract Payments. Borrower shall direct all Contract
Debtors for Pledged Contracts to make, when paying by mail, all payments
directly to the Lockbox. Borrower shall direct all Persons, other than Contract
Debtors, who make payments to Borrower relating to Pledged Contracts, including
but not limited to Contract Rights Payors, to make payment directly to the
Lockbox. In the event Borrower receives any Remittances, Borrower shall, as soon
as possible but no later than the next Business Day following receipt, deposit
the remittances in kind in the Collection Account. Borrower shall hold
Remittances in trust for Lender until delivery to Lender or deposit in the
Collection Account. Borrower shall pay all expenses associated with the Lockbox.
Section 4.2 Application of Payments. All Remittances received by Lender
or the Collection Account shall be applied by Lender to the Indebtedness within
two (2) Business Days after the Remittance has been credited to the Collection
Account. No Remittance other than cash shall be treated as a final payment to
Lender unless and until such item has actually been collected by the Collection
Account and such collection has been finally credited to the Collection Account;
provided, further, that if a Remittance applied to the Indebtedness is charged
back to the Collection Account, Lender can retroactively remove the application
of the Remittance to the Indebtedness and accrue any interest not accrued
because of the application of the Remittance to the Indebtedness. Each
Remittance applied by Lender to the Indebtedness shall be applied by Lender
first to accrued interest and, if sufficient to pay accrued interest, any excess
shall be applied then to the Loan, and, if sufficient to pay the accrued
interest and the Loan, any excess shall then be applied to the remaining
elements of the Indebtedness, if any, or, if not, Lender shall, if there is no
Event of Default or Pre-Default Event, remit the same to Borrower within two
Business Days; provided that, Lender reserves the right to use a different order
of application if there is an Event of Default or Pre-Default Event or Lender
has given prior written notice to Borrower of a different order. All Remittances
received by the Collection Account or Lender may be applied to the Indebtedness
even though no portion of the Indebtedness is otherwise then due and even though
Lender has not sent Borrower a demand, notice or request for payment of the
Indebtedness. Payments shall be deemed to be due by Borrower when received by
Lender unless they are due sooner by the terms of the Loan Documents.
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ARTICLE V - CONTRACT ADMINISTRATION
Section 5.0 Lender Administration
(A) Lender shall have no liability to Borrower with respect to
Remittances received by Lender, the Lockbox, or the Collection Account, other
than to: (i) apply the Remittances pursuant to Section 4.2 of this Agreement;
(ii) ensure that there is a provision in Lenders Agreement with the Lockbox Bank
which requires the bank to routinely provide Borrower with a report of
Remittances received by the Lockbox which itemizes the Remittances by Contract
to the extent the Remittances contain sufficient identifying information; and
(iii) upon termination of this Agreement and Borrowers satisfaction of all of
its obligations under this Agreement, to assign the Lockbox and its contents to
Borrower. Lender shall have no liability to Borrower with respect to any
interest or other earnings which are earned, or could have been earned, on the
Remittances while they are in the Lockbox, the Collection Account, or otherwise.
(B) Borrower shall transfer to Lender the U.S. Postal Service post
office boxes used by Borrower for the receipt of Remittances processed by
Borrower's service centers. Immediately after the U.S. Postal Service has
recorded the post office boxes in the name of Lender, (i) the post office boxes
shall be the Lockbox, and (ii) Lender shall designate Borrower (or employees of
Borrower specified by Borrower) to the U.S. Postal Service as an authorized
retriever of mail from the post office boxes subject to Lender's right to cancel
such authorization. Lender shall not exercise its rights to cancel Borrower's
authorization to retrieve mail from the Lockbox before Lender has the right (as
described in Section 5.1(E)) to take over all or part of the administration that
Borrower is required by this Agreement to perform. Until Lender exercises its
right to take over all or part of the administration, Lender shall maintain a
Collection Account near each of Borrower's service centers identified in Section
5.1(B).
Section 5.1 Borrower Administration
(A) Borrower shall perform all aspects of servicing, administering,
collecting, liquidating, accounting for and managing (collectively,
administering, administer, or administration) the Pledged Contracts it
customarily performs and all aspects that are customarily performed by financial
institutions in the administration of their motor vehicle installment contracts.
Borrower shall provide such administration in a reasonable and prudent way that
does not, in Lenders determination, adversely affect the value of the Collateral
to Lender. Borrower shall provide such administration with at least the same
standard of care used by large financial institutions in the administration of
motor vehicle installment contracts. Lender shall be the sole determine as to
whether such standard of care has been met. The administration provided by
Borrower shall include but not be limited to all servicing currently provided by
Borrower, and Financed Vehicle titling and lien perfection, customer service,
insurance claim tracking and collection, insurance maintenance, Contract
enforcement, Contract billing, payment processing, portfolio and Contract
accounting, portfolio management, delinquency collection, repossession,
foreclosure, resale, and maintaining current Contract Debtor and Financed
Vehicle location information (name, address and phone number). Borrower shall
maintain current, accurate, and complete records of activity and comments
regarding collection, insurance, payments, and other material events. The
records regarding collection, history, payments, Contract accounting, customer
service notes, Contract Debtor names and addresses and Gross Balance shall be
computerized. Borrower shall require Contract Debtors to maintain Required
Contract Debtor Insurance in accordance with Borrowers existing procedures.
Borrower shall administer and otherwise deal with the Contracts in compliance
with all applicable laws. Borrower shall conduct foreclosure sales in a
commercially reasonable manner and take the steps necessary to preserve the
deficiency liability of the Contract Debtors.
(B) Borrower shall administer the Pledged Contracts at its existing
service centers in Irvine, California, and Chesapeake, Virginia or at such other
locations that Borrower provides prior notice of to Lender and Lender approves
for Contract administration.
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(C) Borrower shall furnish to Lender such reports in such form that
Lender determines are necessary for it to track and monitor the Pledged
Contracts, Remittances, Financed Vehicles, and insurance. Such reports shall
include but not be limited to:
REPORT FREQUENCY
------- ---------
Cash Report Daily
Discount Report Summary Monthly
Trial Balance of Contracts Monthly
Gross Delinquency Summary Report Monthly
Loans Paid Off This Month Report Monthly
Loans Charged-Off This Month Report Monthly
Delinquency Detail Report Monthly
The daily reports shall be provided to Lender no later than the next Business
Day after the day covered by the report. The monthly reports shall be provided
to Lender no later than fifteen (15) Business Days after the end of the month.
Borrower shall deliver with the monthly reports a certificate of the chief
financial officer of Borrower, in the form of Exhibit E and a covenant
compliance certificate, certifying as to the completeness and accuracy of the
reports provided pursuant to this Section 5.1(C). Borrower shall deliver to
Lender, no later than the fifteenth (15th) Business Day following each
Accounting Period, an up-to-date master file back-up tape in a form usable by
Lenders computer of all Pledged Contract information for the Accounting Period
relating to the Contract files which Borrower has placed on electronic media,
including but not limited to, payment histories, contract accounting, Gross
Balance, and Contract Debtor names and addresses.
(D) Notwithstanding anything herein to the contrary, (i) Borrower shall
remain liable under all Contracts, and any other contracts and agreements with
Contact Rights Payors or otherwise included in or related to the Collateral, to
the extent set forth therein to perform all of its duties and obligations
thereunder to the same extent as if this Agreement had not been executed; (ii)
the exercise by Lender of any rights under any of the Loan Documents shall not
release Borrower from any of its duties or obligations under the Contracts, or
the other contracts and agreements; and (iii) Lender shall not have any
obligation or liability under the Contracts, or the other contracts and
agreements, nor shall Lender be obligated to perform any of the obligations or
duties of Borrower thereunder or take any action to collect or enforce any
rights thereunder.
(E) Borrower shall administer the Contracts at its own expense. In the
event there is an Event of Default or a Pre-Default Event, Lender may in Lenders
or Borrowers name, take over all or part of the administration that Borrower is
required by this Agreement to perform. If Lender takes over all or part of the
administration, Borrower shall pay to Lender on demand all out-of-pocket costs
incurred by Lender in the performance of Borrowers administration obligations,
and Borrower shall pay Lender for the administration performed by Lender an
administration fee (exclusive of out-of-pocket costs) established by Lender
consistent with generally prevailing fees charged by servicers of Contracts of
similar credit quality, and until so paid such costs and fee shall be part of
the Loan.
