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EXHIBIT 10.20
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AMENDED AND RESTATED NOTE PURCHASE AGREEMENT
(CLASS A-1 TERM NOTES AND CLASS A-2 TERM NOTES),
dated as of July 10, 2008,
among
FOLIO FUNDING II, LLC
as Issuer and Purchaser,
CONSUMER PORTFOLIO SERVICES, INC.,
as Seller,
CITIGROUP FINANCIAL PRODUCTS INC.,
as Note Purchaser and Administrative Agent
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AMENDED AND RESTATED NOTE PURCHASE AGREEMENT
THIS AMENDED AND RESTATED NOTE PURCHASE AGREEMENT, dated as of
July 10, 2008 (as further amended, supplemented, restated or
otherwise modified
from time to time in accordance with the terms hereof, this
"AGREEMENT"), is
made among FOLIO FUNDING II, LLC, a Delaware limited liability
company (the
"ISSUER"), CONSUMER PORTFOLIO SERVICES, INC., a California
corporation ("CPS" or
the "SELLER"), and CITIGROUP FINANCIAL PRODUCTS INC., a Delaware
corporation, as
Note Purchaser (in such capacity, together with any successors in
such capacity,
the "NOTE PURCHASER") and Administrative Agent (in such capacity,
together with
any successors in such capacity, the "ADMINISTRATIVE AGENT").
BACKGROUND
1. In connection with a securitization transaction, the
Issuer, the Seller, the Note Purchaser and the Administrative Agent
have
previously entered into that certain Note Purchase Agreement, dated
as of July
11, 2007 (the "ORIGINAL NOTE PURCHASE AGREEMENT").
2. Section 9.01 of the Original Note Purchase Agreement
permits the Issuer, the Seller, the Administrative Agent and the
Note Purchaser
to amend the Original Note Purchase Agreement.
3. The Issuer, the Seller, the Note Purchaser and the
Administrative Agent intend to change certain terms of the
securitization
transaction and to amend and restate the Original Note Purchase
Agreement in its
entirety to, among other things, reflect a prepayment of the
Initial Class A-1
Notes (as defined below) in order to reduce the outstanding
principal amount of
the Initial Class A-1 Notes to $10,000,000, such prepayment to be
comprised of
one or more cash payments and Warrants. For purposes of determining
the value of
the Warrants with respect to such prepayment, the value of such
shares will be
calculated using the average closing price of CPS common stock for
the seven
days prior to the Effective Date.
4. On the Initial Closing Date, the Issuer 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"), entered into the Indenture, dated as of July
11, 2007
(the "ORIGINAL INDENTURE"), pursuant to which the Issuer issued two
classes of
notes designated as Class A-1 Variable Funding Notes (the "INITIAL
CLASS A-1
NOTES") and Class A-2 Term Notes (the "INITIAL CLASS A-2
NOTES").
5. Contemporaneously with the execution and delivery of this
Agreement, the Original Indenture shall be amended and restated by
the parties
thereto (as the same may be further amended, supplemented, restated
or otherwise
modified from time to time in accordance with the terms thereof,
the
"INDENTURE") in order to provide for, among other things, the
amendment and
restatement of the Initial Class A-1 Notes in order to redesignate
them as Class
A-1 Term Notes (the "CLASS A-1 NOTES") and the amendment and
restatement of the
Initial Class A-2 Term Notes (the "CLASS A-2 NOTES" and, together
with the Class
A-1 Notes, the "NOTES").
6. The security for the Notes includes Residual Interest
Assets representing residual interests in securitizations of motor
vehicle
retail installment contracts and installment promissory notes. The
Notes are
secured by the Residual Interest Assets together with the other
Collateral,
which have been pledged by the Issuer to the Trustee pursuant to
the Indenture.
7. The Issuer acquired the Residual Interest Assets together
with the other Conveyed Property from CPS pursuant to the Sale and
Contribution
Agreement dated as of July 11, 2007 (the "ORIGINAL SALE AND
CONTRIBUTION
AGREEMENT"), by and between the Issuer, as purchaser, CPS, as
seller (in such
capacity, the "SELLER").
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8. Contemporaneously with the execution and delivery of this
Agreement, the Original Sale and Contribution Agreement shall also
be amended
and restated by the parties thereto (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 CONTRIBUTION AGREEMENT").
9. CPS has joined in this Agreement to confirm certain
representations, warranties and covenants made by it as Seller for
the benefit
of the Note Purchaser, the Noteholders and the Administrative
Agent.
Now,
therefore, in consideration of the foregoing, other good
and valuable consideration, and the mutual covenants and agreements
contained
herein, the parties hereto desire to amend and restate the Original
Note
Purchase Agreement and 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 Annex A hereto. 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:
ARTICLE II
PURCHASE AND SALE OF THE NOTES
SECTION 2.01 PURCHASE OF NOTES. On the terms and conditions set
forth
in the Original Indenture, the Original Sale and Contribution
Agreement and the
Original Note Purchase Agreement, and in reliance on the
covenants,
representations and agreements set forth therein, the Issuer issued
and caused
the Trustee to authenticate and deliver to the Note Purchaser the
Initial Class
A-1 Notes and the Initial Class A-2 Notes on the Initial Funding
Date. On the
terms and conditions set forth in the Indenture, the Sale and
Contribution
Agreement and this Agreement, and in reliance on the covenants,
representations
and agreements set forth herein and therein, the Initial Class A-1
Notes and the
Initial Class A-2 Notes shall be amended and restated as of the
Effective Date
and the Issuer shall cause the Trustee to authenticate and deliver
to the Note
Purchaser the Notes on the Effective Date. The Notes shall be dated
the
Effective Date, registered in the name of the Note Purchaser, and
duly
authenticated in accordance with the provisions of the
Indenture.
