1
EXHIBIT 6.4
OPERATING AGREEMENT
2
OPERATING AGREEMENT
This OPERATING AGREEMENT (the "Agreement") is dated as of September 6,
2000, by and between HISPANIC EXPRESS, INC., a Delaware corporation ("HEX") and
BANNER CENTRAL FINANCE COMPANY, a Delaware corporation ("Banner"), with respect
to the following facts:
WHEREAS, Central Financial Acceptance Corporation, a Delaware
corporation ("CFAC") has adopted a Plan of Complete Dissolution, Liquidation and
Distribution (the "Plan of Liquidation") pursuant to which CFAC will completely
liquidate and dissolve;
WHEREAS, prior to dissolving and liquidating under the Plan of
Liquidation, CFAC will contribute to HEX and Banner, which are CFAC's
wholly-owned first tier subsidiaries, the capital stock of certain of CFAC's
subsidiaries (the "Contribution"); and
WHEREAS, in order to provide cost savings and operating efficiencies,
the parties desire that HEX and its subsidiaries (the "HEX Group") perform
various administrative functions for Banner and its subsidiaries (the "Banner
Group") and that the HEX Group perform "Credit Servicing" functions (as
hereinafter defined) with respect to the receivables portfolio of the Banner
Group, in each case upon the terms and conditions set forth herein; and
WHEREAS, the members of the Banner Group have heretofore been accorded
full access to HEX's computer systems and related facilities for the purpose of
performing the data processing, information management and record maintenance
functions required in the conduct of the Banner Group's business ("Systems
Rights"); and
WHEREAS, CFAC and its affiliates has heretofore accorded to the members
of the Banner Group access to the various parcels of real property where the
members of the Banner Group conduct business (each a "Location" and collectively
the "Locations") and the right to occupy designated spaces within each such
Location (individually and collectively, the "Premises") for the conduct of the
Banner Group's business of originating and administering consumer loans (such
rights, collectively, the "Access Rights"); and
WHEREAS, the parties desire to establish the contractual basis upon
which the HEX Group will continue to accord the Systems Rights and the Access
Rights to the Banner Group in order, among other things, to enhance the Banner
Group's ability to obtain independent financing and to facilitate any future
business transactions; and
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions herein contained, the parties agree as follows:
1. Services to be Performed, Rights to be Accorded and Allocation of
Costs and Benefits.
1
3
(a) Services and Rights.
(1) Portfolio Servicing. The HEX Group shall provide Credit
Servicing (as defined in Subsection (b) below) with respect to the Banner
Group's receivables portfolio.
(2) Management Information Systems. The HEX Group shall
provide the Banner Group with information processing, data retrieval and other
management information systems services. If the Banner Group elects to
discontinue receiving such services from the HEX Group, the Banner Group shall
return all information pertaining to the business and operations of the HEX
Group and shall use its best efforts in the transition of all data processing
functions in a manner that does not unduly disrupt the business or operation of
the HEX Group.
(3) Employee Benefit Plans. The HEX Group shall administer
all health plans and any other benefits offered for the benefit of the employees
of the Banner Group.
(4) Legal & Accounting. The HEX Group shall provide to the
Banner Group all legal assistance provided in the ordinary course of business as
requested by the Banner Group. To the extent requested by the Banner Group, the
HEX Group shall provide accounting services to the Banner Group in connection
with the preparation of quarterly, annual and other financial statements.
(5) Insurance. The HEX Group shall include every member of
the Banner Group under any insurance policy maintained by the HEX Group. The HEX
Group shall cause each member of the Banner Group to be named as an additional
insured under any such policies. The HEX Group shall deliver to Banner any
insurance proceeds received by it or one of the other members of the HEX Group
if such proceeds relate to any claim relating to the business of the Banner
Group. The HEX Group shall make appropriate cost allocations to the Banner Group
for any policy, which provides joint coverage to the HEX Group, or any other
member of the HEX Group, and to the Banner Group. Such allocation shall be
reasonable and shall in no case exceed the amount which the Banner Group would
be required to pay in order to separately obtain such insurance.
(6) Systems Rights. The HEX Group shall continue to provide
Systems Rights to the Banner Group in accordance with past practices and shall,
in any event, provide access to computer and data processing systems from each
of the Premises. The computer and related systems provided to the Banner Group
shall be those utilized by the HEX Group from time to time. All data of the
Banner Group maintained by the HEX Group shall be handled in the same manner as
data of the HEX Group, including backup procedures and transfer of such data to
any new systems. The HEX Group shall be entitled to implement and the Banner
Group shall be entitled to require such measures as it may deem reasonably
necessary to segregate and insulate data of the HEX Group from data of the
Banner Group.