Section 5.2 Servicing Agreements. Borrower shall not enter into any
agreements for the servicing (including origination or administration) of the
Pledged Contracts other than servicing agreements with CPS which Lender has
approved. Borrower shall not make any changes to servicing agreements approved
by Lender unless Lender approves the changes. Borrower hereby assigns to Lender
all of Borrower's rights regarding Pledged Contracts under servicing agreements
for the Pledged Contracts. Borrower can continue to exercise such rights until
an Event of Default, at which time they may only be exercised by Lender or with
Lender's approval. Lender assumes no liabilities to Borrower or others with
regard to the servicing agreements.
ARTICLE VI - COLLATERAL: GENERAL TERMS
Section 6.0 Security Interest. To secure the prompt performance and
payment in full when due, whether at stated maturity, by acceleration or
otherwise of the Indebtedness and all of Borrower's existing and future
obligations to Lender whether arising under or related to this Agreement or
otherwise, Borrower hereby
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grants to Lender a continuing security interest in, and lien upon, all of
Borrower's right, title and interest, whether now owned or existing or hereafter
arising or acquired and regardless of where located in, and to, the following:
Contracts; Contract Debtor Documents; Contract Rights; payments from
Contract Debtor bank accounts; chattel paper; leases; installment sale
contracts; installment loan contracts; payments from chattel paper obligors;
security deposits; motor vehicles (including but not limited to cars, trucks and
motorcycles); certificates of title; contract purchase discounts; accounts;
general intangibles; security interests, collateral securing chattel paper;
dealer agreements; dealer reserves and rate participation; rights of Borrower
related to chattel paper, installment contracts, motor vehicles, and collateral
securing chattel paper; documents; instruments; deposit accounts; electronic
funds transfers; equipment; inventory; parts and accessories for motor vehicles;
payments from account debtor bank accounts; reserve accounts; insurance
policies, and benefits and rights under insurance policies, which Borrower is
solely or jointly the owner of, insured under, the lienholder or loss payee
under, or the beneficiary of; and all payments and property of any kind, now or
at any time or times hereafter, in the possession or under the control of
Lender, or a bailee of Lender;
accessions to, substitutions for and all replacements, products and
proceeds of, any of the foregoing property;
books and records (including, without limitation, financial statements,
accounting records, customer lists, credit files, computer programs, print-outs
and other computer materials and records) of Borrower pertaining to any of the
foregoing property; and
Borrower's rights under servicing agreements for the Pledged Contracts.
Section 6.1 Disclosure of Security Interest. Borrower shall make
appropriate entries upon its financial statements and its books and records
disclosing Lenders security interest in the Collateral. Borrower shall inform
Lender of any potentially materially adverse information it receives concerning
the Collateral or Lenders rights in the Collateral.
Section 6.2 Additional Acts. Borrower shall perform all other acts
requested by Lender for the purpose of perfecting, protecting, maintaining and
enforcing Lenders security interest in the Collateral and the priority of such
security interest. Borrower agrees that a carbon, photographic, photostatic, or
other reproduction of this Agreement or of a financing statement is sufficient
as a financing statement. Borrower, upon request of Lender shall either pay and
or reimburse Lender for all costs, filing fees, and taxes associated with the
perfection of Lenders security interest.
Section 6.3 Inspection and Access. Lender and its agents shall have the
rights, at any time, to (i) during Borrowers usual business hours, inspect the
Collateral and the premises upon which any of the Collateral is located; (ii)
during Borrowers usual business hours, inspect, audit and make copies or
extracts from any of Borrowers records, computer systems, files, and books of
account; (iii) during Borrowers usual business hours, monitor Borrowers
performance of its obligations with respect to this Agreement; (iv) obtain
information about Borrowers affairs and finances from any Person; and (v)
verify, in Lenders name or in the name of Borrower, the validity, amount,
quality, quantity, value and condition of, or any other matter relating to, the
Collateral including but not limited to verifying Contract information with
Contract Debtors. Borrower shall, upon Lenders request from time to time,
instruct its vendors, banking and other financial institutions and its
accountants to make available to Lender and discuss with Lender such information
and records as Lender may request. Borrower authorizes Lender, if requested by a
Person other than a credit reporting agency and without request if the Person is
a credit-reporting agency, to provide that Person with information about the
Indebtedness, Collateral and Borrowers performance of this Agreement. As long as
there is a Pre-Default Event, and after an Event of Default has occurred, all
costs, fees and expenses thereafter incurred by Lender, or for which Lender
becomes obligated, in connection with any inspection, audit, monitoring, or
verification shall be payable to Lender by Borrower on demand by Lender and
until paid shall be part of the Loan. If Borrower maintains or stores any data
with respect to Collateral on a computer system, Borrower shall upon request of
Lender, at Lenders option, provide Lender with on-line access or deliver to
Lender duplicate copies of the requested data in machine readable form
acceptable to Lender along with a printout or other hard copy of such data.
Borrower shall, on request of Lender, provide to Lender (at the location
designated by Lender) the Contract Debtor Documents.
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Section 6.4 Right to Notify and Endorse. Borrower hereby irrevocably
authorizes Lender to, at any time and in the name of Lender or Borrower, notify
any or all Contract Debtors and Contract Rights Payors that Lender has a
security interest in Contracts, Contract Rights, and other items of Collateral.
Any such notice shall, at Lenders election, be signed by Borrower and may be
sent on Borrowers stationery.
Section 6.5 Lender Appointed Attorney-in-Fact. Borrower hereby
irrevocable appoints Lender (and all Persons designated by Lender for that
purpose) as Borrowers true and lawful attorney-in-fact to act in Borrowers place
in Borrowers or Lenders name (i) to endorse Borrowers name on any Remittance;
(ii) to sign Borrowers name on any assignment or termination of a security
interest in a Financed Vehicle, on any application for a Certificate of Title
for a Financed Vehicle, or on any UCC financing statement related to Collateral,
and on any other public records regarding the Collateral; and (iii) to send
requests for verification to Contract Debtors. Borrower ratifies and approves
all acts of Lender as Borrowers attorney-in-fact. Lender shall not, when acting
as attorney-in-fact, be liable for any acts or omissions as or for any error of
judgment or mistake of fact or law, except for actions taken in bad faith. This
power, being coupled with an interest, is irrevocable until all payment and
performance obligations of Borrower to Lender have been fully satisfied.
Borrower shall upon request of Lender execute powers of attorney to separately
evidence the foregoing powers granted to Lender. As long as there is a
Pre-Default Event, and after an Event of Default has occurred, all costs, fees
and expense thereafter incurred by Lender, or for which Lender becomes
obligated, in connection with exercising any of the foreign powers shall be
payable to Lender by Borrower on demand by Lender and until paid shall be part
of the Loan.
Section 6.6 Change of Collateral, Location, Office or Structure.
Borrower shall keep the Collateral, other than Collateral delivered to Lender
and Financed Vehicles, at Borrower address in Section 16.1 or, subject to
Section 5.1(B), one of its service centers, and Borrower shall maintain Borrower
address in Section 16.1 or, subject to Section 5.1(B), one of its service
centers, as its principal place of business and chief executive office, unless
Borrower gives Lender at least sixty (60) days' prior written notice of a change
and before the change takes whatever action Lender requires to maintain the
priority and perfection of its security interest in, and access to, the
Collateral. Borrower shall not change its name, trade name, identity, corporate
structure, or service center locations unless Borrower gives Lender at least
sixty (60) days' prior written notice of a change and before the change takes
whatever action Lender requires to maintain the priority and perfection of its
security interest in, and access to the Collateral.
Section 6.7 Lenders Payment of Claims Asserted against Borrower. Lender
may, at any time, in its sole discretion and without obligation to do so and
without waiving or releasing any obligation, liability or duty of Borrower under
the Loan Documents or any Event of Default, pay, acquire or accept an assignment
of any security interest, lien, claim or encumbrance asserted by any Person
against the Collateral; provided that Lender shall first give Borrower written
notice of its intent to do the same, and Borrower does not, within five (5) days
of such notice, pay such claim and/or obtain to Lenders reasonable satisfaction
the release of the security interest, liens, claims or encumbrances to which
such notice relates. All sums paid by Lender in respect thereof and all costs,
fees and expenses, including reasonable attorneys fees, court costs, expenses
and other charges relating thereto, which are incurred by Lender on account
thereof, shall be payable by Borrower to Lender on demand by Lender and until
paid shall be part of the Loan.
