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Exhibit 10.8
AMENDED AND RESTATED NOTE PURCHASE AGREEMENT
THIS AMENDED AND RESTATED NOTE PURCHASE AGREEMENT, dated as of
April
18, 2006 (as amended, supplemented, restated or otherwise modified
from time to
time in accordance with the terms hereof, this "AGREEMENT"), is
made among PAGE
FUNDING LLC, a Delaware limited liability company (the "ISSUER"),
CONSUMER
PORTFOLIO SERVICES, INC., a California corporation ("CPS" or the
"SERVICER"),
and UBS REAL ESTATE SECURITIES INC., a Delaware corporation, as
Note Purchaser
(in such capacity, together with any successors in such capacity,
the "NOTE
PURCHASER").
BACKGROUND
1. Pursuant to the Note Purchase Agreement dated as of June
30, 2004, as amended by Amendment No. 1 thereto dated as of June
29, 2005, and
Amendment No. 2 dated as of February 28, 2006 (the "ORIGINAL NOTE
PURCHASE
AGREEMENT"), the Issuer sold its Variable Funding Note in the
principal amount
of $100,000,000 (as amended and restated to the date hereof, the
"ORIGINAL
NOTE") to the Note Purchaser and obtained the agreement of the Note
Purchaser to
make loans from time to time (each, an "ADVANCE") for the purchase
of Invested
Amounts, all of which Advances are evidenced by the Original
Note.
2. Contemporaneously with the execution and delivery of this
Agreement, the Issuer, the Note Purchaser and Wells Fargo Bank,
National
Association, a national banking association, as trustee (together
with its
successors in trust thereunder as provided in the Indenture
referred to below,
the "TRUSTEE"), are entering into the Amended and Restated
Indenture, of even
date herewith (as the same may be further amended, supplemented,
restated or
otherwise modified from time to time in accordance with the terms
thereof, the
"INDENTURE"), pursuant to which the Issuer will issue its Third
Amended and
Restated Variable Funding Notes, which amends and restates the
Original Note (as
the same may be further amended, supplemented, restated or
otherwise modified
from time to time in accordance with the terms thereof and of the
Indenture, the
"NOTES").
3. The Issuer and the Note Purchaser desire to exchange the
Original Note for the Notes and contemporaneously therewith amend
and restate
the Original Note Purchase Agreement upon the terms and conditions
set forth
herein and in accordance with Section 9.01 of the Original Note
Purchase
Agreement.
4. Now, therefore, in consideration of the premises and the
mutual covenants herein contained, the parties hereto hereby agree
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 DEFINITIONS.
As used in this Agreement and unless the context requires a
different
meaning, capitalized terms used but not defined herein (including
the preamble
and the recitals hereto) shall have the meanings assigned to such
terms in the
Second Amended and Restated Sale and Servicing Agreement dated as
of April 18,
2006 (as the same may be further amended, supplemented, restated or
otherwise
modified from time to time in accordance with the terms thereof,
the "SALE AND
SERVICING AGREEMENT"), among the Issuer, as purchaser and issuer,
CPS, as seller
and servicer (in such capacities, the "SELLER" and the
"SERVICER,"
respectively), and the Trustee, as trustee and backup servicer, or
the
Indenture, as applicable. The definitions of such terms are
applicable to the
singular as well as the plural form of such terms and to the
masculine as well
as the feminine and neuter genders of such terms:
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ARTICLE II
PURCHASE AND SALE OF THE NOTES
SECTION
2.01 THE NOTE PURCHASE.
On the terms and conditions set forth in the Indenture, the Sale
and
Servicing Agreement and this Agreement, and in reliance on the
covenants,
representations and agreements set forth herein and therein, the
Issuer shall
issue and cause the Trustee to authenticate and deliver to the Note
Purchaser
the Notes on the Restatement Effective Date, and the Note Purchaser
shall cancel
the Original Note and return it to the Issuer. The Notes shall be
dated the
Restatement Effective Date, registered in the name of the Note
Purchaser, and
duly authenticated in accordance with the provisions of the
Indenture.
SECTION 2.02 ADVANCES.
Upon the Issuer's request, delivered in accordance with the
provisions
of SECTION 2.03, subject to the satisfaction of all conditions
precedent thereto
and to the terms and conditions of this Agreement and the other
Basic Documents,
and in reliance upon the representations and warranties set forth
herein and
therein, the Note Purchaser shall make Advances from time to time
during the
Term; provided that no Advance shall be required or permitted to be
made on any
date if, after giving effect to such Advance, (a) the Invested
Amount would
exceed the Maximum Invested Amount or (b) a Borrowing Base
Deficiency exists or
would exist. Subject to the terms and conditions of this Agreement
and the
Indenture, the aggregate principal amount of the Notes outstanding
may be
increased or decreased from time to time.