(7) Access Rights. The HEX Group shall continue to provide
Access Rights to the Banner Group in accordance with past practices. Without
limiting the
2
4
foregoing, the HEX Group shall provide such Access Rights to the Banner Group at
each new Location that the HEX Group may hereafter acquire from time to time.
The Banner Group shall have access to each of the Premises at all times when the
HEX Group has access to the applicable Location.
(8) Other Services. To the extent requested by Banner and
approved by the members of its board of directors, the HEX Group may provide the
Banner Group with such other administrative services as may be deemed necessary
or appropriate.
(b) Payment of Costs. The Banner Group shall be responsible for
the actual cost of any goods or services provided for their account by the HEX
Group. In respect of the "Credit Servicing" performed by HEX on behalf of the
Banner Group, the Banner Group shall be responsible for its "Allocable Share"
(as hereinafter defined) of the aggregate "Credit Servicing Expenses" (as
hereinafter defined) incurred by HEX. "Credit Servicing" shall mean the
origination of loans (including applications and credit verifications), credit
collection and application of cash receipts. "Credit Servicing Expenses" shall
mean the gross expenses incurred in the performance of Credit Servicing
activities; provided there shall be attributed to HEX's Credit Servicing
Expenses 100% of the amount charged by the Banner Group to the HEX Group in
respect of the services provided pursuant to subsection (a)(1) above. Banner's
"Allocable Share" of Credit Servicing Expenses, for any period, shall mean the
product obtained by multiplying HEX's aggregate Credit Servicing Expenses for
such period by a fraction, the numerator of which shall be the aggregate amount
of receivables of the Banner Group for such period and the denominator of which
shall be the sum of the aggregate receivables of the HEX Group for such period
plus the aggregate receivables of the Banner Group for such period. Banner shall
pay its Allocable Share on a quarterly basis, in arrears, based upon the
estimated Allocable Share for such quarter. Within 45 days after the end of each
calendar quarter, HEX shall prepare and deliver to Banner a calculation setting
forth in reasonable detail Banner's actual Allocable Share for such quarter.
Except as provided above, the allocable share of such costs for each member of
the Banner Group shall be determined on the basis of its percentage utilization
of the applicable service or management's best estimate thereof.
(c) Responsibilities Attendant to Rights.
(1) The Banner Group shall use the Systems Rights and the
Access Rights solely in the conduct of its business in the ordinary course, in
compliance with applicable laws and consistent with past practice.
(2) The Banner Group shall be responsible for any damage
that it may inflict upon the computer systems or the Locations, including any
damage that may be inflicted upon a Location in connection with the removal of
the Banner Group's property therefrom upon the termination of the Banner Group's
occupation of the Premises at such Location.
(3) The maintenance of each Location (including any
structural elements thereof associated with the applicable Premises) shall be
the responsibility of the HEX Group.
3
5
(4) The Banner Group shall indemnify, defend and hold
harmless the HEX Group and their respective employees, agents, officers and
directors and successors and assigns from and against any and all claims,
demands, suits, actions, proceedings, penalties, fines, liabilities,
encumbrances, liens, losses, settlements, damages, judgments, costs and expenses
(including, without limitation, attorneys' fees) arising out of or relating to
any acts or omissions of the Banner Group and their respective officers,
directors, employees, representatives, agents or invitees, occurring in, on or
about any of the Premises.
(5) The HEX Group shall indemnify, defend and hold harmless
the Banner Group and their respective employees, agents, officers and directors
and successors and assigns from and against any and all claims, demands, suits,
actions, proceedings, penalties, fines, liabilities, encumbrances, liens,
losses, settlements, damages, judgments, costs and expenses (including, without
limitation, attorneys' fees) arising out of or relating to any acts or omissions
of the HEX Group and their respective officers, directors, employees,
representatives, agents or invitees, occurring in, on or about any of the
Locations (except to the extent that the Banner Group is liable therefor
pursuant to the foregoing paragraph (4).
(6) Neither the HEX Group or the Banner Group shall be
liable to the other for any losses, damages, claims or costs arising from the
services or rights provided hereunder, except (x) as may be provided in
paragraphs (4) or (5) above and (y) for losses, damages, claims or costs arising
from the gross negligence or willful misconduct of the party providing such
services or rights.