Section 6.8 Termination of Security Interest. Lenders security interest
in the Collateral shall continue until performance and payment in full of all of
Borrowers obligations to Lender in accordance with the terms of agreements
creating such obligations; and if, at any time, all or part of a payment or
transfer made by Borrower or any other Person and applied by Lender to Borrowers
obligations to Lender is rescinded or otherwise must be returned by Lender for
any reason whatsoever (including, without limitation, the insolvency, bankruptcy
or reorganization of Borrower or such other Person), the security interest
granted hereunder or under any other present or future agreement between
Borrower and Lender, and all rights of Lender, shall be reinstated as to the
obligations which were satisfied by the payment or transfer rescinded or
returned, all as though such payment or transfer had not been made, and Borrower
shall take the action requested by Lender to re-perfect all terminated security
interests and to reinstate all satisfied obligations. Lender shall release its
security interest in Contracts which are sold or pledged to other Persons in
accordance with Section 14.8.
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Section 6.9 Return of Contract Delivery Documents. Lender shall return
to Borrower within three (3) Business Days of Borrowers request any Contract
Delivery Document originals for Contracts paid in full. In addition, provided
that there is no Event of Default or Pre-Default Event and the removal of the
Contract will not result in the Loan exceeding the Borrowing Base, Lender shall
return Contract Delivery Document originals for other Contracts requested by
Borrower for the time and to the extent necessary for Borrower to make
corrections or to enforce the Contracts or the obligations of the Contracts
Rights Payors. Whenever Borrower is in possession or control of Contract
Delivery Documents for Contracts not paid in full, Borrower shall hold them in
trust for Lender.
ARTICLE VII - COLLATERAL: CONTRACTS
Section 7.0 Notice Regarding Contracts.
(A) In the event any amounts due and owing in excess of Five Thousand
Dollars ($5,000) on a Pledged Contract become disputed between the Contract
Debtor and Borrower, or in the event a Contract Debtor for a Pledged Contract
asserts a claim, offset, or defense, or in the event a Person other than
Borrower or a Contract Debtor makes a claim of ownership or other interest in a
Financed Vehicle or Contract, then Borrower shall provide Lender with written
notice thereof within twenty (20) Business Days of learning of the same,
explaining in detail the nature of the matter and the amount in controversy.
Borrower shall promptly, but in no event later than forty (40) Business Days
after learning thereof, inform Lender of all material adverse information
relating to the financial condition of any Contract Debtor, or the value of any
Pledged Contract or Financed Vehicle.
(B) After an Eligible Contract is included in the Borrowing Base, in the
event that Borrower becomes aware that one of the requirements in the definition
of Eligible Contracts or one of the conditions in Section 9.1 are no longer
being satisfied with respect to the Contract, Borrower shall provide Lender with
written notice thereof within twenty (20) Business Days of Borrower becoming
aware, explaining in detail the timing and reasons why the requirement or
condition is not satisfied.
(C) Upon request of Lender, Borrower shall to the extent authorized by
law obtain current credit bureau reports on Contract Debtors.
ARTICLE VIII - COLLATERAL: REMITTANCES AND INSURANCE
Section 8.0 Assignment of Lien in Financed Vehicles. In addition to the
security interest granted in Section 6.0, Borrower hereby assigns absolutely to
Lender Borrowers rights of foreclosure as lienholder of the Financed Vehicles
for Contracts delivered to Lender. This assignment is solely for the purpose of
Lender foreclosing on the liens following an Event of Default. Until an Event of
Default, Borrower has the right to foreclose on a Financed Vehicle. In the event
Lender exercises the right to foreclose, Lender shall be the owner of the
foreclosure sale proceeds and shall apply them to the Indebtedness.
Section 8.1 Absolute Assignment of Remittances. In addition to the
security interest granted in Section 6.0, Borrower hereby absolutely assigns to
Lender Borrowers interest in and right to all Remittances arising on or after
the date of this Agreement, and such Remittances shall be the property solely of
Lender.
Section 8.2 Insurance. In addition to the security interest granted in
Section 6.0, Borrower hereby assigns absolutely to Lender Borrowers right to
refunds and benefits under Required Contract Debtor Insurance, and Optional
Contract Debtor Insurance. In the event Lender uses this assignment to collect
insurance benefits or refunds, Lender shall be the owner of the benefits and
refunds and shall apply them to the Indebtedness.
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ARTICLE IX - CONDITIONS TO LENDING
Section 9.0 Conditions Precedent to Effectiveness of Agreement. The
effectiveness of this Agreement is subject to the condition precedent that
Lender shall have received on or before November 30, 1998 the following, in form
and substance satisfactory to Lender:
(A) With respect to Borrower:
(i) the certificate or articles of incorporation of Borrower
certified, as of a date no more than ten (10) days prior to November 30,
1998, by the Secretary of State of its state of incorporation;
(ii) a good standing certificate, dated no more than ten (10)
days prior to November 30, 1998, from the respective Secretary of State
of its state of incorporation and each state in which Borrower is
required to qualify, or represents that it is qualified, to do business;
(iii) a certificate of the Secretary or Assistant Secretary of
Borrower certifying as of November 30, 1998: (a) the names and true
signatures of the officers authorized on its behalf to sign this
Agreement, (b) a copy of Borrower's by-laws, and (c) a copy of the
resolutions of the board of directors of Borrower approving this
Agreement, the Related Documents to which it is a party and the
transactions contemplated hereby and thereby;
(B) an Officer's Certificate in the form of Exhibit B hereto; and
(C) the Note shall have been duly executed in the form of Exhibit A and
delivered by Borrower to Lender and shall be in full force and effect.
(D) Any necessary third party (including any Governmental Authority)
consents to the closing of the transactions contemplated by this Agreement on
behalf of Borrower hereby, in form and substance satisfactory to the Lender;
(E) INTENTIONALLY LEFT BLANK
(F) An opinion of Borrowers counsel dated as of the Closing Date in the
form of Exhibit C;
(G) A copy of a letter delivered by Borrower to its independent
accountants instructing them to disclose to Lender any and all financial
statements and other information of any kind relating to Borrowers business,
financial condition and other affairs that Lender may request;
(H) An assignment of Borrower's rights to the payments from Contract
Debtor bank accounts;
(I) An executed certificate in the form of Exhibit D and in the form of
Exhibit E attached hereto executed by the Chief Financial Officer of Borrower;
(J) Landlord lien waivers in the form of Exhibit F attached hereto which
shall be provided to Lender within sixty (60) days following the date of this
Agreement;
(K) Evidence that properly executed financing statements for the
Collateral in the form of Exhibit G have been filed with all appropriate filing
officers;
(L) An assignment of Insurance Interests in the form of Exhibit H duly
executed by Borrower;
(M) An executed power of attorney in the form of Exhibit I attached
hereto; and
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(N) Such other approvals, consents, opinions, documents and instruments,
as Lender may reasonably request.
(O) CPS shall have unconditionally guarantied the obligations of
Borrower to Lender and not be in default of its guaranty agreement.
Section 9.1 Conditions to Each Advance. Notwithstanding any other
provision of this Agreement and without affecting in any manner the rights of
Lender hereunder, Lender shall not be obligated to make any Advances (including
the initial Advance) unless at the time of the Advance, all of the following
conditions shall, in Lenders sole determination, be satisfied:
(A) For each Eligible Contract, Borrower shall have included the
Eligible Contract on a List of Contracts delivered to Lender and shall have
delivered to Lender the Contract Delivery Documents; except that, if the
Contract date is less than one hundred twenty (120) days before the date the
Contract is delivered to Lender and a Certificate of Title has not been issued
and Borrower has provided Lender with adequate proof that a Certificate of Title
has been applied for, then the Certificate of Title must be delivered to Lender
within one hundred twenty (120) days of the Contract date;
(B) All of the representations and warranties of Borrower in all of the
Loan Documents shall be true and correct on and as of the date of such Advance
as though they were made on and as of such date and Borrower shall have
performed all of its obligations contained in the Loan Documents required to be
performed as of such date;
(C) The making of the advance will not constitute an Event of Default or
Pre-Default Event;
(D) There shall have been no material adverse change in the condition
(financial or otherwise), business, operations, results of operations or
properties of Borrower since the preceding Advance;
(E) INTENTIONALLY LEFT BLANK;
(F) No claim has been asserted or proceeding commenced challenging this
Agreement or Lenders rights under this Agreement, and no claim has been asserted
which if true would be a breach of a representation and warranty in the Loan
Documents;
(G) No vendor or creditor of Borrower has provided adverse credit
information about Borrower to Lender;
(H) No event of Default shall have occurred, and no Pre-Default Event
shall have occurred and still be in existence;
(I) Lender has a first priority perfected security interest in the
Collateral except to the extent otherwise allowed by this Agreement or Lender in
writing;
(J) An event has not occurred which entitles Lender pursuant to Section
5.1(E) to take over administration of the Contracts;
(K) Lenders most recent inspection of the Collateral or Borrowers
records or operations has been satisfactory to Lender;
(L) The Commitment Termination Date shall not have occurred;
(M) Before and after giving effect to such borrowing and to the
application of proceeds therefrom, there exists Loan Availability;
(N) Each Pledged Contract submitted by Borrower for computation of the
Borrowing Base is an Eligible Contract;
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(O) Borrower shall have provided such additional information and
documentation as Lender may reasonably request; and
(P) None of the actions taken or documents executed to satisfy the
conditions in Section 9.0 have been revoked, rescinded, terminated, or canceled
without Lenders prior consent.
