EXHIBIT 1
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AMENDED AND RESTATED
SECURITIES PURCHASE AGREEMENT
by and between
XXXXXX XXXXXXXXX CAPITAL PARTNERS II, L.P.,
a California limited partnership,
as Purchaser,
and
CONSUMER PORTFOLIO SERVICES, INC.,
a California corporation,
as Issuer
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$16,000,000 Principal Amount
Secured Senior Note Due 2001
(Term A Note)
$30,000,000 Principal Amount
Amended and Restated Secured Senior Note Due 2003
(Term B Note)
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Dated as of March 15, 2000
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TABLE OF CONTENTS
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1. DEFINITIONS; DETERMINATIONS............................................4
1.1 Definitions......................................................4
1.2 Independence of Covenants.......................................32
1.3 Determinations..................................................32
2. PURCHASE AND SALE OF TERM A NOTE; AMENDED AND RESTATED
NOTE..................................................................32
2.1 Authorization...................................................32
2.2 Purchase of Term A Note.........................................33
2.3 Amendment and Restatement.......................................33
2.4 Closing.........................................................33
2.5 Use of Proceeds.................................................33
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................34
3.1 Organization and Good Standing..................................34
3.2 Subsidiaries....................................................34
3.3 Qualification...................................................34
3.4 Authorization; Binding Obligations..............................35
3.5 No Violation; Existing Defaults; Senior Indebtedness............35
3.6 Governmental and Other Third Party Consents.....................36
3.7 Capitalization..................................................36
3.8 Validity and Issuance of Residual Warrant Shares................38
3.9 Transactions with Affiliates....................................38
3.10 Financial Statements............................................39
3.11 Existing Indebtedness; Liens; Investments; Etc..................40
3.12 Certain Changes.................................................41
3.13 Material Contracts; Automobile Contracts........................43
3.14 Trade Accounts Payable..........................................44
3.15 Labor Agreements and Actions....................................44
3.16 Employee Benefit Plans; ERISA...................................44
3.17 Taxes...........................................................47
3.18 Litigation......................................................48
3.19 Governmental Regulation; Margin Stock...........................48
3.20 Compliance with Laws; Licenses and Permits......................49
3.21 Title to Properties and Assets..................................49
3.22 Intellectual Property...........................................49
3.23 Brokers; Certain Expenses.......................................50
3.24 Real Property Leases............................................50
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TABLE OF CONTENTS (continued)
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3.25 Powers of Attorney..............................................51
3.26 Insurance.......................................................51
3.27 Books and Records...............................................52
3.28 Dealers.........................................................52
3.29 Personal Property Leases........................................52
3.30 Employment and Agency Agreements................................52
3.31 Solvency........................................................52
3.32 Environmental Matters...........................................53
3.33 Public Holding Company; Investment Company......................53
3.34 Depository and Other Accounts...................................53
3.35 Tax Status of Securitization Transactions.......................54
3.36 Burdensome Obligations; Future Expenditures.....................54
3.37 FSA Indebtedness and Liabilities................................54
3.38 [Intentionally Omitted].........................................54
3.39 Company SEC Documents; Undisclosed Liabilities..................54
3.40 Listing of Common Stock.........................................55
3.41 Year 2000 Compliant.............................................55
3.42 Stanwich-Related Matters........................................55
3.43 Disclosure......................................................56
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.......................56
4.1 Organization and Good Standing..................................56
4.2 Authorization...................................................56
4.3 Due Execution and Delivery; Binding Obligations.................57
4.4 No Violation....................................................57
4.5 Investment Intent...............................................57
4.6 Accredited Investor Status......................................57
4.7 Purchaser Consents..............................................57
4.8 Brokers.........................................................58
5. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER........................58
5.1 Representations and Warranties; No Default......................58
5.2 Closing and Other Fees..........................................58
5.3 Payment of Accrued Interest.....................................58
5.4 Reimbursement of Fees and Expenses..............................58
5.5 Purchase Permitted By Applicable Laws...........................59
5.6 No Material Adverse Changes.....................................59
5.7 No Injunction or Order..........................................59
5.8 Opinions of Counsel.............................................59
5.9 Delivery of Certain Closing Documents...........................59
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TABLE OF CONTENTS (continued)
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5.10 Collateral Documents............................................60
5.11 Issuance of March 2000 LLCP Shares..............................60
5.12 Stanwich-Related Transactions...................................61
5.13 Delivery of Company Corporate Documents.........................62
5.14 Delivery of Subsidiary Corporate Documents......................63
5.15 Repayment of Existing Indebtedness; UCC Termination Statements..63
5.16 Insurance.......................................................64
5.17 Third Party Consents............................................64
5.18 Trade Payables Plan.............................................64
5.19 Employee Loans and Advances.....................................64
5.20 Financial Projections...........................................64
5.21 Documents in Satisfactory Form..................................64
6. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY..........................65
6.1 Representations and Warranties..................................65
6.2 Purchase Permitted By Applicable Laws...........................65
6.3 No Material Judgment or Order...................................65
6.4 Payment for Term A Note.........................................65
7. AFFIRMATIVE COVENANTS.................................................66
7.1 Payments with Respect to Notes..................................66
7.2 Information Covenants...........................................66
7.3 Performance of Related Agreements...............................69
7.4 Legal Existence; Compliance with Laws...........................69
7.5 Books, Records and Inspections..................................69
7.6 Insurance.......................................................69
7.7 Taxes...........................................................70
7.8 ERISA Matters...................................................70
7.9 Performance of Servicing Duties; Clean-Up Calls.................70
7.10 Communication with Accountants..................................71
7.11 Further Assurances..............................................71
7.12 Future Information..............................................71
7.13 Nasdaq Listing..................................................72
7.14 CARSUSA Flooring Line...........................................72
7.15 Securities and Exchange Act Compliance..........................72
7.16 Additional Subsidiary Guarantors................................73
7.17 CPSRC Shares....................................................74
7.18 Landlord Consents and Waivers...................................74
7.19 Delivery of GE Capital Termination Statements...................74
7.20 Future Securitization Transactions Subsidiary...................74
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TABLE OF CONTENTS (continued)
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7.21 Delivery of Certain Disclosure Schedules........................75
7.22 Existing Liens..................................................75
8. NEGATIVE COVENANTS....................................................75
8.1 Limitations on Indebtedness.....................................75
8.2 Limitations on Liens............................................76
8.3 Limitations on Investments......................................76
8.4 Limitation on Restricted Payments...............................77
8.5 Subsidiaries; Changes in Business...............................77
8.6 Observance of Stanwich Subordination Provisions.................77
8.7 Environmental Liabilities.......................................77
8.8 Amendments to Securitization Transaction Documents..............77
8.9 Limitations on Transactions with Affiliates.....................78
8.10 Restrictions on Fundamental Changes.............................78
8.11 Agreements Affecting Capital Stock and Indebtedness;
Amendments to Material Contracts................................79
8.12 Indebtedness to FSA.............................................79
8.13 Payment Restrictions Affecting Certain Subsidiaries.............79
8.14 No New Loans and Advances.......................................80
8.15 Financial Covenants.............................................80
8.16 Back-Up Servicer................................................80
8.17 LINC and Samco Matters..........................................80
9. INDEMNIFICATION.......................................................81
9.1 Transfer Taxes..................................................81
9.2 Losses..........................................................81
9.3 Indemnification Procedures......................................82
9.4 Contribution....................................................83
9.5 Costs of Collection.............................................83
10. DEFAULTS AND REMEDIES.................................................84
10.1 Events of Default...............................................84
10.2 Acceleration....................................................89
10.3 Other Remedies..................................................89
10.4 Waiver of Past Defaults.........................................89
11. MISCELLANEOUS.........................................................89
11.1 Consent to Amendments...........................................89
11.2 Survival of Representations and Warranties; Purchaser
Investigation ..................................................90
11.3 Entire Agreement................................................90
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TABLE OF CONTENTS (continued)
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11.4 Successors and Assigns; Assignments.............................91
11.5 Severability....................................................91
11.6 Notices.........................................................91
11.7 Accounting Terms and Computations...............................92
11.8 Descriptive Headings; Construction and Interpretation...........93
11.9 Counterparts....................................................93
11.10 Fees and Expenses...............................................93
11.11 Governing Law...................................................93
11.12 Consent to Jurisdiction and Venue...............................94
11.13 Publicity.......................................................95
11.14 Limitation on Liability.........................................95
11.15 Amendment and Restatement.......................................95
11.16 Waiver of Trial by Jury Trial...................................95
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EXHIBITS
Exhibit A-1 -- Term A Note
Exhibit A-2 -- Term B Note
Exhibit B -- Compliance Certificate
DISCLOSURE SCHEDULES
Schedule 3.2 -- Subsidiaries
Schedule 3.5(b) -- Defaults
Schedule 3.5(d) -- Insurance Agreement Events of Default
Schedule 3.7(a) -- Capitalization of the Company
Schedule 3.7(b) -- Capitalization (Subsidiary)
Schedule 3.9 -- Transactions with Affiliates
Schedule 3.10(a) -- Material Adverse Change
Schedule 3.10(d) -- Pro Forma Balance Sheet
Schedule 3.11(a)(i) -- Existing Indebtedness
Schedule 3.11(a)(ii) -- Certain Existing Liens
Schedule 3.11(a)(iii) -- Investments
Schedule 3.11(a)(iv) -- Guarantees
Schedule 3.11(b) -- Post-Closing Indebtedness
Schedule 3.12 -- Certain Changes
Schedule 3.13(a) -- Material Contracts
Schedule 3.13(c) -- Automobile Contracts
Schedule 3.13(d) -- Portfolio Performance Reports
Schedule 3.14 -- Trade Accounts Payable
Schedule 3.16 -- Employee Benefit Plans
Schedule 3.18 -- Litigation
Schedule 3.20 -- Licenses and Permits
Schedule 3.22 -- Intellectual Property
Schedule 3.24 -- Real Property Leases
Schedule 3.26 -- Insurance
Schedule 3.28 -- Dealers
Schedule 3.29 -- Personal Property Leases
Schedule 3.30 -- Employment and Agency Agreements
Schedule 3.34 -- Depository and Other Accounts
Schedule 3.39 -- Company SEC Documents
Schedule 7.19 -- GE Capital Termination Statements
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CONSUMER PORTFOLIO SERVICES, INC.
AMENDED AND RESTATED
SECURITIES PURCHASE AGREEMENT
THIS AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT is entered into as
of the 15th day of March 2000 (as amended, supplemented or otherwise modified
from time to time, this "Agreement"), by and between XXXXXX XXXXXXXXX CAPITAL
PARTNERS II, L.P., a California limited partnership, as purchaser (the
"Purchaser"), and CONSUMER PORTFOLIO SERVICES, INC., a California corporation
(the "Company"), as issuer.
R E C I T A L S
A. Pursuant to the terms of a Securities Purchase Agreement dated as of
November 17, 1998 (the "Original November 1998 Securities Purchase Agreement"),
between the Company and the Purchaser, the Company issued and sold to the
Purchaser a Senior Subordinated Primary Note dated November 17, 1998, in the
original principal amount of $25,000,000 (the "Original November 1998 Primary
Note"), and a Primary Warrant (Warrant No. LL-2) to Purchase 3,450,000 Shares of
Common Stock (the "Original November 1998 Primary Warrant").
B. As part of the transactions contemplated by the Original November 1998
Securities Purchase Agreement, and in partial consideration for the purchase by
the Purchaser of the Original November 1998 Primary Note, the Company agreed,
pursuant to Section 8.21 of the Original November 1998 Securities Purchase
Agreement, to enter into the New Senior Credit Facility, pay all ESFR
Indebtedness and cause the termination of the ESFR Agreement and the release and
reconveyance of all Liens created or existing in favor of the ESFR Agent and/or
the ESFR Lenders, all on or prior to December 31, 1999. (The term "New Senior
Credit Facility," as defined in the Original November 1998 Securities Purchase
Agreement, means a new senior credit facility of the Company (whether a
revolving credit facility, a term loan facility or both), the terms and
provisions of which are satisfactory to the Purchaser, entered into between the
Company (and/or its Subsidiaries) and a syndicate of banks or other financial
institutions acceptable to the Purchaser, under which, among other things: (i)
all Indebtedness evidenced by such new senior credit facility would constitute
Senior Indebtedness; (ii) the Purchaser would be a lender and the Purchaser's
principal term commitment would be no less than $25,000,000; (iii) all
Indebtedness under such new senior credit facility would be secured by first
priority valid and perfected Liens in favor of the lenders thereunder covering
all of the Collateral (as such term is defined in the ESFR Agreement); and (iv)
the proceeds of such new senior credit facility would be used in part by the
Company to pay in full all outstanding ESFR Indebtedness.) The Company has been
unable, prior to the date hereof, to enter into the New Senior Credit Facility
and fulfill its other obligations under Section 8.21 of the Amended November
1998 Securities Purchase Agreement.
C. In addition, as part of the transactions contemplated by the Original
November 1998 Securities Purchase Agreement, and in partial consideration for
the purchase by the Purchaser of the Original November 1998 Primary Note, the
Company further granted to the Purchaser, pursuant to a letter agreement dated
as of November 17, 1998 (the "November 1998 Letter Agreement re ESFR"), between
the Company and the Purchaser, the right and opportunity to replace the credit
facility existing under the ESFR Agreement with a new credit facility that
provided sufficient additional funding to repay all outstanding ESFR
Indebtedness. If the Purchaser notified the Company that it intends to replace
such existing credit facility with such a new credit facility, the Company
agreed to cooperate and work with the Purchaser, as requested by the Purchaser,
to execute and deliver all such agreements, instruments and other documents, and
to take such action or actions, as may be necessary or desirable to cause the
establishment of such new credit facility (including, without limitation, paying
all outstanding ESFR Indebtedness and causing the termination of the ESFR
Agreement and the release and reconveyance of all Liens created or existing in
favor of the ESFR Agent and the ESFR Lenders).
D. Pursuant to a First Amendment to Securities Purchase Agreement dated as
of April 15, 1999 (the "First Amendment to November 1998 Securities Purchase
Agreement"), between the Company and the Purchaser, which amends the Original
November 1998 Securities Purchase Agreement, the Company and the Purchaser
amended and restated (i) the Original November 1998 Primary Note pursuant to an
Amended and Restated Senior Subordinated Primary Note dated as of November 17,
1998, as amended April 15, 1999 (the Original November 1998 Primary Note, as so
amended, being referred to as the "Amended November 1998 Primary Note"), and
(ii) the Original November 1998 Primary Warrant pursuant to an Amended and
Restated Primary Warrant (Warrant No. LLA-1) to Purchase 3,115,000 Shares of
Common Stock (the Original November 1998 Primary Warrant, as so amended, being
referred to as the "Amended November 0000 Xxxxxxx"). The Original November 1998
Securities Purchase Agreement, as amended by the First Amendment to November
1998 Securities Purchaser Agreement, is referred to herein as the "Amended
November 1998 Securities Purchase Agreement."
E. Concurrent with the closing of the transactions contemplated by the
First Amendment to November 1998 Securities Purchase Agreement, the Company and
the Purchaser entered into a Securities Purchase Agreement dated as of April 15,
1999 (the "April 1999 Securities Purchase Agreement"), pursuant to which the
Company issued and sold to the Purchaser a Senior Subordinated Note in the
original principal amount of $5,000,000 (the "April 1999 Note") and a Warrant
(Warrant No. LLB 4) dated April 15, 1999, to Purchase 1,335,000 Shares of Common
Stock (the "April 0000 Xxxxxxx").
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F. The Purchaser has previously exercised in full the Amended November
1998 Primary Warrant (which, among other things, evidenced the shares of Common
Stock purchasable upon exercise of the Bridge Warrant) and exercised in part the
April 1999 Warrant. The number of Warrant Shares (as such term is defined in the
April 0000 Xxxxxxx) that remain unexercised are currently represented by a
Warrant (Warrant No. LLB 5) issued April 15, 1999, and restated upon exercise in
part as of May 26, 1999, to Purchase 1,000 Shares of Common Stock (as amended,
supplemented or otherwise modified from time to time, the "Residual Warrant").
G. Certain Defaults and Events of Default under the Amended November 1998
Securities Purchase Agreement and the April 1999 Securities Purchase Agreement
have occurred since the date that the parties entered into the Original November
1998 Securities Purchase Agreement and the April 1999 Securities Purchase
Agreement, respectively. The Company has requested that the Purchaser waive the
Pre-Closing Date Defaults (including, without limitation, the Company's
inability to, among other things, enter into the New Senior Credit Facility on
or prior to December 31, 1999, pursuant to Section 8.21 of the Amended November
1998 Securities Purchase Agreement (and Section 8.2 of the April 1999 Securities
Purchase Agreement).
H. The Company wishes to issue and sell to the Purchaser a Secured Senior
Note Due 2001 in the principal amount of $16,000,000 as set forth herein, and
the Purchaser is willing to purchase such Secured Senior Note.
I. In recognition of the Company's obligations under Section 8.21 of the
Amended November 1998 Securities Purchase Agreement (and Section 8.2 of the
April 1999 Securities Purchase Agreement), and the Purchaser's rights under the
November 1998 Letter Agreement re ESFR as set forth above, and in consideration
of the Purchaser's willingness to waive the Pre- Closing Date Defaults as
provided in the Waiver Agreement, the Company and the Purchaser are willing to
amend and restate the Amended November 1998 Securities Purchase Agreement and
the April 1999 Securities Purchase Agreement as provided in this Agreement, and
amend and restate the Amended November 1998 Primary Note and the April 1999 Note
into one Amended and Restated Secured Senior Note Due 2003 in the principal
amount of $30,000,000, all on the terms and subject to the conditions set forth
in this Agreement. The parties acknowledge that this Agreement shall constitute
the New Senior Credit Facility in the aggregate principal amount of $46,000,000,
and that the Secured Senior Note Due 2001 and the Amended and Restated Secured
Senior Note Due 2003 shall constitute New Senior Credit Facility Notes for
purposes of the Amended November 1998 Securities Purchase Agreement and the
April 1999 Securities Purchase Agreement.
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J. In addition, in consideration of the Purchaser's willingness to waive
the Pre- Closing Date Defaults, the Company is willing to, among other things,
issue to the Purchaser, on or prior to the Closing Date, the March 2000 LLCP
Shares, all on the terms and subject to the conditions set forth in the Waiver
Agreement.
A G R E E M E N T
In consideration of the mutual covenants and agreements set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, on the terms and subject to the conditions set
forth in this Agreement and the Related Agreements, the parties agree as
follows:
1. DEFINITIONS; DETERMINATIONS.
1.1 Definitions. For the purpose of this Agreement, the following
capitalized terms shall have the meanings set forth below (unless otherwise
specified, the plural shall mean the singular and vice versa):
"Accrued Default Interest" shall have the meaning set forth in the
Waiver Agreement.
"Affiliate" shall mean, when used with reference to any specified
Person, (i) any other Person that, directly or indirectly, owns or
controls, or has the right to acquire, whether beneficially or of record,
or as a trustee, guardian or other fiduciary (other than a commercial bank
or trust company), five percent (5%) or more of the Capital Stock of such
specified Person having ordinary voting power in the election of directors
of such specified Person, (ii) any other Person that, directly or
indirectly, controls, is controlled by, is under direct or indirect common
control with or is included in the Immediate Family of, such specified
Person or any Affiliate of such specified Person, (iii) any executive
officer, director, joint venturer, partner or member of such specified
Person or any Person included in the Immediate Family of any of the
foregoing, (iv) any Dealer, if such Dealer or any Affiliate of such Dealer
is included in the Immediate Family of Xxxxxxx X. Xxxxxxx, Xx., Xxxxxxx X.
Xxxxxxx, Xx. or any other officer or director of the Company, or (v) any
Automobile Contract Debtor, independent contractor, vendor, client or
customer of the Company, if such Automobile Contract Debtor, independent
contractor, vendor, client or customer, or any Affiliate thereof, is
included in the Immediate Family of Xxxxxxx X. Xxxxxxx, Xx., Xxxxxxx X.
Xxxxxxx, Xx. or any other officer or director of the Company. For the
purposes of this definition, "control," when used with respect to any
specified Person, shall mean the power to direct or cause the direction of
management or policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and
the terms "controlling" and
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"controlled" have meanings correlative of the foregoing. Notwithstanding
the foregoing, for the purposes of this Agreement and the Related
Agreements, neither the Purchaser nor any of its Affiliates, officers,
directors, partners or employees shall be deemed to be Affiliates of the
Company or of any Affiliate of the Company.
"Agreement" shall have the meaning set forth in the preamble.
"Amended and Restated Investor Rights Agreement" shall mean an
Amended and Restated Investor Rights Agreement dated as of the Closing
Date, in form and substance satisfactory to the Purchaser, among the
Company, Xxxxxxx X. Xxxxxxx, Xx., Xxxxxxx X. Xxxxxxx, Xx. and the
Purchaser, amending and restating the Investor Rights Agreement dated as
of November 17, 1998, among the Company, Xxxxxxx X. Xxxxxxx, Xx., Xxxxxxx
X. Xxxxxxx, Xx., Xxxxxxx X. Xxxxx and the Purchaser, as amended by a First
Amendment to Investor Rights Agreement dated as of April 1999, as amended,
supplemented or otherwise modified from time to time.
"Amended and Restated Registration Rights Agreement" shall mean an
Amended and Restated Registration Rights Agreement dated as of the Closing
Date, in form and substance satisfactory to the Purchaser, between the
Company and the Purchaser, amending and restating the Registration Rights
Agreement dated as of November 17, 1998, as amended by a First Amendment
to Registration Rights Agreement dated as of April 15, 1999, as amended,
supplemented or otherwise modified from time to time.
"Amended November 1998 Primary Note" shall have the meaning set
forth in the recitals.
"Amended November 1998 Securities Purchase Agreement" shall have the
meaning set forth in the recitals.
"Amended November 0000 Xxxxxxx" shall have the meaning set forth in
the recitals.
"Amended Stanwich Registration Rights Agreement" shall mean the
Consolidated Registration Rights Agreement dated as of November 17, 1998
(the "Stanwich Registration Rights Agreement"), between the Company,
Stanwich and Xxxxx, as amended by a First Amendment dated as of the
Closing Date.
"Amended Stanwich Subordination Agreement" shall mean the
Subordination Agreement dated as of November 17, 1998 (the "Original
Stanwich Subordination Agreement"), among Stanwich, Poole, the Purchaser
and the Company, as amended by the Amendment to Subordination Agreement
dated as of April 15, 1999, among
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Stanwich, the Purchaser and the Company (it being understood that such
amendment was not intended in any way to affect Xxxxx'x obligations under
the Original Stanwich Subordination Agreement insofar as they related to
Xxxxx), and as further amended by a second amendment to Subordination
Agreement dated as of the Closing Date.
"Amount Financed" shall mean, with respect to an Automobile
Contract, the aggregate amount advanced under such Automobile Contract
toward the purchase price of the Financed Vehicle and any related costs,
including amounts advanced in respect of accessories, insurance premiums,
service and warranty contracts, other items customarily financed as part
of retail automobile installment sale contracts or promissory notes, and
related costs.
"Applicable Laws" shall mean (i) the applicable provisions of all
constitutions, treaties, statutes, laws, rules, regulations and ordinances
of any Governmental Authority, including, without limitation, usury laws,
the federal Truth-In-Lending Act, the Equal Credit Opportunity Act, the
Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt
Collection Practices Act, the Federal Trade Commission Act, the
Xxxxxxxx-Xxxx Warranty Act, Regulations B, M and Z of the Federal Reserve
Board and any other consumer credit, equal opportunity, disclosure or
repossession laws or regulations, laws relating to the discharge of
pollutants into the environment and the storage and handling of Hazardous
Materials and laws relating to franchise, building, zoning, health,
sanitation, safety or labor relations, (ii) any Consents of any
Governmental Authority and (iii) any orders, decisions, rulings, judgments
or decrees of any Governmental Authority.
"April 1999 Note" shall have the meaning set forth in the recitals.
"April 1999 Note Documents" shall mean, collectively, the April 1999
Securities Purchase Agreement, the April 1999 Note, the April 1999
Warrant, the other Related Agreements (as such term is defined in the
April 1999 Securities Purchase Agreement) and any and all other
agreements, instruments and other documents contemplated by or relating to
the April 1999 Securities Purchase Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.
"April 1999 Securities Purchase Agreement" shall have the meaning
set forth in the recitals.
"April 0000 Xxxxxxx" shall have the meaning set forth in the
recitals.
"ARC" shall mean Xxxxx Receivables Corp., a California corporation.
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"Asset Sale" shall mean any sale, lease, transfer, issuance or other
disposition (or series of related sales, leases, transfers, issuances or
dispositions) by the Company or any of its Subsidiaries of (i) any shares
of Capital Stock of the Company's Subsidiaries, or (ii) any other assets
or properties of the Company or such Subsidiaries outside of the ordinary
course of business; provided, however, that the term "Asset Sale" shall
not include (a) any sales made by the Company in the ordinary course of
business of Automobile Contracts through the Company's "flow through"
program where the Company sells Automobile Contracts at a price in excess
of the consideration paid by the Company therefor, reduced by principal
payments received thereon (it being understood, however, that "whole loan"
sales made by the Company, the proceeds of which are used to repay
indebtedness under any "warehouse" credit facilities shall continue to be
deemed to be Asset Sales), (b) sales of Automobile Contracts in
securitization transactions of the Company or (c) sales of Automobile
Contracts by the Company or any of its Subsidiaries in the following
transactions: (A) approximately $240.0 million principal amount of such
contracts to Customized Auto Credit Services, Inc. on or about June 7,
1999, (B) approximately $45.0 million principal amount of such contracts
to Nuvell Credit Corporation on or about August 25, 1999, (C)
approximately $5.4 million principal amount of such contracts to Fairlane
Credit LLC on or about August 31, 1999 and (D) approximately $33.0 million
principal amount of such contracts to Crescent Bank and Trust Company on
or about August 26 and September 1, 1999.
"Assignee" shall have the meaning set forth in Section 11.4.
"Assignment" shall mean any assignment or other transfer to one or
more Persons of any Note (or any interest therein) pursuant to the terms
of such Note.
"Automobile Contract" shall mean any installment sale contract for a
Financed Vehicle, which sale contract is owned by the Company or any of
its Subsidiaries.
"Automobile Contract Debtor" shall mean, with respect to any
Automobile Contract, any purchaser or co-purchaser of any Financed Vehicle
purchased, or any other Person who owes payments under, such Automobile
Contract.
"Automobile Principal Balance" shall mean, with respect to any
Automobile Contract, as of the close of business on the last day of a
Collection Period, the Amount Financed minus the sum of the following
amounts without duplication: (i) in the case of any "Rule of 78's"
Automobile Contract, that portion of all Scheduled Payments actually
received on or prior to such day allocable to principal using the
actuarial or constant yield method; (ii) in the case of any "Simple
Interest Receivable" Automobile Contract, that portion of all Scheduled
Payments actually received on or prior to such day allocable to principal
using the "Simple Interest Method"; (iii) any payment of the Purchase
Amount
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with respect to the Automobile Contract allocable to principal; (iv) any
Cram Down Losses in respect of such Automobile Contract; and (v) any
prepayment in full or any partial prepayment applied to reduce the
principal balance of the Automobile Contract.
"Automobile Security Documents" shall mean all security agreements,
chattel mortgages, deeds of trust, mortgages or other security
instruments, guaranties, sureties, and all agreements of every type and
nature (including a certificate of title) securing the obligations of an
Automobile Contract Debtor.
"Bankruptcy Law" shall mean Title 11 of the United States Code (11
U.S.C. Section 101 et seq.) or any similar federal or state law for the
relief of debtors, as amended from time to time.