SECTION 2.03 ADVANCE PROCEDURES.
Whenever the Issuer wishes the Note Purchaser to make an Advance,
the
Issuer shall (or shall cause the Servicer to) notify the Note
Purchaser by
written notice, with an electronic copy of such notice sent to the
Note
Purchaser, substantially in the form of EXHIBIT B hereto (each such
request, an
"ADVANCE REQUEST"), delivered to the Note Purchaser no later than
two Business
Days prior to the proposed Funding Date. Each such Advance Request
shall be
irrevocable and shall in each case refer to this Agreement and
specify the
aggregate amount of the requested Advance to be made on such date.
The Note
Purchaser shall promptly thereafter (but in no event later than
11:00 a.m. New
York City time on the proposed Funding Date) notify the Issuer
whether the Note
Purchaser has determined to make the requested Advance. On the
Funding Date,
subject to the other conditions set forth herein, in the Indenture,
and in the
Sale and Servicing Agreement, the Note Purchaser shall make
available to the
Issuer the amount of such Advance by wire transfer in U.S. dollars
of such
amount in same day funds to an account designated by CPS no later
than 4:00 p.m.
(New York time) on the date of such Advance.
SECTION 2.04 THE NOTES.
On each date an Advance is made, increasing the outstanding
principal
amount of the Notes, and on each date the outstanding principal
amount of the
Notes is reduced, a duly authorized officer, employee or agent of
the Note
Purchaser shall make appropriate notations in its books and records
of the
amount of such Advance and the amount of such reduction, as
applicable. The
Issuer hereby authorizes each duly authorized officer, employee and
agent of the
Note Purchaser to make such notations on the books and records as
aforesaid and
every such notation made in accordance with the foregoing authority
shall be
PRIMA FACIE evidence of the accuracy of the information so recorded
and shall be
binding on the Issuer absent manifest error; provided, however,
that in the
event of a discrepancy between the books and records of the Note
Purchaser and
the records maintained by the Trustee pursuant to the Indenture,
such
discrepancy shall be resolved by the Note Purchaser and the
Trustee.
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SECTION 2.05 COMMITMENT TERM.
The "TERM" of the Commitment hereunder shall be for a period
commencing
on the Original Closing Date and ending on the Facility Termination
Date.
ARTICLE III
INTEREST AND FEES
SECTION 3.01 INTEREST.
Each Advance funded or maintained by the Note Purchaser during
any
Interest Period shall bear interest at the Note Interest Rate.
(a) Interest on Advances shall be due and payable on each
Settlement Date in accordance with the provisions of the Sale and
Servicing
Agreement.
(b) All computations of interest at the Note Interest Rate
shall be made on the basis of a year of 360 days and the actual
number of days
elapsed. Whenever any payment of interest or principal in respect
of any Advance
shall be due on a day other than a Business Day, such payment shall
be made on
the next succeeding Business Day and such extension of time shall
be included in
the computation of the amount of interest owed.
SECTION 3.02 FEES.
(a) The Issuer and the Servicer shall jointly and severally
pay or cause to be paid to the Note Purchaser's reasonable
out-of-pocket
expenses, including its legal fees, in accordance with and subject
to Section
8.05.
(b) On each Settlement Date on or prior to the Facility
Termination Date, the Issuer and the Servicer shall jointly and
severally pay or
cause to be paid to the Note Purchaser a facility fee equal to the
product of
(i) the product of (x) a fraction, the numerator of which is the
actual number
of days elapsed in the related Interest Period and the denominator
of which is
360 and (y) 0.25% and (ii) the excess of (x) the Maximum Invested
Amount over
(y) the daily average outstanding Invested Amount (the "UNUSED
FACILITY FEE")
during the related Interest Period.
SECTION 3.03 INCREASED COSTS, ETC.
The Issuer agrees to reimburse the Note Purchaser for an
increase in the cost of, or any reduction in the amount of any sum
receivable by
the Note Purchaser, including reductions in the rate of return on
the Note
Purchaser's capital, in respect of making, continuing or
maintaining (or of its
obligation to make, continue or maintain) any Advances that arise
in connection
with any change in, or the introduction, adoption, effectiveness,
interpretation
reinterpretation or phase-in, in each case, after the date hereof,
of any law or
regulation, directive, guideline, decision or request (whether or
not having the
force of law) of any court, central bank, regulator or other
Governmental
Authority, except for such changes with respect to increased
capital costs and
taxes which are governed by SECTIONS 3.04 and 3.05, respectively.