The acceptance by Borrower of each Advance shall be deemed to constitute a
representation and warranty by Borrower that, to the best of Borrower's
knowledge and belief, the conditions in this Section are satisfied.
ARTICLE X - REPRESENTATIONS AND WARRANTIES OF BORROWER
Section 10.0 Representations of Borrower. Borrower hereby makes the
following representations and warranties. The representations and warranties are
made as of the execution and delivery of the Agreement, and each time Borrower
delivers Contracts to Lender or requests an Advance the representations and
warranties are deemed to be made again at that time. Lenders knowledge of any
breach of the representations and warranties contained herein shall not void any
of the representations or warranties or affect Lenders rights with respect to
the breach.
(A) Organization, Good Standing, Name, and Location. Borrower is duly
organized and is validly existing as a corporation in good standing under the
laws of the State of California, with power and authority to own its properties
and to conduct its business, and, at all relevant times, has the power,
authority and legal right to acquire, own, and pledge the Pledged Contracts.
Borrower has, and is in good standing under, and is in compliance with, all
governmental approvals, licenses, permits, certificates, inspections, consents
and franchises necessary to conduct its business, to enter into and perform this
Agreement, and to own and operate its business. Principal place of Borrower's
business and chief executive office is set forth in Section 16.1.
(B) Due Qualifications. Borrower has, and is in good standing under, all
licenses, permits, and approvals in all jurisdictions which are required for
Borrowers initial acquisition of the Pledged Contracts and for Borrowers
performance of this Agreement.
(C) Power and Authority. Borrower has the power and authority to execute
this Agreement and carry out its terms, and the execution and performance of the
Agreement have been duly authorized by all necessary corporate action; and the
execution, delivery and performance of the Agreement has been duly authorized by
Borrower by all necessary corporation action. The execution and performance of
this Agreement by Borrower does not require the consent or approval of any
Person.
(D) Valid and Binding Obligations. The Agreement constitutes a valid
loan obligation of Borrower and a valid granting of a security interest in the
Collateral to Lender, enforceable against creditors of and purchasers from
Borrower; and is a legal, valid and binding obligation of Borrower enforceable
in accordance with its terms. Borrower's use of the Advances is a legal and
proper corporate use. Borrower has not used Advances to give any preference to
any creditor or to make a fraudulent transfer.
(E) No Violation. The execution and performance of this Agreement by
Borrower does not conflict with, result in any breach of, nor constitute (with
or without notice or lapse of time) a default under, the articles of
incorporation or bylaws of Borrower, or any indenture, instrument, agreement,
law, or court order by which it is bound; nor does it result in the creation or
imposition of any lien upon any of Borrower's properties.
(F) No Proceedings. There are no proceedings or investigations pending,
or threatened, before any court, regulatory body, administrative agency, or
other governmental instrumentality having jurisdiction over Borrower or its
properties, which (i) assert the invalidity of the Agreement, (ii) seek to
prevent the consummation of any of the transactions contemplated by the
Agreement, (iii) seek any determination or ruling that, if determined adversely
to Borrower, would materially and adversely affect the performance by Borrower
of its respective obligations under, or the validity or enforceability of, the
Agreement.
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(G) Collateral. Borrower has good, indefeasible, sole and marketable
ownership of the Collateral, and the Collateral is, except for those liens to be
released by existing lenders in satisfaction of Section 9.1 and those liens
expressly allowed or created by this Agreement, free and clear of all liens,
claims, charges, defenses, counterclaims, offsets, encumbrances and security
interests of any kind or nature whatsoever. The security interests granted to
Lender pursuant hereto are perfected first priority security interests (other
than those expressly allowed or created by this Agreement) in and to the
Collateral, assuming delivery to Lender of any Collateral as to which possession
is the only method of perfecting a security interest and assuming the filing of
a UCC financing statement with the collateral description with the office of
Secretary of State of California; and no claim of ownership or other interest
has been asserted which would be a breach of this Section 10.0(g).
(H) Taxes. All required federal, state and local tax returns of Borrower
have been accurately prepared and duly and timely filed (within the initial or
extended time period allowed therefor) and all federal, state and local taxes
required to be paid with respect to the periods covered by such returns have
been paid. Borrower has not been delinquent in the payment of any tax,
assessment or other governmental charge which could adversely affect in any way
the Collateral.
(I) Brokers. No person has, or as a result of the transactions
contemplated hereby will have by reason of any Borrower conduct or any agreement
to which Borrower is a party, any right, interest or claim against Borrower,
Lender or the Collateral for any commission, fee or other compensation as a
finder or broker or in any similar capacity.
(J) Status and Condition. Borrower is solvent, in stable financial
condition with a positive net worth and is able to and does pay its liabilities
as they mature. This transaction will not leave Borrower with remaining assets
which are unreasonably small compared to its ongoing operations. Borrower is in
compliance with Section 13.6. Borrower has capital sufficient to carry on its
business and transactions as now carried on and as planned for the future,
including but not limited to the transactions contemplated by this Agreement. No
action, investigation, audit, claim or proceeding is now pending or threatened
against Borrower before any court, board, commission, agency or instrumentality
of any Federal, state or local government or of any agency or any subdivision
thereof, or before any arbitrator or panel of arbitrators, nor to the knowledge
of Borrower, does a state of facts exist which might give rise to such
proceedings, with respect to any matter which if adversely determined could
affect the Collateral, impair the ability of Borrower to perform its obligations
in the Loan Documents, Lender's rights under the Loan Documents, or materially
and adversely affect the financial condition or business of Borrower. Borrower
is not a party to any labor dispute or any labor contract. Borrower is not, and
has not received any notice alleging that it is, in violation of any statute,
regulation, rule or ordinance of any governmental entity, including, without
limitation, the United States of America, any state, city, town, municipality,
county or of any other jurisdiction, or of any agency thereof. Borrower is not
in default with respect to any indenture, loan agreement, mortgage, lease, deed
or other similar agreement relating to the borrowing of monies, or any contract
or other instrument relating to the transactions contemplated by this Agreement
or which is material to its business, prospects, operations or financial
condition.
(K) Disclosure. There is no fact known to Borrower which Borrower has
not disclosed to Lender in writing with respect to the Collateral or the assets,
liabilities, financial condition or activities of Borrower or its Affiliates
which would or may be likely to have a material adverse effect upon the
Collateral or Borrower's ability to perform its obligations under the Agreement.
All information and documents prepared by Borrower and provided to Lender at any
time are true and accurate at the time of delivery. Borrower has no knowledge
that any information or documents, not prepared by Borrower but delivered by
Borrower to Lender were not true and accurate at the time of delivery.
(L) Articles of Incorporation and Certificates of Good Standing. The
Articles of Incorporation of Borrower received by Lender pursuant to Section 9.0
have not been modified. Borrower has not taken or allowed any action which would
result in it not being in good standing. Borrower has not received notice of any
actual or threatened action to revoke its articles of incorporation or good
standing.
(M) Financial Statements. All financial statements of Borrower or
Affiliates delivered to Lender fairly present the assets, liabilities and
financial condition and income as of the dates thereof. There are no material
omissions from the financial statements and there has been no adverse change in
the assets, liabilities or
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financial condition since the date of the most recently delivered financial
statements. There exists no equity or long-term investments in, or outstanding
advances to, or guaranties of, any Person except such equity, investment,
advances or guaranties disclosed in the financial statements. The financial
statements accurately disclose all transactions with Affiliates.
(N) Conditions. Each time Borrower requests an Advance, the Conditions
in Section 9.1 have been met.
(O) Characteristics of Contracts. Each Pledged Contract delivered to
Lender as an Eligible Contract meets all of the requirements listed in the
definition of Eligible Contract, except that Borrower makes no representation or
warranty as to whether (i) the Contract meets such requirements to Lender's
satisfaction, or (ii) the Contract presents a credit, collateral, or
documentation risk unacceptable to Lender. No selection procedures adverse to
Lender have been utilized in selecting the Eligible Contracts delivered to
Lender.