SECTION 2.02 TERM. The term of the Class A-1 Notes (the "CLASS
A-1
TERM") shall be for a period commencing on the Initial Closing Date
and ending
on the Class A-1 Scheduled Maturity Date. The term of the Class A-2
Notes (the
"CLASS A-2 TERM") shall be for a period commencing on the Initial
Closing Date
and ending on the Class A-2 Scheduled Maturity Date. The Class A-1
Term (if the
Class A-1 Invested Amount has not previously been reduced to zero)
and the Class
A-2 Term may be extended one time by the Issuer for only an
additional twelve
months (a) upon written notice to the Administrative Agent, the
Note Purchaser
and the Trustee given not (i) more than 45 days' prior to the
Originally
Scheduled Termination Date and (ii) less than 20 days' prior to the
Originally
Scheduled Termination Date (such written notice to include an
Officer's
Certificate of each of the Issuer and CPS certifying that an
Extension Breach
shall not have occurred as of the date of such notice) ("EXTENSION
NOTICE"), (b)
upon the payment of a renewal fee in the amount equal to 1.00% of
the Aggregate
Invested Amount as of the Originally Scheduled Facility Termination
Date, (c) so
long as the following conditions precedent are satisfied on and as
of the
Originally Scheduled Facility Termination Date: (i) there shall not
have
occurred as of the Originally Scheduled Facility Termination Date
any Extension
Breach; (ii) there shall not have occurred since the date of this
Agreement a
Material Adverse Change; and (iii) there shall not have occurred
since the date
of this Agreement a Material Adverse Effect and (d) if, as of the
Originally
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Scheduled Facility Termination Date, neither the Issuer nor CPS has
received
notice from the Administrative Agent to the effect that all
conditions precedent
set forth in this Section 2.02 have not been satisfied. In
addition, if within 5
Business Days after the delivery of the Extension Notice to the
Administrative
Agent, the Note Purchaser and the Trustee, the Issuer does not
receive a
confirmation from the Administrative Agent that it agrees that no
Extension
Breach has occurred as of the date of such Extension Notice, an
Extension Breach
shall be deemed to have occurred. Upon the extension of the Class
A-1 Term and
the Class A-2 Term pursuant to this Section 2.02, each of the
Issuer and CPS
shall be deemed to have made a representation and warranty to the
effect that
all conditions precedent to such extension have been satisfied as
of the
Originally Scheduled Termination Date.
ARTICLE III
INTEREST AND FEES
SECTION 3.01 INTEREST.
(a) The Class A-1 Notes shall bear interest during each
Interest Period at the Class A-1 Note Interest Rate.
(b) The Class A-2 Notes shall bear interest during each
Interest Period at the Class A-2 Note Interest Rate.
(c) Interest on the Notes with respect to each Interest Period
shall be due and payable on the Settlement Date occurring
immediately subsequent
to such Interest Period in accordance with the provisions of the
Indenture.
All computations of interest shall be made on the basis of a
year of 360 days and the actual number of days elapsed. Whenever
any payment of
interest on or principal of any Note 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 Seller shall jointly and severally pay
or cause to be paid to the reasonable out-of-pocket expenses of the
Note
Purchaser and the Administrative Agent, including legal fees and
disbursements,
in accordance with and subject to SECTION 9.05. In addition, the
Issuer shall
pay or cause to be paid to the Administrative Agent a monthly fee
equal to
$2,083 (the "ADMINISTRATIVE AGENT FEE") pursuant to SECTION 8.5 of
the
Indenture, and when applicable, pursuant to Section 5.7 of the
Indenture.
(b) If the Issuer prepays the Notes in whole or in part on or
prior to the date which is 45 days prior to the Class A-2 Facility
Termination
Date, the Issuer shall pay or cause to be paid to the Noteholders a
prepayment
fee equal to 2.00% of the Invested Amount so prepaid (any such
prepayment fee,
an "PREPAYMENT Fee"). For the avoidance of doubt, the payment of
the Required
Noteholders' Principal Distributable Amount on any Settlement Date
shall not
constitute a prepayment for purposes of this Section.
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 the Notes
that arise in
connection with any change in, or the introduction, adoption,
effectiveness,
interpretation reinterpretation or phase-in, in each case, after
the Initial
Funding Date, 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
3.05 and
3.06, respectively. Each such demand shall be provided to the
Issuer in writing
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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.
SECTION 3.04 FUNDING LOSSES. The Issuer agrees to indemnify each
Party
and to hold each Party harmless from any loss or reasonable expense
(to the
extent not otherwise paid as interest on the Notes) which such
Party may sustain
or incur as a consequence of the making of a principal payment with
respect to a
Note on a day that is not a Settlement Date or the making of any
prepayment with
respect to a Note with less than five (5) days prior written
notice. This
covenant shall survive the termination of this Note Purchase
Agreement and the
payment of all other amounts payable hereunder.
SECTION 3.05 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 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.
SECTION 3.06 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, in
each case
other than as a result of its entering into the Basic Documents
(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 3.06.
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In addition, the Issuer, agrees to pay, and authorizes the
Administrative Agent to pay in its name, any stamp, documentary,
excise or
property tax, charges or similar levies imposed by any applicable
Requirement of
Law or Governmental Authority and all Liabilities with respect
thereto
(including by reason of any delay in payment thereof), in each case
arising from
the execution, delivery or registration of, or otherwise with
respect to, any
Basic Document or any transaction contemplated therein, 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,
collectively, "OTHER TAXES").