Each such
demand shall be provided to the Issuer in writing and shall state,
in reasonable
detail, the reasons therefor and the additional amount required
fully to
compensate the Note Purchaser for such increased cost or reduced
amount or
return. Such additional amounts shall be payable by the Issuer to
the Note
Purchaser within five (5) Business Days of its receipt of such
notice, and such
notice shall, in the absence of manifest error, be conclusive and
binding on the
Issuer.
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SECTION 3.04 INCREASED CAPITAL COSTS.
If any change in, or the introduction, adoption, effectiveness,
interpretation or reinterpretation or phase-in, in each case after
the date
hereof, of any law or regulation, directive, guideline, decision or
request
(whether or not having the force of law) of any court, central
bank, regulator
or other Governmental Authority affects or would affect the amount
of capital
required or reasonably expected to be maintained by the Note
Purchaser or any
Person controlling the Note Purchaser and the Note Purchaser
reasonably
determines that the rate of return on its or such controlling
Person's capital
as a consequence of its commitment or the Advances made by the Note
Purchaser is
reduced to a level below that which the Note Purchaser or such
controlling
Person would have achieved but for the occurrence of any such
circumstance,
then, in any such case after notice from time to time by the Note
Purchaser to
the Issuer, the Issuer shall pay to the Note Purchaser an
incremental commitment
fee sufficient to compensate the Note Purchaser or such controlling
Person for
such reduction in rate of return. A statement of the Note Purchaser
as to any
such additional amount or amounts (including calculations thereof
in reasonable
detail), in the absence of manifest error, shall be conclusive and
binding on
the Issuer; and PROVIDED, FURTHER, that the initial payment of such
increased
commitment fee shall include a payment for accrued amounts due
under this
SECTION 3.04 prior to such initial payment. In determining such
additional
amount, the Note Purchaser may use any method of averaging and
attribution that
it shall reasonably deem applicable so long as it applies such
method to other
similar transactions.
SECTION 3.05 TAXES.
All payments by the Issuer of principal of, and interest on, the
Notes
and all other amounts payable hereunder (including fees) shall be
made free and
clear of and without deduction for any present or future income,
excise, stamp
or franchise taxes and other taxes, fees, duties, withholdings or
other charges
of any nature whatsoever imposed by any taxing authority, but
excluding in the
case of the Note Purchaser, taxes imposed on or measured by its
overall net
income, overall receipts or overall assets and franchise taxes
imposed on it by
the jurisdiction in which the Note Purchaser is organized or is
operating or any
political subdivision thereof (such non-excluded items being called
"TAXES"). In
the event that any withholding or deduction from any payment to be
made by the
Issuer hereunder is required in respect of any Taxes pursuant to
any applicable
law, rule or regulation, then the Issuer will:
(a) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(b) promptly forward to the Note Purchaser or its agent an
official receipt or other documentation evidencing such payment to
such
authority; and
(c) pay to the Note Purchaser or its agent such additional
amount or amounts as is necessary to ensure that the net amount
actually
received by the Note Purchaser will equal the full amount the Note
Purchaser
would have received had no such withholding or deduction been
required.
Moreover, if any Taxes are directly asserted against the Note
Purchaser with respect to any payment received by the Note
Purchaser or its
agent, the Note Purchaser or such agent may pay such Taxes and the
Issuer will
promptly upon receipt of prior written notice stating the amount of
such Taxes
pay such additional amounts (including any penalties, interest or
expenses) as
is necessary in order that the net amount received by such person
after the
payment of such Taxes (including any Taxes on such additional
amount) shall
equal the amount the Note Purchaser would have received had not
such Taxes been
asserted. The Note Purchaser shall make all reasonable efforts to
avoid the
imposition of any Taxes that would give rise to an additional
payment under this
SECTION 3.05.
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If the Issuer fails to pay any Taxes when due to the
appropriate taxing authority or fails to remit to the Note
Purchaser or its
agent the required receipts or other required documentary evidence,
the Issuer
shall indemnify the Note Purchaser and its agent, if any, for any
incremental
Taxes, interest or penalties that may become payable by the Note
Purchaser or
its agent as a result of any such failure. For purposes of this
SECTION 3.05, a
distribution hereunder by the agent for the Note Purchaser shall be
deemed a
payment by the Issuer.
Upon the request of the Issuer, the Note Purchaser, if it is
organized under the laws of a jurisdiction other than the United
States, shall,
prior to the initial due date of any payments hereunder and to the
extent
permissible under then current law, execute and deliver to the
Issuer on or
about the first scheduled payment date in each calendar year
thereafter, one or
more (as the Issuer may reasonably request) United States Internal
Revenue
Service Forms W-8ECI or Forms W-8BEN or such other forms or
documents (or
successor forms or documents), appropriately completed, as may be
applicable to
establish the extent, if any, to which a payment to the Note
Purchaser is exempt
from withholding or deduction of Taxes. The Issuer shall not,
however, be
required to pay any increased amount under this SECTION 3.05 to the
Note
Purchaser if the Note Purchaser fails to comply with the
requirements set forth
in this paragraph.