ARTICLE XI - REPRESENTATIONS AND WARRANTIES OF LENDER
Section 11.0 Representations of Lender. Lender hereby makes the
following representations and warranties:
(A) Due Organization. Lender is a corporation, duly organized, validly
existing and in good standing under the laws of the State of New York, and has
the power to own its assets and to transact the business in which it is
presently engaged with regard to this Agreement;
(B) Requisite Power. Lender has the power to execute, deliver and
perform this Agreement, and has taken all necessary action to authorize the
execution, delivery and performance of this Agreement; and
(C) Binding Agreement. This Agreement has been duly executed and
delivered by Lender and constitutes the legal, valid and binding obligation of
Lender, enforceable in accordance with its terms.
ARTICLE XII - INDEMNITIES OF BORROWER
Section 12.0 Indemnity. Borrower shall indemnify and hold Lender
harmless from any and all losses, claims, damages, costs, good faith
settlements, expenses, taxes, reasonable attorneys' fees or other liabilities,
including but not limited to costs of investigation, litigation fees and
expenses, and costs in successfully asserting the right to indemnification
hereunder (collectively, "Lossee") incurred by Lender at any time and pertaining
to (i) facts which are, or allegations which if true would be, a breach of any
representation, warranty, obligation, agreement or covenant of Borrower
contained in the Loan Documents, or (ii) Lender entering into the Loan Documents
or making Advances or handling Remittances or administering Pledged Contracts,
(iii) an Event of Default or a Pre-Default Event, or (iv) activities, operations
or conduct of Borrower or its Affiliates.
ARTICLE XIII - AFFIRMATIVE COVENANTS
The following covenants shall remain in effect until the full payment
and performance of all of the obligations of Borrower to Lender:
Section 13.0 Financing Statements. At the request of Lender, Borrower
shall execute such financing statements as Lender determines may be required by
law to perfect, maintain and protect the interest of Lender in the Collateral
and in the proceeds thereof.
Section 13.1 Books and Records. Borrower shall maintain accurate and
complete books and records with respect to the Collateral and Borrower's
business. All accounting books and records shall be maintained in accordance
with generally accepted accounting principles consistently applied.
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Section 13.2 Payment of Fees and Expenses. Borrower shall pay to Lender,
on demand, any and all fees, costs or expenses which Lender pays to a bank or
other similar institution arising out of or in connection with (i) the
forwarding to Borrower, or any other Person on behalf of Borrower, by Lender of
Advances pursuant to this Agreement and (ii) the return of payments deposited
for collection by Lender, including but not limited to payments by Borrower and
payments by Contract Debtors.
Section 13.3 Continuity of Business and Compliance With Agreement.
Borrower shall continue in business in a prudent, reasonable and lawful manner
with all necessary licenses, permits, and qualifications necessary to perform
this Agreement. Borrower shall regularly and properly train its employees to
comply with all applicable laws governing the administration and purchase of
Contracts. Borrower shall take the steps necessary for the representations and
warranties in Article X to be true at all times. In the event that Borrower
learns that a representation and warranty in Article X is no longer true, it
shall notify Lender within twenty (20) Business Days after learning thereof.
Section 13.4 Financial Statements and Access to Records. Borrower shall
provide Lender with quarterly consolidated audited or unaudited financial
statements of Borrower and its consolidated Subsidiaries within 45 days of the
end of each of Borrower's fiscal quarters, and with audited consolidated annual
financial statements within one hundred and twenty (120) days of Borrower's
fiscal year-end audited by an independent certified public accounting firm
acceptable to Lender. Upon request of Lender, Borrower shall provide Lender with
unaudited (or audited if Borrower so chooses) monthly financial statements.
Borrower shall deliver to Lender with each financial statement a certificate by
the chief financial officer of Borrower verifying the accuracy and completeness
of such statement.
Section 13.5 Subsequent Actions. At the request of Lender, Borrower
shall execute and deliver to Lender after execution of this Agreement such
documents or take such action as Lender deems necessary to carry out the
Agreement.
Section 13.6 Financial Condition. Borrower shall notify Lender in
writing, promptly upon its learning thereof of any material adverse change in
the financial condition of Borrower. Section 13.7 Litigation Matters. Borrower
shall notify Lender in writing, promptly upon its learning thereof, of any
litigation, arbitration or administrative proceeding which may materially and
adversely affect the operations, financial condition or business of Borrower or
its ability to perform this Agreement or which in any way involve Lender's
security interest in the Collateral or other rights under the Loan Documents.
Section 13.8 Value of Collateral. If in Lender's judgment the Collateral
has materially decreased in value, other than the ordinary depreciation of
Financed Vehicles, Borrower shall either provide enough additional Collateral to
satisfy Lender or Borrower shall reduce the Loan by an amount sufficient to
satisfy Lender.
Section 13.9 Payment of Obligations. Borrower shall pay and perform, as
and when due, all of its obligations, including, without limitation, all of its
obligations to Lender.
Section 13.10 Insurance. Borrower shall maintain customary amounts of
insurance covering, without limitation, fire, theft, burglary, public liability,
property damage, product liability, workers' compensation, and liability arising
from the collection of Contracts and sale of motor vehicles. Borrower shall pay
all insurance premiums payable for such coverage and shall upon request of
Lender deliver a copy of the policies of such insurance to Lender, together with
evidence of payment of all premiums therefor.
Section 13.11 Certificates of Title. Borrower shall promptly apply for
and obtain Certificates of Title for all Financed Vehicles. Borrower shall
promptly deliver to Lender all Certificates of Title it receives for Financed
Vehicles for Pledged Contracts.
Section 13.12 Interest Rate Spread. If at any time the differential
between Borrower's gross yield (including the impact of any discount retained by
Borrower) on Borrower's portfolio of Contracts and the
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applicable rate of interest hereunder is less than seven and one-half (7.5%),
Lender may in its sole discretion cease making Advances to Borrower hereunder.
Section 13.13 Year 2000 Compliance. On and after March 31, 1999,
Borrower shall be Year 2000 Compliant.
ARTICLE XIV - NEGATIVE COVENANTS
Borrower covenants and agrees that hereafter, without Lender's prior
written consent, which Lender may or may not give, in its sole discretion, until
all of Borrower's obligations to Lender with respect to this Agreement are
performed and paid in full:
Section 14.0 Mergers, Etc. Borrower shall not merge with, consolidate
with, acquire or otherwise combine with any Person, transfer any division or
segment of its operations to any Person or form any subsidiary.
Section 14.1 Investments. Borrower shall not make any investment in any
Person through the direct or indirect holding of securities or otherwise.
Section 14.2 Dividends. Borrower shall not declare or pay dividends
except in accordance with all applicable laws and in no event to any Person
other than CPS.
Section 14.3 Loans and Advances. Except for routine and customary salary
advances, Borrower shall not make any unsecured loans or other advances of money
to officers, directors, employees, stockholders or Affiliates in excess of
Twenty Thousand Dollars ($20,000.00) in the aggregate. Borrower shall not incur
any long term or working capital debt (other than the Indebtedness) secured by
Contracts.
Section 14.4 INTENTIONALLY LEFT BLANK
Section 14.5 Transactions with Affiliate. Borrower shall not enter into,
or be a party to, any transaction with any Affiliate, or stockholder of
Borrower, except, consistent with Borrower's practice before entering into this
Agreement, in the ordinary course of, and pursuant to the reasonable
requirements of, Borrower's business and upon fair and reasonable terms which
are fully disclosed to Lender and are no less favorable to Lender than would
obtain in a comparable arm's length transaction with a Person not an Affiliate
or stockholder of Borrower.
Section 14.6 Adverse Transactions. Borrower shall not enter into any
transaction which adversely affects the Collateral or Borrower's ability to
perform this Agreement or Lender's rights under the Loan Documents; or permit or
agree to any extension, compromise or settlement or make any change or
modification of any kind or nature with respect to any Pledged Contract,
including any of the terms thereof or the amounts due thereunder except for
customary payment extensions of Pledged Contracts done in accordance with
Borrower's policies and routines in existence on the Closing Date, no more
frequently than once every twelve (12) months for a period of no more than three
(3) months.
Section 14.7 Guaranties. Borrower shall not guaranty or otherwise in any
way, become liable with respect to the obligations or liabilities of any other
Person except (i) the Affiliates' obligations to Lender and (ii) by customary
endorsement of instruments or items of payment for deposit to the general
account of Borrower or for delivery to Lender.
Section 14.8 Collateral. Except as otherwise expressly permitted in the
Loan Documents, Borrower shall not convey or allow any ownership, security, or
other, interest in the Collateral other than Borrower's ownership interest and
Lender's security interest. Borrower shall not interfere with or countermand
Lender's instructions to any Person to send Remittances to the Lockbox, the
Collection Account or Lender. Borrower can sell or pledge Contracts which are
not Eligible Contracts provided that the sale or loan proceeds are
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delivered to Lender for application to the Indebtedness. Borrower can grant
purchase money security interests in its equipment to Persons other than Lender.