The Issuer shall reimburse and indemnify, within 30 days after
receipt of demand therefor (with copy to the Administrative Agent),
each Note
Purchaser for all Taxes and Other Taxes (including any Taxes and
Other Taxes
imposed by any jurisdiction on amounts payable under this Section)
paid by such
Note Purchaser and any Liabilities arising therefrom or with
respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally
asserted. A
certificate of the Note Purchaser (or of the Administrative Agent
on behalf of
such Note Purchaser) claiming any compensation under this clause,
setting forth
the amounts to be paid thereunder and delivered to the Issuer with
copy to the
Administrative Agent, shall be conclusive, binding and final for
all purposes,
absent manifest error. In determining such amount, the
Administrative Agent and
such Note Purchaser may use any reasonable averaging and
attribution methods.
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 3.06, 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 3.06 to the
Note
Purchaser if the Note Purchaser fails to comply with the
requirements set forth
in this paragraph.
SECTION 3.07 DETERMINATION OF MARKET VALUE; MANDATORY PREPAYMENT.
On
any Business Day, (i) if the Aggregate Invested Amount of the Notes
is equal to
or greater than $65 million, (ii) upon and subsequent to the
occurrence of any
Event of Default or Principal Coverage Ratio Violation, (iii) upon
and
subsequent to a Shadow Rating Failure or (iv) upon the occurrence
of any of the
events set forth in Section 10(b) of the Warrant (each such
Business Day, a
"VALUATION DATE"), the Administrative Agent will have the right to
value the
Pledged Residual Interest Certificates on a mark-to-market basis.
On any
Valuation Date, on which (i) a Collateral Deficiency exists, (ii)
the Aggregate
Invested Amount of the Notes is equal to or greater than $65
million and (iii)
there shall not have occurred on or prior to such date an Event of
Default, a
Principal Coverage Ratio Violation, a Shadow Rating Failure or any
of the events
set forth in Section 10(b) of the Warrant, the Issuer shall, not
later than ten
Business Days after its receipt of notice from the Administrative
Agent of such
Collateral Deficiency, prepay the Aggregate Invested Amount of the
Notes
sequentially by an amount equal to such Collateral Deficiency. On
any other
Valuation Date, in the event a Collateral Deficiency exists on such
Valuation
Date, the Issuer shall, not later than one Business Day after its
receipt of
notice from the Administrative Agent of such Collateral Deficiency,
prepay the
Aggregate Invested Amount of the Notes by an amount equal to such
Collateral
Deficiency. For the avoidance of doubt, the Administrative Agent
shall have the
right in its sole discretion, absent manifest error, to determine
whether a
Principal Coverage Ratio Violation has occurred and to calculate
the Class A
Principal Coverage Ratio and the Collateral Deficiency.
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SECTION 3.08 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 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
4:00 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. (I)
The
Issuer made certain representations and warranties, on which (i)
the Note
Purchaser relied in purchasing the Notes, (ii) the Trustee relied
in receiving a
security interest in the Residual Interest Assets and the other
Collateral
related thereto under the Indenture and (iii) the Administrative
Agent and the
Note Purchaser relied in executing the Original Note Purchase
Agreement on the
Initial Closing Date. Such representations and warranties were made
as of the
Initial Closing Date, as of the Initial Funding Date and as of each
Funding Date
after the Initial Funding Date. In addition, the Issuer will make
the following
representations and warranties as of the Effective Date and as of
each
Settlement Date (other than Section 5.01(I)(l)), on which (i) the
Administrative
Agent and the Note Purchaser relied in executing this Agreement on
the Effective
Date and (ii) the Trustee relied in executing the Indenture on the
Effective
Date.
(a) SALE AND CONTRIBUTION AGREEMENT. Each of the
representations and warranties of the Purchaser set forth in the
Sale and
Contribution 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 Note 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 Note to be a "purpose
credit" within
the meaning of Regulation U. The use of the proceeds from any Note
will not
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 Note
Purchaser, the
Administrative Agent or the Trustee in connection with the
negotiation,
preparation, delivery or performance of this Agreement, the Notes,
the
Indenture, the Sale and Contribution 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.
(h) COLLATERAL SECURITY.
(i) The Issuer 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 or Liens that are released immediately prior to
such
pledge.
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(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. 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, except such as have been or may hereinafter be
filed
pursuant to this Agreement evidencing the Issuer Secured Parties'
first
priority Lien therein, or except such as shall be terminated as to
the
Collateral no later than immediately prior to the pledge of
such
Collateral to the Trustee in favor of the Issuer Secured Parties
under
this Agreement.
(iii) Upon filing of the financing statement
delivered to the Administrative Agent and the Trustee by the Issuer
on
or prior to the Initial Funding Date with the Secretary of State of
the
State of Delaware (which financing statement was in proper form
for
filing in such jurisdiction and accurately described the
Collateral),
the Lien created pursuant to the Indenture constituted, and such
Lien
currently constitutes a perfected security interest in the
Collateral
in favor of the Trustee for the benefit of the Issuer Secured
Parties,
which Lien is and 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 Residual Interest Certificates
to the Trustee in accordance with Section 2.1(a) of the Sale
and
Contribution Agreement, the Lien created pursuant to the
Indenture
constituted, and such Lien currently constitutes, a perfected
security
interest in such Residual Interest Certificates in favor of the
Trustee
for the benefit of the Issuer Secured Parties, which Lien is and
will
be prior to all other Liens of all other Persons that may be
perfected
by possession of such Residual Interest Certificates under Article
9 of
the Uniform Commercial Code and which Lien is enforceable as such
as
against all other Persons.