SECTION 3.06 MARK-TO-MARKET ADJUSTMENTS.
(a) In the event that a Borrowing Base Deficiency exists on
any date of determination as determined by the Note Purchaser in
its sole
discretion, the Issuer shall on the same Business Day of the
receipt of notice
from the Note Purchaser (or if notice is received after 10:01 a.m.
New York
time, then on the next Business Day), prepay the Invested Amount by
an amount
equal to such Borrowing Base Deficiency by paying such amount to or
at the
direction of the Note Purchaser (the "MARGIN CALL"). If a Borrowing
Base
Deficiency is not fully paid by the Issuer pursuant to the
immediately preceding
sentence, then (i) on any Funding Date, the Note Purchaser shall
net and set-off
the amount of any outstanding Borrowing Base Deficiency against the
amount of
the Advance to be made on such Funding Date and (ii) on each
Settlement Date as
of which any portion of such Borrowing Base Deficiency shall remain
outstanding,
any amount otherwise payable to the Issuer on such Settlement Date
pursuant to
Section 5.7(a)(viii) of the Sale and Servicing Agreement shall
instead be
deposited to the Note Distribution Account pursuant to Section
5.7(a)(iv) of the
Sale and Servicing Agreement, to the extent of such unpaid
Borrowing Base
Deficiency, for payment to the Note Purchaser on such Settlement
Date as a
prepayment of the Invested Amount.
(b) The Servicer, the Seller and the Issuer shall cooperate
with the Note Purchaser and will execute and deliver, or cause to
be executed
and delivered, all such documents that may be reasonably necessary
to calculate
the Market Value, and will take all such other actions, as Note
Purchaser may
reasonably request from time to time in order to calculate the
Market Value. On
the 11th and 25th day of each month during the Term (or if such day
is not a
Business Day, on the immediately succeeding Business Day), the Note
Purchaser
shall advise the Servicer of the Market Value, as calculated by the
Note
Purchaser in its sole discretion.
SECTION 3.07 ILLEGALITY; SUBSTITUTED INTEREST RATES.
Notwithstanding any other provisions herein, (a) if any Requirement
of
Law or any change therein or in the interpretation or application
thereof shall
make it unlawful for the Note Purchaser to make or maintain any
Notes at the
LIBOR rate as contemplated by this Agreement, or (b) in the event
that the Note
Purchaser shall have determined (which determination shall be
conclusive and
binding upon the Issuer) that by reason of circumstances affecting
the LIBOR
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interbank market neither adequate nor reasonable means exist for
ascertaining
the LIBOR rate, or (c) the Note Purchaser shall have determined
(which
determination shall be conclusive and binding on the Issuer) that
the applicable
LIBOR rate will not adequately and fairly reflect the cost to the
Note Purchaser
of maintaining or funding the Notes based on such applicable LIBOR
rate
(provided that the parties hereto acknowledge and agree that the
Note Purchaser
shall only make such determination if the published LIBOR rate used
by the Note
Purchaser does not accurately reflect the actual LIBOR rate), (x)
the obligation
of the Note Purchaser to make or maintain the Notes at the LIBOR
rate shall
forthwith be suspended and the Note Purchaser shall promptly notify
the Issuer
thereof (by telephone confirmed in writing) and (y) each Note then
outstanding,
if any, shall, from and including the date that is forty-five (45)
days after
the Issuer's receipt of notice from the Note Purchaser of the
occurrence of any
condition set forth in clauses (a), (b) or (c), or at such earlier
date as may
be required by law, until payment in full thereof, bear interest at
the rate per
annum equal to the greater of (i) the Prime Rate and (ii) the rate
of interest
(including the Applicable Margin) in effect on the date immediately
preceding
the date any event described in clause (a), (b) or (c) occurred
(calculated on
the basis of the actual number of days elapsed in a year of 360
days). If
subsequent to such suspension of the obligation of the Note
Purchaser to make or
maintain the Notes at the LIBOR rate it becomes lawful for the Note
Purchaser to
make or maintain the Notes at the LIBOR rate, or the circumstances
described in
clause (b) or (c) above no longer exist, the Note Purchaser shall
so notify the
Issuer and its obligation to do so shall be reinstated effective as
of the date
it becomes lawful for the Note Purchaser to make or maintain the
Notes at the
LIBOR rate or the circumstances described in clause (b) or (c)
above no longer
exist.
ARTICLE IV
OTHER PAYMENT TERMS
SECTION 4.01 TIME AND METHOD OF PAYMENT.