Borrower can lease as lessee, equipment it uses.
Section 14.9 INTENTIONALLY LEFT BLANK
ARTICLE XV - EVENTS OF DEFAULT
Section 15.0 Events of Default. An Event of Default means the occurrence
or existence of one or more of the following events or conditions (whatever the
reason for the Event of Default and whether voluntary, involuntary or caused by
operation of law) which is not waived in writing by Lender or cured as provided
in Section 15.7 to the extent Section 15.7 applies:
(A) A breach by Borrower of any representation, warranty or obligation
contained herein or in the other Loan Documents or in any other agreement with
Lender.
(B) A breach by Borrower or an Affiliate of any representation,
warranty, or obligation contained in any other agreement with Lender.
(C) The Collateral or any other of Borrower's or an Affiliate's assets
are attached, seized, levied upon or subjected to a writ or distress warrant, or
come within the possession of any receiver, trustee, custodian or assignee for
the benefit of creditors and the same is not dissolved within thirty (30) days
thereafter; and application is made by any Person other than Borrower for the
appointment of a receiver, trustee, or custodian for the Collateral or any other
of Borrower's or an Affiliate's assets and the same is not dismissed within
thirty (30) days after the application therefor; or Borrower or an Affiliate
shall have concealed, removed or permitted to be concealed or removed, any part
of its property, with intent to hinder, delay or defraud its creditors or made
or suffered a transfer of any of its property which may be fraudulent under any
bankruptcy, fraudulent conveyance or other similar law.
(D) An application is made by Borrower or an Affiliate for the
appointment of a receiver, trustee or custodian for the Collateral or any other
of Borrower's or an Affiliate's assets; a petition under any section or chapter
of the Bankruptcy Code or any similar federal or state law or regulation shall
be filed by Borrower or an Affiliate; Borrower or an Affiliate shall make an
assignment for the benefit of its creditors or any case or proceeding is filed
by Borrower, or an Affiliate for its dissolution, liquidation, or termination;
Borrower ceases to conduct its Contract purchase and servicing business.
(E) Borrower is enjoined, restrained or in any way prevented by court
order from conducting all or any material part of its business affairs, or a
petition under any section or chapter of the Bankruptcy Code or any similar
federal or state law or regulation is filed against Borrower or an Affiliate, or
any case or proceeding is filed against Borrower or an Affiliate for its
dissolution or liquidation, and such injunction, restraint, petition, case or
proceeding is not dismissed within thirty (30) days after the entry or filing
thereof.
(F) A notice of lien, levy or assessment, with respect to an obligation
of $5,000 or more, is filed of record with respect to all or any of Borrower's
or an Affiliate's assets by the United States, or any department, agency or
instrumentality thereof, or by any state, county, municipal or other
governmental agency and it is not released within thirty (30) days after the
filing; or if any taxes or debts become a lien or encumbrance upon the
Collateral or any other of Borrower's assets, and the same is not released
within thirty (30) days after the same becomes a lien or encumbrance.
(G) Borrower or an Affiliate becomes insolvent or admits in writing to
its inability to pay its debts as they mature.
(H) An event has occurred which entitles Lender pursuant to Section
5.1(E) to take over administration of the Contracts.
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(I) There occurs or exists any situation which leads Lender to believe,
in good faith, that Borrower may not, or may be unable to, pay in the normal
course one or more payment obligations to Lender, and Lender has given Borrower
at least ten (10) days' notice thereof.
(J) A financial statement of Borrower or an Affiliate reveals that its
financial condition has materially adversely deteriorated after the execution of
this Agreement.
(K) An audited financial statement of Borrower is not unqualified.
(L) The Rolling Average Delinquency exceeds 3.0%.
(M) The Average Charged-Off Losses exceeds 0.55%.
(N) Any other event occurs which will, in Lender's reasonable opinion,
have a material adverse effect on the Collateral, Lender's rights under the Loan
Agreements, or on Borrower's financial or business condition, operations or
prospects, including, without limitation, any change in the due diligence
procedures used by Borrower to qualify Contract Debtors for Contracts, and
Lender has given Borrower at least ten (10) days' notice thereof.
(O) INTENTIONALLY LEFT BLANK
(P) Borrower or any Affiliate is in default of its obligations under any
transaction involving the securitization of Contracts.
(A) INTENTIONALLY LEFT BLANK
(B) A default by CPS of any of its obligations under the Secured
Guaranty Agreement pursuant to which CPS, among other obligations, guarantied
the Borrower's payment of the Indebtedness to Lender.
Section 15.1 Default Rate of Interest. Upon and after an Event of
Default and subject to Section 2.5, Borrower's obligations to Lender shall
continue to bear interest, calculated daily on the basis of a 365-day year at
the per annum rate set forth in Section 2.3, plus additional post-default
interest of one percent (1%) per annum until paid in full.
Section 15.2 Lender's Remedies. Whenever a Pre-Default Event exists and
whenever Lender is entitled to take over Contract administration, Lender may
without prior notice immediately suspend making Advances. Upon and after an
Event of Default, Lender shall have the following rights and remedies. The
rights and remedies shall be cumulative, and none exclusive, except to the
extent required by law. Lender's exercise of any right, remedy, or
attorney-in-fact appointment shall not relieve Borrower of any of its
obligations to Lender.
(A) The right, at Lender's discretion and without notice to Borrower,
(i) to immediately cease further Advances and/or terminate this Agreement, and
(ii) to declare Borrower's obligations to Lender immediately due and payable,
whereupon Borrower's obligations shall become and be due and payable, without
presentment, demand, protest or further notice or process of any kind, all of
which are expressly waived by Borrower. Borrower's obligations to Lender shall
be immediately due and payable without declaration by Lender if the Event of
Default consists of a petition filed under the Bankruptcy Code or any similar
federal or state law.
(B) All of the rights and remedies of a secured party under the UCC and
other applicable laws, including the right to appoint a receiver.
(C) The right at any time to (i) enter through self-help and without
judicial process, upon the premises of Borrower without any obligation to pay
rent to Borrower or to enter any other place or places where the Collateral is
located and kept, and remove the Collateral or remain on and use the premises
for the purpose of collecting or disposing of the Collateral, and (ii) require
Borrower to assemble the Collateral and make it available to Lender at a place
to be designated by Lender.
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(D) The right to sell or otherwise dispose of all or any of the
Collateral at public or private sale, as Lender in its sole discretion may deem
advisable, with such notice as may be required by law; and such sales may be
adjourned from time to time with or without notice. Lender shall have the right
to conduct such sales on the premises of Borrower without charge for such time
and Collateral as Lender may see fit. Lender is hereby granted a license or
other applicable right to use, without charge, Borrower's labels, patents,
copyrights, rights of use of any name, trade secrets, trade names, trademarks
and advertising matter, or any property of a similar nature, as it pertains to
the Collateral, in advertising for sale and selling any Collateral and
Borrower's rights under all licenses and all franchise agreements shall inure to
Lender's benefit for this purpose. Lender shall have the right to sell, lease or
otherwise dispose of the Collateral, or any part thereof, for cash, credit or
any combination thereof, and Lender may purchase all or any part of the
collateral at public, or, if permitted by law, private sale and, in lieu of
actual payment of such purchase price, may set off the amount of such price
against Borrower's obligations to Lender. Without excluding other methods of
disposition which may be commercially reasonable, it shall be a commercially
reasonable disposition of the Pledged Contracts and Contract Rights for Lender
to collect and enforce the Contracts and Contract Rights in a manner similar to
its collection and enforcement of contracts and Contract Rights for its own
account or for the account of other Persons. If any deficiency shall arise from
the disposition of Collateral, Borrower shall remain liable to Lender therefor.
(E) The right at any time and from time to time thereafter, at Lender's
sole discretion and without notice to Borrower, (i) to enforce payment of the
Contract Debtor's and Contract Rights Payor's obligations, and to collect and
foreclose, by legal proceedings or otherwise, the Collateral in the name of
Lender or Borrower and (ii) to take control, in any manner, of any item of
payment for or proceeds of the Collateral. Lender is not obligated to pursue the
Collateral or any other Person in order to enforce Borrower's obligations to
Lender.
(F) The right to take over in Lender's or Borrower's name all or part of
the administration of the Contracts.
(G) The right to carry out the actions within the scope of Borrower's
appointment of Lender as attorney-in-fact.
(H) The right to offset or apply the funds in the Collection Account.