"Board of Directors" shall mean, with respect to any Person, the
board of directors (or similar governing body) of such Person.
"Bridge Loan Agreement" shall mean the Bridge Loan Agreement, dated
as of November 2, 1998, between the Purchaser and the Company, pursuant to
which, on the terms and subject to the conditions set forth therein, the
Company issued and sold to the Purchaser the Bridge Note and the Bridge
Warrant.
"Bridge Loan Documents" shall mean, collectively, the Bridge Loan
Agreement, the Bridge Note, the Bridge Warrant, the Irrevocable
Instruction Letter (as such term is defined in the Bridge Loan Agreement),
the representation letter dated as of November 2, 1998, delivered by the
Company to the Purchaser, the other Related Agreements (as such term is
defined in the Bridge Loan Agreement) and any and all agreements,
instruments and other documents executed and/or delivered in connection
therewith, as the same may be amended, supplemented or otherwise modified
from time to time.
"Bridge Note" shall mean the Senior Bridge Note dated November 2,
1998, made payable by the Company to the Purchaser in the principal amount
of $2,500,000.
"Bridge Warrant" shall mean the Bridge Warrant (Warrant No. LL-1) to
Purchase 345,000 Shares of Common Stock of the Company, dated November 2,
1998, issued by the Company to the Purchaser under the Bridge Loan
Agreement.
"Business Day" shall mean any day except Saturday, Sunday and any
day which either is a legal holiday under the laws of the State of
California or is a day on which banking institutions located in such state
are authorized or obligated to close.
8
"Capital Expenditures" shall mean, with respect to any period, the
aggregate of all expenditures (whether paid in cash or accrued) of the
Company and its Subsidiaries made during such period, including all
Capital Lease Obligations, for property, plant and equipment (other than
repairs), other fixed assets and improvements, or for replacements,
substitutions or additions thereto, that are required to be capitalized on
the consolidated balance sheet of the Company in accordance with GAAP.
"Capital Lease Obligations" shall mean any obligations of the
Company and its Subsidiaries under all leases of real or personal property
that are required to be recorded as a capitalized lease on the
consolidated balance sheet of the Company and its Subsidiaries in
accordance with GAAP.
"Capital Stock" shall mean, with respect to any Person, (i) if such
Person is a corporation, any and all shares of capital stock,
participations in profits or other equivalents (however designated) or
other equity interests of such Person, (ii) if such Person is a limited
liability company, any and all membership units or other interests, or
(iii) if such Person is a partnership or other entity, any and all
partnership or entity units or other interests.
"CARSUSA" shall mean CARSUSA Inc., a California corporation.
"Change in Control" shall have the meaning set forth in Section 6 of
the Notes, respectively.
"Closing" shall have the meaning specified in Section 2.4.
"Closing Date" shall have the meaning specified in Section 2.4.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended, as set forth in Section 4980B of the Code and
Part 6 of Title I of ERISA.
"Collateral" shall mean the collateral under the Collateral
Documents, however defined.
"Collateral Documents" shall mean, collectively, the Security
Agreement, the landlord waivers and consents, the notices of security
interest in deposit accounts, the UCC financing statements, the UCC
perfection certificate and all other agreements, instruments and documents
delivered from time to time in connection therewith or otherwise to secure
the Obligations to Purchaser or any other obligations of the Company
9
or any other Person under this Agreement, the Notes or any other Related
Agreement, in each case as amended, restated, supplemental or otherwise
modified from time to time.
"Collection Period" shall mean (i) with respect to the first Payment
Date, the period commencing at the close of business on the Initial
Cut-Off Date and ending at the close business on the last day of the then
current month, and (ii) with respect to each subsequent Payment Date, the
preceding calendar month. Any amount stated "as of the close of business
of the last day of a Collection Period" shall give effect to the following
calculations as determined as of the end of the day on such last day: (i)
all applications of collections and (ii) all distributions.
"Common Stock" shall mean the common stock, no par value per share,
of the Company.
"Company" shall have the meaning set forth in the preamble.
"Company SEC Documents" shall mean all registration statements,
prospectuses, reports, schedules, forms, statements and other documents
(including all exhibits, schedules and other information included or
incorporated by reference therein) which are filed or are required to be
filed by the Company (or any of its Subsidiaries) with the SEC under the
Securities Act, the Exchange Act or the rules and regulations promulgated
thereunder, and all applications, filings, reports and other documents
which are filed or are required to be filed by the Company with the Nasdaq
or the NYSE.
"Company Stock Plans" shall mean, collectively, the Company's 1991
Stock Option Plan, as amended, and the Company's 1997 Long-Term Incentive
Stock Plan.
"Consent" shall mean any consent, approval, authorization, waiver,
permit, grant, franchise, license, exemption or order of, any
registration, certificate, qualification, declaration or filing with, or
any notice to, any Person, including, without limitation, any Governmental
Authority.
"Contingent Obligations" shall mean, with respect to any Person, any
obligation, direct or indirect, contingent or otherwise, of such Person
(i) with respect to any indebtedness or other obligation of another
Person, including, without limitation, any direct or indirect guarantee of
such indebtedness (other than any endorsement for collection or deposit in
the ordinary course of business) or any other direct or indirect
obligation, by agreement or otherwise, to purchase or repurchase any such
indebtedness or obligation or any security therefor, or to provide funds
for the payment or discharge of any such Indebtedness or obligation
(whether in the form of loans, advances, stock purchases, capital
contributions, dividends or otherwise), letters of credit and
10
reimbursement obligations for letters of credit, (ii) to provide funds to
maintain the financial condition of any other Person, or (iii) otherwise
to indemnify or hold harmless the holders of indebtedness or other
obligations of another Person against loss in respect thereof. The amount
of any Contingent Obligation under clauses (i) and (ii) above shall be the
maximum amount guaranteed or otherwise supported by the Contingent
Obligation.
"Convertible Securities" shall mean any securities or other
obligations issued or issuable by the Company or any other Person that are
exercisable or exchangeable for, or convertible into, any Capital Stock of
the Company.
"CPSL" shall mean CPS Leasing, Inc., a Delaware corporation.
"CPS Marketing" shall mean CPS Marketing, Inc., a California
corporation.
"CPS 123 Corp." shall mean CPS 123 Corp., a Delaware corporation.
"CPSRC" shall mean CPS Receivables Corp., a California corporation.
"CPSRC Shares" shall mean 1,000 shares of common stock, no par value
per share, of CPSRC, represented by stock certificate no. 3 and registered
in the name of the Company, which shares represent all of the issued and
outstanding Capital Stock of CPSRC.
"Cram Down Losses" shall mean, with respect to any Automobile
Contract, if a court of appropriate jurisdiction in an insolvency
proceeding shall have issued an order reducing the amount owed on an
Automobile Contract or otherwise modifying or restructuring Scheduled
Payments to be made on an Automobile Contract, an amount equal to such
reduction in the net present value (using as the discount rate the lower
of the contract rate or the rate of interest specified by the court in
such order) of the Scheduled Payments as so modified or restructured. A
"Cram Down Loss" shall be deemed to have occurred on the date such order
is entered.
"Credit Enhancer" shall mean FSA and/or any other Person which is
not an Affiliate of the Company that issues any surety bond, letter of
credit or other credit enhancement in connection with any Securitization
Transaction in which the Company (or any Subsidiary of the Company) is the
issuer.
"Custodian" shall mean any receiver, trustee, assignee, liquidation,
sequestrator or similar official under any Bankruptcy Law.
11
"Cut-Off Date" shall mean the date upon which (i) money received
under Automobile Contracts sold in any Securitization Transaction becomes
payable to the trustee or similar Person with respect to the relevant
Securitization Transaction Documents (including, without limitation,
principal prepayments relating to Scheduled Payments), and (ii) all Net
Liquidation Proceeds received with respect to such Automobile Contracts.
"Dealer" shall mean any Person that has sold Goods to any Automobile
Contract Debtor pursuant to an Automobile Contract.
"Default" shall mean any event or condition which, with the giving
of notice or the lapse of time or both, would become an Event of Default.
"Determination Date" shall mean the earlier of (i) the seventh
Business Day of each calendar month and (ii) the fifth Business Day
preceding the related Payment Date.
"Disclosure Schedules" shall have the meaning specified in the
introductory paragraph of Section 3.
"Environmental Laws" shall mean all Applicable Laws relating to
Hazardous Materials or the protection of human health or the environment,
including all requirements pertaining to reporting, permitting,
investigating or remediating releases or threatened releases of Hazardous
Materials into the environment, or relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials.
"Equity Rights" shall mean any warrants, options or other rights to
subscribe for or purchase, or obligations to issue, any Capital Stock of
the Company, or any Convertible Securities, or any stock appreciation
rights, including, without limitation, the LLCP Warrants and any options
or similar rights issued or issuable under any employee stock option plan,
pension plan or other employee benefit plan of the Company.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and any successor statute, including the rules and
regulations promulgated thereunder, in each case as amended from time to
time.
"ERISA Affiliate" shall mean any Person that is or was a member of
the controlled group of corporations or trades or businesses (as defined
in Sections (b), (c), (m) or (o) of Section 414 of the IRC) of which the
Company or any of its Subsidiaries is or was a member at any time within
the last six (6) years.
12
"ESFR Agent" shall mean State Street Bank and Trust Company, as
"Agent" for itself and for each other ESFR Lender, and any successor agent
under the ESFR Agreement.
"ESFR Agreement" shall mean, collectively, that certain Residual
Interest in Securitizations Revolving Credit and Term Loan Agreement,
dated as of April 30, 1998, by and among the Company, the ESFR Agent,
State Street Bank and Trust Company, as ESFR Lender, The Structured
Finance High Yield Fund, LLC, as ESFR Lender, and The Prudential Insurance
Company of America, as ESFR Lender, as amended by (i) a letter amendment
to the ESFR Agreement, dated November 2, 1998 ("ESFR Amendment No. 1");
(ii) a Second Amendment Agreement dated as of November 17, 1998; (iii) a
Third Amendment Agreement and Confirmation of Security Documents dated as
of April 15, 1999; (iv) a Loan Amendment and Forbearance Agreement dated
as of November 3, 1999; and (v) a Fifth Amendment Agreement and Amendment
and Confirmation of Security Documents dated as of February 8, 2000.
"ESFR Indebtedness" shall mean any and all Indebtedness of the
Company and its Subsidiaries and other amounts owing under the ESFR
Agreement and the ESFR Loan Documents.
"ESFR Lenders" shall mean the "Lenders" under the ESFR Agreement.
"ESFR Loan Documents" shall mean "Loan Documents" as such term is
defined under the ESFR Agreement.
"Event of Default" shall have the meaning specified in Section 10.1.
"Excess Cash" shall mean, in any period, all cash released to the
Company or any of its Subsidiaries, by way of dividend, payment,
distribution or otherwise, during such period in connection with any
Securitization Transaction.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, as the same
shall be in effect at the time.
"Existing Indebtedness" shall have the meaning set forth in Section
3.11(a).
"Existing Liens" shall mean all Liens against the Company, its
Subsidiaries or their respective assets and properties existing as of the
Closing Date after giving effect to the Lien terminations required under
Section 7.22.
13
"Financed Vehicle" shall mean a new or used automobile, light truck,
van or minivan, together with all accessions thereto, securing any
Automobile Contract Debtor's indebtedness under an Automobile Contract.
"Financial Statements" shall have the meaning specified in Section
3.10.
"Fiscal Quarter" shall mean any quarter of a Fiscal Year.
"Fiscal Year" shall mean the fiscal year of the Company, which shall
be the twelve (12) month period ending on December 31 in each calendar
year, or such other period as the Company may designate in writing and the
Purchaser may approve in writing.
"FSA" shall mean Financial Security Assurance Inc., a New York stock
insurance company.
"FSA Stock Pledge Agreement" shall mean the Stock Pledge Agreement
dated as of June 10, 1994, among the Company, FSA and the Trustee, as
collateral agent on behalf of Financial Security.
"FSA Warrant" shall mean the Warrant Agreement dated as of November
30, 1998, between the Company and FSA Portfolio Management Inc., as
purchaser, together with Warrant Certificate No. 1 dated as of December 4,
1998, which is part of a duly authorized issue of warrants issued pursuant
to such Warrant Agreement.
"Fully Diluted Basis" shall mean, at any time, a basis that includes
all shares of Capital Stock of the Company issued and outstanding at such
time and all additional shares of Capital Stock of the Company which would
be issued upon the conversion or exercise of all Equity Rights of the
Company outstanding at such time.
"FundCo" shall mean CPS Funding Corp., a California corporation.
"Future Servicing Cash Flows" shall mean, as of any date of
determination, the present value on such date of the difference between
(i) the cash collected from obligors on Automobile Contracts in each
Securitization Transaction and (ii) the sum of (A) principal and interest
passed-through on the certificates issued to investors in such
Securitization Transaction, (B) a two percent (2%) annual servicing fee
and (C) other expenses, including trustee fees, collateral agent fees,
standby servicing fees, surety bond premiums and the underwriter's
discount.
14
"GAAP" shall mean generally accepted accounting principles and
practices set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession, all as in
effect on the date hereof, applied on a basis consistent with prior
periods.
"Goods" shall mean any new or used automobile or light truck,
including equipment sold or financed in connection therewith, or any other
item of personal property, each being intended principally for personal or
family use by consumers, sold, leased or otherwise encumbered under any
Automobile Contract.
"Governmental Authority" shall mean any nation or government, and
any state or political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions
of or pertaining to government, and any court, tribunal or arbitrator(s)
of competent jurisdiction, and any self-regulatory organization.
"Guarantee" shall mean, with respect to any Person, (i) any
guarantee (other than by endorsement of negotiable instruments for
collection in the ordinary course of business), direct or indirect, of any
indebtedness or other obligation of any other Person and (ii) any
agreement, direct or indirect, contingent or otherwise, the practical
effect of which is to assure in any way the payment or performance (or
payment of damages in the event of non-performance) of any indebtedness or
other obligation of such other Person, including, without limitation, any
indemnification agreement, warranty and agreement to pay amounts drawn
down by letters of credit. The amount of a Guarantee shall be deemed to be
the maximum amount of the obligation guaranteed for which the guarantor
could be held liable under such Guarantee.
"Hazardous Materials" shall mean any substance (i) the presence of
which requires investigation or remediation under any Applicable Laws;
(ii) that is defined or becomes defined as a "hazardous waste" or
"hazardous substance" under any Applicable Laws, including the
Comprehensive Environmental Response, Compensation and Liability Act (42
U.S.C. Section 9601 et seq.) or the Resource Conservation and Recovery Act
(42 U.S.C. Section 6901 et seq.); (iii) that is toxic, explosive,
corrosive, inflammable, infectious, radioactive, carcinogenic, mutagenic
or otherwise hazardous and is or becomes regulated by any Governmental
Authority; (iv) the presence of which on any real property causes or
threatens to cause a nuisance upon the real property or to adjacent
properties or poses or threatens to pose a hazard to any real property or
to the health or safety of Persons on or about any real property; or (v)
without limitation, that contains gasoline or other petroleum
hydrocarbons, polychlorinated biphenyls or asbestos.
15
"Holder" shall mean any Person (including, without limitation, the
Purchaser) in whose name any Note is registered in the register maintained
by the Company pursuant to Section 11 of the Notes, respectively.
"Immediate Family" of a Person includes such Person's spouse, and
the parents, children and siblings of such Person or his or her spouse and
their spouses and other Persons related to the foregoing by blood,
adoption or marriage within the second degree of kinship.
"Indebtedness" shall mean, with respect to the Company and its
Subsidiaries, without duplication, (i) any indebtedness or obligations,
contingent or otherwise, for borrowed money; (ii) all obligations
evidenced by bonds, notes, debentures or similar instruments; (iii) all
obligations to pay the deferred purchase price of property or services
(excluding trade payables incurred in the ordinary course of business that
are not overdue by more than sixty (60) days from its due date and that
are not being contested in good faith); (iv) all Capital Lease
Obligations; (v) all obligations secured by a Lien to which any property
or assets owned by the Company or any of its Subsidiaries is subject,
whether or not the obligations secured thereby have been assumed by the
Company or any such Subsidiaries; (vi) all Contingent Obligations of the
Company and its Subsidiaries, whether for letters of credit or bankers'
acceptances or otherwise; (vii) all obligations under facilities for the
discount or sale of receivables; (viii) the maximum fixed repurchase price
of any redeemable stock of the Company and its Subsidiaries; and (ix) all
Guarantees of items which would be included within this definition
(regardless of whether such items would appear upon such balance sheet);
provided, further, that the term "Indebtedness" shall be expanded to
include any Indebtedness for Money Borrowed (as such term is defined in
the RISRS Indenture or the PENS Indenture) to the extent not already
covered by clauses (i) through (ix) above.
"Indemnified Parties" shall have the meaning specified in Section
9.2.
"Initial Cut-Off Date" shall mean the first Cut-Off Date of any
Securitization Transaction.
"Insurance Agreement Event of Default" shall mean an "Insurance
Agreement Event of Default" as defined in each of the Insurance and
Indemnity Agreements among the Company, CPSRC and FSA or other event or
condition, however defined, which has a substantially similar meaning to
such defined term.
"Intellectual Property" shall mean all intellectual property,
including, without limitation, (i) patents, patent registrations, patent
applications, patent disclosures and any related continuation,
continuation-in-part, divisional, reissue, reexamination, utility,
16
model and certificate of invention; (ii) trademarks, service marks, trade
dress, logos, trade names, domain names and corporate names, and any
registrations and applications for registration thereof; (iii) copyrights
and registrations and applications for copyrights, including, without
limitation, the Company's proprietary scoring and underwriting model; (iv)
computer software, data and documentation; (v) trade secrets, know-how,
processes and techniques, research and development, works, financial,
marketing and business data, pricing and cost information, business and
marketing plans, customer and supplier lists and any other confidential
information; (vi) all proprietary rights relating to any of the foregoing;
and (vii) copies and tangible embodiments thereof.
"Investment and Guaranty Agreement" shall mean that certain
Investment Agreement and Continuing Guaranty dated as of April 15, 1999,
by and among Stanwich, Xxxxxxx X. Xxxxxxx, Xx., Xxxxxxx X. Xxxxxxx, Xx.,
the Company and the Purchaser.
"Investments" shall mean, as applied to any Person, (i) any direct
or indirect acquisition by such Person of any Capital Stock of any other
Person, or all or any substantial part of the business or assets of such
other Person, and (ii) any direct or indirect loan, advance or capital
contribution by such Person to any other Person (including, without
limitation, any Affiliate, officer, director or employee of the Company).
"IRC" shall mean the Internal Revenue Code of 1986, as amended, or
any successor statute, and the treasury regulations promulgated
thereunder.
"Licenses and Permits" shall mean, collectively, all licenses,
franchises, permits, consents, approvals, registrations, certificates and
authorizations of all Governmental Authorities necessary to the conduct of
the businesses of the Company and its Subsidiaries, including, without
limitation, all licenses issued or issuable under the finance laws in each
state in which the activities of the Company and its Subsidiaries,
respectively, would require such licensing, licenses required for the sale
or brokerage of insurance products, compliance with all bonding
requirements of any Governmental Authority and any licenses, franchises,
permits, consents, approvals, registrations, certificates and
authorizations required to be held to comply with or obtain exemptions
from the usury laws of any state.
"Lien" shall mean any lien, pledge, mortgage, security interest,
charge or encumbrance of any kind (including, without limitation, the
interest of a lessor under a Capital Lease having substantially the same
economic effect), any agreement to give or refrain from giving any lien,
pledge, mortgage, security interest, charge or other encumbrance of any
kind, any conditional sale or other title retention agreement, any
17
lease in the nature thereof and the filing of any financing statement or
other similar form of notice under the laws of any jurisdiction.
"LINC" shall mean LINC Acceptance Company, LLC, a Delaware limited
liability company, which is involved in the marketing and originating of
Automobile Contracts.
"Liquidated Contracts" shall mean any Automobile Contract (i) which
has been liquidated by the Servicer through the sale of the Financed
Vehicle or (ii) for which the related Financed Vehicle has been
repossessed and 120 days have elapsed since the date of such repossession
or (iii) as to which an Automobile Contract Debtor has failed to make more
than 90% of a Scheduled Payment of more than ten dollars for 180 or more
days as of the end of a Collection Period or (iv) with respect to which
proceeds have been received which, in the Servicer's judgment, constitute
the final amounts recoverable in respect of such Automobile Contract.
"LLCP Coverage Ratio" shall mean, as of any date, a fraction,
expressed as a percentage, the numerator of which shall be equal to the
sum of (i) all cash, (ii) all restricted cash (iii) all servicing fees
receivable and (iv) all investment in credit enhancements, in each case as
shown on the consolidated balance sheet of the Company and its
Subsidiaries as of such date, and the denominator of which shall be equal
to all Indebtedness outstanding under the Notes as of such date.
"LLCP Representative" shall have the meaning set forth in the
Amended and Restated Investor Rights Agreement.
"LLCP Shares" shall mean (i) any and all shares of Common Stock
issued or issuable upon exercise of, or otherwise under, any LLCP Warrants
(including, without limitation, any Warrant Shares or other shares issued
as an "anti-dilution" or other adjustment) and (ii) the March 2000 LLCP
Shares.
"LLCP Warrants" shall mean, collectively, the following Equity
Rights: (i) the Bridge Warrant; (ii) the Original November 1998 Primary
Warrant; (iii) the Amended November 1998 Primary Warrant; (iv) the April
0000 Xxxxxxx; and (v) the Residual Warrant.
"Losses" shall have the meaning specified in Section 9.2.
"March 2000 LLCP Shares" shall have the meaning set forth in the
Waiver Agreement.
18
"March 2000 Stanwich Shares" shall have the meaning set forth in the
Waiver Agreement.
"Margin Regulations" shall mean Regulations T, U and X of the Board
of Governors of the Federal Reserve System, or any successor thereto (the
"Federal Reserve Board"), as amended from time to time.
"Margin Stock" shall mean "margin stock" as defined in the Margin
Regulations.
"Material Adverse Effect" or "Material Adverse Change" shall mean a
material adverse effect on or adverse change in, as the case may be, (i)
the business, assets, condition (financial or otherwise), properties,
results of operations and prospects of the Company, individually, and the
Company and its Subsidiaries (other than LINC or Samco) taken as a whole,
or (ii) the ability of the Company, individually, and the Company and its
Subsidiaries (other than LINC or Samco) taken as a whole, to perform its
or their obligations under this Agreement or any Related Agreements.
"Material Contracts" shall have the meaning set forth in Section
3.13.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"NAB" shall mean NAB Asset Corporation, a Texas corporation.
"NAB Loans" shall mean any and all loans and advances made by or on
behalf of the Company to NAB.
"Nasdaq" shall mean The Nasdaq National Market System or any
successor reporting system.
"Net Available Cash" shall mean, with respect to any Asset Sale, all
cash payments received from such Asset Sale (including cash payments
received by way of deferred payment of principal pursuant to a note or
installment receivable or otherwise, but only as and when received, but
excluding any other consideration received in the form of assumption by
the Company or any of its Subsidiaries of Indebtedness relating to the
property that is the subject of such Asset Sale or received in any other
non-cash form), in each case net of (i) all legal, title and recording Tax
expenses, commissions and other fees and expenses incurred, and all
federal, state and local Taxes required to be accrued as a liability under
GAAP, as a consequence of such Asset Sale, and (b) all payments made on
any Indebtedness which is secured by any property subject to such Asset
Sale, in accordance with the terms of any Lien upon such property, or
which must
19
by its terms or in order to obtain a necessary Consent to such Asset Sale,
or under Applicable Laws, be repaid out of the proceeds from such Asset
Sale.
"Net Interest Receivable" shall mean, at any date of determination,
the net present value as of such date of Future Servicing Cash Flows
available to be distributed to the Company by any Subsidiary of the
Company in connection with any Securitization Transaction as determined in
accordance with Statement of Financial Accounting Standards No. 125 ("SFAS
125"). Future Servicing Cash Flows represent the difference between the
coupon rate on the Automobile Contracts and the pass-through rate on the
certificates issued to the investors in the securitized pool in excess of
a Base Servicing Fee of two percent (2%) and any other continuing costs
such as trustee or surety bond premiums. To determine the Net Interest
Receivable, the Future Servicing Cash Flows are first estimated using an
assumed rate of prepayment that is intended to be conservative relative to
historical experience and then discounted as a market rate commensurate
with the risk associated with this type of investment. The Net Interest
Receivable is then reduced by a credit loss provision based upon
historical experience and deemed adequate to cover net losses over the
life of the trust. The Net Interest Receivable is subsequently amortized
against servicing income on a level-yield basis.
"Net Liquidation Proceeds" shall mean, with respect to any
Securitization Transaction, as to any Liquidated Contract, all amounts
realized with respect to such Automobile Contract net of (i) reasonable
expenses incurred by the Servicer in connection with the collection of
such Automobile Contract and the repossession and disposition of the
Financed Vehicle and (ii) amounts that are required to be refunded to the
Automobile Contract Debtor on such Automobile Contract; provided, however,
that "Net Liquidation Proceeds" with respect to any Automobile Contract
shall in no event be less than zero.
"New Senior Credit Facility" shall have the meaning set forth in the
Amended November 1998 Securities Purchase Agreement.
"New Senior Credit Facility Notes" shall mean, for purposes of the
Amended November 1998 Securities Purchase Agreement and the April 1999
Securities Purchase Agreement, the Term A Note and the Term B Note.
"NYSE" shall mean The New York Stock Exchange, Inc.
"Norwest" shall mean Norwest Bank Minnesota, National Association.
"Notes" shall mean, collectively, the Term A Note and the Term B
Note, and shall also include, where applicable, any additional note or
notes issued by the Company in
20
connection with any Assignments thereof. The term "Note" shall refer to
either the Term A Note or the Term B Note, as applicable.
"November 1998 Letter Agreement re ESFR" shall have the meaning set
forth in the recitals.
"November 1998 Transaction Documents" shall mean the Bridge Loan
Documents, the Original November 1998 Securities Purchase Agreement, the
Original November 1998 Primary Note, the November 1998 Primary Warrant,
the other Related Agreements (as such term is defined in the November 1998
Securities Purchase Agreement) and any and all agreements, instruments and
other documents relating thereto or contemplated thereby, as amended,
supplemented or otherwise modified from time to time.
"Obligations to Purchaser" shall mean any and all Indebtedness,
claims, liabilities or obligations of the Company and any of its
Subsidiaries owing to the Purchaser or any Affiliate of the Purchaser (or
any successor, assignee or transferee of the Purchaser or such Affiliate)
under or with respect to the November 1998 Transaction Documents, the
April 1999 Note Documents, this Agreement, the Notes, the Amended and
Restated Registration Rights Agreement, the Amended and Restated Investor
Rights Agreement, the Subsidiary Guaranty, the Collateral Documents and
the other Related Agreements, the LLCP Shares and any and all agreements,
instruments or other documents heretofore or hereafter executed or
delivered in connection with any of the foregoing, of whatever nature,
character or description, including, without limitation, any claims for
rescission or other damages under applicable federal and state securities
laws, in each case whether due or not due, direct or indirect, joint
and/or several, absolute or contingent, voluntary or involuntary,
liquidated or unliquidated, determined or undetermined, now or hereafter
existing, amended, renewed, extended, exchanged, restated, refinanced,
refunded or restructured, whether or not from time to time decreased or
extinguished and later increased, created or incurred, whether for
principal, interest, premiums, fees, costs, expenses (including, without
limitation, attorneys' fees) or other amounts incurred for administration,
collection, enforcement or otherwise, whether or not arising after the
commencement of any proceeding under the Bankruptcy Laws (including,
without limitation, post-petition interest) and whether or not allowed or
allowable as a claim in any such proceeding, and whether or not recovery
of any such obligation or liability may be barred by any statute of
limitations or such Indebtedness, claim, liability or obligation may
otherwise be unenforceable.