All amounts payable to the Note Purchaser hereunder or with respect
to
the Notes shall be made by wire transfer of immediately available
funds in
Dollars not later than 5:00 p.m., New York City time, on the date
due. Any funds
received after that time will be deemed to have been received on
the next
Business Day.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01 REPRESENTATIONS AND WARRANTIES OF THE ISSUER.
The Issuer makes the following representations and warranties, on
which
the Note Purchaser relies in purchasing the Notes and in making
each Advance,
and on which the Trustee relies in receiving a security interest in
the
Receivables and the other Collateral related thereto under the
Indenture. Such
representations are made as of the Restatement Effective Date and
as of each
Funding Date after the Restatement Effective Date, and shall
survive the
issuance of the Notes, the making of each Advance and the grant of
a security
interest in the Receivables and the other Collateral related
thereto to the
Trustee under the Indenture.
(a) SALE AND SERVICING AGREEMENT. Each of the representations
and warranties of the Purchaser set forth in Section 7.1 of the
Sale and
Servicing Agreement is true and correct.
(b) OTHER OBLIGATIONS. The Issuer is not in default in the
performance, observance or fulfillment of any obligation, covenant
or condition
in any of the Basic Documents to which it is a party or in any
other agreement
or instrument to which it is a party or by which it is bound.
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(c) NO PUBLIC OFFERING OF THE NOTES. Neither the Issuer nor,
to the best of the Issuer's knowledge after due inquiry, anyone
acting on the
Issuer's behalf, has offered, pledged, sold or otherwise disposed
of any Note or
any interest therein or solicited any offer to buy or accept a
transfer, pledge
or other disposition of any Note or any interest therein or
otherwise approached
or negotiated with respect to any Note or any interest therein,
with any person
in any manner, or made any general solicitation by means of general
advertising
or in any other manner, or taken any other action, which would
constitute a
public distribution of the Notes under the Securities Act, or which
would render
the disposition of any Note a violation of Section 5 of the
Securities Act or
any State securities laws, or require registration or qualification
pursuant
thereto.
(d) NO REGISTRATION UNDER THE SECURITIES ACT. Assuming the
Note Purchaser is not purchasing the Notes with a view toward
further
distribution and that the Note Purchaser has not engaged in any
general
solicitation or general advertising within the meaning of the
Securities Act,
the offer and sale of the Notes in the manner contemplated by this
Agreement is
a transaction exempt from the registration requirements of the
Securities Act,
and the Indenture is not required to be qualified under the Trust
Indenture Act.
(e) REGULATIONS T, U AND X. No proceeds of any Advance will be
used, directly or indirectly, by the Issuer for the purpose of
purchasing or
carrying any Margin Stock (as defined in Regulation U of the Board
of Governors
of the Federal Reserve System) or for the purpose of reducing or
retiring any
indebtedness that was originally incurred to purchase or carry
Margin Stock or
for any other purpose which might cause any Advance to be a
"purpose credit"
within the meaning of Regulation U. Neither the making of any
Advance hereunder,
nor the use of the proceeds thereof, will violate or otherwise
conflict with the
provisions of Regulations T, U or X of the Board of Governors of
the Federal
Reserve System.
(f) INVESTMENT COMPANY STATUS. The Issuer is not, nor will the
consummation of the transactions contemplated by the Basic
Documents cause the
Issuer to be, an "investment company" or an "affiliated person" of,
or
"promoter" or "principal underwriter" for, an "investment company,"
as such
terms are defined in the Investment Company Act of 1940, as amended
(the
"INVESTMENT COMPANY ACT"), or a company "controlled" by an
investment company
within the meaning of the Investment Company Act. The consummation
of the
transactions contemplated by the Basic Documents will not violate
any provision
of the Investment Company Act or any rule, regulation or order
issued by the
Securities and Exchange Commission thereunder. The Issuer is not
subject to
regulation under any applicable law (other than Regulation X of the
Board of
Governors of the Federal Reserve System) that limits its ability to
incur
Indebtedness.
(g) FULL DISCLOSURE. The information, reports, financial
statements, exhibits, schedules, officer's certificates and other
documents
furnished by or on behalf of the Issuer to the Seller, the
Servicer, the Note
Purchaser, the Trustee or the Backup Servicer in connection with
any particular
Advance or the negotiation, preparation, delivery or performance of
this
Agreement, the Notes, the Indenture, the Sale and Servicing
Agreement and the
other Basic Documents or included herein or therein or delivered
pursuant hereto
or thereto, taken as a whole, are true and correct (or, in the case
of
projections, are based on good faith reasonable estimates) on the
date as of
which such information is stated or certified and do not and will
not contain an
untrue statement of a material fact, or omit to state any material
fact
necessary to make the statements herein or therein contained, in
the light of
the circumstances under which they were made, not misleading. All
such financial
statements fairly present the financial condition of the Issuer as
of the date
specified therein (subject to normal year-end audit adjustments)
all in
accordance with GAAP. On such date, the Issuer had no material
contingent
liabilities, liabilities for taxes, or unusual or anticipated
losses from any
unfavorable commitments, except as referred to or reflected in such
financial
statements as of such date. There is no fact known to the Issuer,
after due
inquiry, that would have a Material Adverse Effect and that has not
been
disclosed herein, in the other Basic Documents or in a report,
financial
statement, exhibit, schedule, disclosure letter or other writing
furnished to
the Note Purchaser for use in connection with the transactions
contemplated
hereby or thereby.