Section 15.3 Injunctive Relief. Borrower recognizes that if there is an
Event of Default then, depending on the nature of the Event of Default, it may
be that no remedy at law will provide complete or adequate relief to Lender, and
Lender shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving actual damages. The injunctive relief
shall not be a waiver of Lender's rights to other relief and remedies.
Section 15.4 Notice. Any notice required to be given by Lender of a
sale, lease, or other disposition of the Collateral which is given pursuant to
Section 16.1 at least five (5) days prior to such proposed action, shall
constitute commercially reasonable and fair notice thereof to Borrower. Notice
of less duration shall not be presumed to be commercially unreasonable or
unfair.
Section 15.5 Appointment of Lender as Borrower's Lawful Attorney.
Borrower irrevocably appoints Lender (and all persons designated by Lender) as
Borrower's true and lawful attorney-in-fact to act in its name, place and stead
and at its expense to: (i) demand payment of the Pledged Contracts, other
Collateral consisting of payment obligations and Contract Rights; (ii) enforce
payment of the Pledged Contracts, other Collateral consisting of payment
obligations and Contract Rights, by legal proceedings or otherwise; (iii)
exercise all of Borrower's rights and remedies with respect to the collection
and enforcement of the Pledged Contracts, other Collateral consisting of payment
obligations, and Contract Rights; (iv) settle, adjust, compromise, discharge,
release, extend or renew the Pledged Contracts, other Collateral consisting of
payment obligations, and Contract Rights; (v) if permitted by applicable law,
sell or assign the Collateral upon such terms, for such amounts and at such time
or times as Lender deems advisable; (vi) take control, in any manner, of any
item of payment or proceeds with respect to the Collateral; (vii) prepare, file
and sign Borrower's name on any proof of claim in Bankruptcy or similar document
against any Contract Debtor or Contract Rights Payor; (ix) prepare, file and
sign Borrower's name on any notice of lien, assignment or satisfaction of lien
or similar document in connection with the
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Collateral; (x) do all acts and things necessary, in Lender's sole discretion,
to exercise Lender's rights granted in or referred to in Section 15.2 of this
Agreement; (xi) endorse the name of Borrower upon any item of payment or
proceeds consisting of or relating to the Collateral and deposit the same in the
account of Lender for application to the Indebtedness; (xii) use the information
recorded on or contained in any data processing equipment and computer hardware
and software relating to the collateral to which Borrower has access; (xiii)
open Borrower's mail to collect Collateral and direct the Post Office to deliver
Borrower's mail to an address designated by Lender; and (xiv) do all things
necessary to carry out and enforce this Agreement which Borrower has failed to
do. Borrower ratifies and approves all acts of Lender as Borrower's
attorney-in-fact. Lender shall not, when acting as attorney-in-fact, be liable
for any acts or omissions as or for any error of judgment or mistake of fact or
law, except for actions taken in bad faith. This power, being coupled with an
interest, is irrevocable until all payment and performance obligations of
Borrower to Lender have been fully satisfied. Borrower shall upon request of
Lender execute powers of attorney to separately evidence the foregoing powers
granted to Lender. All costs, fees and expenses incurred by Lender, or for which
Lender becomes obligated, in connection with exercising any of the foregoing
powers shall be payable to Lender by Borrower on demand by Lender and until paid
shall be part of the Loan.
Section 15.6 Lender's Default. In the event of any default of the Loan
Documents by Lender or any claim by Borrower related to the Loan Documents,
Borrower's sole and exclusive remedy against Lender shall be a cause of action
sounding in contract with damages limited to actual and direct damages incurred.
Lender shall in no event be liable for ordinary negligence, delay in performance
or any consequential, special, punitive, incidental or indirect damages,
including without limitation, loss of profit or goodwill. Lender shall in no
event be liable for any loss or damage directly or indirectly resulting from the
furnishing of services or reports under this Agreement. With respect to any
goods and services provided by Lender, LENDER MAKES NO WARRANTIES, whether
express or implied, including, without limitation, implied WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. Borrower shall have no
cause of action against Lender for a default of the Loan Documents unless
Borrower first notices Lender of the default and allows Lender a reasonable time
of at least thirty (30) Business Days to cure the default and Lender fails to
cure the default.
Section 15.7 Borrower's Right to Cure. In the event of an unintentional
Pre-Default Event by Borrower with respect to payment obligations or the
delivery of Contract Delivery Documents or Remittances, Borrower shall have
three (3) Business Days to cure the Pre-Default Event before Lender exercises
its right to ▇▇▇ Borrower or repossess the Collateral. In the event of any other
type of unintentional default by Borrower (but not including a default by CPS
under its Secured Guaranty Agreement with Lender), Borrower shall have thirty
(30) calendar days to cure the default before Lender exercises its right to ▇▇▇
Borrower or repossess the Collateral. Regardless of whether Borrower cures a
default, Lender shall be entitled to indemnification pursuant to Article XII
with respect to any Losses arising from claims asserted against Lender.
ARTICLE XVI - GENERAL TERMS AND CONDITIONS
Section 16.0 This Agreement shall be governed and construed in
accordance with the laws of the State of California.
Section 16.1 Notices. Any notice, request, demand, instruction or other
communication to be given any party herein in writing shall be effective upon
delivery during regular business hours at the offices of Borrower and Lender
hereinafter set forth or at such other offices that either party notifies the
other of in writing. The failure to deliver a copy as set forth below shall not
affect the validity of the notice to Borrower or Lender. Such communications
shall be given by telecopy, commercial delivery service, or sent by certified
mail, postage prepaid and return receipt requested, as follows:
If to Borrower:
CPS Funding Corporation
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Electronic FAX (▇▇▇) ▇▇▇-▇▇▇▇
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Attention: Chief Financial Officer
If to Lender:
General Electric Capital Corporation
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Electronic FAX (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Manager, Asset Based Financing
with a copy to:
General Electric Capital Corporation
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Electronic FAX (847) 277 - 5983
Attention: Counsel - Auto Financial Services
Section 16.2 Headings. Paragraph headings have been inserted in this
Agreement as a matter of convenience for reference only. The paragraph headings
shall not be used in the interpretation of this Agreement.
Section 16.3 Severability. If any one or more of the provisions of this
Agreement are held to be invalid, illegal or unenforceable in any respect for
any reason, the validity, legality or enforceability of any such provision or
provision in every other respect and of the remaining provisions of this
Agreement shall not be in any way impaired.
Section 16.4 Offset. Lender has the right to offset, apply, or recoup
any obligation of Borrower to Lender, arising under the Loan Documents or
otherwise, against any obligations or payments Lender owes to Borrower, arising
under the Loan Documents or otherwise, or against any property of Borrower held
by Lender. Borrower waives any right to offset, apply, or recoup against any
obligation it owes to Lender. Lender is not obligated to collect any of the
Contracts or pursue any of the other Collateral or any of Lender's rights at any
time as a condition to payment and performance by Borrower.
Section 16.5 Independent Contractor. Borrower is an independent
contractor in all matters relating to this Agreement and the Collateral and is
not an agent or representative of Lender. Borrower has no authority to act on
behalf of or bind Lender.
Section 16.6 Expenses. Each party shall bear the expenses of its own
performance of this Agreement.
Section 16.7 Modification of Loan Documents; Sale of Interest. This
Agreement may not be modified, altered or amended, except by an agreement in
writing and signed by Borrower and Lender. The rights of Lender granted in or
referred to in this Agreement shall apply to any modification of or supplement
to the Loan Documents. Borrower may not without Lender's prior written
permission, sell, assign or transfer any of the Loan Documents, or any portion
thereof, including, without limitation, Borrower's rights, title, interests,
remedies, powers and duties thereunder. Any sale, assignment, or transfer by
Borrower without Lender's permission shall be void ab initio. Borrower hereby
consents to Lender's participation, sale, assignment, transfer or other
disposition, at any time or times hereafter, of any of the Loan Documents, or of
any portion thereof, including, without limitation, Lender's rights, title,
interests, remedies, powers and duties thereunder. The Loan Documents shall be
binding upon and inure to the benefit of the permitted successors and assigns of
Borrower and Lender.
Section 16.8. Attorneys' Fees and Lender's Expenses. If, following an
Event of Default, Lender shall in good faith employ counsel for advice or other
representation or shall incur other costs and expenses in connection with (A)
any litigation, contest, dispute, suit, proceeding or action (whether instituted
by Lender, Borrower or any other Person) in any way relating to the Collateral,
any of the Loan Documents or any other agreements executed or delivered in
connection herewith, (B) any attempt to enforce, or enforcement of, any rights
of Lender against Borrower or any other Person, including, without limitation,
Contract Debtors, that may be
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obligated to Lender by virtue of any of the Loan Documents, (C) any actual or
attempted inspection, verification, protection, collection, sale, liquidation or
other disposition of the Collateral, then, in any such event, the attorneys'
fees arising from such services and all expenses, costs, charges and other fees
(including expert's fees) incurred by Lender in any way arising from or relating
to any of the events or actions described in this Section shall be payable to
Lender by Borrower on demand by Lender and until paid shall be part of the Loan.