(i) NO DEFAULT OR EVENT OF DEFAULT. No Default or Event of
Default 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, the Administrative Agent or their respective
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 complete copies of all other Basic
Documents to
which it is a party as of the Closing Date, all of which Basic
Documents are in
full force and effect as of the Closing 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.
(m) RESIDUAL INTEREST CERTIFICATES. Each Residual Interest
Certificate was issued pursuant to an Eligible Committed
Securitization.
(n) NO FRAUDULENT CONVEYANCE. As of the Initial Funding Date
and as of each Funding Date, the fair value of the assets of the
Issuer was
greater than the fair value of its liabilities (including, without
limitation,
contingent liabilities of the Issuer), and the Issuer was, 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.
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<PAGE>
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 has not transferred any
Collateral with
any intent to hinder, delay or defraud any of its creditors. The
Issuer has not
used, and 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 Residual Interest
Assets by CPS
under the Sale and Contribution Agreement.
(o) NO OTHER BUSINESS. The Issuer engages in no business
activities other than the purchase of the Residual Interest Assets,
pledging the
Collateral to the Trustee under the Indenture, transferring
Residual Interest
Assets in connection with securitizations or third-party 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
such
activity is engaged in, or as amended with the prior written
consent of the
Administrative Agent. 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 Basic
Documents.
(r) ERISA. The Issuer does not maintain any Plans, and the
Issuer agrees to notify the Administrative Agent 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
written notice to the Administrative Agent 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.
(s) OWNERSHIP OF ISSUER. CPS owns beneficially and of record
100% of membership interests in the Issuer free and clear of all
Liens. The
Issuer is a disregarded entity for federal income tax purposes and
no election
has been made or will be made to treat the Issuer as a corporation
or an
association taxable as a corporation for federal income tax
purposes. Each
Residual Interest Certificate represents an interest in a Trust
with respect to
which an opinion of counsel was rendered that such Trust is not
taxable as a
corporation for federal income tax purposes and to the Issuer's
knowledge such
opinion is still correct.
(II)
In addition to the representations and warranties set
forth in Section 5.01(I) above, the Issuer makes the following
representations
and warranties on which each of the Note Purchaser, the
Administrative Agent and
the Trustee are relying upon in entering in the Basic Documents as
of the
Effective Date (other than Section 5.01(I)(l) and Section
5.01(II)(b)). In
addition, the Issuer will make the following representations and
warranties as
of each Settlement Date.
(a) MAINTENANCE OF SECURITY INTEREST. All financing statements
and continuation statements and amendments thereto, if any, have
been executed
and filed that are necessary to continue and maintain the
perfection of the
first priority security interest of the Trustee for the benefit of
the Issuer
Secured Parties in the Collateral and their proceeds.
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(b) NO PRINCIPAL COVERAGE RATIO VIOLATION. Except as otherwise
disclosed to the Administrative Agent on the Settlement Date
Statement relating
to any Settlement Date, no Principal Coverage Ratio Violation has
occurred.
(c) BASIC DOCUMENTS. The Issuer has furnished to the Note
Purchaser true, accurate and complete copies of all other Basic
Documents to
which it is a party as of the Effective Date, all of which Basic
Documents are
in full force and effect as of the 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.
SECTION 5.02 REPRESENTATIONS AND WARRANTIES OF CPS. (I) CPS
made
certain representations and warranties, on which the Issuer relied
in purchasing
the Residual Interest Assets, on which the Note Purchaser relied in
purchasing
the Notes, on which the Note Purchaser and the Administrative Agent
relied in
executing the Original Note Purchase Agreement and on which the
Trustee relied
in executing the Original Indenture. Such representations and
warranties were
made as of the Initial Closing Date and as of each Funding Date
after the
Initial Funding Date. In addition, CPS will make the following
representations
and warranties as of the Effective Date and as of each Settlement
Date, on which
(i) the Administrative Agent and the Note Purchaser relied in
executing this
Agreement on the Effective Date and (ii) the Trustee relied in
executing the
Indenture on the Effective Date.
(a) SALE AND CONTRIBUTION AGREEMENT. Each of the
representations and warranties of the Seller in the Sale and
Contribution
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) Neither CPS
nor any of its Affiliates is 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 could reasonably be expected to
have a
Material Adverse Effect and (ii) neither CPS nor any of its
Affiliates is in
default under or with respect to any contract, agreement, lease or
other
instrument to which CPS or any of its Affiliates is a party and
which is
material to CPS's or such Affiliate's condition (financial or
otherwise),
business, operations or properties, and neither CPS nor any of its
Affiliates
has 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
Seller) is true and correct as of the date originally made, as of
the Initial
Funding Date, as of each Funding Date, as of the Effective Date and
as of each
Settlement Date.
(e) NO PUBLIC OFFERING OF NOTES. Neither CPS nor, to the best
of CPS's knowledge after due inquiry, anyone acting on CPS'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.
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<PAGE>
(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. The use of the proceeds
from the
issuance of the Notes will not violate or otherwise conflict with
the provisions
of Regulations T, U or X of the Board of Governors of the Federal
Reserve
System.
(g) SECURITY INTEREST. Notwithstanding the intent of the
parties set forth in Section 6.3 of the Sale and Contribution
Agreement, the
Sale and Contribution Agreement is effective to create valid and
enforceable
Liens on the Conveyed Property in favor of the Issuer. Upon filing
of the
financing statement delivered to the Administrative Agent and the
Trustee by CPS
on or prior to the Initial Funding Date in each jurisdiction
(including, without
limitation, the State of California) in which required by
applicable law (which
financing statement was in proper form for filing in each such
jurisdiction and
accurately describes the Collateral), the Lien created pursuant to
the Sale and
Contribution Agreement constituted, and such Lien currently
constitutes a first
priority perfected security interest in the Conveyed Property in
favor of the
Issuer, which Lien is and will be prior to all other Liens and
which Lien is
enforceable as such as against all Persons.