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(h)
COLLATERAL SECURITY.
(i) The Issuer (i) owns and will own, and has and
will have good title to each item that it pledges as Collateral,
free
and clear of any and all Liens (including, without limitation, any
tax
liens), other than Liens created in favor of the Trustee pursuant
to
the Indenture and (ii) has not and will not have assigned to any
person
any of its right, title or interest in any item it pledges as
Collateral immediately prior to such pledge. No security
agreement,
financing statement or other public notice similar in effect
with
respect to all or any part of the Collateral is or will be on file
or
of record in any public office or authorized by the Issuer, except
such
as have been or may hereinafter be filed pursuant to the Basic
Documents and except such as shall be terminated as to the
Collateral
no later than concurrently with the pledge of such Collateral to
the
Trustee under the Indenture.
(ii) The Indenture is effective to create, as
collateral security for the Notes, a valid and enforceable Lien on
the
Collateral in favor of the Trustee.
(iii) Upon filing of the financing statement
delivered to the Note Purchaser and the Trustee by the Issuer on
or
prior to the Restatement Effective Date with the Secretary of State
of
the State of Delaware (which financing statement is in proper form
for
filing in such jurisdiction and accurately describes the
Collateral),
the Lien created pursuant to the Indenture will constitute a
perfected
security interest in the Collateral in favor of the Trustee, which
Lien
will be prior to all other Liens of all other Persons that may
be
perfected by filing a financing statement under Article 9 of
the
Uniform Commercial Code and which Lien is enforceable as such
as
against all other Persons.
(iv) Upon delivery of Contracts evidencing the
Receivables to the Trustee in accordance with Section 2.1(a) of
the
Sale and Servicing Agreement, the Lien created pursuant to the
Indenture will constitute a perfected security interest in such
Contracts in favor of the Trustee, which Lien will be prior to
all
other Liens of all other Persons that may be perfected by
possession of
such Contracts under Article 9 of the Uniform Commercial Code and
which
Lien is enforceable as such as against all other Persons.
(i) NO FUNDING TERMINATION EVENT. No Funding Termination
Event, or event which, with the giving of notice or the passage of
time or both
would constitute a Funding Termination Event, has occurred and is
continuing.
(j) OWNERSHIP OF PROPERTIES. The Issuer has good and
marketable title to any and all of its properties and assets,
subject only to a
Lien under the Indenture.
(k) LEGAL COUNSEL, ETC. The Issuer has consulted with its own
legal counsel and independent accountants to the extent it has
deemed necessary
regarding the tax, accounting and regulatory consequences of the
transactions
contemplated by this Agreement and the other Basic Documents, and
the Issuer is
not participating in such transactions in reliance on any
representations of the
Note Purchaser or its Affiliates, or its counsel, with respect to
tax,
accounting, regulatory or any other matters.
(l) BASIC DOCUMENTS. The Issuer has furnished to the Note
Purchaser true, accurate and (except as otherwise consented by the
Note
Purchaser) complete copies of all other Basic Documents to which it
is a party
as of the Restatement Effective Date, all of which Basic Documents
are in full
force and effect as of the Restatement Effective Date and no terms
of any such
agreements or documents have been amended, modified or otherwise
waived as of
such date. No party to any Basic Document is in default under any
of its
obligations thereunder.
8
<PAGE>
(m) ELIGIBLE RECEIVABLES. All of the Receivables included in
the Borrowing Base are Eligible Receivables.
(n) NO FRAUDULENT CONVEYANCE. As of the Restatement Effective
Date and immediately after giving effect to each Advance, the fair
value of the
assets of the Issuer is greater than the fair value of its
liabilities
(including, without limitation, contingent liabilities of the
Issuer), and the
Issuer is and will be solvent, does and will pay its debts as they
mature and
does not and will not have an unreasonably small capital to engage
in the
business in which it is engaged and proposes to engage. The Issuer
does not
intend to incur, or believe that it has incurred, debts beyond its
ability to
pay such debts as they mature. The Issuer is not in default under
any material
obligation to pay money to any Person. The Issuer is not
contemplating the
commencement of insolvency, bankruptcy, liquidation or
consolidation proceedings
or the appointment of a receiver, liquidator, conservator, trustee
or similar
official in respect of the Issuer or any of its assets. The Issuer
is not
transferring any Collateral with any intent to hinder, delay or
defraud any of
its creditors. The Issuer will not use the proceeds from the
transactions
contemplated by this Agreement or any other Basic Document to give
any
preference to any creditor or class of creditors. The Issuer has
given fair
consideration and reasonably equivalent value in exchange for the
sale of the
Receivables by CPS under the Sale and Servicing Agreement.