"Option Pool" shall mean any Equity Rights to purchase shares of
Common Stock which may be granted by the Board of Directors of the Company
(or the compensation committee thereof) to directors, officers and key
employees of the Company or of any
21
Affiliate of the Company under a plan adopted or to be adopted by the
Board of Directors of the Company or the shareholders of the Company,
including, without limitation, the Existing Stock Plans, at an exercise
price per share that is not less than the fair market value of the shares
of Common Stock as of the date of grant, as determined by the Board of
Directors of the Company (or the compensation committee thereof) in good
faith and approved (i) in the case of a grant to any officer (other than a
senior executive officer) or employee of the Company who is not a member
of the Board of Directors of the Company, by a majority vote of the Board
of Directors of the Company (or the compensation committee thereof), and
(ii) in the case of any grant to a senior executive officer or member of
the Board of Directors of the Company, by the unanimous vote of the
members of the Board of Directors of the Company (or the compensation
committee thereof) who are not being granted or receiving such Equity
Rights, unless such grant (and the number of shares of Common Stock
issuable upon exercise thereof) is consistent with past grants by the
Board of Directors of the Company to such member, in which case by a
majority vote of the Board of Directors (or the compensation committee
thereof) of the Company.
"Original November 1998 Primary Note" shall have the meaning set
forth in the recitals.
"Original November 1998 Primary Warrant" shall have the meaning set
forth in the recitals.
"Original November 1998 Securities Purchase Agreement" shall have
the meaning set forth in the recitals.
"Payment Date" shall mean, with respect to each Collection Period,
the 15th day of the following calendar month or, if such day is not a
Business Day, the immediately following Business Day.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"PENS" shall mean the "10.50% Participating Equity Notes" due April
15, 2004, issued by the Company in the original principal amount of
$20,000,000 pursuant to a First Supplemental Indenture dated as of April
15, 1997, between the Company and Bankers Trust Company, as trustee
thereunder. The PENS is the first series of unsecured subordinated
debentures, notes or other evidences of indebtedness to be issued under
the PENS Indenture.
"PENS Indenture" shall mean an Indenture, dated as of April 15,
1997, as supplemented by the First Supplemental Indenture, dated as of
April 15, 1997, between
22
the Company and Bankers Trust Company, as trustee thereunder, as in effect
on the date hereof or as amended pursuant to Section 8.11(a).
"Permitted Investments" shall mean any one or more of the following:
(i) any direct obligations of the United States of America
(including obligations issued or held in book-entry form on the books of
the Department of the Treasury of the United States of America) or
obligations the timely payment of the principal of and interest on which
are fully guaranteed by the United States of America, all of which mature
within three (3) months from the date of acquisition thereof; or
(ii) any interest-bearing demand or time deposits or
certificates of deposit that mature no more than thirty (30) days from the
date of creation thereof and that are either (a) insured by the Federal
Deposit Insurance Corporation or (b) held in any United States commercial
bank having general obligations rated at least "AA" or equivalent by
Standard & Poor's Rating Group Corporation or Xxxxx'x Investors Service,
Inc. and having capital and surplus of at least $500,000,000 or the
equivalent.
"Permitted Liens" shall mean:
(i) judgment and attachment Liens in connection with (a)
judgments that do not constitute an Event of Default so long as the
judgment creditor has not succeeded in the foreclosure thereof and
reserves have been established to the extent required by GAAP as in
effect at such time and (b) litigation and legal proceedings that
are being contested in good faith by appropriate proceedings (or as
to which the Company or any of its Subsidiaries, as the case may be,
is preparing to promptly initiate in appropriate proceedings) so
long as adequate reserves have been established in accordance with
GAAP and so long as such Liens do not encumber assets in an
aggregate amount (together with the amount of any unstayed judgments
against the Company or any of its Subsidiaries) in excess of
$1,000,000;
(ii) Liens for Taxes, assessments or other governmental
charges or levies on property of the Company or any of its
Subsidiaries if the same shall not at the time be delinquent or
thereafter can be paid without penalty, or are being contested in
good faith by appropriate proceedings, and Liens for personal
property Taxes so long as such Liens do not secure an amount in
excess of $20,000;
23
(iii) pledges or deposits by the Company or any of its
Subsidiaries under worker's compensation laws, unemployment
insurance laws or similar legislation;
(iv) Liens on the property of the Company or any of its
Subsidiaries incurred in the ordinary course of business to secure
performance of obligations with respect to statutory or regulatory
requirements, performance or return-of- money bonds, surety or
indemnity bonds or other obligations of like nature and incurred in
a manner consistent with industry practice, in each case which are
not incurred in connection with the borrowing of money, the
obtaining of advances or credit or the payment of the deferred
purchase price of property (provided that the Company may incur
Liens to secure surety or indemnity bonds or other obligations of
like nature outside of the ordinary course of business so long as
such Liens do not encumber assets in excess of $350,000 in the
aggregate);
(v) Liens imposed by operation of law, such as carriers',
warehousemen's and mechanics' Liens, on property of the Company or
any of its Subsidiaries arising in the ordinary course of business
and securing payment of obligations which are not more than sixty
(60) days past due or are being contested in good faith by
appropriate proceedings and, if required by GAAP, are appropriately
reserved for on the books of the Company or such Subsidiary, as the
case may be; and
(vi) utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature
generally existing with respect to properties of a similar
character;
provided, however, that each of the Liens described in the foregoing
clauses (i) through (vi) inclusive shall only constitute a Permitted Lien
so long as such Liens do not materially interfere with the conduct of the
business of the Company and its Subsidiaries, individually or taken as a
whole, or result in a Material Adverse Change.
"Person" shall mean any individual, trustee, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, limited liability
partnership, other business entity or Governmental Authority.
"Pledged Stanwich Notes" shall have the meaning set forth in the
Amended Stanwich Subordination Agreement.
"Xxxxx" shall mean Xxxx X. Xxxxx, an individual and an Affiliate of
Stanwich.
24
"Xxxxx Replacement Note" shall mean the Convertible Subordinated
12.5% Note dated November 16, 1998, in the principal amount of $1,000,000,
made payable by the Company in favor of Xxxxx.
"Pre-Closing Date Defaults" shall have the meaning set forth in the
Waiver Agreement.
"Previously Pledged Stanwich Notes" shall have the meaning set forth
in the Amended Stanwich Subordination Agreement.
"Pro Forma Closing Balance Sheet" shall have the meaning set forth
in Section 3.10(d).
"Purchase Price" shall have the meaning specified in Section 2.2.
"Purchased Contract" shall mean an Automobile Contract purchased as
of the close of business on the last day of a Collection Period by the
Servicer.
"Purchaser" shall have the meaning set forth in the preamble.
"Real Property" shall mean any real property or "facility" (as
defined in the Resource Conversation and Recovery Act (RCRA), 42 U.S.C.
Section 6901 et seq.) currently or formerly owned, operated, leased or
occupied by the Company and its Subsidiaries.
"Related Agreements" shall mean, collectively, the Notes, the
Amended and Restated Registration Rights Agreement, the Amended and
Restated Investor Rights Agreement, the Subsidiary Guaranty, the Waiver
Agreement, the Collateral Documents, the March 2000 LLCP Shares, the
Stanwich-Related Agreements and any and all other agreements, instruments,
certificates and documents executed or delivered in connection herewith or
therewith, as the same may be amended, supplemented or otherwise modified
from time to time.
"Residual Interest In Securitizations" shall mean, at any date of
determination, the present value as of such date of the aggregate (without
duplication) of the Company's or any Subsidiaries' interest in (i) the Net
Interest Receivable relating to all Securitization Transactions, (ii) the
Spread Accounts relating to all Securitization Transactions and (iii) any
over-collateralized accounts.
"Residual Warrant" shall have the meaning set forth in the recitals.
25
"Residual Warrant Shares" shall mean any and all shares of Common
Stock issued or issuable upon exercise of the Residual Warrant.
"Restricted Payment" shall mean any one or more of the following:
(i) any dividend or other distribution, direct or indirect, on
account of any Capital Stock of such Person now or hereafter outstanding;
(ii) any redemption, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or indirect, of
any shares of any Capital Stock of such Person now or hereafter
outstanding; and
(iii) any payment or prepayment of principal of, premium, if
any, or interest, fees or other charges on or with respect to, and any
redemption, purchase, retirement, defeasance, sinking fund or similar
payment with respect to any Subordinated Indebtedness (provided that any
sinking fund payments required to be made by the Company under the terms
of the Existing Indebtedness shall not constitute a Restricted Payment);
provided, however, that the following shall not constitute a
Restricted Payment so long as the Company is Solvent and no Default or
Event of Default has occurred and is continuing or would occur as a result
thereof: (a) any dividend or other distribution, direct or indirect, on
account of any Capital Stock of such Person now or hereafter outstanding
which is payable solely in shares of Common Stock; (b) any regularly
scheduled payments of principal of and/or interest on any Subordinated
Indebtedness made in accordance with the terms and provisions of the
Subordinated Agreements; (c) any sales or transfers of Automobile
Contracts (or pools thereof) between or among the Company and its
Subsidiaries in connection with any Securitization Transaction (including,
without limitation, any warehousing transactions); (d) any purchases by
the Company of its Capital Stock under the Company's Employee Savings
(401(k)) Plan;(e) any dividend or other distribution, direct or indirect,
on account of any Capital Stock (now or hereafter outstanding) of any of
the Company's Subsidiaries to the Company; or (f) the cancellation or
acquisition of any Capital Stock of the Company as payment to the Company
of the exercise price of any Equity Rights.
"RISRS" shall mean the "Rising Interest Subordinated Redeemable
Security Due 2006" issued by the Company in the original principal amount
of $20,000,000, pursuant to a First Supplemental Indenture dated as of
December 15, 1995, between the Company and Xxxxxx Trust and Savings Bank,
as trustee thereunder. The RISRS is the first series of unsecured
subordinated debentures, notes or other evidences of indebtedness to be
issued under the RISRS Indenture.
26
"RISRS Indenture" shall mean an Indenture dated as of December 15,
1995, between the Company and Xxxxxx Trust and Savings Bank, as trustee,
as supplemented by the First Supplemental Indenture, dated as of December
15, 1995, between the Company and Bankers Trust Company, as trustee
thereunder, as in effect on the date hereof or as amended pursuant to
Section 8.11(a).
"Samco" shall mean Samco Acceptance Corp., a Delaware corporation.
"Scheduled Payment" shall mean, with respect to any Collection
Period for any Automobile Contract, the amount set forth in such
Automobile Contract as required to be paid by the Automobile Contract
Debtor in such Collection Period (without giving effect to deferments of
payments or any rescheduling of payments in any insolvency or similar
proceedings).
"SEC" shall mean the Securities and Exchange Commission, or any
successor agency.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder, all as the same
shall be in effect at the time.
"Securitization Transaction Documents" shall mean any and all
agreements, instruments and other documents now existing or hereafter
entered into in connection with the consummation of any Securitization
Transaction.
"Securitization Transactions" shall mean any and all transactions,
whether now existing or hereafter arising or entered into, involving the
pooling and sale of Automobile Contracts by the Company or any of its
Subsidiaries, now existing or hereafter arising or entered into,
including, without limitation, Xxxxx Xxxxxxx Xxxxx 0000-0, Xxxxx Grantor
Trust 0000-0, Xxxxx Xxxxxxx Xxxxx 0000-0, Xxxxx Grantor Trust 1993-4, CPS
Auto Grantor Trust 1994-1, CPS Auto Grantor Trust 1994-2, CPS Auto Grantor
Trust 1994-3, CPS Auto Grantor Trust 1994-4, CPS Auto Grantor Trust
1995-1, CPS Auto Grantor Trust 1995-2, CPS Auto Grantor Trust 1995-3, CPS
Auto Grantor Trust 1995-4, CPS Auto Grantor Trust 1996-1, FASCO Auto
Grantor Trust 1996-1, CPS Auto Grantor Trust 1996-2, CPS Auto Grantor
Trust 1996-3, CPS Auto Grantor Trust 1997-1, CPS Auto Grantor Trust
1997-2, CPS Auto Receivables Trust 1997-3, CPS Auto Receivables Trust
1997-4, CPS Auto Receivables Trust 1997-5, CPS Grantor Trust 1998-1, CPS
Auto Receivables Trust 1998-2, CPS Auto Receivables Trust 1998-3 and CPS
Auto Receivables Trust 1998-4 and any future securitization transaction to
which the Company is a party in any capacity.
27
"Security Agreement" shall mean a Pledge and Security Agreement
dated as of the Closing Date, in form and substance satisfactory to the
Purchaser, between the Company and the Purchaser.
"Senior Indebtedness" shall mean the principal amount of, premium,
if any, and interest on (i) any Indebtedness of the Company, whether now
outstanding or hereafter created, incurred, assumed or guaranteed, unless
in the instrument creating or evidencing such Indebtedness or pursuant to
which such Indebtedness is outstanding it is provided that such
Indebtedness is subordinate in right of payment or rights upon liquidation
to any other Indebtedness of the Company, and (ii) refundings, renewals,
extensions, modifications, restatements, and increases of any such
Indebtedness. The term "Senior Indebtedness" shall include any and all
Indebtedness and other amounts owing under the Notes.
"Senior Subordinated Indebtedness" shall mean, collectively, the
RISRS, the PENS, the Stanwich Indebtedness, the Xxxxx Replacement Note and
any other Indebtedness of the Company which ranks pari passu with the
RISRS, the PENS and the Stanwich Indebtedness and the Xxxxx Replacement
Note; provided, however, that such other Indebtedness is evidenced or
governed by provisions that are reasonably satisfactory to the Purchaser,
in each case as amended, supplemented, modified, refinanced, renewed,
replaced, restructured or exchanged from time to time in accordance with
Section 8.11(a).
"Servicer" shall mean the Company, as the servicer of Automobile
Contracts, and each successor Servicer.
"Solvent" shall mean, with respect to any Person, that on the date
of determination: (i) the present fair saleable value of the assets of
such Person will exceed the amount that will be required to pay the
probable liability on the existing debts (whether matured or unmatured,
liquidated or unliquidated, absolute, fixed or contingent) of such Person
as they become absolute and matured; (ii) the sum of the debts (whether
matured or unmatured, liquidated or unliquidated, absolute, fixed or
contingent) of such Person will not exceed all of the property of such
Person at a fair valuation; and (iii) the capital of such Person will not
be unreasonably small for such Person to carry on its businesses.
"Spread Accounts" shall mean, with respect to any Securitization
Transaction, the named "Spread Account", together with all other cash
collateral accounts or other escrow or reserve accounts established and
maintained by the trustee for the benefit of the Company, any of its
Subsidiaries, certificate holders and/or the Credit Enhancer.
28
"Stanwich" shall mean Stanwich Financial Services Corp., a Rhode
Island corporation or Stanwich Partners, Inc., a Delaware corporation, as
applicable.
"Stanwich Commitment Note" shall mean the Subordinated Promissory
Note dated September 30, 1999, made by the Company to Stanwich in the
principal amount of $1,500,000.
"Stanwich Debt Documents" shall mean, collectively, all agreements,
instruments and other documents, whether now existing or hereafter entered
into, evidencing or governing any Stanwich Indebtedness, including,
without limitation, (i) the 0000 Xxxxxxxx Notes, (ii) the Stanwich
Replacement Note, (iii) the Xxxxx Replacement Note, (iv) the Stanwich Debt
Restructure Agreement, (v) the Amended Stanwich Subordination Agreement
and (vi) the Stanwich Commitment Note, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
Section 8.11(a).
"Stanwich Debt Restructure Agreement" shall mean a Debt Restructure
Agreement dated as of November 17, 1998, among the Company, Stanwich and
Xxxxx.
"Stanwich Indebtedness" shall mean, collectively, any and all
Indebtedness of the Company or its Subsidiaries or both owing to Stanwich
or any of Stanwich's shareholders, officers, directors, employees or
Affiliates (including, without limitation, Xxxxx, but excluding the
Company and its Subsidiaries), including Indebtedness owing under the
following:
(i) the seven (7) "Partially Convertible Subordinated 9%
Notes" dated June 12, 1997 (the "1997 Stanwich Notes"), issued by
the Company to Stanwich in the aggregate principal amount of
$15,000,000;
(ii) the Stanwich Replacement Note (which, among other things,
supersedes and replaces (A) the Convertible Promissory Note dated
August 13, 1998, issued by the Company to Stanwich in the principal
amount of $500,000, (B) the Convertible Promissory Note dated August
21, 1998, issued by the Company to Stanwich in the principal amount
of $425,000, and (C) the Convertible Promissory Note dated September
2, 1998, issued by the Company to Stanwich in the principal amount
of $3,075,000, all as provided in the Stanwich Debt Restructure
Agreement);
(iii) the Xxxxx Replacement Note; and
(iv) the Stanwich Commitment Note;
29
in each of clauses (i) through (iv) above as amended, supplemented,
modified, refinanced, renewed, replaced, restructured or exchanged from
time to time in accordance with Section 8.11(a).
"Stanwich-Related Agreements" shall mean the Stanwich Debt
Agreements, the Amended Stanwich Registration Rights Agreement, the
Amended Stanwich Subordination Agreement, the Stanwich Termination and
Settlement Agreement and any and all agreements, instruments and documents
executed and delivered in connection therewith or from time to time with
respect to any Stanwich Indebtedness.
"Stanwich Replacement Note" shall mean the Convertible Subordinated
12.5% Note dated November 16, 1998, in the principal amount of $4,000,000,
made payable by the Company in favor of Stanwich.
"Stanwich Termination and Settlement Agreement" shall have the
meaning set forth in Section 5.12(a).
"Subordinated Agreements" shall mean, collectively, the RISRS
Indenture, the PENS Indenture, the Stanwich Debt Documents and all other
agreements, instruments and other documents evidencing or governing any
Indebtedness of the Company or any of its Subsidiaries, whether now
existing or hereafter entered into, that expressly provides that such
Indebtedness is subordinate in right of payment or rights upon liquidation
to any other Indebtedness of the Company, together with any and all
related agreements, instruments and other documents between or among the
Company, any of its Subsidiaries and/or the Subordinated Lenders, in each
case as amended, supplemented or otherwise modified from time to time in
accordance with Section 8.11(a).
"Subordinated Indebtedness" shall mean Indebtedness that is not
Senior Indebtedness, as such Indebtedness may be refinanced, renewed,
replaced, restructured or exchanged from time to time in accordance with
Section 8.11(a).
"Subordinated Lenders" shall mean the lenders of Subordinated
Indebtedness (including, without limitation, Stanwich and Xxxxx).
"Subsidiary" and "Subsidiaries" shall mean, with respect to any
Person, any other Person of which more than fifty percent (50%) of the
total voting power of Capital Stock entitled to vote (without regard to
the occurrence of any contingency) in the election of directors (or other
Persons performing similar functions) are at the time directly or
indirectly owned by such first Person. Unless otherwise indicated, the
term "Subsidiary" refers to a Subsidiary of the Company.
30
"Subsidiary Guarantors" shall mean CPSL, CPS Marketing and any other
Person that is or becomes a "Guarantor" under the Subsidiary Guaranty.
"Subsidiary Guaranty" shall mean a Joint and Several General and
Continuing Guaranty dated as of the Closing Date, in form and substance
satisfactory to the Purchaser, duly executed by the Subsidiary Guarantors.
"Systems" shall have the meaning set forth in Section 3.41.
"Tax" or "Taxes" shall mean any present and future income, excise,
sales, use, stamp or franchise taxes and any other taxes, fees, duties,
levies, withholdings or other charges of any nature whatsoever imposed by
any taxing authority, whether federal, state, local or foreign, together
with any interest and penalties and additions to tax.
"Term A Note" shall have the meaning specified in Section 2.1.
"Term B Note" shall have the meaning set forth in Section 2.3.
"Termination Event" shall mean (i) the Company, any Benefit Plan or
any fiduciary (within the meaning of Section 3(21) of ERISA) of a Benefit
Plan being named as a defendant in a lawsuit filed under ERISA; (ii) the
Internal Revenue Service giving notice that it intends to revoke the
tax-qualified status of any Benefit Plan; (iii) the occurrence of a
"Reportable Event" described in Section 4043 of ERISA with respect to a
Benefit Plan, regardless of whether the PBGC has waived the notice
requirements with respect to such event in its regulations; (iv) the
imposition of liability (whether absolute or contingent) as a result of a
complete or partial withdrawal from a Multiemployer Plan, if any; (v) the
filing of a notice to terminate a Benefit Plan in a distress termination
under Section 4041(c) of ERISA; (vi) the institution of proceedings by the
PBGC to terminate a Benefit Plan or to appoint a trustee pursuant to
Section 4042 of ERISA, or the occurrence of any event or set of
circumstances that might reasonably constitute grounds for the PBGC to do
either; (vii) the restoration of a plan by the PBGC pursuant to Section
4047 of ERISA; or (viii) the Company's withdrawal from a single-employer
plan during the plan year in which it is a substantial employer pursuant
to Section 4063 of ERISA.
"Third Party Intellectual Property Rights" shall have the meaning
specified in Section 3.22(a).
"Trigger Event" shall have the meaning set forth in any agreement
executed in connection with any Securitization Transaction and shall
include any other term or definition having substantially the same meaning
as "Trigger Event" as defined in any Securitization Transaction Documents.
31
"UCC" shall mean the Uniform Commercial Code, as adopted and in
force in the State of California as from time to time in effect, and the
Uniform Commercial Code of any other jurisdiction as required under
Division 9103 of the California Commercial Code.
"USAP Audit" shall mean an audit conducted according to the
requirements and standards set forth in the Uniform Single Attestation
Program promulgated by the Mortgage Bankers Association of America.
"Waiver Agreement" shall mean a Waiver Agreement dated as of the
Closing Date, in form and substance satisfactory to the Purchaser, between
the Company and the Purchaser.
"WareCo" shall mean CPS Warehouse Corp., a Delaware corporation.
"Warrant Shares" shall mean any and all shares of Common Stock
issued or issuable upon exercise of, or otherwise under, any LLCP
Warrants.
"Year 2000 Compliant" shall have the meaning set forth in Section
3.41.
1.2 Independence of Covenants. All covenants and agreements under this
Agreement shall each be given independent effect so that if a particular action
or condition is not permitted by any such covenant, the fact that it would be
permitted by another covenant, by an exception thereto, or be otherwise within
the limitations thereof, shall not avoid the occurrence of a Default or an Event
of Default if such action is taken or condition exists.
1.3 Determinations. Any determination or calculation contemplated by this
Agreement or any Related Agreement that is made by the Purchaser shall be final
and conclusive and binding upon the Company in the absence of manifest error.
2. PURCHASE AND SALE OF TERM A NOTE; AMENDED AND RESTATED NOTE.
2.1 Authorization. The Company has authorized the issuance, sale and
delivery to the Purchaser of a Secured Senior Note Due 2001 in the principal
amount of $16,000,000, in substantially the form of Exhibit A-1 (as the same may
be amended, restated, supplemented, modified, renewed, refinanced or
restructured from time to time, the "Term A Note"). The Indebtedness evidenced
by the Term A Note, including the payment of principal thereof, and all premium,
if any, and interest thereon, shall constitute Senior Indebtedness of the
Company and shall rank pari passu in right of payment and rights upon
liquidation to the Indebtedness evidenced by the Term B Note.
32
2.2 Purchase of Term A Note. Subject to the terms and conditions contained
herein, and in reliance upon the representations, warranties, covenants and
agreements contained herein, at the Closing, the Company shall issue, sell and
deliver to the Purchaser, and the Purchaser shall purchase from the Company, the
Term A Note. The aggregate purchase price to be paid by the Purchaser for the
Term A Note shall be $16,000,000 (the "Purchase Price"), which will be paid in
accordance with Section 2.4.
2.3 Amendment and Restatement. In addition, the Company has authorized the
amendment and restatement of the Amended November 1998 Primary Note and the
April 1999 Note together in one Amended and Restated Secured Senior Note Due
2003 in the principal amount of $30,000,000, in substantially the form of
Exhibit A-2 (as the same may be amended, restated, supplemented, modified,
renewed, refinanced or restructured from time to time, the "Term B Note"). The
Indebtedness evidenced by the Term B Note, including the payment of principal
thereof, and all premium, if any, and interest thereon, shall constitute Senior
Indebtedness of the Company and shall rank pari passu in right of payment and
rights upon liquidation to the Indebtedness evidenced by the Term A Note.
2.4 Closing. The closing (the "Closing") of the issuance, sale and
delivery of the Term A Note, the amendment and restatement of the Amended
November 1998 Primary Note and the April 1999 Note into the Term B Note and the
other transactions contemplated by this Agreement shall take place at the
offices of Xxxxxxx & XxXxxxxx, 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, on the date hereof or as soon as practicable thereafter
immediately following the satisfaction or waiver of the conditions precedent set
forth in Section 5 and Section 6 (such date being the "Closing Date"). At the
Closing, the Company shall deliver to the Purchaser (a) the Term A Note, duly
executed by the Company, against delivery by the Purchaser of the Purchase Price
(net of amounts permitted to be withheld pursuant to Section 11.8) by wire
transfer in immediately available funds to such bank as the Company may request
in writing (which request shall be made in writing at least one (1) Business Day
prior to the Closing Date) for credit to an account designated by the Company in
such request, and (b) the Term B Note in exchange for the surrender of the
Amended November 1998 Primary Note and the April 1999 Note.
2.5 Use of Proceeds. The proceeds to be received by the Company from the
sale of the Term A Note hereunder shall be used solely to (a) pay in full all
ESFR Indebtedness and (b) pay all costs, fees and expenses associated with the
transactions contemplated by this Agreement and the Related Agreements. The
Company acknowledges that it will not receive any proceeds from the amendment
and restatement of the Amended November 1998 Primary Note and the April 1999
Note and issuance of the Term B Note.
33
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents
and warrants to the Purchaser that, except as set forth in the disclosure
schedules (the "Disclosure Schedules"), the following statements are true and
correct as of the date hereof:
3.1 Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California. The Company has all power and authority, and all Licenses and
Permits, necessary to own or lease and operate its properties and assets and to
carry on its business as now being conducted and as proposed to be conducted.
The Company has the requisite power and authority to enter into this Agreement
and each Related Agreement to which it is a party, to issue, sell and deliver
the Term A Note to be issued by it hereunder, to amend and restate the Amended
November 1998 Primary Note and the April 1999 Note into the Term B Note and to
consummate the other transactions contemplated hereby and by the Related
Agreements.
3.2 Subsidiaries.
(a) Schedule 3.2 sets forth a true, correct and complete list of all
direct and indirect Subsidiaries of the Company, setting forth, as to each
Subsidiary, its name, the jurisdiction of its incorporation, the address of its
principal executive offices, the number of outstanding shares of its Capital
Stock and the number of such outstanding shares owned, directly or indirectly,
by the Company. Each Subsidiary is a corporation duly organized, validly
existing and, if applicable, in good standing (other than LINC) under the laws
of the jurisdiction of its incorporation and has all power and authority, and
all Licenses and Permits, necessary to own or lease and operate its properties
and to carry on its business as now conducted and as proposed to be conducted.
LINC does not conduct any business and is inactive. ARC owns or holds no assets,
does not, and will not, conduct any business and is inactive.