(h) FULL DISCLOSURE. The information, reports, financial
statements, exhibits, schedules, officer's certificates and other
documents
furnished by or on behalf of CPS, the Seller or any of their
respective
Affiliates to the Issuer, the Purchaser, the Note Purchaser, the
Administrative
Agent or the Trustee in connection with the negotiation,
preparation, delivery
or performance of the Original Note Purchase Agreement, the Initial
Class A-1
Notes, the Initial Class A-2 Notes, the Original Sale and
Contribution
Agreement, the Original Indenture 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 could
reasonably be
expected to 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 or the Administrative Agent for use in connection with
the
transactions contemplated hereby or thereby.
(i) ERISA. Neither CPS nor any of its Affiliates maintain any
Plans (other than CPS's defined contribution (401(k)) plan and the
MFN Financial
Corporation Pension Plan), and CPS agrees to notify the
Administrative Agent in
writing in advance of forming any Plans. Neither CPS nor any of its
Affiliates
has any obligations or liabilities with respect to any Plans or
Multiemployer
Plans (other than CPS's defined contribution (401(k)) plan and the
MFN Financial
Corporation Pension Plan), 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. CPS will give
prior written
notice to the Administrative Agent 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 CPS or any of its Affiliates are in substantial
compliance
with all applicable laws (including ERISA). CPS is not an employer
under any
Multiemployer Plan.
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<PAGE>
(j) [RESERVED].
(k) [RESERVED].
(l) Each of CPS and its Affiliates is in compliance in all
material respects with all agreements to which it is bound under
all applicable
ABS Issuance Agreements. The Issuer has made available to the
Administrative
Agent true and complete copies of all ABS Issuance Agreements and
related
transaction and other closing documents. Each party to the
applicable ABS
Issuance Agreements has performed in all material respects all of
its respective
obligations thereunder, and there is no pending or threatened
cancellation of
any ABS Issuance Agreement, and neither CPS nor any of its
Affiliates has
received any notice to the effect that any party to any ABS
Issuance Agreement
intends to cease doing business with CPS or any of its
Affiliates.
(m) Neither CPS nor any of its Affiliates, including any
issuer or depositor in any Securitization (a "SECURITIZATION
ISSUER"), and no
servicer with respect to a Securitization, has taken any action
which would
cause any trust, corporation, partnership or other entity
("SECURITIZATION
ENTITY") to be registered as an investment company pursuant to the
Investment
Company Act, or which would cause any Securitization Entity to be
"controlled
by" an investment company within the meaning of the Investment
Company Act.
(n) Each Securitization Issuer and each servicer with respect
to a Securitization has made all filings required to be made by or
under the
Securities Exchange Act of 1934, as amended. There is no pending or
threatened
claim that any private placement memorandum or other offering
document, or any
amendments or supplements thereto contained, as of the date on
which it was
issued by a Securitization Entity in any Securitization, any untrue
statement of
a material fact or omitted to state any material fact required to
be stated
therein or necessary to make the statements therein, in light of
the
circumstances under which they were made, not misleading. No
securities were
issued or sold by CPS or any of its Affiliates in violation of
Section 5 of the
Securities Act of 1933, as amended, in any Securitization.
(o) No Securitization Issuer, no depositor or servicer with
respect to a Securitization and no entity serving as trustee for
any
Securitization has taken any action which would adversely affect
the
characterization or tax treatment for federal, state or local
income or
franchise tax purposes of any Securitization Entity or any
securities issued in
a Securitization, and all required federal, state and local tax and
information
returns relating to any Securitization have been properly
filed.
(p) Since June 30, 2007, no rating agency has downgraded, or
given the CPS any indication that it is considering a downgrading
of any
securities issued in any Securitization Transaction that has not
been disclosed
in writing to the Administrative Agent, other than a downgrade
resulting solely
from a downgrade in the rating of the related monoline insurer.
(q) Except as would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect,
neither CPS nor
any of its Affiliates has done or failed to do, or has caused to be
done or
omitted to be done, any act, the effect of which would operate to
invalidate or
materially impair (x) any approvals of any rating agency, insurer,
investor or
other party to any ABS Issuance Agreement, or (y) any fidelity
bond, direct
surety bond, or errors and omissions insurance policy required by
any agency,
insurer or investor, or other party to any ABS Issuance
Agreement.
(r) Each Transferred Residual Interest Certificate and each
Pledged Residual Interest Certificate are substantially the form of
the Residual
Interest Certificates transferred by CPS to the Issuer and pledged
by the Issuer
to the Trustee, for the benefit of the Issuer Secured Parties, on
the Initial
Funding Date and on each Funding Date.
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(II) In addition to the representations and warranties set
forth in Section 5.02(I) above, CPS makes the following
representations and
warranties on which each of the Note Purchaser, the Administrative
Agent and the
Trustee are relying upon in entering in the Basic Documents as of
the Effective
Date. In addition, CPS will make the following representations and
warranties as
of each Settlement Date.
(a) MAINTENANCE OF SECURITY INTEREST. As of the Effective Date
and as of each Settlement Date, all financing statements and
continuation
statements and amendments thereto have been executed and filed that
are
necessary to continue and maintain the perfection of the first
priority security
interest of the Issuer in the Conveyed Property.