(o) NO OTHER BUSINESS. The Issuer engages in no business
activities other than the purchase of the Receivables and the Other
Conveyed
Property, pledging the Receivables and the other Collateral to the
Trustee under
the Indenture, transferring Receivables and the Other Conveyed
Property in
connection with securitizations and in connection with whole-loan
sales, issuing
the Notes and other activities relating to the foregoing to the
extent permitted
by the organizational documents of the Issuer as in effect on the
date hereof,
or as amended with the prior written consent of Note Purchaser.
Without
limitation of the foregoing, the Issuer is not an issuer of
securities other
than the Notes or a borrower under any loan or financing agreement,
facility or
other arrangement other than the facility established pursuant to
this Agreement
and the other Basic Documents.
(p) NOTES ENTITLED TO BENEFIT OF THE INDENTURE. The Notes
purchased by the Note Purchaser hereunder will be entitled to the
benefit of the
security provided in the Indenture.
(q) NO INDEBTEDNESS. The Issuer has no Indebtedness, other
than Indebtedness incurred under (or contemplated by) the terms of
the Notes,
the Indenture, the Sale and Servicing Agreement and this
Agreement.
(r) ERISA. The Issuer does not maintain any Plans, and the
Issuer agrees to notify the Note Purchaser in advance of forming
any Plans.
Neither the Issuer nor any Affiliate of the Issuer (other than MFN
under the MFN
Financial Corporation Pension Plan and CPS under its defined
contribution
(401(k)) plan) has any obligations or liabilities with respect to
any Plans or
Multiemployer Plans, nor have any such Persons had any obligations
or
liabilities with respect to any such Plans during the five year
period prior to
the date this representation is made or deemed made. The Issuer
will give notice
to the Note Purchaser if at any time it or any Affiliate has any
obligations or
liabilities with respect to any Plan or Multiemployer Plan. All
Plans maintained
by the Issuer or any Affiliate are in substantial compliance with
all applicable
laws (including ERISA). The Issuer is not an employer under any
Multiemployer
Plan.
9
<PAGE>
SECTION 5.02 REPRESENTATIONS AND WARRANTIES OF CPS.
CPS makes the following representations and warranties, on which
the
Issuer relies in purchasing the Receivables and the Other Conveyed
Property
related thereto, and on which the Note Purchaser relies in
purchasing the Notes.
Such representations and warranties are made as of the Restatement
Effective
Date and as of each Funding Date after the Restatement Effective
Date, and shall
survive the sale by CPS to the Issuer of the Receivables and the
Other Conveyed
Property related thereto under the Sale and Servicing Agreement,
the issuance of
the Notes, the purchase of each Advance and the grant of a security
interest in
the Receivables and the other Collateral related thereto by the
Issuer to the
Trustee under the Indenture.
(a) SALE AND SERVICING AGREEMENT. Each of the representations,
warranties and covenants of the Seller and the Servicer in the Sale
and
Servicing Agreement is true and correct.
(b) INVESTMENT COMPANY STATUS. CPS is not, nor will the
consummation of the transactions contemplated by the Basic
Documents cause CPS
to be, an "investment company" or an "affiliated person" of, or
"promoter" or
"principal underwriter" for, an "investment company," as such terms
are defined
in the Investment Company Act or a company "controlled by" an
investment company
within the meaning of the Investment Company Act. The consummation
of the
transactions contemplated by this Agreement and each other Basic
Document to
which CPS is a party will not violate any provision of such Act or
any rule,
regulation or order issued by the Securities and Exchange
Commission thereunder.
CPS is not subject to regulation under any applicable law (other
than Regulation
X of the Board of Governors of the Federal Reserve System) that
limits its
ability to incur Indebtedness.
(c) NO MATERIAL ADVERSE EFFECT; NO DEFAULT. (i) CPS is not a
party to any indenture, loan or credit agreement or any lease or
other agreement
or instrument or subject to any charter or corporate restriction
that could
have, and no provision of applicable law or governmental regulation
has had or
would have a Material Adverse Effect and (ii) CPS is not in default
under or
with respect to any contract, agreement, lease or other instrument
to which CPS
is a party and which is material to CPS's condition (financial or
otherwise),
business, operations or properties, and CPS has not delivered or
received any
notice of default thereunder, other than such defaults as have been
waived.