(b) All of the outstanding Capital Stock of each Subsidiary has been
duly authorized and is validly issued, fully paid and non-assessable, and is
owned by the Company or its Subsidiaries as specified in Schedule 3.2, in each
case free and clear of any Liens and of any other restrictions (including any
restrictions on the right to vote, sell or otherwise dispose of such Capital
Stock) except as set forth on Schedule 3.2.
3.3 Qualification. The Company and each of its Subsidiaries (other than
LINC) is duly qualified or licensed and in good standing as a "foreign
corporation" duly authorized to do business in each jurisdiction in which the
character of the properties owned or the nature of the activities conducted
makes such qualification or licensing necessary, except where the failure to be
so qualified or licensed could not have a Material Adverse Effect.
34
3.4 Authorization; Binding Obligations. The execution, delivery and
performance by the Company of this Agreement and each of the Related Agreements
by the Company and its Subsidiaries, the issuance, sale and delivery of the Term
A Note, the amendment and restatement of the Amended November 1998 Primary Note
and the April 1999 Note into the Term B Note, the grant of the Liens in favor of
the Purchaser pursuant to the Security Agreement and the other Collateral
Documents and the consummation of the other transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on the part
of the Company or any of its Subsidiaries, as applicable. This Agreement has
been duly executed and delivered by the Company and, at the Closing, each of the
Related Agreements will be duly executed and delivered by the Company or its
Subsidiaries that is a party thereto. This Agreement is, and each Related
Agreement will at the time of the Closing be, a legal, valid and binding
obligation of the Company or its Subsidiaries that is a party thereto,
enforceable against such Person in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or conveyance or similar laws relating to or
limiting creditors' rights generally or by equitable principles relating to
enforceability and except as rights of indemnity or contribution may be limited
by federal or state securities or other laws or the public policy underlying
such laws.
3.5 No Violation; Existing Defaults; Senior Indebtedness.
(a) The execution, delivery and performance by the Company of this
Agreement and each of the Related Agreements by the Company and its
Subsidiaries, the issuance, sale and delivery of the Term A Note, the amendment
and restatement of the Amended November 1998 Primary Note and the April 1999
Note into the Term B Note, the grant of the Liens in favor of the Purchaser
pursuant to the Security Agreement and the other Collateral Documents and the
consummation of the other transactions contemplated hereby and thereby do not
and will not violate or conflict with, or cause a default under, or give rise to
a right of termination under, (i) the charter or bylaws of the Company or any of
its Subsidiaries, as in effect on the date hereof; (ii) any Applicable Laws; or
(iii) any term of any lease, credit agreement, indenture, note, mortgage,
instrument or other agreement to which the Company or any of its Subsidiaries is
a party or by which any of its or their properties or assets are bound.
(b) Except as set forth in Schedule 3.5(b), neither the Company nor
any of its Subsidiaries is in default, breach or violation of (i) its charter or
bylaws, as in effect on the date hereof, (ii) any term of any material lease,
credit agreement, note, instrument or other agreement (including, without
limitation, any agreements executed in connection with any Securitization
Transaction) to which it is a party or by which any of its properties or assets
are bound or (iii) to the best knowledge of the Company, any Applicable Laws.
Without limiting the generality of the foregoing, except as set forth in
Schedule 3.5(b), no "default" or "event of default" has occurred and is
continuing under any agreement, instrument or other document to which the
Company or any of its Subsidiaries is a party which evidences or governs any
Indebtedness of
35
the Company or its Subsidiaries, as the case may be (other than such "defaults"
or "events of default" as have been duly waived by the appropriate Person
pursuant to waivers which are in effect as of the date hereof).
(c) Immediately following the Closing, the Indebtedness evidenced by
the Notes will constitute "Senior Indebtedness" (as such term is defined in the
RISRS Indenture, the PENS Indenture and the Stanwich Debt Documents), and there
will be no agreement, indenture, instrument or other document to which the
Company or any of its Subsidiaries is a party or by which it or they are bound
that requires the subordination in right of payment or rights upon liquidation
of any Obligations to Purchaser to the repayment of any other Indebtedness of
the Company or any of its Subsidiaries.
(d) Except as set forth on Schedule 3.5(d), no Trigger Event has
occurred under any agreement executed in connection with any Securitization
Transaction nor has any Insurance Agreement Event of Default occurred.
(e) There are no contractual or other restrictions or limitations
which prohibit the issuance, sale and delivery by the Company of the Term A
Note, or the issuance and delivery by the Company of the Term B Note, as
contemplated hereunder, prohibit or restrict any merger, sale of assets or other
event which could cause a Change in Control or otherwise prohibit any other
financings by the Company, including, without limitation, any public or private
debt or equity financings.
3.6 Governmental and Other Third Party Consents. Neither the Company nor
any of its Subsidiaries or other Affiliates is required to obtain any Consent in
connection with execution, delivery or performance of this Agreement or any
Related Agreement, the issuance, sale and delivery of the Term A Note, the
amendment and restatement of the Amended November 1998 Primary Note and the
April 1999 Note into the Term B Note or the grant of the Liens in favor of the
Purchaser, or for the purpose of maintaining in full force and effect any
Licenses and Permits, from (a) any Governmental Authority, (b) any trustee,
Credit Enhancer, rating agency or other party to any Securitization Transaction
in connection with the execution and delivery of this Agreement or any Related
Agreement or (c) any other Person, except where the failure to obtain such
consent or maintain any such License or Permit, as the case may be, could not
have a Material Adverse Effect.
3.7 Capitalization.
(a) Schedule 3.7(a) sets forth a true, correct and complete
description of the authorized capital stock of the Company and the number of
shares of each class of Capital Stock that is issued and outstanding as of the
date hereof. As of the date hereof, (i) 20,107,501 shares of Common Stock were
issued and outstanding; (ii) no shares of preferred stock of the Company
36
were issued and outstanding; (iii) 4,200,000 shares of Common Stock were
reserved for issuance under the Company Stock Plans, of which options to
purchase 46,250 shares are available for future grants, options to purchase
1,428,400 shares have been exercised and options to purchase 2,725,350 shares
are outstanding of which options to purchase no shares are exercisable; (iv) an
aggregate of 2,412,228 shares of Common Stock were reserved for issuance upon
conversion of the PENS and the Stanwich Indebtedness; and (e) 1,000 shares of
Common Stock were reserved for issuance upon exercise of the Residual Warrant.
All of the issued and outstanding shares of Capital Stock of the Company have
been duly authorized and are validly issued, fully paid and non-assessable, and
are free and clear of any Liens and other restrictions (including any
restrictions on the right to vote, sell or otherwise dispose of such Capital
Stock but excluding any such restrictions under the Amended and Restated
Investor Rights Agreement) and of any preemptive or other similar rights to
subscribe for or to purchase any such Capital Stock. Except as set forth on
Schedule 3.7(a) (which Schedule sets forth a true, correct and complete
description of, with respect to each security, title, name of the holder or
Person, as applicable, the number of shares of Capital Stock underlying such
security, exercise price, expiration date and percentage of shares of such
Capital Stock on a Fully Diluted Basis), as of the date hereof, there are: (i)
no outstanding Equity Rights; (ii) to the best knowledge of the Company, no
voting trusts or other agreements or undertakings with respect to the voting of
the Capital Stock of the Company; (iii) no obligations or rights (whether fixed
or contingent) on the part of the Company, any of its directors or officers or,
to the best knowledge of the Company, any other Person to purchase, repurchase,
redeem or "put" any outstanding shares of the Capital Stock of the Company or
Equity Rights; and (iv) no agreements to which the Company, any of its directors
or officers or, to the best knowledge of the Company, any other Person is a
party granting any other Person any rights of first offer or first refusal,
registration rights or "drag-along," "tag-along" or similar rights with respect
to any transfer of any Capital Stock of the Company or Equity Rights. All shares
of Capital Stock of the Company and Equity Rights that have been issued by the
Company have been offered, issued and sold in compliance with all applicable
federal and state securities laws.
(b) Schedule 3.7(b) sets forth a true, correct and complete
description of the authorized capital stock of each Subsidiary of the Company
and the number of shares of each class of Capital Stock that is issued and
outstanding as of the date hereof. There are no options, warrants or similar
rights to purchase or otherwise acquire any shares of Capital Stock of any
Subsidiary. All shares of Capital Stock of each Subsidiary that have been issued
have been offered, issued and sold in compliance with all applicable federal and
state securities laws.
(c) No shares of Capital Stock of the Company will become issuable
to any Person (including, without limitation, FSA) pursuant to any
"anti-dilution" or other provisions contained in any issued and outstanding
Equity Rights on account of the issuance of any LLCP Warrants (or the exercise
thereof), the March 2000 LLCP Shares, the March 0000 Xxxxxxxx Shares or the
application of the "anti-dilution" provisions contained in any LLCP Warrant.
37
(d) The Company has not incurred, and should not incur, any charges
to its statement of operations in connection with any repricing, including,
without limitation, that which occurred on or about October 22, 1998, of stock
options issued under the Company Stock Plans.
(e) The March 2000 LLCP Shares have been duly authorized and, when
issued and delivered at or prior to the Closing, will be validly issued, fully
paid and nonassessable and will be issued in compliance with Applicable Laws
(including, without limitation, applicable federal and state securities laws).
(f) Pursuant to the FSA Stock Pledge Agreement, the Company pledged
to FSA, and FSA has a valid first priority security interest in, all of the
Company's right, title and interest in and to the CPSRC Shares as security for
the full and complete performance of all Obligations (as such term is defined
therein).
3.8 Validity and Issuance of Residual Warrant Shares. The Residual Warrant
Shares, when issued, delivered and paid for pursuant to the terms of the
Residual Warrant, will be duly and validly issued, fully paid and nonassessable.
3.9 Transactions with Affiliates.
(a) Except as set forth in Schedule 3.9, during the period
commencing January 1, 1998 and ending December 31, 1999, no shareholder,
employee, officer, director or Affiliate of the Company or any of its
Subsidiaries or, to the best knowledge of the Company, Affiliate of any such
Person, and no member of the Immediate Family of any such Person, has engaged in
any transaction or relationship with the Company or any of its Subsidiaries
involving amounts in excess of $60,000 (other than the payment of compensation
to such Persons in the ordinary course of business).
(b) Except as set forth in Schedule 3.9, since January 1, 1998, no
shareholder, employee, officer, director or Affiliate of the Company or any of
its Subsidiaries or, to the best knowledge of the Company, Affiliate of any such
Person, and no member of the Immediate Family of any such Person, has engaged in
any transaction or relationship with the Company or any of its Subsidiaries
(other than the payment of compensation to such Persons in the ordinary course
of business).
(c) Schedule 3.9 sets forth a true, complete and accurate
description of the terms of each transaction or relationship required to be set
forth on Schedule 3.9.
(d) No Subsidiary of the Company loans or advances funds to any of
its officers, directors, employees or, if any, minority shareholders.
38
(e) This Section 3.9 does not apply to transactions or relationships
involving (i) sales or transfers of Automobile Contracts (or interests therein)
between or among the Company and its Subsidiaries in connection with any
Securitization Transaction (including, without limitation, any warehousing
transaction), (ii) any Investments disclosed on Schedule 3.11(a)(iii) or (iii)
purchases by the Company of Automobile Contracts from CARSUSA, so long as the
terms of such purchases are no less favorable to the Company than those that may
be obtained from unrelated franchised dealers and are negotiated at arm's
length.
3.10 Financial Statements; Disclosure.
(a) The Company has delivered to the Purchaser copies of (i) audited
consolidated balance sheets of the Company and its Subsidiaries as of December
31, 1996, 1997 and 1998, and audited consolidated statements of operations,
shareholders' equity and changes in financial position or cash flows for each of
the three (3) years then ended, together with a report and an unqualified
opinion of KPMG LLP, the Company's independent public accountants, (ii)
unaudited financial statements of the Company and its Subsidiaries consisting of
a balance sheet as of December 31, 1999, and a statement of operations and cash
flows for the twelve (12) month period then ended, and (iii) the "monthly board
packages," including the unaudited financial information contained therein, for
each of the calendar months preceding the calendar month ended February 29, 2000
(the financial statements and information referred to in clauses (i), (ii) and
(iii) being collectively referred to as the "Financial Statements"). The
Financial Statements have been prepared in accordance with GAAP (except that,
with respect to the monthly board packages, the Dealer acquisition fees
reflected in the financial statements included therein have not been accounted
for in accordance with GAAP) and fairly present the consolidated and
consolidating financial position and results of operations of the Company and
its Subsidiaries as of the dates and for the periods indicated therein. Except
as set forth in Schedule 3.10(a), since December 31, 1999, there has not been
any Material Adverse Change.
(b) All financial statements and other financial information not
included in the Financial Statements and previously furnished by or on behalf of
the Company, its Subsidiaries or any of their representatives or agents to the
Purchaser in connection with this Agreement and the transactions contemplated
hereby adequately reflect the financial position and results of operations of
the Company and its Subsidiaries, as applicable, as of the dates and for the
period indicated therein, and do not contain any untrue statement of a material
fact or omit to state any material fact necessary to make the statements herein
or therein contained not misleading.
(c) Neither the Company nor any of its Subsidiaries, nor any of its
or their officers, directors or other Affiliates (i) is contemplating the filing
of a petition under the Bankruptcy Laws, or the liquidation of all or any major
portion of its or their assets or properties, or (ii) is aware of any Person
contemplating the filing of any petition against the Company or any of its
Subsidiaries under the Bankruptcy Laws; provided, however, that the parties
acknowledge
39
that an involuntary petition for bankruptcy under Chapter 7 of the Bankruptcy
Laws was filed against LINC on October 29, 1999, in the United States Bankruptcy
Court for the District of Connecticut (Case Xx. 00 00000 XXXX). Neither the
Company nor any of its Subsidiaries is contemplating changing its business, as
such business is being conducted on the date hereof.
(d) Schedule 3.10(d) sets forth a true, correct and complete copy of
a consolidated balance sheet of the Company and its Subsidiaries as of January
31, 2000, as adjusted to give pro forma effect to the consummation of the
transactions contemplated by this Agreement as if such transactions had occurred
on such date (the "Pro Forma Closing Balance Sheet"), together with footnotes
describing the pro forma adjustments and the assumptions underlying the Pro
Forma Closing Balance Sheet. The Pro Forma Closing Balance Sheet presents fully
and fairly in all material respects the pro forma consolidated financial
position of the Company and its Subsidiaries as of January 31, 2000, and
properly gives effect to the application of the pro forma adjustments described
therein and contemplated herein. All assumptions underlying the Pro Forma
Closing Balance Sheet were made in good faith and are reasonable under the
circumstances.
(e) Neither the Company nor any of its directors or officers is
aware of any fact or circumstance that would cause KPMG LLP, the Company's
independent public accountants, to render a qualified opinion with respect to
the consolidated financial statements of the Company and its Subsidiaries for
the fiscal year ended December 31, 1999.
3.11 Existing Indebtedness; Liens; Investments; Etc.
(a) Schedule 3.11(a) sets forth a true and correct list, and
describes, as of the date or dates indicated therein, as applicable:
(i) all Indebtedness of the Company and its Subsidiaries on a
consolidated basis (collectively,"Existing Indebtedness")
outstanding immediately prior to the Closing Date, showing, as to
each Indebtedness, the payee thereof and the total amount
outstanding (by principal, interest and other amounts, if
applicable);
(ii) (A) all UCC financing statements on file as of the "time
of request" set forth therein, respectively, in the States of
California, Texas and Virginia, naming the Company as a debtor, and
(B) all material pledges and other material Liens on the assets of
the Company for which no UCC financing statement has been filed;
40
(iii) all Investments (other than Investments made under any
pooling and servicing agreement or insurance agreement with respect
to any Securitization Transaction) of the Company and its
Subsidiaries immediately prior to the Closing Date; and
(iv) all Guarantees of the Company and its Subsidiaries
existing immediately prior to the Closing Date.
(b) Immediately following the Closing, the Company and its
Subsidiaries will not have any Indebtedness, whether accrued, absolute,
contingent or otherwise (whether individually or in the aggregate), except for
the Indebtedness set forth on Schedule 3.11(b). Without limiting the generality
of the foregoing, immediately following the Closing, no Indebtedness or other
amounts shall be outstanding under the ESFR Agreement or the ESFR Loan
Documents.
(c) The NAB Loans have been indefeasibly paid in full in cash, and
there is no outstanding indebtedness owing by NAB to the Company or any of its
Subsidiaries or other Affiliates.
(d) There are no amendments to the ESFR Agreement (or any provisions
thereof) other than those referred to in clauses (i) through (iv) of the
definition thereof.
3.12 Certain Changes. Except as set forth on Schedule 3.12 (which shall be
delivered to the Purchaser on March 21, 2000, pursuant to Section 7.21), since
December 31, 1999, there has not been:
(a) any damage or destruction to, or loss of, any asset of the
Company or any of its Subsidiaries, whether or not covered by insurance, which
could have a Material Adverse Effect;
(b) any waiver by the Company or any of its Subsidiaries of a
valuable right or of a material debt owed to it, other than those arising in the
ordinary course of business in connection with the Company's servicing and
collection activities relating to Automobile Contracts;
(c) any satisfaction or discharge of any Lien or payment of any
obligation by the Company or any of its Subsidiaries outside of the ordinary
course of business;
(d) any material change or amendment to any Automobile Contract,
Dealer Agreement or Material Contract by which the Company, any of its
Subsidiaries or any of its or their respective properties or assets is bound or
subject, other than those arising in the ordinary
41
course of business in connection with the Company's servicing and collection
activities relating to Automobile Contracts;
(e) any material adverse change in the assets, liabilities,
condition (financial or otherwise) or operations of the Company or any of its
Subsidiaries;
(f) any change in the Contingent Obligations of the Company or any
of its Subsidiaries, by way of Guarantees or otherwise, outside of the ordinary
course of business;
(g) any declaration or payment of any dividend or other distribution
of assets of the Company to its shareholders, or the adoption or consideration
of any plan or arrangement with respect thereto;
(h) any resignation or termination of the employment of any
director, officer or key employee of the Company or any of its Subsidiaries;
(i) any Investment by the Company or any of its Subsidiaries in the
Capital Stock of any Person (provided that the Company shall not be obligated to
include on Schedule 3.12 the employee loans and advances provided to the
Purchaser pursuant to Section 5.19);
(j) any offer, issuance or sale of any shares of Capital Stock of
the Company or any Equity Rights (other than those issued under the Option
Pool);
(k) any material change in the Company's credit guidelines and
policies, charge-off policies or accounting methods, procedures or policies;
(l) any incurrence of any Indebtedness by the Company or any of its
Subsidiaries;
(m) any agreement or commitment to do any of the foregoing;
(n) any deterioration in the quality of the portfolio of Automobile
Contracts owned by the Company or any of its Subsidiaries; or
(o) any other event or condition of any character which could have a
Material Adverse Effect.
42
3.13 Material Contracts; Automobile Contracts.
(a) Schedule 3.13(a) (which shall be delivered to the Purchaser on
March 21, 2000, pursuant to Section 7.21) sets forth a true and complete list of
all material contracts, agreements, commitments or arrangements, whether oral or
written, of the Company and any of its Subsidiaries, including, without
limitation, all servicing agreements, sub-servicing agreements, leases (whether
real property or personal property), pooling and servicing agreements,
agreements entered into in connection with any Securitization Transaction,
underwriting agreements, dealer affiliation agreements, employment and other
agreements with management, joint venture agreements, partnership agreements,
agreements, instruments and other documents evidencing Indebtedness (including,
without limitation, the ESFR Agreement and the Subordinated Agreements) and all
other material agreements and commitments (including, without limitation, all
agreements, commitments or arrangements involving, in any instance, any
obligation of the Company or any of its Subsidiaries to pay an amount in excess
of $100,000, or the breach or termination of which could have a Material Adverse
Effect) (all such contracts, agreements, commitments and arrangements, whether
entered into prior to, on or after the Closing Date, being collectively referred
to herein as the "Material Contracts").
(b) Each Material Contract is legal, valid, binding and enforceable
against the parties thereto in accordance with its terms and is in full force
and effect as of the date hereof. The Company and its Subsidiaries (as
applicable) and, to the best knowledge of the Company, all third parties to the
Material Contracts are in substantial compliance with the terms thereof, and no
default or event of default by the Company or, to the best knowledge of the
Company, any such third party, exists thereunder which could cause a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries is a party to
any contract, commitment, license, agreement, obligation or arrangement that
restricts it from carrying on its business or any part thereof, or from
competing in any line of business or with any other Person.
(c) Each Automobile Contract arose from the sale or lease of Goods,
was originated by the Company or any of its Subsidiaries, or by a Dealer or
other Person and subsequently purchased by the Company or such Subsidiary, and
is a bona fide and valid deferred payment obligation of the Automobile Contract
Debtor, providing for the retention of a first lien or security interest in the
underlying Goods to secure payment of the obligation evidenced thereby, and is
binding and enforceable against the Automobile Contract Debtor in accordance
with its terms, and neither the Company nor any of its Subsidiaries knows of any
fact which impairs or will impair the validity of any such Automobile Contract,
except where the failure of any Automobile Contracts, individually or in the
aggregate, to be bona fide, valid, binding or enforceable or the impairment of
any Automobile Contracts, individually or in the aggregate, could not have a
Material Adverse Effect. The Automobile Contracts and related Automobile
Security Documents are free of any claim for credit, deduction, discount,
allowance, defense (including the defense of usury), dispute, counterclaim or
setoff which, individually or in
43
the aggregate, could have a Material Adverse Effect. Each Automobile Contract is
free of any Lien in favor of any Person other than the Company. Each Automobile
Contract correctly sets forth the payment terms between the Company and the
Automobile Contract Debtor, including the interest rate applicable thereto,
except where the failure to set forth such terms could not result in a Material
Adverse Effect. Except as set forth in Schedule 3.13(c) (which shall be
delivered to the Purchaser on March 21, 2000, pursuant to Section 7.21), to the
best knowledge of the Company, the signatures of all Automobile Contract Debtors
are genuine and each Automobile Contract Debtor had the legal capacity to enter
into and execute such documents on the date thereof. There is only one original
counterpart of the Automobile Contract executed by the Automobile Contract
Debtor (with the possible exception of one duplicate original counterpart which,
if in existence, is in the Contract Debtor's sole possession).
(d) Schedule 3.13(d) sets forth true and correct portfolio
performance reports.
3.14 Trade Accounts Payable. Except to the extent disputed in good faith
by the Company, all trade accounts payable of the Company and its Subsidiaries
were incurred in the ordinary course of business and are valid. Schedule 3.14
sets forth a true and complete list of all trade accounts payable of the Company
and its Subsidiaries as of a recent date, reflecting agings per trade account
payable in categories of thirty (30), sixty (60), ninety (90) and more than
ninety (90) days after the date of invoice.
3.15 Labor Agreements and Actions. Neither the Company nor any of its
Subsidiaries is bound by or subject to any written or oral, express or implied,
contract, commitment or arrangement with any labor union, and no labor union has
requested or sought to represent any of the employees, representatives or agents
of the Company or any such Subsidiaries. There is no strike or other labor
dispute, including, without limitation, any unfair labor practice, charge or
other proceeding before the National Labor Relations Board, involving the
Company pending or, to the best knowledge of the Company, threatened. Neither
the Company nor any of its Subsidiaries is aware of any labor organization
activity involving the employees of the Company or any of its Subsidiaries, or
of any officer or key employee, or any group of officers or key employees, that
intends to terminate his or her employment with the Company. The Company has no
knowledge of any fact or circumstance which could, with the passage of time or
otherwise, cause this representation and warranty to be no longer true and
correct. Each of the Company and its Subsidiaries is in compliance with all
provisions of the Fair Labor Standards Act and all state wage and hour laws and
all workers compensation laws, except where the failure to be in compliance
could not have a Material Adverse Effect. The Company is not engaged in any
unfair labor practice which has had or could have a Material Adverse Effect.
3.16 Employee Benefit Plans; ERISA. For purposes of this Section 3.16, the
term "Company" shall include any Person that is or would be aggregated with the
Company under Section 414(b), (c), (m), or (o) of the IRC.
44
(a) Schedule 3.16 (which shall be delivered to the Purchaser on
March 21, 2000, pursuant to Section 7.21) sets forth a true, correct and
complete list of:
(i) Each termination or severance agreement involving the
Company or its Subsidiaries, on the one hand, and any of its respective
employees whose annual compensation is at a base rate equal to or
exceeding $60,000, on the other hand;
(ii) All employee benefit plans, as defined in Section 3(3) of
ERISA; and
(iii) All other profit-sharing, bonus, stock option, stock
purchase, stock bonus, restricted stock, stock appreciation right, phantom
stock, vacation pay, holiday pay, tuition reimbursement, scholarship,
severance, dependent care assistance, excess benefit, incentive
compensation, salary continuation, supplemental retirement, employee loan
or loan guarantee program, split dollar, cafeteria plan, and other
compensation arrangements;
in each case maintained or contributed to by the Company for the benefit of its
employees (or former employees) and/or their beneficiaries. All of these types
of arrangements shall be collectively referred to as "Benefit Plans". An
arrangement will not fail to be a Benefit Plan simply because it only covers one
individual, or because the Company's obligations under the plan arise by reason
of its being a "successor employer" under Applicable Laws. Furthermore, a
Voluntary Employees' Beneficiary Association under Section 501(c)(9) of the IRC
will be considered a Benefit Plan for this purpose.
(b) All costs of administering and contributions required to be made
to each Benefit Plan under the terms of that Benefit Plan, ERISA, the IRC,
or any other applicable law have been timely made, and are fully
deductible in the year for which they were paid. All other amounts that
should be accrued to date as liabilities of the Company under or with
respect to each Benefit Plan (including administrative expenses and
incurred but not reported claims) for the current plan year of the plan
have been recorded on the books of the Company. There will be no liability
of the Company (i) with respect to any Benefit Plan that has previously
been terminated or (ii) under any insurance policy or similar arrangement
procured in connection with any Benefit Plan in the nature of a
retroactive rate adjustment, loss sharing arrangement, or other liability
arising wholly or partially out of events occurring before the Closing.
(c) Each Benefit Plan has been operated at all times in accordance
with its terms, and complies currently, and has complied in the past, both in
form and in operation, with all Applicable Laws, including ERISA and the IRC.
The Internal Revenue Service has issued a favorable determination letter with
respect to each Benefit Plan that is intended to qualify under
45
Section 401(a) or 501(c)(9) of the IRC, and no event has occurred (either before
or after the date of the letter) that would disqualify the plan.
(d) The Company does not maintain any plan that provides (or will
provide) medical or death benefits to one or more former employees or
independent contractors (including retirees) following termination of
employment, other than benefits that are required to be provided under COBRA or
any state law continuation coverage or conversion rights. The Company has
complied in all material respects with the continuation coverage requirements of
COBRA.
(e) There are no investigations, proceedings, lawsuits or claims
pending or, to the best knowledge of the Company, threatened relating to any
Benefit Plan.
(f) The Company does not have any intention or commitment, whether
legally binding or not, to create any additional Benefit Plan, or to modify any
existing Benefit Plan so as to increase benefits to participants or the cost of
maintaining the plan. The benefits under all Benefit Plans are as represented,
and have not been, and will not be increased subsequent to the date documents
are provided to the Purchaser except in the ordinary course of business and
consistent with competitive business standards. No statement, either oral or
written, has been made by the Company (or any agent of the Company) to any
Person regarding any Benefit Plan that is not in accordance with the Plan that
could have adverse economic consequences to the Purchaser.
(g) None of the persons performing services for the Company have
been improperly classified as being independent contractors, leased employees,
or as being exempt from the payment of wages for overtime, except where the
improper classification could not result in a Material Adverse Effect.