Section 16.9 Waiver by Lender. Lender's failure, at any time or times
hereafter, to require strict performance by Borrower of any provision of this
Agreement or any of the other Loan Documents shall not waive, affect or diminish
any right of Lender thereafter to demand strict performance therewith. Any
suspension or waiver by Lender of an Event of Default by Borrower under the Loan
Documents shall not suspend, waive or affect any other Event of Default by
Borrower under the Loan Documents, whether the same is prior or subsequent
thereto and whether of the same or of a different type. None of the
undertakings, agreements, warranties, covenants and representations of Borrower
contained in the Loan Documents and no Event of Default by Borrower under the
Loan Documents shall be deemed to have been suspended or waived by Lender unless
such suspension or waiver is by an instrument in writing signed by a manager of
Lender and identifies the matter waived or suspended. Any consent or approval by
Lender pursuant to this Agreement is not a waiver by Lender of, or an admission
by Lender of the truth of, any Borrower's representations and warranties in this
Agreement.
Section 16.10 Waivers by Borrower. Except as otherwise provided for in
this Agreement, Borrower waives (i) notice and consummation of presentment,
demand, protest, dishonor, intent to accelerate, acceleration, (ii) all rights
to notice and a hearing prior to taking possession or control of, or Lender's
replevy, attachment or levy upon, the Collateral; (iii) any bond or security in
a judicial proceeding as a condition to Lender exercising any of Lender's
remedies; (iv) the benefit of all valuation, appraisement and exemption laws,
(v) TRIAL BY JURY in any dispute with Lender arising out of or related to any of
the Loan Documents, and (vi) any claim against Lender arising before November
30, 1998. The failure or delay of Lender to strictly enforce the terms of this
Agreement shall not be a waiver of Lender's right to do so.
Section 16.11 Counterparts. This Agreement may be executed in two or
more counterparts, with the same effect as if all parties had signed the same
document. All such counterparts shall be deemed an original, shall be construed
together and shall constitute one and the same instrument.
Section 16.12 Entire Agreement. This Agreement contains the entire
agreement among the parties regarding the loan by Lender to Borrower based on
Contracts and supersedes all prior agreements, whether written or oral, with
respect thereto.
Section 16.13 Statements of Account. Each report, billing statement,
Statement of Borrowing Base, and payment transcript which is prepared by Lender
shall, except for manifest errors, be deemed final, binding and conclusive upon
Borrower in all respects as to all matters reflected therein, and shall
constitute an account stated between Borrower and Lender, unless thereafter
waived in writing by Lender or unless, within thirty (30) days after Borrower's
receipt of such document, Borrower delivers to Lender notice of a written
objection thereto specifying the claimed error. In the event of such an error,
only those items expressly objected to in such notice shall be deemed to be
disputed by Borrower and Lender's only liability to Borrower shall be to issue a
corrected document.
Section 16.14 Publicity. Borrower authorizes Lender to publicize
"tombstone" or similar announcements with respect to the financing contemplated
under this Agreement, and to use Borrower' name and logo in connection therewith
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Section 16.15 Contract Documents. After Lender reviews a Contract form
or any other form used in connection with a Contract (collectively, the "Form"),
Lender may inform Borrower hereto that the Form may not comply with certain laws
or that the Form is not acceptable to Lender as an Eligible Contract form unless
certain changes are made. Borrower is responsible for its use of the Forms and
for any changes Borrower makes to the Forms in response to Lender's comments.
Lender shall have no liability to Borrower arising from Borrower's use of, or
changes to, any Form regardless of whether Lender approved the Form or the
changes or whether Lender conditioned the use of the Form as an Eligible
Contract Form or Lender's comments regarding a Form, Borrower remain obligated
to Lender to conduct its business in a lawful manner, including the use of Forms
which comply with applicable laws.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
CPS FUNDING CORPORATION,
as Borrower
By: ________________________________
Name: _____________________________
Title: _____________________________
GENERAL ELECTRIC CAPITAL
CORPORATION, as Lender
By: ________________________________
Name: _____________________________
Title: _____________________________
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EXHIBIT A
AMENDED AND RESTATED PROMISSORY NOTE
$100,000,000.00 November 30, 1998
FOR VALUE RECEIVED, the undersigned, CPS FUNDING CORPORATION, a
California corporation ("Borrower"), hereby promises to pay to GENERAL ELECTRIC
CAPITAL CORPORATION, a New York corporation ("Lender"), or order, the principal
amount (the "Principal") of up to One Hundred Million Dollars ($100,000,000.00),
or such other amount constituting the Loan made by Lender to Borrower pursuant
to the Amended and Restated Motor Vehicle Installment Contract Loan and Security
Agreement, dated as of November 30, 1998 between Borrower and Lender (the
"Agreement"). All terms used in this Note shall have the meanings given to them
in the Agreement if they are defined in the Agreement and not defined in this
Note. Borrower further promises to pay interest ("Interest") on the amount of
the Principal outstanding from time to time from the date hereof until such
Principal shall be paid in full, at a rate per annum (calculated on the basis of
a year of 365 days for the actual days elapsed) equal to the applicable rate of
interest provided for in the Agreement.
Interest and Principal shall be due and payable at the times provided
for in the Agreement. All payments of Principal and Interest shall be made in
lawful money of the United States of America and in immediately available funds
to Lender at GE Capital, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: Manager - Asset Based Financing, or such other address as may be
specified by Lender or any other holder of this Note.
This Note is the Note described in, and is subject to the terms and
provisions of, the Agreement, as the same may at any time be amended or modified
and in effect.
Upon and after an Event of Default, the outstanding Principal of this
Note and any Interest and fees accrued thereon shall, at the option of the
holder of this Note and without demand, notice or legal process of any kind,
become immediately due and payable.
The records of the holder of this Note shall, in the absence of manifest
error, be conclusive evidence at any time as to the amount of the outstanding
Principal of this Note and the amount of Interest accrued thereon.
This Note is secured by a security interest in the Collateral, as
described in and evidenced by the Agreement. This Note is enforceable by the
holder without first enforcing the security interest and whether or not the
security interest exists or is enforceable.
If any suit or other proceeding shall be instituted to enforce this
Note, the holder of the Note shall, in addition to such other relief as the
court may award, be entitled to recover attorneys' fees, expenses and costs of
investigation, including, without limitation, attorneys' fees, costs and
expenses of investigation incurred in appellate proceedings or in connection
with any case or proceeding under the Bankruptcy Code or similar law.
No delay or failure on the part of the holder of this Note to exercise
any power or right given under this Note shall operate as a waiver of any right
or remedy of the holder; nor shall any right or remedy of the holder hereunder
or under any other applicable law be abridged or modified by any course of
conduct.
The undersigned and all endorsers, guarantors, and all persons liable or
to become liable on this Note hereby waive presentment, protest, demand, notice
of dishonor, notice of protest, and any and all delays or lack of diligence or
collection and any other notice or further requirement necessary to hold each of
them liable for payment. The right to a trial by jury and to plead any statute
of limitations as a defense to any demand on this Note, or any guaranty hereof,
or any agreement to pay the same, or any and all obligations or liabilities
arising out
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of or in connection with this Note is expressly waived by the undersigned,
endorsers and guarantors, to the fullest extent permitted by the law.
No payment of interest hereunder shall exceed the maximum amount payable
under applicable law.
This Note may not be modified, amended or terminated, except in a
written instrument executed by both Borrower and the holder of this Note.
Borrower agrees that the rights granted to Lender pursuant to this Note shall
accrue to any Person who is lawfully in possession of this Note with an
assignment from Lender.
This Note shall be governed by and construed in accordance with the laws
of the State of California. This Note amends, restates and supersedes the prior
Notes of Borrower payable to the order of Redwood Receivables Corpration
pursuant to the Receivables Funding and Servicing Agreement, dated as of June 1,
1995, as amended, and is given in substitution therefor and not in satisfaction
of Borrower's obligations thereunder.
IN WITNESS WHEREOF, Borrower has executed and delivered the foregoing
Note as of the day and year first above written.
CPS FUNDING CORPORATION
By: ________________________________
Name: _____________________________
Title: _____________________________
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