(d) REPRESENTATIONS AND WARRANTIES OF CPS UNDER BASIC
DOCUMENTS. Each representation and warranty made by it in each
Basic Document to
which it is a party (including any representation and warranties
made by it as
Servicer) is true and correct as of the date originally made, as of
the
Restatement Effective Date and as of and after giving effect to the
making of
each Advance as if made on and as of the making of each Advance as
if set forth
in full herein.
(e) NO PUBLIC OFFERING OF NOTES. Neither the Servicer nor, to
the best of the Servicer's knowledge after due inquiry, anyone
acting on the
Servicer's behalf, has offered, transferred, pledged, sold or
otherwise disposed
of any Note or any interest therein, or solicited any offer to buy
or accept a
transfer, pledge or other disposition of any Note or any interest
therein or
otherwise approached or negotiated, with respect to any Note or any
interest
therein, with any person in any manner, or made any general
solicitation by
means of general advertising or in any other manner, or taken any
other action,
which would constitute a public distribution of the Notes under the
Securities
Act, or which would render the disposition of any Note a violation
of Section 5
of the Securities Act or any state securities laws, or require
registration or
qualification pursuant thereto.
(f) REGULATIONS T, U AND X. No proceeds of any sale hereunder
will be used, directly or indirectly, by CPS for the purpose of
purchasing or
carrying any Margin Stock (as defined in Regulation U of the Board
of Governors
of the Federal Reserve System) or for the purpose of reducing or
retiring any
indebtedness that was originally incurred to purchase or carry
Margin Stock or
for any other purpose which might cause any sale hereunder to be a
"purpose
credit" within the meaning of Regulation U. Neither the making of
any Advance
hereunder, nor the use of the proceeds thereof, will violate or
otherwise
conflict with the provisions of Regulations T, U or X of the Board
of Governors
of the Federal Reserve System.
10
<PAGE>
(g) SECURITY INTEREST. Notwithstanding the intent of the
parties set forth in Section 2.2 of the Sale and Servicing
Agreement, the Sale
and Servicing Agreement is effective to create valid and
enforceable Liens on
the Receivables and the Other Conveyed Property in favor of the
Issuer. Upon
filing of the financing statement delivered to the Note Purchaser
and the
Trustee by CPS on or prior to the Restatement Effective Date in
each
jurisdiction (including, without limitation, the State of
California) in which
required by applicable law (which financing statement is in proper
form for
filing in each such jurisdiction and accurately describes the
Collateral), the
Lien created pursuant to the Sale and Servicing Agreement will
constitute a
first priority perfected security interest in the Receivables and
the Other
Conveyed Property in favor of the Purchaser, which Lien will be
prior to all
other Liens and which Lien is enforceable as such as against all
Persons. From
the Original Closing Date to the Restatement Effective Date, the
Trustee for the
benefit of the Noteholders and Note Purchaser has maintained a
continuous first
priority perfected security interest in all of the Issuer's right,
title and
interest in, to and under the Receivables and the Other Conveyed
Property (as
such terms were defined during the period from the Original Closing
Date to the
Restatement Effective Date).
(h) FULL DISCLOSURE. The information, reports, financial
statements, exhibits, schedules, officer's certificates and other
documents
furnished by or on behalf of CPS, the Servicer, the Seller or any
of their
respective Affiliates to the Issuer, the Purchaser, the Note
Purchaser, the
Trustee or the Backup Servicer in connection with any particular
Advance or the
negotiation, preparation, delivery or performance of this
Agreement, the Notes
and the other Basic Documents or included herein or therein or
delivered
pursuant hereto or thereto, taken as a whole, are true and correct
in every
material respect (or, in the case of projections, are based on good
faith
reasonable estimates) on the date as of which such information is
stated or
certified and do not and will not contain an untrue statement of a
material
fact, or omit to state any material fact necessary to make the
statements herein
or therein contained, in the light of the circumstances under which
they were
made, not misleading. All such financial statements fairly present
the financial
condition of CPS or such Affiliates as of the date specified
therein (subject to
normal year-end audit adjustments) all in accordance with GAAP. On
such date,
neither CPS nor any of its Affiliates had any material contingent
liabilities,
liabilities for taxes, or unusual or anticipated losses from any
unfavorable
commitments, except as referred to or reflected in such financial
statements as
of such date. There is no fact known to CPS or any of its
Affiliates, after due
inquiry, that would have a Material Adverse Effect and that has not
been
disclosed herein, in the other Basic Documents or in a report,
financial
statement, exhibit, schedule, disclosure letter or other writing
furnished to