(h) None of the Benefit Plans provide any benefits that (i) become
payable or become vested solely as a result of the consummation of this
transaction or (ii) would result in excess parachute payments (within the
meaning of Section 280G of the IRC), either (A) solely as a result of the
consummation of this transaction or (B) as a result of the consummation of this
transaction and any actions taken by the Purchaser after the Closing Date.
Furthermore, the consummation of this transaction will not require the funding
(whether formal or informal) of the benefits under any Benefit Plan (e.g.,
contributions to a "rabbi trust").
(i) None of the assets of any Benefit Plan that is a "pension plan"
within the meaning of Section 3(2) of ERISA are invested in a group annuity
contract or other insurance contract that is subject to any surrender charge,
interest rate adjustment, or other similar expense upon its premature
termination.
46
(j) No Benefit Plan has any interest in any annuity contract or
other investment or insurance contract issued by an insurance company that is
the subject of bankruptcy, conservatorship, rehabilitation, or similar
proceeding.
(k) With respect to each Benefit Plan that is subject to Title IV of
ERISA:
(i) No amount is due or owing from the Company to the PBGC,
other than a liability for premiums under Section 4007 of ERISA;
(ii) All premiums have been paid to the PBGC on a timely
basis;
(iii) The value, determined on a termination basis using the
actuarial assumptions stated in the plan, of all accrued and ancillary
benefits (whether or not vested) under each such plan did not exceed, as
of the most recent valuation date, and will not exceed as of the Closing
Date, the then current fair market value of the assets of the plan; and
(iv) No reportable events (within the meaning of Section 4043
of ERISA) have occurred.
(l) In the case of each Benefit Plan that is subject to IRC Section
412, there is no accumulated funding deficiency (within the meaning of IRC
Section 4971), whether or not such deficiency has been waived.
(m) The Company does not contribute to, and is not a participant in,
any Multiemployer Plan.
3.17 Taxes.
(a) The Company and each of its Subsidiaries has filed within the
required time periods (after giving effect to any permitted extensions) all
federal, state and other Tax returns required to have been filed by it or them,
and has paid all Taxes which were due and payable by it or them, prior to the
date hereof, other than (i) Taxes that are being contested in good faith and for
which reserves have been properly established on the Pro Forma Closing Balance
Sheet and the internal consolidated balance sheets of the Company in accordance
with GAAP and (ii) personal property Taxes not to exceed $20,000.
(b) The Company and each of its Subsidiaries has withheld and paid
all Taxes required to be withheld and paid by it or them in connection with
amounts paid or owing to any employee, creditor, shareholder or other third
party.
47
(c) (i) Neither the Company nor any of its Subsidiaries has been
advised that any Tax returns have been or are being audited by any Governmental
Authority; (ii) there are no agreements, waivers or other arrangements providing
for an extension of time with respect to the assessment of any Taxes or
deficiency against the Company or any of its Subsidiaries; (iii) there are no
actions, suits, proceedings or claims now pending by or against the Company or
any of its Subsidiaries in respect of any Taxes or assessments; and (iv) there
is no pending or, to the best knowledge of the Company, threatened audit or
investigation of the Company or any of its Subsidiaries by any Governmental
Authority relating to any Taxes or assessments, or any claims for additional
taxes or assessments asserted by any Governmental Authority.
(d) Neither the Company nor any of its Subsidiaries is a party to or
bound by any tax sharing, tax indemnity or tax allocation agreement or other
similar arrangement.
3.18 Litigation. Except as set forth on Schedule 3.18, and except with
respect to Automobile Contracts, there are no (a) actions, suits, proceedings or
investigations pending or threatened before any Governmental Authority against
or affecting the Company or any of its Subsidiaries or Affiliates or (b) orders,
decrees, judgments, injunctions or rulings of any Governmental Authority against
the Company or any of its Subsidiaries or Affiliates. All claims pending against
the Company or any of its Subsidiaries under or with respect to any Automobile
Contracts not disclosed on Schedule 3.18 do not exceed $500,000 in the
aggregate. Such Schedule sets forth, as to each matter identified therein, the
names of the parties thereto, the forum for such matter, a summary of the
details of the matter, the settlement or other disposition of the matter
(including the monetary value of such settlement or other disposition) or, if
such matter is still pending, a statement to that effect. There is no action,
suit or other proceeding pending or threatened which questions the validity of
this Agreement, the Notes or the other Related Agreements or any action taken or
to be taken pursuant hereto or thereto, or which could, individually or in the
aggregate, have a Material Adverse Effect.
3.19 Governmental Regulation; Margin Stock. Neither the Company nor any of
its Subsidiaries is subject to the Investment Company Act of 1940, as amended,
or to any Applicable Laws limiting its ability to incur Indebtedness or to
create Liens on any of its properties or assets to secure such Indebtedness.
Neither the Company nor any of its Subsidiaries is engaged principally, or as
one of its important activities, in the business of extending credit for the
purposes of purchasing or carrying Margin Stock. The value of all Margin Stock
held by the Company and its Subsidiaries constitutes less than 5.0% of the
value, as determined in accordance with the Margin Regulations, of all assets of
the Company and its Subsidiaries.
48
3.20 Compliance with Laws; Licenses and Permits. The Company and each of
its Subsidiaries is in compliance with all Applicable Laws, except to the extent
that non-compliance could not reasonably be expected to have a Material Adverse
Effect. Without limiting the generality of the foregoing, each of the Company,
its Subsidiaries and its or their employees, agents and other representatives is
in compliance with the Foreign Corrupt Practices Act of 1977, as amended (15
U.S.C. ss.78dd-2 et seq.). Schedule 3.20 (which shall be delivered to the
Purchaser on March 21, 2000, pursuant to Section 7.21) sets forth a true,
correct and complete list of all material Licenses and Permits held by the
Company and each of its Subsidiaries in connection with the ownership of its or
their assets or the conduct of its or their businesses (which Schedules shall
set forth, with respect to each License and Permit, its name, the issuing
Person, the date it was issued and the date of expiration), and such Licenses
and Permits constitute all of the Licenses and Permits required under Applicable
Laws to own their respective assets or conduct their respective businesses as
now conducted and as proposed to be conducted. All of the Licenses and Permits
are validly issued and in full force and effect, and the Company and its
Subsidiaries have fulfilled and performed in all material respects their
obligations with respect thereto and have full power and authority to operate
thereunder.
3.21 Title to Properties and Assets; Liens. Each of the Company and its
Subsidiaries has good and marketable title to all of its properties and assets
(including, without limitation, all shares of Capital Stock owned or held by
it), and none of such properties or assets is subject to any Liens except for
the Existing Liens and the Permitted Liens. Each of the Company and its
Subsidiaries enjoys quiet possession under all leases to which they are parties
as lessees, and all of such leases are valid, subsisting and in full force and
effect. None of such leases contains any provision restricting the incurrence of
indebtedness by the lessee or any unusual or burdensome provision materially
adversely affecting the current and proposed operations of the Company and its
Subsidiaries. Neither LINC nor Samco has any material assets, properties or
operations.
3.22 Intellectual Property.
(a) Each of the Company and its Subsidiaries owns, or is licensed or
otherwise possesses legally enforceable rights to use, all Intellectual Property
that is used in the conduct of its business as currently conducted and as
proposed to be conducted, except where the failure to own, license or possess
the same could not have a Material Adverse Effect. Schedule 3.22 (which shall be
delivered to the Purchaser on March 21, 2000, pursuant to Section 7.21) lists
(i) all patents, patent applications, trademarks, servicemarks, trademark and
servicemark applications, copyrights, trade names and domain names owned or held
by the Company or any of its Subsidiaries and used in the conduct of its or
their businesses, including the jurisdictions in which each such Intellectual
Property right has been issued or registered or in which any such application
for such issuance or registration has been filed; (ii) all material written
licenses, sublicenses and other agreements to which the Company or any of its
Subsidiaries is a party and pursuant to which any Person (other than employees
of the Company
49
in the course of their employment) is authorized to use any such Intellectual
Property rights; and (iii) all material written licenses, sublicenses and other
agreements to which the Company or any of its Subsidiaries is a party and
pursuant to which the Company or any of its Subsidiaries is authorized to use
any third party patents, trademarks or copyrights, including computer software
which are used in the businesses of the Company or the Subsidiaries or which
form a part of any product or service of the Company or its Subsidiaries ("Third
Party Intellectual Property Rights"), all of which are in full force and effect.
The Company has made available to the Purchaser correct and complete copies of
all such patents, registrations, applications, licenses and agreements and
related documentation, all as amended to date. Neither the Company nor any of
its Subsidiaries has agreed to indemnify any Person for or against any
infringement, misappropriation or other conflict with respect to any item of
Intellectual Property that the Company owns or uses. Neither the Company nor any
of its Subsidiaries is a party to any oral license, sublicense or agreement
which, if reduced to written form, would be required to be listed in Schedule
3.22 under the terms of this Section 3.22.
(b) Neither the Company nor any of its Subsidiaries will be, as a
result of the execution and delivery of this Agreement or the performance of the
Company's obligations under this Agreement, in breach of any license, sublicense
or other agreement relating to the Intellectual Property or Third Party
Intellectual Property Rights.
(c) Neither the Company nor any of its Subsidiaries has been named
in any suit, action or other proceeding which involves a claim of infringement
of any Intellectual Property rights of any third party. Except as disclosed in
Schedule 3.22, the performance of the services offered by the Company and its
Subsidiaries do not infringe on any Intellectual Property right of any other
Person, and to the best knowledge of the Company, the Intellectual Property
rights of the Company and its Subsidiaries are not being infringed by
activities, products or services of any third party.
3.23 Brokers; Certain Expenses. Neither the Company nor any of its
Subsidiaries has paid or is obligated to pay any fee or commission to any
broker, finder, investment banker or other intermediary in connection with this
Agreement, any Related Agreement or any of the transactions contemplated hereby
or thereby. Neither the Company nor any of its Subsidiaries is bound by any
agreement or commitment for the provision of investment banking or financial
advisory services with respect to any proposed recapitalization, issuance of
debt or equity securities or other transactions involving the Company or any of
its Subsidiaries or the provision of any other investment banking or financial
advisory services to the Company or any of its Subsidiaries.
3.24 Real Property Leases. Schedule 3.24 (which shall be delivered to the
Purchaser on March 21, 2000, pursuant to Section 7.21) sets forth a true and
complete list of all real property leases, subleases and licenses pursuant to
which the Company or any of its Subsidiaries
50
is a lessor, lessee, sublessor, sublessee, licensor or licensee of real
property, including the term thereof, any extension and renewal options, and the
rent payable thereunder. The Company has delivered to the Purchaser correct and
complete copies of the same (as amended to date). With respect to each such
lease, sublease and license, except as set forth on Schedule 3.24:
(a) Such lease, sublease and license is legal, valid, binding and
enforceable against the parties thereto;
(b) no party thereto is in breach or default, and no event has
occurred which, with notice or lapse of time, would constitute a breach or
default or permit termination, modification, or acceleration thereunder;
(c) there are no disputes, oral agreements or forbearance programs
in effect;
(d) neither the Company nor any of its Subsidiaries, as the case may
be, has assigned, transferred, conveyed, mortgaged, deeded in trust or
encumbered any interest therein; and
(e) All parking lots located on any real property subject thereto
are in compliance with Applicable Laws, including, without limitation, zoning
requirements.
3.25 Powers of Attorney. There are no outstanding powers of attorney
granted by or on behalf of the Company or any of its Subsidiaries, other than
powers of attorney granted to (a) purchasers of Automobile Contracts from the
Company in order to assign or transfer such Contracts to third parties and (b)
Persons who repossess Financed Vehicles in order to convey title thereto to
third parties.
3.26 Insurance. Schedule 3.26 sets forth a true and complete list of all
liability and other insurance policies insuring the Company and its Subsidiaries
against losses arising out of or related to the businesses of the Company and
its Subsidiaries (and accurately describes the coverage carried and expiration
dates of such policies) and all key man life insurance policies owned or
maintained by the Company (including, without limitation, the directors and
officers liability insurance and key man life insurance policy on the life of
Xxxxxxx X. Xxxxxxx, Xx. required to be maintained under Section 7.6). Each of
the Company and its Subsidiaries is covered by insurance in scope and amount
customary and reasonable for the businesses in which it is engaged and will be
so covered after consummation of the transactions contemplated hereby. The
insurance policies listed on Schedule 3.26 constitute insurance protection
against all liability, claims and risks occurring in the ordinary course of
business customarily included within comprehensive liability coverage and at
amounts and levels customarily maintained for a business of this type. All such
policies are in full force and effect.
51
3.27 Books and Records. The minute books and other similar records of the
Company and its Subsidiaries contain true and complete records of all actions
taken at any meetings of the Board of Directors of the Company or any committees
thereof and shareholders of the Company and its Subsidiaries and of all written
consents executed in lieu of the holding of any such meetings. The books and
records of the Company accurately reflect in all respects the assets,
liabilities, business, financial condition and results of operations of the
Company and have been maintained in accordance with good business, accounting
and bookkeeping practices.
3.28 Dealers. Schedule 3.28 (which shall be delivered to the Purchaser on
March 21, 2000, pursuant to Section 7.21) sets forth a true and complete list of
all Dealers as of the date hereof. No Dealer accounts for more than five percent
(5.0%) of the aggregate Amount Financed under Automobile Contracts purchased by
the Company during the calendar year ended December 31, 1999.
3.29 Personal Property Leases. Schedule 3.29 (which shall be delivered to
the Purchaser on March 21, 2000, pursuant to Section 7.21) sets forth a true and
complete list and description of all agreements (or group of related agreements)
for the lease of personal property requiring payments by the Company or its
Subsidiaries over the remaining life of the lease of $10,000 or more. Neither
the Company nor any of its Subsidiaries has breached any agreement pertaining
to, is in default with respect to, or is overdue in payment of, any amounts
owing under any agreement for the lease of real property, except where any such
breach (or breaches) or default (or defaults), individually or in the aggregate,
could not have a Material Adverse Effect. No such lease agreement contains any
provisions which restrict or prohibit (a) the issuance and sale of the Term A
Note or the amendment and restatement of the Amended November 1998 Primary Note
or the April 1999 Note into the Term B Note, (b) any other financings by the
Company or any Subsidiaries, including, without limitation any public or private
debt or equity financings or (c) other than ordinary restrictions on assignment,
any merger, sale of assets or other event which could cause a Change in Control.
3.30 Employment and Agency Agreements. Schedule 3.30 sets forth a true and
complete list of all employment, agency, independent contractor or sales
representative agreements, compensation agreements, golden parachute agreements
and non-competition or non-solicitation agreements to which the Company or any
of its Subsidiaries is a party, true and complete copies of which have been
provided to the Purchaser. Each such agreement is in writing, is a valid and
binding agreement enforceable in accordance with its terms, and no party to any
such agreement is in breach of, or in default with respect to, its obligations
under such agreement nor is the Company or any of its Subsidiaries aware of any
facts or circumstances which might give rise to a breach or default thereunder.
3.31 Solvency. Each of the Company and its Subsidiaries (other than LINC
and Samco) is, and immediately following the consummation of the transactions
contemplated by
52
this Agreement each of the Company and its Subsidiaries (other than LINC and
Samco) will be, Solvent. Neither the Company nor any of its Subsidiaries will,
by virtue of the consummation of the transactions contemplated hereby and by the
Related Agreements, incur debts that will be beyond its ability to pay as they
mature. No transfer of property is being made and no obligation is being
incurred in connection with the transactions contemplated by this Agreement and
the Related Agreements with the intent to hinder, delay or defraud either
present or future creditors of the Company or its Subsidiaries.
3.32 Environmental Matters. Neither the Company nor any of its
Subsidiaries has ever caused or permitted any Hazardous Materials to be disposed
of on or under any Real Property, and no Real Property has ever been used (by
the Company and/or any Subsidiary or, to the best knowledge of the Company, by
any other Person) as (a) a disposal site or permanent storage site for any
Hazardous Materials or (b) a temporary storage site for any Hazardous Materials.
Each of the Company or its Subsidiaries has been issued and is in compliance
with all material Licenses and Permits relating to environmental matters and
necessary or desirable for its business, and has filed all notifications and
reports relating to chemical substances, air emissions, underground storage
tanks, effluent discharges and Hazardous Materials waste storage, treatment and
disposal required in connection with the operation of its businesses, the
failure to have or comply with which, individually or in the aggregate, has had
or could have a Material Adverse Effect. All Hazardous Materials used or
generated by the Company or any of its Subsidiaries or any business merged into
or otherwise acquired by the Company or any of its Subsidiaries have been
generated, accumulated, stored, transported, treated, recycled and disposed of
in compliance with all Environmental Laws, the violation of which has any
reasonable likelihood of having a Material Adverse Effect. Neither the Company
nor any of its Subsidiaries has any liabilities with respect to Hazardous
Materials, and to the best knowledge of the Company, no facts or circumstances
exist which could give rise to liabilities with respect to the violation
(whether by the Company or any other Person) of any Environmental Laws and/or
Hazardous Materials which could have any Material Adverse Effect.
3.33 Public Holding Company; Investment Company. Neither the Company nor
any of its Subsidiaries is a "holding company" or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended. The Company is not an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
3.34 Depository and Other Accounts. Schedule 3.34 sets forth a true and
complete list of all banks and other financial institutions and depositories at
which the Company or any of its Subsidiaries maintains (or has caused to be
maintained) deposit accounts, spread accounts, yield supplement reserve
accounts, operating accounts, trust accounts, trust receivable accounts or other
accounts of any kind or nature into which funds of the Company or any of its
Subsidiaries
53
(including funds in which the Company maintain a contingent or residual
interest) is deposited from time to time. Such Schedule 3.34 correctly
identifies the name and address of each depository, the name in which each
account is held, the purpose of the account, the account number, the contact
person at such depository and his or her telephone number. The Company will from
time to time notify the Purchaser and supplement Schedule 3.34 as new accounts
are established within two (2) Business Days thereof.
3.35 Tax Status of Securitization Transactions. None of the trusts created
by or on behalf of the Company in connection with any Securitization Transaction
is, or will be, classified as an association taxable as a corporation under the
IRC or is, or will be, otherwise taxable as a separate entity for federal income
tax purposes.
3.36 Burdensome Obligations; Future Expenditures. Neither the Company nor
any of its Subsidiaries is a party to or bound by any agreement or contract
(including, without limitation, the Material Contracts listed on Schedule
3.13(a)), instrument, deed or lease or is subject to any charter, bylaw or other
restriction, commitment or requirement which, in the opinion of its management,
is so unusual or burdensome that in the foreseeable future it could have, or
cause or create a material risk of having or causing, a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries anticipates that the future
expenditures, if any, by the Company and its Subsidiaries needed to meet the
provisions of any Applicable Laws will be so burdensome as to have or cause, or
create a material risk of having or causing, a Material Adverse Effect.
3.37 FSA Indebtedness and Liabilities. None of the Company, any of its
Subsidiaries or any trust maintained in connection with any Securitization
Transaction occurring prior to the Closing Date has any Indebtedness owing to
FSA (or any Affiliate of FSA) pursuant to any agreement, commitment or
arrangement to which FSA (or any such Affiliate) is a party, other than
Indebtedness incurred in connection with such Securitization Transaction of the
type which the Company believes is customarily incurred in connection with
similar securitization transactions insured by similarly situated Credit
Enhancers, the assets of which consist solely of Automobile Contracts.
3.38 [Intentionally Omitted.]
3.39 Company SEC Documents; Undisclosed Liabilities.
(a) The Company has timely filed all Company SEC Documents which
were required to be filed by it with the SEC and the Nasdaq and the NYSE since
December 31, 1996. Schedule 3.39 sets forth a true, complete and correct list of
all Company SEC Documents required to be filed by the Company since December 31,
1998, the respective dates on which they were filed and a notation to the
effect, if true, that such filing was late.
54
(b) As of their respective dates, the Company SEC Documents complied
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and none of the Company SEC Documents, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the Company SEC Documents complied as to
form, as of their respective dates of filing with the SEC, in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, were prepared in accordance with
GAAP (except, in the case of unaudited statements, as permitted by Form 10-Q and
the SEC) applied on a consistent basis during the periods involved and fairly
present the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Such financial
statements reflect appropriate reserves established for all Automobile Contracts
and general ledger accounts in accordance with GAAP.
3.40 Listing of Common Stock. The Common Stock is listed for trading
solely on the Nasdaq. Except for the RISRS and the PENS which are listed for
trading on the NYSE, no Capital Stock or other securities of the Company or any
of its Subsidiaries are listed for trading on any other securities exchange or
on Nasdaq.
3.41 Year 2000 Compliant. All devices, systems, machinery, information
technology, computer software and hardware and other data sensitive technology
necessary for the Company and its Subsidiaries to carry on its or their
businesses as presently conducted and as contemplated to be conducted in the
future (individually and collectively, the "Systems") are Year 2000 Compliant.
For purposes of this Agreement, the term "Year 2000 Compliant" shall mean that
such Systems are designed to be used prior to, during and after the Gregorian
calendar year 2000 A.D. and will operate during each such time period without
error relating to date data, specifically including any error relating to, or
the product of, date data which represents or references different centuries or
more than one century.
3.42 Stanwich-Related Matters.
(a) On or about September 30, 0000, Xxxxxxxx purchased from the
Company for cash the Stanwich Commitment Note. Since November 17, 1998 (and
except as contemplated by the Waiver Agreement), the Company has not issued to
Stanwich (or any of its Affiliates) any Stanwich Commitment Warrants (as such
term is defined in the Investment and Settlement Agreement) or any other
options, warrants or other rights to purchase Common Stock, whether in
connection with the purchase by Stanwich of the Stanwich Commitment Note or
otherwise.
55
(b) Other than the Stanwich Indebtedness, no Indebtedness or other
amounts are due or payable by the Company to Stanwich or any of Stanwich's
shareholders, officers, directors, employees or Affiliates (other than the
Company and its Subsidiaries). The definition of Stanwich Debt Documents lists
all presently existing agreements, instruments or other documents representing
or evidencing any obligation of the Company to pay to Stanwich or any of its
Affiliates any Indebtedness or other amounts.
(c) The Stanwich Consulting Agreement dated February 14, 1996,
between the Company and Stanwich, has been effectively terminated, and no
amounts are owed by the Company or any of its Subsidiaries thereunder.
(d) The Company has fully performed its obligations under Section
6.10 of the April 1999 Securities Purchase Agreement.
3.43 Disclosure. After due inquiry of the directors, executive officers
and employees of the Company having knowledge of the matters represented,
warranted or stated herein, no representation, warranty or other statement made
by or on behalf of the Company, its Subsidiaries or its or their respective
representatives and agents to the Purchaser, whether written or oral, whether
included in any materials provided to the Purchaser prior to the date hereof or
included in this Agreement or any Related Agreement or in any Exhibit or
Schedule or in any other document or instrument delivered at any time prior to
the Closing, is, or will be, untrue with respect to any material fact or omits,
or will omit, to state a material fact necessary in order to make the statement
made herein or therein, in light of the circumstances in which such statement
was made, not misleading. The information contained in each of the management
questionnaires completed by certain officers and directors of the Company and
delivered to the Purchaser in connection with the consummation of the
transactions contemplated by the Amended November 1998 Securities Purchase
Agreement is true and correct.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser hereby
represents and warrants to the Company that the following statements are true
and complete as of the date hereof:
4.1 Organization and Good Standing. The Purchaser is a limited partnership
formed and validly existing under the laws of the State of California, and has
all requisite power and authority to enter into this Agreement and each Related
Agreement to which it is a party and to consummate the transactions contemplated
hereby and thereby.
4.2 Authorization. The execution, delivery and performance of this
Agreement and of each of the Related Agreements to which the Purchaser is a
party, and the consummation of the transactions contemplated hereby and thereby
have been duly authorized by all necessary action on the part of the Purchaser.
56
4.3 Due Execution and Delivery; Binding Obligations. This Agreement has
been duly executed and delivered by the Purchaser. This Agreement is, and at the
time of the Closing each Related Agreement to which the Purchaser is a party
will be, a legal, valid and binding obligation of the Purchaser, enforceable
against the Purchaser in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or conveyance or similar laws relating to or limiting creditors' rights
generally or by equitable principles relating to enforceability and except as
rights of indemnity or contribution may be limited by federal or state
securities or other laws or the public policy underlying such laws.
4.4 No Violation. The execution, delivery and performance by the Purchaser
of this Agreement and each Related Agreement to which the Purchaser is a party,
and the consummation of the transactions contemplated hereby, do not violate (a)
the limited partnership agreement of the Purchaser as in effect on the date
hereof, (b) any law, statute, rule or regulation applicable to the Purchaser,
(c) any order, ruling, judgment or decree of any Governmental Authority binding
on the Purchaser or (d) any term of any material indenture, mortgage, lease,
agreement or instrument to which the Purchaser is a party.
4.5 Investment Intent. The Purchaser is acquiring the Term A Note for its
own account, for investment purposes, and not with a view to or for sale in
connection with any distribution thereof. The Purchaser understands that the
Term A Note has not been registered under the Securities Act or registered or
qualified under any state securities law in reliance upon specific exemptions
therefrom, which exemptions may depend upon, among other things, the bona fide
nature of the Purchaser's investment intent as expressed herein.
4.6 Accredited Investor Status. The Purchaser is an "accredited investor"
(as such term is defined in Rule 501 of Regulation D under the Securities Act).
By reason of its business and financial experience, the Purchaser has such
knowledge, sophistication and experience in business and financial matters so as
to be capable of evaluating the merits and risks of the investment in the Term A
Note, has the capacity to protect its own interests and is able to bear the
economic risk of such investment. The Purchaser has had an opportunity to review
the books and records of the Company and to ask questions of representatives of
the Company concerning the terms and conditions of the transactions contemplated
by this Agreement.
4.7 Purchaser Consents. The execution and delivery by the Purchaser of
this Agreement and each of the Related Agreements to which it is a party, and
the consummation by the Purchaser of the transactions contemplated hereby, do
not and will not require the Consent of any Governmental Authority or any other
Person, other than Consents that have already been obtained or made.
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4.8 Brokers. Neither the Purchaser nor any of its Affiliates has paid or
is obligated to pay any fee or commission to any broker, finder, investment
banker or other intermediary in connection with this Agreement, any Related
Agreement or any of the transactions contemplated hereby or thereby.
5. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER. The obligation of the
Purchaser to consummate the transactions contemplated hereby, including, without
limitation, to purchase , is subject to the satisfaction, prior to or at the
Closing, of the conditions set forth in this Section 5; provided, however, that
any or all of such conditions may be waived, in whole or in part, by the
Purchaser in its sole and absolute discretion:
5.1 Representations and Warranties; No Default. Each of the
representations and warranties made by the Company contained in this Agreement
shall be true and correct in all material respects as of the date made, and
shall be true and correct in all material respects as of the Closing Date, with
the same effect as if made on and as of the Closing Date; each of the covenants,
agreements and obligations of the Company under this Agreement to be performed
or satisfied by it or them on or prior to the Closing Date shall have been
performed or satisfied by it or them on or before the date hereof; and no
Default or Event of Default shall exist or result from the issuance and sale of
the Term A Note or the other transactions contemplated by this Agreement. The
Company shall have delivered to the Purchaser an officers' certificate, signed
by the President and Chief Executive Officer and the Chief Financial Officer of
the Company, dated as of the Closing Date, to such effect and to the effect that
each of the other conditions set forth in this Section 5 has been satisfied and
fulfilled.
5.2 Closing and Other Fees. The Company shall have paid to the Purchaser,
by wire transfer in immediately available funds to a bank account designated by
the Purchaser, a non- refundable, non-accountable closing fee of $325,000 (which
closing fee may be withheld by the Purchaser from the proceeds of the Term A
Note and which withholding shall constitute payment in full of the Company's
obligation with respect to such closing fee).