(b) FULL DISCLOSURE. The information, reports, financial
statements, exhibits, schedules, officer's certificates and other
documents
furnished by or on behalf of CPS, the Seller or any of their
respective
Affiliates to the Issuer, the Purchaser, the Note Purchaser, the
Administrative
Agent or the Trustee in connection with the negotiation,
preparation, delivery
or performance of this Agreement, the Class A-1 Notes, the Class
A-2 Notes, the
Sale and Contribution Agreement, the Indenture 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 could
reasonably be
expected to 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 or the Administrative Agent for use in connection with
the
transactions contemplated hereby or thereby.
SECTION 5.03 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
NOTE
PURCHASER. The Note Purchaser hereby covenants to the Issuer and
the Seller that
it will perform the obligations required of it under the Basic
Documents in
accordance with the terms of the Basic Documents. In addition, the
Note
Purchaser represents and warrants to the Issuer and the Seller, (i)
with respect
to clauses (a) through (e) below, as of the Initial Funding Date
and (ii) with
respect to clauses (f) and (g) below, as of the Effective Date (or,
with respect
to (i) and (ii), as of a subsequent date on which a successor or
assignee of the
Note Purchaser shall become a party hereto, in which case such
successor or
assignee hereby represents and warrants to the Issuer and the
Seller), that:
(a) it has had an opportunity to discuss the Issuer's and the
Seller's business, management and financial affairs, and the terms
and
conditions of the transactions contemplated by the Basic Documents,
with the
Issuer and the Seller and their respective representatives;
(b) it is either (i) a "qualified institutional buyer" within
the meaning of Rule 144A under the Securities Act or (ii) an
"accredited
investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) of
Regulation D
under the Securities Act, and has sufficient knowledge and
experience in
financial and business matters to be capable of evaluating the
merits and risks
of investing in, and is able and prepared to bear the economic risk
of investing
in, the Notes;
(c) it is purchasing the Notes for its own account, or for the
account of one or more (i) "qualified institutional buyers" within
the meaning
of Rule 144A under the Securities Act or (ii) "accredited
investors" within the
meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D under
the Securities
Act that meet the criteria described in SUBSECTION (b) and for
which it is
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acting with complete investment discretion, for investment purposes
only and not
with a view to distribution, subject, nevertheless, to the
understanding that
the disposition of its property shall at all times be and remain
within its
control;
(d) it understands that the Notes have not been and will not
be registered or qualified under the Securities Act or any
applicable state
securities laws or the securities laws of any other jurisdiction
and are being
offered only in a transaction not involving any public offering
within the
meaning of the Securities Act and may not be resold or otherwise
transferred
unless so registered or qualified or unless an exemption from
registration or
qualification is available, that the Issuer is not required to
register the
Notes, and that any transfer must comply with provisions of Section
2.5 of the
Indenture and SECTION 9.17 hereof;
(e) it understands that the Notes will bear the legend set out
in the forms of Notes attached as EXHIBITS A-1 AND A-2 to the
Indenture and be
subject to the restrictions on transfer described in such
legend;
(f) it will comply with all applicable federal and state
securities laws in connection with any subsequent resale of the
Notes; and
(g) this Agreement has been duly and validly authorized,
executed and delivered by the Note Purchaser and constitutes a
legal, valid,
binding obligation of the Note Purchaser, enforceable against the
Note Purchaser
in accordance with its terms except as enforceability may be
limited by
bankruptcy, insolvency, reorganization or other similar laws
affecting the
enforcement of creditors' rights generally and by equitable
limitations on the
availability of specific remedies, regardless of whether such
enforceability is
considered in a proceeding in equity or at law.
ARTICLE VI
CONDITIONS
SECTION 6.01 CONDITIONS PRECEDENT TO THE EFFECTIVENESS. This
Agreement
shall be effective as of the Effective Date upon the satisfaction
of the
following conditions precedent:
(a) the issuance of the duly executed and authorized Warrants
pursuant to this Agreement, substantially in the form attached as
EXHIBIT A
hereto, registered in the name of Citigroup Global Markets
Inc.;
(b) receipt by the Administrative Agent of (i) one or more
cash prepayments in respect of principal of the Initial Class A-1
Note in the
aggregate amount of $12,765,243.93 and (ii) one or more cash
prepayments in
respect of interest on the Initial Class A-1 Note in the aggregate
amount of
$145,376.77;
(c) all consents, waivers and approvals necessary for the
consummation of the transactions contemplated by the Basic
Documents shall have
been obtained and shall be in full force and effect;
(d) confirmation satisfactory to the Administrative Agent that
all conditions to the amendment and restatement of the Initial
Class A-1 Notes
and the Initial Class A-2 Notes under the Indenture and the other
Basic
Documents have been satisfied;
(e) the Note Purchaser shall have received (i) a duly
executed, authorized and authenticated Class A-1 Note registered in
its name and
stating that the principal amount thereof is equal to the Class A-1
Facility
Amount, and (ii) a duly executed, authorized and authenticated
Class A-2 Note
registered in its name and stating that the principal amount
thereof is equal to
the Class A-2 Facility Amount;
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(f) CPS shall have paid all fees and expenses required to be
paid by CPS and the Issuer on or prior to the Effective Date,
including all fees
and expenses required under SECTION 9.05(a) hereof;
(g) confirmation satisfactory to the Administrative Agent that
the Notes purchased by the Note Purchaser hereunder shall be
entitled to the
benefit of the security provided in the Indenture and shall
constitute the
legal, valid and binding agreement of the Issuer, enforceable
against the Issuer
in accordance with its terms except as enforceability may be
limited by
bankruptcy, insolvency, reorganization or other similar laws
affecting the
enforcement of creditors' rights generally and by equitable
limitations on the
availability of specific remedies, regardless of whether such
enforceability is