2. Allocation of Business Opportunities. HEX and Banner shall
not, without prior written consent of each other, directly or indirectly engage
in or enter any business, which the other is currently engaged in.
3. Employee Benefits. HEX hereby agrees to assume all customary
and reasonable liabilities of CFAC (and the subsidiaries thereof that become
subsidiaries of HEX or Banner under the Contribution), under existing employee
welfare benefit and profit sharing plans with respect to the employees of CFAC
and such subsidiaries who become employees of the Hex Group and/or the Banner
Group in connection with the Contribution. The employment by the Hex Group or
the Banner Group of individuals who were employees of CFAC or such subsidiaries
will not be deemed a severance of employment from CFAC or such subsidiaries for
purposes of any policy, plan, program or agreement of CFAC or such subsidiaries
that provides for the payment of severance, salary continuation or similar
benefits. HEX hereby agrees to assume all liabilities and responsibilities for
CFAC's Supplemental Executive Retirement Plan.
4. Guaranty of Banner Debt. HEX hereby agrees that for the period
commencing as of the date first set forth above and ending on December 31, 2002,
it shall guarantee up to $4 million of Banner's bank or equivalent debt that
Banner may require in connection with the acquisition of consumer receivables
purchased from Banner Central Electric, Inc., an affiliated company.
5. Term and Termination. This Agreement shall have a five (5)
year term, and this Agreement or any specific service provided herein may be
terminated by any party hereto upon one year's prior written notice to the other
party.
4
6
6. Independent Parties. The parties are independent parties
engaged in the operation of their respective businesses. No party has the
authority to enter into contracts or assume any obligations for any other party
or is to be considered as the agent or employee of any other party for any
purpose whatsoever. Nothing in this Agreement shall be construed to establish a
relationship of partners or joint venturers among the parties.
7. Successors and Assigns; Third Parties. This Agreement shall be
binding upon and shall inure to the benefit of the parties and their respective
successors and permitted assigns. This Agreement may not be assigned or
delegated by any party without the consent of the other parties; provided that
Banner shall have the right to assign this Agreement for collateral purposes to
any bona fide financial institutions in connection with obtaining financing. Any
such financial institutions and the respective subsidiaries of Banner shall be
express third party beneficiaries of this Agreement; provided that no other
person shall have any rights or benefits under, or by virtue of, this Agreement.
8. Notices. All notices, requests, demands and other
communications provided for by this Agreement shall be in writing (including
telecopier or similar writing) and shall be deemed to have been given at the
time when mailed in any general or branch office of the United States Postal
Service, enclosed in a registered or certified postpaid envelope, or sent by
Federal Express or other similar overnight courier service, addressed to the
appropriate party at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Secretary, or to such changed address as such party may have fixed by
notice or, if given by telecopier, when such telecopy is transmitted and the
appropriate answer-back is received.
9. Governing Law. This Agreement shall be governed by the laws of
the State of California without giving effect to the principles of conflicts of
law.
10. Entire Agreement. This Agreement sets forth the entire
agreement among the parties with respect to its subject matter. This Agreement
may not be amended or otherwise modified except in writing duly executed by all
of the parties. No waiver of any provision or breach of this Agreement shall be
effective unless such waiver is in writing and signed by the party against which
enforcement of such waiver is sought. A waiver by any party of any breach or
violation of this Agreement shall not be deemed or construed as a waiver of any
subsequent breach or violation thereof.
11. Severability. Should any part, term or condition hereof be
declared illegal or unenforceable or in conflict with any other law, the
validity of the remaining portions or provisions of this Agreement shall not be
affected thereby, and the illegal or unenforceable portions of the Agreement
shall be and hereby are redrafted to conform with applicable law, while leaving
the remaining portions of this Agreement intact.
12. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same document.
13. Headings. Section headings are for convenience only and do
not control or affect the meaning or interpretation of any terms or provisions
of this Agreement.
5
7
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
HISPANIC EXPRESS, INC.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇,
Chief Executive Officer,
President and Secretary
BANNER CENTRAL FINANCE COMPANY
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive Officer,
Chief Financial Officer and Secretary
Central Financial Acceptance Corporation hereby acknowledges that it has read
and understands the foregoing Agreement, and approves each of the provisions
thereof as such provisions may relate to Central Financial Acceptance
Corporation.
CENTRAL FINANCIAL ACCEPTANCE CORPORATION
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive Officer
6