5.3 Payment of Accrued Interest. The Company shall have paid to the
Purchaser, by wire transfer in immediately available funds to a bank account
designated by the Purchaser, all interest on the Amended November 1998 Primary
Note and the April 1999 Note that has accrued through and including the Closing
Date and remains unpaid, including, without limitation, all Accrued Default
Interest (as such term is defined in Section 2.3 of the Waiver Agreement).
5.4 Reimbursement of Fees and Expenses. The Company shall have paid
directly to LLCP's attorneys, by wire transfer in immediately available funds to
a bank account designated by its attorneys, all attorneys' fees and expenses
incurred by or on behalf of LLCP in connection with the administration, exercise
and enforcement of LLCP's rights, powers and remedies against
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the Company through the date of the Closing Date and the preparation,
negotiation, execution and delivery of this Agreement and the Related
Agreements.
5.5 Purchase Permitted By Applicable Laws. The consummation of the
transactions contemplated by this Agreement shall not be prohibited by or
violate any Applicable Laws and shall not subject any party to any Tax, penalty
or liability, under or pursuant to any Applicable Laws. Without limiting the
generality of the foregoing, the consummation of the transactions contemplated
hereby shall otherwise comply with all applicable requirements of federal
securities and state securities or "blue sky" laws.
5.6 No Material Adverse Changes. Since December 31, 1999, there shall not
have occurred any Material Adverse Change.
5.7 No Injunction or Order. There shall not have been issued any
injunction, order, decree or ruling that prohibits or limits any of the
transactions contemplated by this Agreement or the Related Agreements, and there
shall not be any action, suit, proceeding or investigation pending or, to the
best knowledge of the Company, threatened against the Company that (a) draws
into question the validity, legality or enforceability of this Agreement or the
Related Agreements or the consummation of the transactions contemplated hereby
or thereby or (b) might result, in the judgment of the Purchaser, in the
imposition of a penalty if the Term A Note were delivered as contemplated
hereunder or in any Material Adverse Change.
5.8 Opinions of Counsel. The Purchaser shall have received the following:
(a) an opinion letter of Xxxx & Xxxxx, special counsel to the Company, dated the
Closing Date and addressed to the Purchaser, in form and substance satisfactory
to the Purchaser and its legal counsel, and (b) an opinion letter of Xxxx
Xxxxxxxx, Esq., General Counsel to the Company, dated the Closing Date and
addressed to the Purchaser, in form and substance satisfactory to the Purchaser
and its legal counsel.
5.9 Delivery of Certain Closing Documents. The Company shall have
delivered to the Purchaser the following closing documents, each dated as of the
Closing Date:
(a) This Agreement, duly executed by the Company, together with the
Disclosure Schedules;
(b) The Term A Note, duly executed by the Company;
(c) The Term B Note, duly executed by the Company;
(d) The Amended and Restated Registration Rights Agreement, duly
executed by the Company;
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(e) The Amended and Restated Investor Rights Agreement, duly
executed by the Company, Xxxxxxx X. Xxxxxxx, Xx. and Xxxxxxx X. Xxxxxxx, Xx.,
and acknowledged by Xxxxxxx X. Xxxxx;
(f) The Subsidiary Guaranty, duly executed by the Subsidiary
Guarantors;
(g) The Waiver Agreement, duly executed by the Company; and
(h) Such other documents as the Purchaser may request.
5.10 Collateral Documents. The Company shall have delivered to the
Purchaser at or prior to the Closing the following collateral documents, each
dated as of the Closing Date:
(a) The Security Agreement, duly executed by the Company, together
with the exhibits and schedules thereto;
(b) UCC-1 financing statements, naming the Company as debtor, as
applicable, duly executed by the Company as requested by the Purchaser;
(c) Original certificates representing or evidencing the Pledged
Stock (as such term is defined in the Security Agreement), together with stock
powers duly executed by the Company in blank;
(d) Notices of Security Interests in Deposit Accounts, in form and
substance satisfactory to the Purchaser, duly executed by the Company with
respect to such banks and other financial institutions as designated by the
Purchaser;
(e) UCC perfection certificate, in form and substance satisfactory
to the Purchaser, duly executed by the Company; and
(f) Such other documents relating to the Collateral as the Purchaser
may request.
5.11 Issuance of March 2000 LLCP Shares. The Company shall have duly
issued and delivered to LLCP a certificate, registered in the name of the
Purchaser, representing the March 2000 LLCP Shares to be issued to LLCP pursuant
to Section 2.1 of the Waiver Agreement.
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5.12 Stanwich-Related Transactions.
(a) Stanwich shall have delivered to the Purchaser at or prior to
the Closing the following closing documents:
(i) A second amendment to the Original Stanwich Subordination
Agreement dated as of the Closing Date, duly executed by Stanwich, Xxxxx
and the Company;
(ii) A first amendment to the Stanwich Registration Rights
Agreement dated as of the Closing Date, in form and substance satisfactory
to the Purchaser, duly executed by the Company and Stanwich;
(iii) A Termination and Settlement Agreement with respect to
Investment and Guaranty Agreement dated as of the Closing Date, in form
and substance satisfactory to the Purchaser (the "Stanwich Termination and
Settlement Agreement"), duly executed by the Company and each Guarantor
(as such term is defined in the Investment and Guaranty Agreement);
(iv) A copy of the Stanwich Commitment Note; and
(v) A Secretary's Certificate of Stanwich, in form and
substance satisfactory to the Purchaser, dated as of the Closing Date and
duly executed by the Secretary of the Company.
(b) Stanwich, for itself and on behalf of the other Guarantors,
shall have paid to LLCP, by wire transfer in immediately available funds to a
bank account designated by LLCP, a non-refundable, non-accountable waiver fee in
the amount of $150,000, which waiver fee shall be deemed fully earned as of the
date of this Agreement.
(c) Stanwich, for itself and on behalf of the other Guarantors,
shall have paid directly to LLCP's attorneys, by wire transfer in immediately
available funds to a bank account designated by LLCP, all attorneys' fees and
expenses incurred by or on behalf of LLCP in connection with the administration,
exercise and enforcement of LLCP's rights, powers and remedies against the
Guarantors through the date of this Agreement and the preparation, negotiation,
execution and delivery of this Agreement and the other agreements, instruments
and other documents contemplated hereby to which the Guarantors (or any
Guarantor) is a party or is otherwise bound.
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(d) The Company and the Guarantors shall have delivered to the
Purchaser a closing certificate, dated as of the Closing Date and in form and
substance satisfactory to the Purchaser, duly signed by the President and Chief
Financial Officer of the Company, the President of Stanwich and each other
Guarantor, to the effect that all of the representations and warranties made by
the Company and the Guarantors in the Stanwich Termination and Settlement
Agreement shall be true and correct in all material respects as of the date made
and are true and correct in all material respects on and as of the Closing Date,
with the same effect as if such representations and warranties were made on and
as of the Closing Date.
5.13 Delivery of Company Corporate Documents. The Company shall have
delivered to the Purchaser at or prior to the Closing the following corporate
documents with respect to the Company:
(a) Certified copies of its charter or similar organizational
documents as amended through the Closing Date, certified by its Secretary as
being in full force and effect as of the Closing Date;
(b) A good standing certificate and, if available, a good standing
tax certificate, issued by the Secretary of State of the State of California and
the Franchise Tax Board, in each case dated as of a recent practicable date
prior to the Closing Date;
(c) Foreign good standing certificates from each jurisdiction in
which it is required to be qualified to transact business as a foreign
corporation or other entity, in each case dated as of a recent practicable date
prior to the Closing Date;
(d) Copies of its bylaws or similar governing document as amended
through the Closing Date, certified by its Secretary as being in full force and
effect as of the Closing Date;
(e) Resolutions of its Board of Directors approving and authorizing
the execution and delivery of this Agreement, the Notes and the other Related
Agreements to which it is a party and the consummation of the transactions
contemplated thereby, including, without limitation, the issuance and delivery
of the March 2000 LLCP Shares and payment of the Accrued Default Interest,
certified by its Secretary as being in full force and effect as of the Closing
Date;
(f) Incumbency certificates of its officers who are authorized to
execute, deliver and perform this Agreement, the Related Agreements and any
other agreements, instruments, certificate or other documents required to be
executed by it in connection herewith; and
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(g) Such other documents as the Purchaser may request.
5.14 Delivery of Subsidiary Corporate Documents. The Company shall have
delivered to the Purchaser at or prior to the Closing the following corporate
documents with respect to each Subsidiary:
(a) Certified copies of its charter or similar organizational
documents as amended through the Closing Date, certified by its Secretary as
being in full force and effect as of the Closing Date;
(b) A good standing certificate and, if available, a good standing
tax certificate, issued by the Secretary of State of its jurisdiction of
incorporation and the state taxing authority of such jurisdiction, in each case
dated as of a recent practicable date prior to the Closing Date;
(c) Foreign good standing certificates from each jurisdiction in
which it is required to be qualified to transact business as a foreign
corporation or other entity, in each case dated as of a recent practicable date
prior to the Closing Date;
(d) Copies of its bylaws or similar governing document as amended
through the Closing Date, certified by its Secretary as being in full force and
effect as of the Closing Date;
(e) Resolutions of its Board of Directors approving and authorizing
the execution and delivery of the Related Agreements to which it is a party and
the consummation of the transactions contemplated thereby;
(f) Such other documents as the Purchaser may request.
5.15 Repayment of Existing Indebtedness; UCC Termination Statements. Prior
to or simultaneously with the Closing:
(a) The Company shall have paid in full all Indebtedness,
liabilities and other obligations owing under the ESFR Agreement and Loan
Documents (as such term is defined in the ESFR Agreement), and the Company shall
have delivered to the Purchaser written evidence of the same;
(b) The Company shall have delivered to the Purchaser UCC
termination statements, duly executed by the ESFR Agent and/or the ESFR Lenders
fully and effectively releasing any and all Liens securing the Indebtedness,
liabilities or other obligations referred to in clause (a) above; and
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(c) The ESFR Agent shall have delivered to the Purchaser originals
of all Pledged Shares and other Collateral held by the ESFR Agent.
5.16 Insurance. The Company shall deliver to the Purchaser original
certificates of liability insurance with respect to the insurance policies
required to be maintained by the Company and its Subsidiaries as of the Closing
Date pursuant to Section 7.6, (including, without limitation, the directors and
officers liability insurance and the key man life insurance policy on the life
of Xxxxxxx X. Xxxxxxx, Xx.), together with additional insured and lender's loss
payable endorsements in favor of the Purchaser, all in form and substance
satisfactory to the Purchaser.
5.17 Third Party Consents. The Company and each of its Subsidiaries shall
have obtained all Consents required to be obtained in connection with the
transactions contemplated by this Agreement.
5.18 Trade Payables Plan. The Company shall have delivered to the
Purchaser at or prior to the Closing a written plan, in form and substance
satisfactory to the Purchaser, detailing how the Company intends to repay
current trade payables.
5.19 Employee Loans and Advances. The Company shall deliver to the
Purchaser at or prior to the Closing Date a certificate, dated as of the Closing
Date, duly executed by the President and Chief Executive Officer and the Senior
Vice President and Chief Financial Officer of the Company, setting forth a true,
correct and complete list of all outstanding loans and advances made by the
Company or any of its Subsidiaries to any directors or officers of the Company
or any of its Subsidiaries, including the dates made, the names of the obligors
and the outstanding principal, interest and other amounts due.
5.20 Financial Projections. The Company shall have delivered to the
Purchaser an officers' certificate, signed by the Chief Financial Officer of the
Company, certifying as to the projected annual balance sheets, income statements
and statements of cash flows of the Company and its Subsidiaries, on a
consolidated basis, for the three (3) year period ending December 31, 2002. Such
officers' certificate shall state that (a) the projections, which shall be
attached thereto, have been prepared on a reasonable basis and in good faith by
the Company and are believed by the Company to be reasonable, (b) all
assumptions underlying such projections were made in good faith and are
reasonable under the circumstances and (c) neither the Company nor any of its
directors of officers is aware of any facts or information that would lead the
Company to believe that such projections are incorrect or misleading in any
material respect.
5.21 Documents in Satisfactory Form. All proceedings taken prior to or at
the Closing in connection with the issuance and sale of the Term A Note, the
amendment and restatement of the Amended November 1998 Securities Purchase
Agreement and the April 1999 Note into the Term B Note, the grant of Liens in
favor of the Purchaser and the consummation of the other
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transactions contemplated hereby, and all papers and other documents relating
thereto, shall be in form and substance satisfactory to the Purchaser and its
legal counsel, and the Purchaser shall have received copies of such documents
and papers, all in form and substance satisfactory to the Purchaser and its
counsel, all such documents, where appropriate, to be counterpart originals and/
or certified by proper authorities, corporate officials and other Persons.
Without limiting the generality of the foregoing, the Company shall have made
such arrangements as may be requested by the Purchaser (a) to ensure that the
proceeds from the issuance and sale of the Term A Note will be applied in the
manner set forth in Section 2.5 and (b) for the direct payment to the
Purchaser's third party service providers of the costs and expenses incurred by
the Purchaser, as provided in Section 11.10.
6. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligation of the Company
to consummate the transactions contemplated hereby is subject to the
satisfaction, prior to the Closing, of the conditions set forth in this Section
6; provided, however, that any or all of such conditions may be waived, in whole
or in part, by the Company in its sole and absolute discretion:
6.1 Representations and Warranties. The representations and warranties of
the Purchaser contained in this Agreement shall be true and correct in all
material respects at and as of the Closing Date after giving effect to the
transactions contemplated by this Agreement, as if made on and as of such date,
and the Purchaser shall have performed or satisfied all of its covenants and
agreements hereunder to be performed or satisfied on or prior to the Closing
Date.
6.2 Purchase Permitted By Applicable Laws. The consummation of the
transactions contemplated by this Agreement shall not be prohibited by or
violate any Applicable Laws and shall not subject any party to any Tax, penalty
or liability, under or pursuant to any Applicable Laws, and shall not be
enjoined (temporarily or permanently) under, or prohibited by or contrary to,
any injunction, order or decree. Without limiting the generality of the
foregoing, the consummation of the transactions contemplated hereby shall
otherwise comply with all applicable requirements of federal and state
securities laws.
6.3 No Material Judgment or Order. There shall not be any judgment, ruling
or order of any Governmental Authority which, in the reasonable judgment of the
Company, would prohibit the issuance or delivery of the Term A Note or the
amendment and restatement of the Amended November 1998 Primary Note and the
April 1999 Note into the Term B Note, or subject the Company or its Subsidiaries
to any material penalty if the Term A Note were to be delivered hereunder.
6.4 Payment for Term A Note. The Purchaser shall have delivered to the
Company the Purchase Price required to be paid by Section 2.3, less the amounts
provided for in Section 11.10.
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7. AFFIRMATIVE COVENANTS. The Company covenants and agrees that, until all
Indebtedness (including, without limitation, all principal of, premium, if any,
and interest) and other amounts owing under the Notes shall have been
indefeasibly paid in full, the Company shall perform, comply with and observe
the covenants set forth in this Section 7, provided that the covenants contained
in Section 7.4 (Legal Existence; Compliance with Laws), Section 7.13 (Nasdaq
Listing) and Section 7.15 (Securities and Exchange Act Compliance) shall survive
the payment of all such Indebtedness and other amounts.
7.1 Payments with Respect to Notes. The Company shall pay all principal
of, premium, if any, interest and other amounts due pursuant to the terms of the
Notes on the dates and in the manner provided for therein including, without
limitation, all mandatory prepayments of principal of and interest on the Notes
as specifically required under the terms of the Notes.
7.2 Information Covenants. The Company shall furnish to the Purchaser:
(a) Within ninety (90) days after the end of each fiscal year of the
Company, (i) the audited consolidated and consolidating balance sheets of the
Company and its Subsidiaries at the end of such year, and (ii) the related
audited consolidated and consolidating statements of income, shareholders'
equity and cash flows for such fiscal year, setting forth in comparative form
with respect to such financial statements figures for the previous fiscal year,
all in reasonable detail, together with the opinion thereon of independent
public accountants selected by the Company and reasonably satisfactory to the
Purchaser (it being understood that the current accountants of the Company are
satisfactory to the Purchaser), which opinion shall be unqualified and shall
state that such financial statements have been prepared in accordance with GAAP
applied on a basis consistent with that of the preceding fiscal year (except for
changes, if any, which shall be specified and approved by the Purchaser in
advance of the delivery of such opinion) and that the audit by such accountants
in connection with such financial statements has been made in accordance with
generally accepted auditing standards; provided, however, that such accountants'
certification may be limited to the consolidated financial statements, in which
case the consolidating financial statements shall be certified by the Chief
Financial Officer of the Company; provided further, however, that the Company
shall not be required to furnish to the Purchaser the information set forth in
this clause (a) if the Company is required to file with the SEC, at the time
such information is required to be furnished to the Purchaser under this clause
(a), the information, documents and other reports required to be filed with the
SEC pursuant to Section 13, 14 or 15(d) of the Exchange Act;
(b) Within forty-five (45) days after the end of each of the first
three (3) quarterly accounting periods in each fiscal year of the Company, (i)
the unaudited consolidated and consolidating balance sheets of the Company and
its Subsidiaries as at the end of such period, and (ii) the related unaudited
consolidated and consolidating statements of income and cash flows for such
period and for the period from the beginning of the current fiscal year to the
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end of such period, all in reasonable detail and signed by the Chief Financial
Officer of the Company; provided, however, that the Company shall not be
required to furnish to the Purchaser the information set forth in this clause
(b) if the Company is required to file with the SEC, at the time such
information is required to be furnished to the Purchaser under this clause (b),
the information, documents and other reports required to be filed with the SEC
pursuant to Section 13, 14 or 15(d) of the Exchange Act;
(c) [Intentionally Omitted]
(d) Promptly (but not later than three (3) Business Days) after it
becoming available, a copy of the Company's annual USAP Audit;
(e) Promptly (but not later than three (3) Business Days) after
their becoming available, copies of all filings by the Company or any of its
Subsidiaries, or by any party in connection with any Securitization Transaction,
with the SEC, or any periodic or special reports filed with any other
Governmental Authority, and copies of any material notices and other material
communications from the SEC or from any other Governmental Authority which
specifically relate to the Company or any of its Subsidiaries;
(f) Promptly (but not later than three (3) Business Days) upon
receipt thereof, copies of all audit reports and management letters, if any,
submitted to the Company or any of its Subsidiaries by independent public
accountants in connection with each interim or special audit of the books of the
Company or any of its Subsidiaries made by such accountants and copies of all
financial statements, reports, notices and proxy statements, if any, sent by the
Company to its shareholders;
(g) Immediately, notice of: (i) the institution or commencement of
any action, suit, proceeding or investigation by or against or affecting the
Company, any of its Subsidiaries or any of its or their respective assets,
including, without limitation, any action, suit, proceeding or investigation
involving the SEC, the Nasdaq or the NYSE; (ii) any litigation or proceeding
instituted by or against the Company or any of its Subsidiaries, or any
judgment, award, decree, order or determination relating to any litigation or
proceeding involving the Company or any of its Subsidiaries; (iii) the
imposition or creation of any Lien against any asset of the Company or any of
its Subsidiaries; (iv) any reportable event under ERISA, together with a
statement of the Chief Executive Officer, Chief Financial Officer and/or
Controller of the Company as to the details thereof and a copy of its notice
thereof to the PBGC; (v) any known release or threat of release of Hazardous
Materials on or onto any Real Property or the incurrence of any expense or loss
in connection therewith or upon the Company's obtaining knowledge of any
investigation, action or the incurrence of any expense or loss by any
Governmental Authority in connection with the containment or removal of any
Hazardous Materials for which expense or loss the Company may be liable or
potentially responsible (all such notices shall describe the nature of
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any lawsuit); provided, however, that no notice shall be required to be given
under this clause (g) to disclose (A) the replevin of any Financed Vehicle; (B)
the enforcement of the Company's rights under any Automobile Contract; or (C)
the commencement of any consumer bankruptcy proceeding with respect to a
Financed Vehicle;
(h) Immediately upon receipt or issuance by the Company or any of
its Subsidiaries, (i) copies of all covenant compliance certificates, budgets,
projections, requests for waivers, notices of default, requests for amendments
or other material documents relating to any agreements, instruments or other
documents evidencing or governing any Subordinated Indebtedness, (ii) to the
extent not inconsistent with any confidentiality provisions, copies of any
agreements or other documents to which the Company (or any of its Subsidiaries)
and any Credit Enhancer (including, without limitation, FSA or any Affiliate of
FSA) are parties and (iii) any agreements, instruments and other material
documents relating to any Senior Indebtedness or any warehouse lines of credit
entered into by the Company or any of its Subsidiaries;
(i) Together with the information package for each calendar month
required to be delivered under clause (j) below (but not later than the twenty
fifth day after the end of such month), a certificate of the Chief Financial
Officer of the Company, in substantially the form of Exhibit C (a "Compliance
Certificate"), setting forth, among other things, the calculations required to
establish compliance with the financial covenants set forth in Section 8.15 with
respect to such calendar month;
(j) Simultaneously with its delivery to the members of the Board of
Directors of the Company, all reports, budgets, materials and other information
furnished to such Board members with respect to the Company and its
Subsidiaries, including, without limitation, copies of the monthly information
package delivered to such Board members, which package shall consist of (i)
monthly financial statements; (ii) financial ratio analysis and departmental
cost accounting information; (iii) an executive summary with respect to monthly
performance; (iv) year-to-date origination information; (v) twelve-month
historical origination information; (vi) portfolio performance data; (vii) asset
recovery/dealer compliance information; and (viii) stock price performance; and
(ix) such additional information as may be included therein; provided, however,
that if the information package for any month or the annual operating budget for
any fiscal year is not delivered to the Board members with respect to any
particular month or fiscal year, as the case may be, the Company shall
nonetheless deliver the same to LLCP within thirty (30) days after the end of
such month or not later than thirty (30) days prior to the commencement of such
fiscal year, as the case may be; and
(k) Promptly (but not later than five (5) Business Days) after its
request, such other information concerning the business, affairs and condition
of the Company and its Subsidiaries as the Purchaser may from time to time
reasonably request.
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7.3 Performance of Related Agreements. The Company shall perform, comply
with and observe all of its obligations under the Notes and each other Related
Agreement.
7.4 Legal Existence; Compliance with Laws. The Company shall, and shall
cause its Subsidiaries to, (a) maintain its corporate existence and business;
(b) maintain all properties which are reasonably necessary for the conduct of
such business, now or hereafter owned, in good repair, working order and
condition; (c) take all actions necessary to maintain and keep in full force and
effect all of its Licenses and Permits; and (d) comply in all material respects
with all Applicable Laws in respect of the conduct of its business and the
ownership of its properties in the states in which it conducts its business;
provided, however, that nothing in this Section 7.4 shall be interpreted to
restrict or in any manner affect the Company's or any of its Subsidiaries'
ability to elect to discontinue any line of business or to discontinue doing
business in any state if the Board of Directors of the Company or of such
Subsidiary, as the case may be, deems such discontinuance to be in its or their
best interests.
7.5 Books, Records and Inspections. The Company shall, and shall cause
each of its Subsidiaries to, keep proper books of record and account in which
full, true and complete entries in conformity with GAAP and all requirements of
Applicable Laws shall be made of all dealings and transactions in relation to
its business and activities. If at any time an LLCP Representative is not a duly
elected and current member of the Board of Directors of the Company, the Company
shall, and shall cause each of its Subsidiaries to, permit officers and
designated representatives and/or agents of the Purchaser to visit and inspect
any of the properties of the Company or such Subsidiaries, to examine the books
of account of the Company or such Subsidiaries and to discuss the affairs,
finances and accounts of the Company or such Subsidiaries with, and be advised
as to the same by, its officers and independent accountants, all at such
reasonable times and intervals and to such reasonable extent as the Purchaser
may then request.
7.6 Insurance. The Company shall maintain with financially sound and
reputable insurers policies of insurance, coverage amounts and related terms and
conditions for the Company and its Subsidiaries normally maintained by companies
engaged in the same or similar business as the Company against loss or damage
and such other policies of insurance and coverage amount as may be reasonably
requested by the Purchaser. Such insurance shall include, without limitation,
comprehensive general liability, fire and extended coverage, product liability
and recall, property damage, workers' compensation, flood insurance (if
customarily maintained in locations in which the Company or any of its
Subsidiaries is located), earthquake loss insurance, environmental liability
insurance, business interruption insurance (either for loss of revenues or for
additional expenses) and directors and officers liability insurance as provided
in the Amended and Restated Investor Rights Agreement. All insurance covering
liability shall name the Purchaser as an additional insured, and all insurance
covering property subject to a Lien in favor of the Purchaser shall name the
Purchaser as a loss payee and, with respect to any
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casualty or loss, provide that the full amount of insurance proceeds shall be
payable to the Purchaser. In addition, until the Obligations to Purchaser have
been indefeasibly paid, the Company shall maintain a key man life insurance
policy on the life of Xxxxxxx X. Xxxxxxx, Xx., the President and Chief Executive
Officer of the Company, in an amount equal to $10,000,000. Such key man life
insurance policy shall name the Company as the owner and the Purchaser as the
irrevocable beneficiary. Each of the insurance policies required to be
maintained under this Section 7.6 shall provide for at least thirty (30) days'
prior written notice to the Purchaser of the cancellation or substantial
modification thereof.
7.7 Taxes. The Company shall, and shall cause each of its Subsidiaries to,
pay and discharge when due all Taxes, except as contested in good faith and by
appropriate proceedings if adequate reserves (in the good faith judgment of the
management of the Company) have been established with respect thereto.
7.8 ERISA Matters.
(a) The Company shall, and shall cause each of its Subsidiaries to,
cause each Benefit Plan to be operated in compliance with the terms of such
Benefit Plan and Applicable Law and shall pay and discharge promptly any
liability imposed upon it or them pursuant to the provisions of such Benefit
Plan and Applicable Law; provided, however, that the Company and its
Subsidiaries shall not be required to pay any such liability if (i) the amount,
applicability, or validity thereof shall be diligently contested in good faith
by appropriate proceedings and (ii) such Person shall have set aside on its
books reserves which, in the good faith judgment of the Board of Directors of
such Person, are adequate with respect thereto.
(b) The Company shall, and shall cause each of its Subsidiaries to,
deliver to the Purchaser promptly, but in no event more than five (5) Business
Days after any officer of the Company obtains knowledge of, (i) the Internal
Revenue Service's (A) revocation of the tax- qualified status of any Benefit
Plan that is a tax-qualified retirement plan, (B) imposition of an excise tax
upon the occurrence of a "prohibited transaction" as such term is defined in
Section 4975 of the IRC, or (C) disallowance of a deduction (in whole or in
part) for a contribution to a Benefit Plan, (ii) the institution of a lawsuit
against a Benefit Plan (or a Fiduciary of such plan), or (iii) the United Stated
Department of Labor's imposition of a penalty under Section 502 of ERISA
relating to a Benefit Plan, a written notice specifying the nature of such
action, what action has been taken, is being taken, or is proposed to be taken
with respect thereto, and a copy of any correspondence or other documentation
relating to the matter.
7.9 Performance of Servicing Duties; Clean-Up Calls. The Company shall,
and shall cause ARC and CPSRC to, comply with the provisions of its charter
documents and bylaws and with the terms of the pooling and servicing agreements,
instrument and other documents relating to any Securitization Transaction, and
perform the duties of servicer in compliance with the
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terms thereof. The Company may make "clean up" calls under, or in connection
with, any Securitization Transaction at any time or from time to time that the
Company has the right to do so.