considered in a proceeding in equity or at law;
(h) no Material Adverse Change shall have occurred since June
15, 2008;
(i) the Administrative Agent shall have received:
(i) a duly executed and delivered original
counterpart of each Basic Document, including the Guaranty, in the
form
of which is attached as EXHIBIT B hereto, each such document being
in
full force and effect;
(ii) certified copies of charter documents and each
amendment thereto, and resolutions of the Board of Directors or
other
governing authority of each of the Issuer and the Seller
authorizing or
ratifying the execution, delivery and performance of all Basic
Documents to which it is a party, certified by the Secretary or
an
Assistant Secretary of each of the Issuer and the Seller as of
the
Effective Date, which certificate shall state that the
resolutions
thereby certified have not been amended, modified, revoked or
rescinded
as of the date of such certificate;
(iii) a certificate of the Secretary or an Assistant
Secretary of the Issuer and the Seller, as applicable, certifying
the
names and the signatures of its officer or officers authorized to
sign
all transaction documents to which it is a party;
(iv) a certificate of a senior officer of CPS to the
effect that the representations and warranties of CPS and the
Seller in
this Agreement and the other Basic Documents to which either of
them is
a party are true and correct as of the Effective Date, and that
each of
CPS and the Seller has complied in all material respects with
all
agreements and satisfied all conditions on its part to be performed
or
satisfied at or prior to the Effective Date;
(v) a certificate of a senior officer of the Issuer
to the effect that the representations and warranties of the Issuer
and
the Purchaser in this Agreement and the other Basic Documents to
which
either of them is a party are true and correct as of the Effective
Date
and that each of the Issuer and the Purchaser have complied in
all
material respects with all agreements and satisfied all conditions
on
their part to be performed or satisfied at or prior to the
Effective
Date;
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(vi) legal opinions (including opinions relating to
true sale, non-consolidation and other bankruptcy matters, tax,
UCC
with respect to perfection and priority of the Trustee's
security
interest in the Collateral, securities law relating to the Class
A-1
Notes, the Class A-2 Notes and the Warrants, Investment Company
Act
relating to Investment Company Act matters, enforceability,
corporate
matters, an opinion pursuant to Section 9.2 of the Original
Indenture
and an opinion from the Trustee with respect to general matters)
in
form and substance satisfactory to the Note Purchaser and its
counsel;
(vii) confirmation satisfactory to the Administrative
Agent that all necessary UCC filings have been made and delivery to
the
Administrative Agent
and its legal counsel of applicable UCC search
reports dated as of July 3, 2008;
(viii) payment of reasonable out-of-pocket fees and
expenses of the Note Purchaser and the Administrative Agent in
accordance with SECTION 3.02(a) hereof;
(ix) copies of certificates or other evidence from
the Secretary of State or other appropriate authority of the States
of
Delaware and California, evidencing the good standing of the Issuer
and
the Seller in the States of Delaware and California, in each
case,
dated no earlier than 5 days prior to the Effective Date;
(x) confirmation satisfactory to the Administrative
Agent that a Trust Receipt was issued by the Trustee pursuant
to
SECTION 2.12 of the Indenture with respect to the Pledged
Residual
Interest Certificates funded on each Funding Date;
(xi) such other documents, opinions and information
as the Note Purchaser may reasonably request;
(j) confirmation satisfactory to the Administrative Agent that
the Issuer has irrevocably instructed the trustee and/or paying
agent under the
ABS Issuance Agreements related to any Pledged Residual Interest
Assets funded
on each Funding Date, providing for, among other things, all
payments payable in
respect of the related Pledged Residual Interest Assets to be paid
directly to
the Collection Account for the benefit of the Issuer Secured
Parties;
(k) an update satisfactory to the Administrative Agent with
respect to litigation matters relating to CPS or any Affiliates of
CPS; and
(l) CPS and the Administrative Agent shall have mutually
agreed upon the form of the Settlement Date Statement attached as
EXHIBIT E to
the Indenture.
ARTICLE VII
COVENANTS
SECTION 7.01 AFFIRMATIVE COVENANTS. Prior to the termination of
this
Agreement and each other Basic Document and the indefeasible
payment of all
obligations hereunder and thereunder:
(a) NOTICE OF DEFAULTS, LITIGATION, ADVERSE JUDGMENTS, ETC.
CPS or the Issuer, as applicable, shall give notice to
Administrative Agent
promptly in writing:
(i) upon CPS or the Issuer, as the case may be,
becoming aware of, and in any event within two (2) Business Days
after,
the occurrence of any Event of Default or Default or any event
of
default or default under any other Basic Document or any other
material
agreement of CPS or any Specified Affiliate of CPS;
(ii) upon, and in any event within two (2) Business
Days after, service of process on CPS or the Issuer, as the case
may
be, or any agent thereof for service of process, in respect of
any
legal or arbitrable proceedings affecting CPS, the Issuer or any
other
Specified
Affiliate of CPS (x) that questions or challenges the
validity or enforceability of any of the Basic Documents, (y) in
which
the amount in controversy exceeds $1,000,000 or (z) that could
reasonably be expected to have a Material Adverse Effect;
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(iii) upon, and in any event within two (2) Business
Days after, CPS or the Issuer, as the case may be, becoming aware
of
any event or change in circumstances that could reasonably be
expected
to (A) have a Material Adverse Effect, (B) constitute a
Material
Adverse Change or (C) cause an Event of Default;
(iv) upon, and in any event within two (2) Business
Days after, CPS or the Issuer, as the case may be, becoming aware
of
entry of a judgment or decree in respect of CPS, the Issuer or
any
other Specified Affiliate of CPS, its respective assets or any of
the
Collateral in an amount in excess of $1,000,000; and
(v) upon any governmental inquiry, whether formal or
informal, or the initiation of any legal process, litigation,
arbitration, or administrative, regulatory or judicial
investigation
against or concerning the CPS, the Issuer or any other
Specified
Affiliate of CPS potentially involving an amount (i) in excess
of
$1,000,000 or (ii) less than $1,000,000 and is otherwise
material,
including without limitation any putative class action.