7.10 Communication with Accountants. So long as no Default or Event of
Default shall have occurred and be continuing, the Purchaser shall not
communicate directly with the Company's independent certified public accountants
without the prior written consent of the Purchaser, which consent shall not be
unreasonably withheld. If any Default or Event of Default shall have occurred
and be continuing, the Company hereby authorizes its independent certified
public accountants to (a) furnish to the Purchaser any and all financial
statements and other supporting financial documents, work papers and schedules
as the Purchaser may request and (b) discuss with the Purchaser, as often as the
Purchaser may reasonably request, the accounts, financial condition, business
and affairs of the Company and its Subsidiaries, in each case without the
consent of the Company.
7.11 Further Assurances. From time to time after the date hereof, the
Company will execute and deliver, and will cause any of its Subsidiaries and any
other Persons to execute and deliver, such additional instruments, certificates
and documents, and will take all such actions, as the Purchaser may reasonably
request, for the purposes of implementing or effectuating the provisions of this
Agreement, the Notes or any other Related Agreement or to establish, maintain,
perfect or continue the Purchaser's security interests in the Collateral. Upon
exercise by the Purchaser of any power, right, privilege or remedy pursuant to
this Agreement or any Related Agreement which requires any Consent, the Company
will execute and deliver, and will cause any of its Subsidiaries and any other
Persons to execute and deliver, all applications, certifications, instruments
and other documents and papers that may be required to be obtained for such
Consent.
7.12 Future Information. All data, certificates, reports, statements,
documents and other information furnished by or on behalf of the Company, any of
its Subsidiaries or any of its or their respective representatives or agents to
the Purchaser in connection with this Agreement, the Related Agreements or the
transactions contemplated hereby and thereby, at the time the information is so
furnished, shall not contain any untrue statement of a material fact, shall be
complete and correct in all material respects to the extent necessary to give
the Purchaser sufficient and accurate knowledge of the subject matter thereof,
and shall not omit to state a material fact necessary in order to make the
statements contained therein not misleading in light of the circumstances under
which such information is furnished.
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7.13 Nasdaq Listing. The Company shall do or cause to be done all things
necessary to maintain the listing of its Common Stock on the Nasdaq (or, if the
Company so elects, maintain a listing of its Common Stock for trading on the
NYSE).
7.14 CARSUSA Flooring Line. The Company shall not permit, and shall cause
its Subsidiaries not to permit, the outstanding balance of the CARSUSA flooring
line to exceed $330,000 at any time. In addition, the Company shall use its
reasonable best efforts to reduce the outstanding balance of the CARSUSA
flooring line to zero as soon as practicable.
7.15 Securities and Exchange Act Compliance.
(a) The Company shall timely file with the SEC, and provide to the
Purchaser concurrently therewith, all Company SEC Documents as are specified in
the Exchange Act as being required to be filed by U.S. corporations that are
subject to reporting requirements of the Exchange Act. In addition, the Company
shall timely file with the Nasdaq and the NYSE and provide to the Purchaser
concurrently therewith, all Company SEC Documents required to be filed
therewith. Each Company SEC Document to be filed by the Company, when filed with
the SEC or the Nasdaq, as the case may be, will comply with all applicable
requirements of the Securities Act, the Exchange Act, the Nasdaq rules and the
NYSE rules, as applicable, and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements of the
Company and its Subsidiaries to be included in each Company SEC Document to be
filed by the Company will comply as to form, as of the date of its filing with
the SEC, with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, will be prepared in accordance with
GAAP (except, in the case of unaudited statements, as permitted by the SEC) and
will fairly present in all material respects the consolidated financial position
of the Company and its Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end audit adjustments
consistent with past practices and consistently applied). Notwithstanding
anything to the contrary contained in this Section 7.15, the Company shall not
be deemed to be in default of this Section 7.15 if the Company is late in filing
any Company SEC Document, provided that (a) such Company SEC Document is filed
with the SEC within ten (10) Business Days after the filing was due, shall
notify the Purchaser in writing of the late filing and (b) such late filing
shall not in any manner adversely affect the Purchaser's right to avail itself
of the benefits under Rule 144 promulgated under the Securities Act with respect
to the Warrant Shares, and provided further that the Company shall not rely on
the grace period in this sentence on more than two (2) occasions during the term
of this Agreement.
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(b) If the exercise, sale or other disposition of the Residual
Warrant pursuant to or in connection with any sale, reorganization, merger or
other business combination involving the Company would be subject to the
provisions of Section 16(b) of the Exchange Act, then the Company shall pay to
Purchaser, prior to or upon the consummation of any such sale, reorganization,
merger or other business combination, in lieu of such exercise, sale or
disposition and in satisfaction of the Residual Warrant and to the extent of the
number of Residual Warrant Shares set forth in clause (ii) below, an amount in
cash equal to the product of (i) the difference between the fair value of the
consideration to be received for each share of Common Stock pursuant to such
sale, reorganization, merger or other business combination and the Warrant
Purchase Price (as defined in the Residual Warrant) then in effect, multiplied
by (ii) the number of Residual Warrant Shares, the sale or other disposition of
which would be subject to the provisions of Section 16(b) of the Exchange Act.
7.16 Additional Subsidiary Guarantors. The Company shall take all such
action, and will cause each of its Subsidiaries to take all such action, from
time to time as shall be necessary to ensure that all Subsidiaries of the
Company (other than "bankruptcy remote special purpose" Subsidiaries) are
Subsidiary Guarantors under the Subsidiary Guaranty. Without limiting the
generality of the foregoing, if, subject to Section 8.5, the Company or any of
its Subsidiaries shall form or acquire any new Subsidiary after the date hereof
(or any "bankruptcy remote special purpose" Subsidiary ceases to such a
Subsidiary), the Company or such Subsidiary will cause such new Subsidiary (a)
to execute and deliver a joinder to the Subsidiary Guaranty, in form and
substance satisfactory to the Purchaser, pursuant to which such Subsidiary would
become a Subsidiary Guarantor, (b) if such Subsidiary has any Subsidiaries,
pledge agreements, together with (i) certificates representing all of the
Capital Stock of any Person owned by such Subsidiary, (ii) undated stock powers
executed in blank and (iii) such opinions of counsel and such approving
certificates of such Subsidiary as the Purchaser may request in respect of
complying with any legend on any such certificate or any other matter relating
to such shares, (c) such other agreements, instruments, approvals or other
documents as may be requested by the Purchaser in order to create, perfect,
establish, and maintain the first priority of any Lien in favor of the Purchaser
to effect the intent that such Subsidiary shall become bound by all of the
terms, covenants and agreements contained in the Related Agreements to which
Subsidiary Guarantors are parties and that all property and assets of such
Subsidiary shall become Collateral for the Obligations to Purchaser, and (d)
opinions of counsel to the Company or such Subsidiary as to such matters as the
Purchaser may request. In addition, the Company shall grant to the Purchaser a
valid first priority perfected security interest in the Capital Stock of such
Subsidiary to secure the Obligations to Purchaser.
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7.17 CPSRC Shares. The Company covenants and agrees that, if the security
interest granted by the Company to FSA in and to the CPSRC Shares terminates
pursuant to Section 18 of the FSA Pledge Agreement or otherwise, it shall (a)
immediately notify the Purchaser of such event in writing and (b) within three
(3) Business Days following the effective date of termination, (i) grant to the
Purchaser a valid, perfected first priority pledge and security interest in and
to the CPSRC Shares, free and clear of any Liens of any other Person, on terms
and conditions substantially similar to those contained in the Security
Agreement, and (ii) deliver to the Purchaser the original certificate or
certificates evidencing or representing the CPSRC Shares, together with stock
powers duly executed in blank. In addition to, and notwithstanding, the
foregoing provisions of this Section 7.17, the Company shall use its reasonable
best efforts to obtain from FSA, at such time or times prior to the termination
of FSA's security interest in the CPSRC Shares as the Company reasonably
believes it has an opportunity to do so, FSA's consent to the grant by the
Company to the Purchaser of a valid pledge and security interest in and to the
CPSRC Shares, subject only to the security interest of FSA.
7.18 Landlord Consents and Waivers. The Company shall use its best efforts
to deliver (or cause to be delivered) to the Purchaser, within one hundred and
twenty (120) days following the Closing Date, landlord consents and waivers, in
form and substance satisfactory to the Purchaser, executed by the Company's real
property lessors or landlords with respect to the business locations that are
leased by the Company.
7.19 Delivery of GE Capital Termination Statements. Not later than
Thursday, March 23, 2000, the Company shall deliver to the Purchaser each of the
UCC termination statements set forth on Schedule 7.19, duly executed by GE
Capital Corp. as secured party, terminating the security interests referenced
therein, respectively. Such UCC termination statements shall be in proper form
for filing with the appropriate Governmental Authority.
7.20 Future Securitization Transactions Subsidiary. The Company covenants
and agrees that, with respect to each of its future Securities Transactions, it
shall participate and complete each such Securitization Transaction through CPS
123 Corp., which shall be a wholly owned Subsidiary of the Company. In this
regard, until such time as the Company initiates the first Securitization
Transaction after the date hereof, the Company shall not permit CPS 123 Corp. to
enter into any other transaction with any third party or assume or become liable
for any liabilities or obligations (except for obligations incurred in
connection with its organization), and the Company shall cause CPS 123 Corp. to
duly adopt the characteristics of, and become, a "bankruptcy remote special
purpose" entity as soon as practicable.
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7.21 Delivery of Certain Disclosure Schedules. Not later than Tuesday,
March 21, 2000, the Company shall deliver to the Purchaser the following
Disclosure Schedules, each of which shall be true, complete and correct as of
the Closing Date and as of the date such Disclosure Schedules are delivered to
the Purchaser: Schedules 3.12, 3.13(a), 3.13(c), 3.16, 3.20, 3.22, 3.24, 3.28
and 3.29.
7.22 Existing Liens. The Company shall update Schedule 3.11(a)(ii)
(Existing Liens) to reflect all Liens existing through the Closing Date and
deliver such updated Schedule to the Purchaser not later than Tuesday, March 21,
2000. Such updated Schedule shall contain a true, correct and complete list of
all Liens against the Company and its Subsidiaries existing as of the Closing,
including all UCC financing statements filed in any state or other jurisdiction,
whether in California, Texas, Virginia or otherwise, naming the Company or any
Subsidiary as debtor. The Company agrees to use its best efforts to terminate
any such listed Lien (including, without limitation, causing any secured party
to file a UCC termination statement terminating any such Lien) designated by the
Purchaser for termination, which termination shall be effective no later than
thirty (30) days after such designation; provided, however, that the Company
shall cause the termination of (a) any Lien deemed by the Purchaser to
materially adversely affect the rights of the Purchaser in the Collateral or (b)
at the request of the Purchaser, any Lien (that does not constitute a Permitted
Lien) that secures Indebtedness of $100,000 or more.
8. NEGATIVE COVENANTS. In addition, the Company covenants and agrees that, until
all Indebtedness (including, without limitation, all principal of, premium, if
any, and interest) and other amounts owing under the Notes shall have been
indefeasibly paid in full, the Company shall perform, comply with and observe
the covenants set forth in this Section 8.
8.1 Limitations on Indebtedness. The Company shall not, and shall not
permit any of its Subsidiaries to, create, incur, assume or become or remain
liable in respect of any Indebtedness, except for:
(a) Obligations to Purchaser;
(b) Existing Indebtedness, including any refinancings, renewals,
replacements, restructurings or exchanges thereof, but subject to Section
8.11(a);
(c) Unsecured Subordinated Indebtedness that is expressly made
subordinate in right of payment and rights upon liquidation to all Senior
Indebtedness, including, without limitation, the Indebtedness evidenced by the
Notes, provided that such Indebtedness (i) does not exceed, when taken together
with all other Subordinated Indebtedness, the Consolidated Net Worth (as defined
in the RISRS Indenture or the PENS Indenture, as the case may be) of the Company
at any time outstanding, (ii) does not mature prior to the one (1) year
anniversary of
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the stated maturity date of the Term B Note; and (iii) is on terms and
conditions reasonably satisfactory to the Purchaser;
(d) Indebtedness in the form of Capital Lease Obligations used to
finance the acquisition, construction or improvement of assets of the Company or
any of its Subsidiaries in an aggregate amount not to exceed $5,000,000;
(e) Indebtedness incurred by the Company or any of its Subsidiaries
in connection with the warehousing of Automobile Contracts in the ordinary
course of business, subject to Section 8.11(a); and
(f) Indebtedness of the type described in clause (v) of the
definition of the term "Indebtedness," but only to the extent that such
Indebtedness is secured by a Permitted Lien.
8.2 Limitations on Liens. The Company shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly, create, incur, assume or suffer
to exist, any mortgage, lien, charge or encumbrance on, or security interest in,
or pledge of, or conditional sale or other title retention agreement with
respect to, any real or personal property (tangible or intangible, now existing
or hereafter acquired), except for:
(a) Liens in favor of the Purchaser;
(b) Permitted Liens;
(c) Existing Liens;
(d) Financing statements filed by any Credit Enhancer (including,
without limitation, FSA) against the Company or any Subsidiary in connection
with any Securitization Transaction;
(e) Any Lien constituting a renewal, extension or replacement of any
Existing Lien, provided that the principal amount of any Indebtedness or other
obligation secured by such renewal, extension or replacement Lien does not
exceed the principal amount of the Indebtedness or other obligation renewed,
extended or replaced.
8.3 Limitations on Investments. The Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, make or own any
Investment, except:
(a) Permitted Investments;
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(b) The Investments and Guarantees set forth on Schedule 3.12;
(c) Automobile Contracts;
(d) Investments permitted under Section 8.14; and
(e) Indemnification agreements in favor of Credit Enhancers or
underwriters executed in connection with any Securitization Transaction.
8.4 Limitation on Restricted Payments. The Company shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly, make any
Restricted Payment.
8.5 Subsidiaries; Changes in Business. The Company shall not, and shall
not permit any of its Subsidiaries to, create any additional Subsidiaries
(provided, however, that the Company may from time to time create wholly owned,
"bankruptcy remote special purpose" Subsidiaries for the sole purpose of
entering into any Securitization Transaction). The Company shall not, and shall
not permit its Subsidiaries to, engage in any business other than the
purchasing, selling and servicing of Automobile Contracts.
8.6 Observance of Stanwich Subordination Provisions. The Company shall not
make, or cause or permit to be made, any payments in respect of any Stanwich
Indebtedness in contravention of any of the subordination provisions applicable
to any such Stanwich Indebtedness.
8.7 Environmental Liabilities. The Company shall not, and shall not permit
any of its Subsidiaries to, violate any material Environmental Laws or other
requirement of law, rule or regulation regarding Hazardous Materials. Without
limiting the generality of the foregoing, the Company shall not, and shall not
permit any of its Subsidiaries to, dispose of any Hazardous Materials into or
onto, or from, any Real Property, nor allow any Lien imposed pursuant to any
Environmental Laws to be imposed or to remain on such Real Property, except for
Liens being contested in good faith by appropriate proceedings and for which
adequate reserves have been established and are being maintained on the books of
the Company or its Subsidiaries, as the case may be.
8.8 Amendments to Securitization Transaction Documents. The Company shall
not, and shall not permit any of its Subsidiaries to, amend, modify or change
(or consent to any such amendment, modification or change), in any manner
adverse to the interests of the Purchaser, any of the provisions set forth in
the Securitization Transaction Documents without the prior written consent of
the Purchaser. Without limiting the generality of the foregoing, the Company
shall not, and shall not permit any of its Subsidiaries to, consent or agree,
without the prior written
77
consent of the Purchaser, to any increase in the amount on deposit in any
"Spread Accounts" so as to maintain the rating of the related Securitization
Transaction.
8.9 Limitations on Transactions with Affiliates. The Company shall not,
and shall not permit any of its Subsidiaries to, enter into any transaction with
any officer, director, employee or Affiliate of the Company at any time on terms
that are less favorable to the Company or such Subsidiary, as the case may be,
than those that might be obtained in an arm's length transaction at such time
from a Person who is not an officer, director, employee or Affiliate of the
Company. Any transaction between the Company, on the one hand, and any Affiliate
of the Company, on the other hand, shall be unanimously approved in advance by
all of the members of the Board of Directors of the Company who are not
interested in the transaction; provided, however, that no such Board approval
shall be required with respect to sales of Automobile Contracts made by the
Company to its Subsidiaries, or by its Subsidiaries to the Company, in the
ordinary course of its business so long as such sales are made on terms that are
no less favorable to the Company than those that might be obtained in an arm's
length transaction with a Person who is not an Affiliate of the Company. This
Section 8.9 shall not apply to (a) any transactions between the Company and
CARSUSA, Inc. so long as such transactions are on terms that are no less
favorable to the Company than those that might be obtained in an arm's length
transaction from a Person who is not an Affiliate or otherwise related to the
Company, or (b) compensation payable by the Company to Xxxxxxx X. Xxxxxxx, Xx.,
the Chairman of the Company, so long as he remains as Chairman of the Board, at
a rate not to exceed $125,000 per annum.
8.10 Restrictions on Fundamental Changes. The Company shall not, and shall
not permit any of its Subsidiaries to:
(a) make any change in its business objectives, purposes, structure
or operations that could in any way adversely affect the repayment of the
Obligations to Purchaser or have a Material Adverse Effect;
(b) amend its charter or bylaws, as applicable;
(c) sell, lease, transfer or otherwise dispose of, in one
transaction or a series of transactions, all or a significant portion of its
assets, other than dispositions of assets in the ordinary course of business
consistent with past practice;
(d) enter into any merger, acquisition, consolidation,
reorganization or recapitalization; or
(e) liquidate, wind up or dissolve.
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8.11 Agreements Affecting Capital Stock and Indebtedness; Amendments to
Material Contracts.
(a) The Company shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of the Purchaser, (i) enter
into any voting agreement, voting trust, irrevocable proxy or other agreement
affecting the voting rights of shares of the Capital Stock of the Company (other
than revocable proxies in connection with meetings of shareholders of the
Company) or its Subsidiaries, except as contemplated by this Agreement or any
Related Agreement; (ii) refinance, renew, replace, restructure or exchange any
Existing Indebtedness; or (iii) amend, supplement or otherwise modify, or waive,
any term or provision of any agreement, instrument or other document evidencing
or governing any Indebtedness of the Company or any of its Subsidiaries
(including, without limitation, the RISRS Indenture, the PENS Indenture, any
Stanwich Debt Documents or any other Subordinated Agreements).
(b) The Company shall not, and shall not permit any of its
Subsidiaries to, cancel or terminate any Material Contract (or consent to or
accept any cancellation or termination thereof), amend or otherwise modify any
Material Contract or give any consent, waiver or approval thereunder, waive any
breach of or default under any Material Contract, or take any action in
connection with any Material Contract that would impair the value of the
interests or rights of the Company thereunder or that would impair the interest
or rights of the Purchaser hereunder or under this Agreement or any Related
Agreement.
8.12 Indebtedness to FSA. The Company shall not, and shall not permit any
of its Subsidiaries to, have outstanding at any time Indebtedness for the
payment of money of any kind or nature (whether matured or unmatured or
contingent or non-contingent) to FSA or any Affiliate of FSA pursuant to any
agreement to which FSA is a party, other than Indebtedness (whether matured or
unmatured or contingent or non-contingent) in connection with any securitization
transactions of the type which is consistent with past practice and which the
Company reasonably believes is customary in securitization transactions insured
by FSA, the assets of which consist solely of Automobile Contracts.
8.13 Payment Restrictions Affecting Certain Subsidiaries. The Company
shall not, and shall not permit any of its Subsidiaries (other than "bankruptcy
remote special purpose" Subsidiaries formed in connection with any
Securitization Transaction) to, enter into or permit to exist any agreement,
instrument or other document which, directly or indirectly, prohibits or
restricts in any manner, or would have the effect of prohibiting or restricting
in any manner, the ability of any such Subsidiary to (a) pay dividends or make
other distributions in respect of its Capital Stock owned by the Company or any
other such Subsidiary, (b) pay or repay any Indebtedness owed to the Company or
any other such Subsidiary, (c) make loans or advances to the Company or (d)
transfer any of its properties or assets to the Company or any other such
Subsidiary.
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8.14 No New Loans and Advances. From and after April 12, 1999, the Company
shall not, and shall not permit any of its Subsidiaries to, make any loans or
advances to any directors, officers or employees of the Company or any of its
Subsidiaries, or renew, refinance or restructure any of such loans or advances
or the terms thereof, without the prior written consent of the Purchaser;
provided, however, that the Company and its Subsidiaries may make advances for
reasonable and incidental business expenses approved in advance by the Chief
Financial Officer of the Company and not to exceed $2,500 in any one (1) month
to any employee in the ordinary course of business, all of which shall be repaid
within thirty (30) days after the date such loan or advance is made. The Company
shall ensure that all loans and advances made by the Company, whether made prior
to, on or after the date hereof, are evidenced by a promissory note or other
written instrument or agreement (copies of which shall be provided to the
Purchaser) which provides for the repayment in full in cash of such loans and
advances. In addition, on the last Business Day of each calendar month,
commencing April 30, 2000, the Company shall deliver to the Purchaser a
certificate, duly signed by the President and Chief Executive Officer and the
Chief Financial Officer of the Company, listing all such loans and advances,
including the dates made, the names of the obligors and the outstanding
principal, interest and other amounts due, and certifying that such list is
true, accurate and complete as of the date of such certificate.
8.15 Financial Covenants.
(a) Maximum Capital Expenditures. The Company and its Subsidiaries
shall not incur Capital Expenditures during any fiscal year, commencing with the
fiscal year ending December 31, 2000, in excess of $2,000,000.
(b) LLCP Coverage Ratio. Commencing with the calendar month ending
March 31, 2000, and for each calendar month thereafter, the Company shall not
permit, and cause its Subsidiaries not to permit, the LLCP Coverage Ratio to be
less than two hundred percent (200%) at and as of the end of each such calendar
month.
8.16 Back-Up Servicer. The Company shall not change its back-up servicer
from Norwest without the prior written consent of the Purchaser.
8.17 LINC and Samco Matters. The Company shall not, and shall not permit
its Subsidiaries to, transfer any assets or properties to LINC in excess of
$125,000, unless the Company or any such Subsidiary is compelled to do so by a
non-appealable written order of a court of competent jurisdiction (and, in such
event, the Company will deliver a copy of such order to the Purchaser), and LINC
shall continue to conduct no business and remain inactive. In addition, the
Company shall not, and shall not permit its Subsidiaries to, transfer any assets
or properties to Samco.
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9. INDEMNIFICATION.
9.1 Transfer Taxes. The Company shall pay all stamp, transfer and other
similar Taxes (together in each case with interest and penalties, if any)
payable or determined to be payable in connection with the execution and
delivery of this Agreement or the issuance and sale of the Notes and shall hold
harmless the Purchaser from and against any and all liabilities with respect to
or resulting from any delay in paying, or omission to pay, such Taxes.
9.2 Losses.
(a) Whether or not the transactions contemplated by this Agreement
are consummated, the Company shall indemnify and hold harmless the Purchaser,
its successors and assigns, and its Affiliates, employees, partners, officers,
directors, representatives, agents, attorneys, successors and assigns (the
"Indemnified Parties"), from and against any and all losses, claims, damages,
liabilities, judgments, expenses and costs, including, without limitation,
attorneys' fees and other fees and expenses incurred in, and the costs of
preparing for, investigating or defending any matter (collectively, "Losses"),
incurred by such Indemnified Party in connection with or arising from:
(i) Any breach of any warranty or the inaccuracy of any
representation made by the Company or any of its Subsidiaries in this
Agreement or any Related Agreement;
(ii) The failure of the Company or any of its Subsidiaries to
fulfill any of its covenants, agreements or undertakings under this
Agreement or any Related Agreement (or any other document or instrument
executed herewith or pursuant hereto);
(iii) Any breach, violation, Default or Event of Default under
the Amended November 1998 Securities Purchase Agreement, the April 1999
Securities Purchase Agreement or any Related Agreement (as such term is
defined therein, as applicable), which is based on (A) the failure of the
Company or any of its Subsidiaries to pay to the Purchaser or any of its
Affiliates any principal, interest, premium, fees, costs, expenses or
other amounts (other than the Accrued Default Interest) due or owing at
any time prior to the Effective Date or (B) fraud (including, without
limitation, intentional misrepresentation and misappropriation of funds)
occurring at any time prior to the Closing Date; and
(iv) Any third party actions, suits, proceedings or claims
brought against any Indemnified Party in connection with, arising out of
or with respect to (A) any other matters arising out of or in connection
with the transactions contemplated
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by this Agreement, the Notes or any other Related Agreement, any November
1998 Transaction Document or any April 1999 Note Document, or (B) the
business, operations or affairs of the Company (including, without
limitation, any litigation in which any Company is involved).
(b) The Company shall either pay directly all Losses which it is
required to pay hereunder or reimburse any Indemnified Party within ten (10)
days after any request for such payment. The obligations of the Company to the
Indemnified Parties under this Section 9 shall be separate obligations to each
Indemnified Party, and the liability of the Company to such Indemnified Parties
hereunder shall not be extinguished solely because any Indemnified Party is not
entitled to indemnity hereunder.
(c) The obligations of the Company to the Indemnified Parties under
this Section 9 shall survive (i) the repayment of the Notes (whether at
maturity, by prepayment or acceleration or otherwise), (ii) any transfer of the
Notes or any interest therein, (iii) the termination of this Agreement or any
Related Agreement and (iv) the issuance, exercise, assignment and/or sale of the
Residual Warrant (or any interest therein) or the sale of any Warrant Shares.
9.3 Indemnification Procedures. Any Person entitled to indemnification
under this Section 9 shall (a) give prompt written notice to the Company of any
claim with respect to which it seeks indemnification and (b) permit the Company
to assume the defense of such claim with counsel selected by the Company and
reasonably acceptable to such Person; provided, however, that any Person
entitled to indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claim, but the fees and
expenses of such counsel shall be at the expense of such Person, unless (i) the
Company has agreed to pay such fees or expenses; (ii) the Company has failed to
notify such Person in writing within ten (10) days of its receipt of such
written notice of claim that it will assume the defense of such claim and employ
counsel reasonably satisfactory to such Person; or (iii) in the judgment of any
such Person, based upon the written advice of counsel, a conflict of interest
may exist between such Person and the Company with respect to such claims (in
which case, if the Person notifies the Company in writing that such Person
elects to employ separate counsel at the expense of the Company, the Company
shall not have the right to assume the defense of such claim on behalf of such
Person). The Company will not be subject to any liability for any settlement
made without its consent (but such consent may not be unreasonably withheld). No
Indemnified Party may, without the consent (which consent will not be
unreasonably withheld) of the Company, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to the Company of a release from all
liability in respect of such claim or litigation.
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9.4 Contribution. If the indemnification provided for in this Section 9 is
unavailable to the Purchaser or any other Indemnified Party in respect of any
Losses, then the Company, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by the Indemnified Party as a result of
such Losses, in such proportion as is appropriate to reflect the relative fault
of the Company, on the one hand, and such Indemnified Party on the other hand,
in connection with the actions, statements or omissions which resulted in such
Losses, as well as any other relevant equitable considerations. The relative
fault of the Company, on the one hand, and such Indemnified Party on the other
hand, shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has been
taken by, or relates to information supplied by, either the Company or such
Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent any such action, statement or
omission. The parties agree that it would not be just and equitable if
contribution pursuant to this Section 9.4 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to above. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
9.5 Costs of Collection. The Company agrees to pay all costs and expenses,
including the fees and expenses of any attorneys, accountants and other experts
retained by the Holder, which are expended or incurred by the Holder in
connection with (a) the enforcement of this Note or the collection of any sums
due hereunder, whether or not suit is commenced; (b) any actions for declaratory
relief in any way related to this Note; (c) the protection or preservation of
any rights of the Holder under this Note; (d) any actions taken by the Holder in
negotiating any amendment, waiver, consent or release of or under this Note; (e)
any actions taken in reviewing the Company's or any of its Subsidiaries'
financial affairs if an Event of Default has occurred or the Holder has
determined in good faith that an Event of Default may likely occur, including,
without limitation, the following actions: (i) inspect the facilities of the
Company and any of its Subsidiaries or conduct audits or appraisals of the
financial condition of the Company and any of its Subsidiaries; (ii) have an
accounting firm chosen by the Holder review the books and records of the Company
and any of its Subsidiaries and perform a thorough and complete examination
thereof; (iii) interview the Company's and each of its Subsidiaries' employees,
accountants, customers and any other individuals related to the Company or its
Subsidiaries which the Holder believes may have relevant information concerning
the financial condition of the Company and any of its Subsidiaries; and (iv)
undertake any other action which the Holder believes is necessary to assess
accurately the financial condition and prospects of the Company and any of its
Subsidiaries; (f) the Holder's participation in any refinancing, restructuring,
bankruptcy or insolvency proceeding involving the Company, any of its
Subsidiaries or any other Affiliate of the Company; (g) verifying, maintaining,
or perfecting any security interest or other Lien granted to the Holder in any
collateral; (h) any effort by the Holder to protect, assemble, complete,
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collect, sell, liquidate or otherwise dispose of any collateral, including in
connection with any case under Bankruptcy Law; or (i) any refinancing or
restructuring of this Note, including, without limitation, any restructuring in
the nature of a "work out" or in any insolvency or bankruptcy proceeding.
10. DEFAULTS AND REMEDIES.
10.1 Events of Default. An "Event of Default" occurs if:
(a) The Company shall (i) fail to pay as and when due (whether at
stated maturity, upon acceleration or required prepayment or otherwise) any
principal on any Note, or (ii) fail to pay any interest, premium, if any, fees,
costs, expenses or other amounts payable under this Agreement, any Note or any
other Related Agreement within one (1) Business Day after the date due
thereunder; or
(b) (i) The Company shall breach or fail to perform, comply
with or observe any agreement, covenant or obligation required to be
performed by it under Section 7.1 (Payments with Respect to Notes),
clauses (a), (b), (i) or (j) of Section 7.2 (Information Covenants),
Section 7.9 (Performance of Servicing Duties; Clean-Up Calls), Section
7.14 (CARSUSA Flooring Line), Section 7.15 (Securities and Exchange Act
Compliance), Section 7.22 (Existing Liens), Section 8.1 (Limitations on
Indebtedness), Section 8.2 (Limitations on Liens), Section 8.6 (Observance
of Stanwich Subordination Provisions), Section 8.10 (Restrictions on
Fundamental Changes) and Section 8.15 (Financial Covenants);
(ii) The Company shall breach or fail to perform, comply
with or observe any agreement, covenant or obligation required to be
performed by it under Section 7.2 (Information Covenants) (other than
clauses (a), (b), (i) or (j)), and such breach or failure shall not have
been remedied within three (3) Business Days after written notice thereof
by the Purchaser to the Company; or
(c) The Company or any of its Subsidiaries shall breach or fail to
perform, comply with or observe any agreement, covenant or obligation required
to be performed by it under this Agreement or any Related Agreement (other than
the agreements, covenants or obligations expressly covered by Sections 11.1(a)
and (b)) and such breach or failure shall not have been remedied within thirty
(30) days after written notice thereof by the Purchaser to the Company; or
(d) Any representation or warranty made by the Company or any of its
Subsidiaries under, relating to or in connection with this Agreement or any
Related Agreement shall be false or misleading when made (or deemed made); or
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(e) The Company or any of its Subsidiaries (other than LINC or
Samco) shall:
(i) default in the payment (whether at stated maturity, upon
acceleration or required prepayment or otherwise), beyond any period of
grace provided therefor, of any principal of or interest on any other
Indebtedness with a principal amount in excess of $100,000; or
(ii) commit any breach of or default under (other than as
provided in Section 10.1(e)(i) above) any term of any agreement, indenture
or instrument evidencing or governing any other Indebtedness (other than
Capital Lease Obligations) in excess of $50,000 individually or $250,000
in the aggregate, if the effect of such breach or default is to cause, or
to permit the holder or holders of such other Indebtedness to cause (upon
the giving of notice or the passage of time or both), such other
Indebtedness to become or be declared due and payable, or required to be
prepaid, redeemed, purchased or defeased (or an offer of prepayment,
redemption, purchase or defeasance is made) prior to its stated maturity,
unless such breach or default has been waived within ten (10) days
following such breach or default by the Person or Persons entitled to give
such waiver; or
(iii) be in default of any of its lease obligations (whether
Capital Lease Obligations or otherwise) in excess of $500,000 at any time
outstanding and the lessor under any defaulted capital lease to which the
Company or any of its Subsidiaries is a party shall retake possession of
the property leased thereunder or shall initial legal proceedings to
repossess (or recover possession of) such leased property; or
(iv) default (which default may or may not be an Insurance
Agreement Event of Default) under any of its insurance and/or indemnity
agreements with FSA or any other Credit Enhancer and, as a result thereof,
(A) FSA or such other Credit Enhancer (I) forecloses on any of its
collateral, (II) does not release to the Company, or withholds, funds
which are otherwise to be released or distributed to the Company and such
funds are not released for a period of thirty-one (31) consecutive days,
or (III) otherwise exercises any of its other rights, powers or remedies
against the Company or any such Subsidiary with respect thereto, or (B) a
default or event of default occurs, beyond any period of grace provided
therefor, under any agreement, instrument or other document (other than
any Securitization Transaction Document) to which the Company or any such
Subsidiary is a party; or
(f) This Agreement or any Related Agreement, or any material
provision thereof, shall cease to be of full force and effect for any reason
other than in accordance with its terms, or the Company or any of its
Subsidiaries or other Affiliates shall repudiate or disavow any of its
obligations under or the validity or enforceability of this Agreement or any
Related Agreement, or any material provision thereof, including by operation of
law or otherwise; or
85
(g) There shall be commenced against the Company or any of its
Subsidiaries (other than LINC or Samco) an involuntary case seeking the
liquidation or reorganization of such Person under the Bankruptcy Code or any
similar proceeding under any other Applicable Law or an involuntary case or
proceeding seeking the appointment of a Custodian or to take possession of all
or a substantial portion of its properties or to operate all or a substantial
portion of its business, and any of the following events occur: (i) any such
Person consents to the institution of the involuntary case or proceeding; (ii)
the petition commencing the involuntary case or proceeding is not timely
controverted; (iii) the petition commencing the involuntary case or proceeding
remains undismissed and unstayed for a period of sixty (60) days; or (iv) an
order for relief shall have been issued or entered therein; or
(h) The Company or any of its Subsidiaries (other than LINC or
Samco) shall institute a voluntary case seeking liquidation or reorganization
under the Bankruptcy Code or any similar proceeding under any other Applicable
Law, or shall consent thereto; or shall consent to the conversion of an
involuntary case to a voluntary case; or shall file a petition, answer a
complaint or otherwise institute any proceeding seeking, or shall consent or
acquiesce to the appointment of, a Custodian or to take possession of all or a
substantial portion of its property or to operate all or a substantial portion
of its business; or shall make a general assignment for the benefit of
creditors; or shall generally not pay its debts as they become due; or the Board
of Directors of any such Person (or any committee thereof) adopts any resolution
or otherwise authorizes action to approve any of the foregoing; or
(i) The Company or any of its Subsidiaries (other than LINC or
Samco) shall suffer any money judgments, writs, warrants of attachment or other
orders that involve an amount or value in excess of $100,000, and such
judgments, writs, warrants or other orders shall continue unsatisfied and
unstayed for a period of thirty (30) days; or
(j) As a result of the current bankruptcy proceeding involving LINC
or the insolvency of Samco, as the case may be, a default or event of default
occurs under any agreement, instrument or other document to which LINC or Samco,
as the case may be, is a party, or any Person to whom LINC or Samco is indebted
accelerates such indebtedness, and, as a result, any creditor of LINC or Samco
asserts any claim involving the substantive consolidation of the Company or any
of its Subsidiaries (other than LINC or Samco) or recovers any indebtedness or
other amount in excess of $500,000 owed by LINC or Samco from the Company or any
of its Subsidiaries (other than LINC or Samco); or
(k) There shall occur a Material Adverse Change; or
(l) There shall occur a Change in Control; or
86
(m) There shall occur any "Special Redemption Event" (as defined in
the RISRS Indenture); or
(n) The LLCP Representative, if appointed pursuant to Section 1.1 of
the Amended and Restated Investor Rights Agreement, shall be removed from the
Board of Directors of the Company, or the LLCP Representative shall not be
elected or appointed to such Board at any future election of directors, and, in
each such case, the Company shall not have caused any other individual
designated by LLCP as the LLCP Representative to have been elected or appointed
as a member of such Board within five (5) days after the Purchaser shall have
designated such other individual (provided, however, that the voluntary
resignation of the LLCP Representative shall not be deemed to constitute an
Event of Default under this clause (n)); or
(o) (i) Any Termination Event shall occur that, when taken together
with all other Termination Events that have occurred, could result in a
liability to the Company or any ERISA Affiliate in excess of $100,000; (ii) the
Company or any ERISA Affiliate shall have committed a failure described in
Section 302(f)(1) of ERISA and the amount determined under Section 302(f)(3) of
ERISA is at least $100,000; (iii) any failure to make full payment (including
all required installments) when due of all amounts that, under the provisions of
any Benefit Plan or Applicable Law, the Company or any ERISA Affiliate is
required to pay as contributions thereto, which would result in a liability to
the Company or ERISA Affiliate in excess of $100,000; or (iv) the Company or any
ERISA Affiliate shall have incurred any accumulated funding deficiency in excess
of $100,000, whether or not waived, with respect to any Benefit Plan.
The foregoing Events of Default shall be deemed to have occurred,
respectively, and any adjustments in the interest rate under the Notes or other
remedies available to the Purchaser hereunder or thereunder shall begin to
apply, at the following times:
(i) in the case of the clause (a) above, as of 12:00 p.m.
(noon) (Los Angeles time) on the day on which such payment is due but has
not been paid;
(ii) in the case of clause (b)(i) above, immediately upon the
occurrence of any such breach of failure, or in the case of clause
(b)(ii), as of the close of business on such third Business Day, if such
breach of failure shall not have been cured by such date;
(iii) in the case of clause (c) above, as of the close of
business on such thirtieth day, if such breach or failure shall not have
been cured by such date;
87
(iv) in the case of clause (d) above, as of the close of
business on the day on which the Company first became aware, or should
have become aware, that such representation or warranty was false or
misleading when made;
(v) in the case of clause (e)(i) above, as of the close of
business on the day on which such payment of principal or interest is due,
or in the case of clause (e)(ii), as of the close of business on the tenth
day following such breach or default if such breach or default has not
been waived by the Person or Persons entitled to give such waiver, or in
the case of (e)(iii), as of the close of business on the day that such
lessor retakes possession of the leased property or initiates legal
proceedings to repossess, or in the case of (e)(iv)(A), as of the close of
business on the date upon which FSA forecloses on its collateral, or as of
the close of business on such thirty-first day, or as of the close of
business on the date upon which FSA exercises any such rights, powers and
remedies, or in the case of (e)(iv)(B), as of the close of business on the
day such default or event of default occurs;
(vi) in the case of clause (f) above, as of the close of
business on the day such provision ceases to be enforceable or is
repudiated or disavowed;
(vii) in the case of clause (i) above, as of the close of
business on the last day of such thirty (30) day period if such judgment,
writ, warrant or other order remains unsatisfied or unstayed;
(viii) in the case of clauses (g) and (h) above, immediately
prior to the occurrence of any of the events enumerated therein;
(ix) in the case of clause (j) above, immediately upon any
such claim assertion or recovery;
(x) in the case of clause (k) above, immediately upon the
occurrence of the Material Adverse Change occurs;
(xi) in the case of clauses (l) or (m) above, immediately upon
the occurrence of the Change in Control or the "Special Redemption Event,"
as the case may be;
(xii) in the case of clause (n) above, as of the close of
business on the last day of such five (5) day period if the Board of
Directors shall not have elected or appointed such other LLCP
Representative to such Board; and
88
(xiii) in the case of clause (o) above, immediately upon the
occurrence of any such events.
10.2 Acceleration. If any Event of Default (other than an Event of Default
specified in clause (g) or (h) of Section 10.1) occurs and is continuing, the
Purchaser may, by written notice to the Company, declare all outstanding
principal of, and accrued and unpaid interest on, the Notes to be due and
payable. Upon any such declaration of acceleration, such principal and interest
shall become immediately due and payable. If an Event of Default specified in
clause (g) or (h) of Section 10.1 occurs, all outstanding principal of, and
accrued and unpaid interest on, the Notes shall become immediately due and
payable without any declaration or other act on the part of the Purchaser. The
Company hereby waives all presentment for payment, demand, protest, notice of
protest and notice of dishonor, and all other notices of any kind to which it
may be entitled under Applicable Law or otherwise.
10.3 Other Remedies. If any Default or Event of Default shall occur and be
continuing, the Purchaser may proceed to protect and enforce its rights and
remedies under this Agreement and any Related Agreement by exercising all rights
and remedies available under this Agreement, any Related Agreement or Applicable
Laws (including, without limitation, the UCC), either by suit in equity or by
action at law, or both, whether for the collection of principal of or interest
on the Notes, to enforce the specific performance of any covenant or other term
contained in this Agreement or any Related Agreement. No remedy conferred in
this Agreement upon the Purchaser is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy conferred herein or now or hereafter existing at
law or in equity or by statute or otherwise.
10.4 Waiver of Past Defaults. The Purchaser may, by written notice to the
Company, waive any Default or Event of Default and its consequences with respect
to this Agreement, the Notes or any other Related Agreement; provided, however,
that no such waiver will extend to any subsequent or other Default or Event of
Default or impair any rights of the Purchaser which may arise as a result of
such Default or Event of Default.
11. MISCELLANEOUS.
11.1 Consent to Amendments. No amendment, supplement or other modification
to this Agreement or any Related Agreement shall be effective unless the same
shall be in writing and signed by the Purchaser, and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, if, and only if, the Company shall have obtained the prior
written consent of the Purchaser to such action or omission. No course of
dealing between the Company or its Subsidiaries, on the one hand, and the
Purchaser (or any other Holder), on the other hand, nor any delay in exercising
any rights hereunder or under any Note or any other Related Agreement shall
operate as a waiver of any rights of the Purchaser (or
89
any other Holder). Notwithstanding anything to the contrary contained in this
Agreement, whenever the Purchaser is required or permitted to give its consent,
such consent shall not be unreasonably withheld; provided, however, that the
Purchaser may withhold its consent to the taking of any action by the Company,
and the Purchaser may request the payment by the Company of a consent fee as a
condition to giving its consent, if (a) in the good faith judgment of the
Purchaser, such action would, when taken, (i) adversely affect or impair (or
threaten to adversely affect or impair) the ability of the Company or any of its
Subsidiaries to make any payments under this Agreement, any Note or any other
Related Agreement, (ii) materially adversely affect or impair (or threaten to
materially adversely affect or impair) the ability of the Company or any of its
Subsidiaries to perform its material covenants and obligations thereunder or
(iii) adversely affect the Collateral or the perfection, priority, continuation
or validity of the Liens therein, or (b) such consent is requested is requested
in connection with the matters set forth under Section 8.2 (Limitation on
Liens), Section 8.4 (Limitations on Restricted Payments), Section 8.6
(Observance of Stanwich Subordination Provisions), Section 8.9 (Limitations on
Transactions with Affiliates) or Section 8.10 (Restrictions on Fundamental
Changes).
11.2 Survival of Representations and Warranties; Purchaser Investigation.
All representations, warranties, covenants and agreements of the Company
contained herein, or made in writing by or on behalf of the Company pursuant
hereto or in connection herewith, shall survive the execution and delivery of
this Agreement, the issuance, sale and delivery of the Notes, the repayment of
the Notes and the due diligence or other investigation of the Company and its
Subsidiaries made by and on behalf of the Purchaser. The Company hereby agrees
that neither the Purchaser's review of the books and records or condition
(financial or otherwise), business, assets, properties, operations or prospects
of the Company or any of its Subsidiaries or other Affiliates, nor any other due
diligence investigation conducted by or on behalf of the Purchaser, shall be
deemed to constitute knowledge by the Purchaser of the existence or absence of
any facts or any other matters so as so reduce the Purchaser's right to rely on
the accuracy of the representations and warranties of the Company contained in
this Agreement or any Related Agreement.
11.3 Entire Agreement. This Agreement, together with the Exhibits and
Schedules, the Notes and the other Related Agreements constitute the full and
entire agreement and understanding between the Purchaser and the Company
relating to the subject matter hereof and thereof, and supersede all prior oral
and written, and all contemporaneous oral, agreements and understandings
relating to the subject matter hereof. The parties further acknowledge that the
investment proposal letter dated February 28, 2000, between the Company and the
Purchaser shall be superseded by this Agreement, the Notes and the other Related
Agreements.
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11.4 Successors and Assigns; Assignments. This Agreement shall inure to
the benefit of, and be binding upon, the parties and their respective successors
and permitted assigns. The Purchaser may, without the consent of the Company,
sell, assign or delegate to one or more Persons (each an "Assignee") all or any
part of its right, title and interest in and to this Agreement, the Notes or any
other Related Agreement, including, without limitation, all or any part of the
Obligations to Purchaser, subject to compliance with applicable federal and
state securities laws; provided, however, that, in any privately negotiated
transaction involving a sale or assignment by the Purchaser of any such right,
title or interest, the Purchaser shall obtain from the Assignee in writing
investment intent representations which would be customarily obtained in
transactions of such nature; and provided further, however, that the Company may
continue to deal solely and directly with the Purchaser in connection with any
right, title or interest so assigned until written notice of such assignment,
together with payment instructions, addresses and related information with
respect to the Assignee, shall have been given to the Company. If the Purchaser
assigns to any Assignee a fifty percent (50.0%) or lesser interest in and to the
aggregate principal amount of the Notes then outstanding, any decisions that the
Purchaser is entitled to make under this Agreement, the Notes and the other
Related Agreements shall be made by the Purchaser, and the Company may continue
to deal solely and directly with respect to the Purchaser in connection with the
interests so assigned to the Assignee.
11.5 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provisions in any other jurisdiction.
11.6 Notices. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given if transmitted by telecopier with
receipt acknowledged, or upon delivery, if delivered personally or by recognized
commercial courier with receipt acknowledged, or upon the expiration of 72 hours
after mailing, if mailed by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
(i) If to the Purchaser, at:
Xxxxxx Xxxxxxxxx Capital Partners II, L.P.
c/o Levine Xxxxxxxxx Capital Partners, Inc.
000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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with a copy to:
Xxxxxxx & XxXxxxxx
000 X. Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
(ii) If to the Company, at:
Consumer Portfolio Services, Inc.
00000 Xxxxxx Xxxxxx Xxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Xx., President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxx & Xxxxx
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or at such other address or addresses as the Purchaser or the Company, as the
case may be, may specify by written notice given in accordance with this Section
11.6.
11.7 Accounting Terms and Computations. For purposes of this Agreement,
(a) all accounting terms used in this Agreement that are not expressly defined
herein have the meanings given to them under GAAP, (b) all computations made
pursuant to this Agreement or any Related Agreement shall be made in accordance
with GAAP and (c) all financial statements and other financial information to be
delivered by the Company or any of its Subsidiaries hereunder or under any
Related Agreement shall be prepared in accordance with GAAP, except that any
interim financial statements or other financial information which are unaudited
may be subject to year-end audit adjustments and may omit footnotes.
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11.8 Descriptive Headings; Construction and Interpretation. The
descriptive headings of this Agreement are for convenience of reference only, do
not constitute a part of this Agreement and are not to be considered in
construing or interpreting this Agreement. All section, preamble, recital,
exhibit, schedule, disclosure schedule, annex, clause and party references are
to this Agreement unless otherwise stated. No party, nor its counsel, shall be
deemed the drafter of this Agreement for purposes of construing the provisions
of this Agreement, and all provisions of this Agreement shall be construed in
accordance with their fair meaning, and not strictly for or against any party.
11.9 Counterparts. This Agreement may be executed in two or more
counterparts and by facsimile, each of which shall be deemed an original, but
all of which together shall constitute one instrument.
11.10 Fees and Expenses. The Company shall reimburse the Purchaser for,
and shall pay, all actual and estimated out-of-pocket costs and expenses of
every type and nature (including, without limitation, fees and expenses of
counsel, accounting fees and expenses, fees and expenses related to any due
diligence investigation and all other deal-related costs and expenses) incurred
by or on behalf of the Purchaser in connection with the preparation,
negotiation, execution and delivery of this Agreement, the Notes and the other
Related Agreements and the consummation of the transactions contemplated hereby
(which costs and expenses may be withheld by the Purchaser from the proceeds to
be paid to the Company for the Term A Note) and, as directed by the Purchaser,
the Company shall pay directly to the Purchaser's third party service providers
all such costs and expenses incurred by the Purchaser (which withholding and
direct payment/reimbursement shall constitute payment in full of the Company's
obligations to reimburse the Purchaser for such costs and expenses). The
Company's reimbursement and other obligations under this Section 11.10 are in
addition to the Company's obligations to reimburse and/or pay all fees, costs
and expenses of the Purchaser set forth in the Waiver Agreement and the Stanwich
Termination and Settlement Agreement and elsewhere in this Agreement, and the
Company hereby authorizes the Purchaser to withhold all such costs and expenses.
11.11 Governing Law. IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE (WITHOUT
REGARD TO THE CHOICE OF LAW OR CONFLICTS OF LAW PROVISIONS THEREOF) AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
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11.12 Consent to Jurisdiction and Venue. EACH OF THE COMPANY AND THE
PURCHASER HEREBY CONSENTS AND AGREES THAT ALL ACTIONS, SUITS OR OTHER
PROCEEDINGS ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE NOTE OR ANY
OTHER RELATED AGREEMENT SHALL BE TRIED AND LITIGATED IN STATE OR FEDERAL COURTS
LOCATED IN THE CITY OF LOS ANGELES, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA,
WHICH COURTS SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY AND ALL
CLAIMS, CONTROVERSIES AND DISPUTES ARISING OUT OF OR RELATED TO THIS AGREEMENT,
THE NOTE OR ANY OTHER RELATED AGREEMENT. NOTWITHSTANDING THE FOREGOING, NOTHING
CONTAINED IN THIS SECTION 11.9 SHALL PRECLUDE THE PURCHASER FROM BRINGING ANY
ACTION, SUIT OR OTHER PROCEEDING IN THE COURTS OF ANY OTHER LOCATION WHERE THE
COMPANY PARTIES OR ANY ONE OF THEM OR ANY OF ITS OR THEIR ASSETS OR THE
COLLATERAL MAY BE FOUND OR LOCATED OR TO ENFORCE ANY JUDGMENT OR OTHER COURT
ORDER IN FAVOR OF THE PURCHASER.
EACH OF THE COMPANY AND THE PURCHASER HEREBY (A) IRREVOCABLY SUBMITS
TO THE JURISDICTION OF ANY SUCH COURT AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION, SUIT OR OTHER PROCEEDING COMMENCED IN ANY SUCH
COURT, (B) WAIVES ANY RIGHT IT MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR ANY OBJECTION THAT SUCH PERSON MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION OR IMPROPER VENUE AND (C) CONSENTS TO THE GRANTING OF SUCH
LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH OF THE
COMPANY AND THE PURCHASER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS,
COMPLAINT OR OTHER PROCESS ISSUED IN ANY SUCH ACTION, SUIT OR OTHER PROCEEDING
AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE
BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PARTY AT THE ADDRESS SET FORTH
IN SECTION 11.6 (NOTICES) AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED
UPON THE EARLIER OF SUCH PERSON'S ACTUAL RECEIPT THEREOF OR FIVE DAYS AFTER
DEPOSIT IN THE UNITED STATES MAIL, PROPER POSTAGE PREPAID.
TO THE EXTENT PERMITTED UNDER THE APPLICABLE LAWS OF ANY SUCH
JURISDICTION, THE COMPANY HEREBY WAIVES, IN RESPECT OF ANY SUCH ACTION, SUIT OR
OTHER PROCEEDING, THE JURISDICTION OF ANY OTHER COURT OR COURTS THAT NOW OR
HEREAFTER, BY REASON OF
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SUCH PERSON'S PRESENT OR FUTURE DOMICILE, OR OTHERWISE, MAY BE AVAILABLE TO IT.
11.13 Publicity. Each party will consult with the other before issuing,
and provide each other the opportunity to review, comment upon and concur with
and use reasonable efforts to agree on, any press release or other public
statement with respect to the transactions contemplated by this Agreement, and
shall not issue any such press release or make such other public announcement
prior to such consultation, except as either party may determine is required
under Applicable Laws or by obligations pursuant to any listing agreement with
any national securities exchange or Nasdaq. The parties agree that the initial
press release to be issued with respect to the transactions contemplated by this
Agreement shall be in the form heretofore agreed to by the parties.
11.14 Limitation on Liability. No claim shall be made by the Company or
any of its Affiliates against the Purchaser, or any Affiliates, partners,
directors, officers, employees, agents or representatives of the Purchaser, for
any special, indirect, consequential or punitive damages in respect of any claim
for breach of contract or under any other theory of liability arising out of or
related to the transactions contemplated by this Agreement, the Notes, any other
Related Agreement, the November 1998 Transaction Documents or the April 1999
Note Documents, or any act, omission or event occurring in connection therewith.
The Company hereby waives, releases and agrees not to xxx upon any claim for
such damages, whether or not accrued and whether or not known or suspected to
exist in its favor.
11.15 Amendment and Restatement. This Agreement amends and restates the
Amended November 1998 Securities Purchase Agreement and the April 1999
Securities Purchase Agreement on and as of the Closing Date, and the Amended
November 1998 Securities Purchase Agreement and the April 1999 Securities
Purchase Agreement shall remain in full force and effect as amended and restated
hereby. The Amended November 1998 Securities Purchase Agreement and the April
1999 Securities Purchase Agreement, as amended and restated hereby, is hereby
ratified and affirmed by the parties in all respects.
11.16 Waiver of Trial by Jury Trial. EACH PARTY HEREBY WAIVES THE RIGHT TO
A TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER PROCEEDING ARISING OUT OF,
CONNECTED WITH OR RELATED TO THIS AGREEMENT OR ANY RELATED AGREEMENT, OR ANY
CLAIM, CONTROVERSY OR DISPUTE ARISING OUT OF OR RELATED TO THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, REGARDLESS OF WHICH PARTY INITIATES SUCH ACTION
OR ACTIONS.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their duly authorized representatives as of the date first
written above.
PURCHASER
XXXXXX XXXXXXXXX CAPITAL PARTNERS, INC.,
a California corporation
On behalf of XXXXXX XXXXXXXXX CAPITAL
PARTNERS II, L.P., a California limited
partnership
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxx
President
COMPANY
CONSUMER PORTFOLIO SERVICES, INC.,
a California corporation
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
--------------------------------------------
Xxxxxxx X. Xxxxxxx, Xx.
President and Chief Executive Officer
By: /s/ Xxxxx X. Stock
--------------------------------------------
Xxxxx X. Stock
Senior Vice President and Chief Financial Officer
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