Each notice pursuant to this subsection (a) shall be accompanied by
a
statement of an officer of CPS or the Issuer, as applicable,
setting
forth details of the occurrence referred to therein and stating
what
action CPS and the Issuer, as the case may be, have taken or
propose to
take with respect thereto.
(b) TAXES. Each of CPS and the Issuer shall pay and discharge
all taxes and governmental charges upon it (including as a result
of being a
member of any consolidated or unitary tax group) or against any of
its
properties or assets or its income prior to the date after which
penalties
attach for failure to pay, except to the extent that CPS or the
Issuer, as
applicable, shall be contesting in good faith in appropriate
proceedings its
obligation to pay such taxes or charges, adequate reserves having
been set aside
for the payment thereof in accordance with GAAP.
(c)
CONTINUITY OF BUSINESS AND COMPLIANCE WITH AGREEMENT AND
LAW. Each of CPS and the Issuer shall:
(i) preserve and maintain its legal existence;
(ii) comply with the requirements of all applicable
laws, rules, regulations and orders of governmental authorities
and
other Requirements of Law (including, without limitation, Consumer
Laws
and all environmental laws);
(iii) keep adequate records and books of account, in
which complete entries will be made in accordance with GAAP
consistently applied;
(iv) not move its chief executive office or chief
operating office from the addresses referred to herein or change
its
jurisdiction of organization unless it shall have provided the
Administrative Agent 30 days prior written notice of such
change;
(v) pay and discharge all taxes, assessments and
governmental charges or levies imposed on it or on its income
or
profits or on any of its property prior to the date on which
penalties
attach thereto, except for any such tax, assessment, charge or levy
the
payment of which is being contested in good faith and by proper
proceedings and against which adequate reserves are being
maintained;
and
(vi) continue in business in a prudent, reasonable
and lawful manner with all licenses, rights, permits, franchises
and
qualifications necessary to perform its respective obligations
under
this Agreement, the Sale and Contribution Agreement, the Notes and
the
other Basic Documents.
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(d) OWNERSHIP OF THE ISSUER. CPS shall own beneficially and of
record 100% of the membership interests in the Issuer free and
clear of all
Liens.
(e) [RESERVED.]
(f) COLLATERAL STATEMENTS. The Issuer will furnish or cause to
be furnished to the Administrative Agent from time to time
statements and
schedules further identifying and describing the Collateral and
such other
reports in connection with the Collateral as Administrative Agent
may reasonably
request, all in reasonable detail, including without limitation
each statement,
certificate and report required to be delivered to the Trustee or
the
Noteholders under any Basic Document.
(g) COMPLIANCE CERTIFICATE. Each of CPS and the Issuer shall
deliver or cause to be delivered a Compliance Certificate to the
Administrative
Agent within 75 days after the end of each fiscal year and within
30 days after
the end of each other fiscal quarter or, if such day is not a
Business Day, the
immediately preceding Business Day.
(h) ACTIONS TO ENFORCE RIGHTS UNDER CONTRACTS. CPS and the
Issuer shall take such reasonable and lawful actions as the
Administrative Agent
shall request to enforce Administrative Agent's rights under the
Collateral,
and, following the occurrence of an Event of Default, shall take
such reasonable
and lawful actions as are necessary to enable Administrative Agent
to exercise
such rights in Administrative Agent's own name.
(i)
MONTHLY SERVICER'S CERTIFICATE. CPS shall deliver to the
Note Purchaser, the Administrative Agent and the Trustee, in a
computer-readable
format reasonably acceptable to each such Person (i) the monthly
servicer's
certificate (each, a "MONTHLY SERVICER'S CERTIFICATE") with respect
to each
Eligible Committed Securitization for which a Residual Interest
Certificate has
been pledged to the Trustee pursuant to the Indenture at the same
time such
Monthly Servicer's Certificate is required to be delivered pursuant
to the
applicable Securitization Transaction Documents and (ii) a
Settlement Date
Statement pursuant to Section 3.9(a) of the Indenture no later than
12:00 noon,
New York City time, on each Determination Date. CPS shall deliver
to the
Administrative Agent and the Trustee a hard copy of any such
Monthly Servicer's
Certificate or Settlement Date Statement upon request of such
Person.
(j) SEPARATE EXISTENCE; NO COMMINGLING. Until the Notes are
repaid in full and all of the Basic Documents are terminated, the
Issuer shall
limit its activities to such activities as are incident to and
necessary or
convenient to accomplish the following purposes: (i) to acquire,
own, hold,
pledge, finance and otherwise deal with Residual Interest Assets to
be pledged
to the Trustee for the benefit of the Issuer Secured Parties
pursuant to the
Indenture and (ii) to sell, securitize or otherwise liquidate all
or any portion
of such Residual Interest Assets in accordance with the provisions
of the Basic
Documents. In addition, prior to the payment of the Notes in full
and
termination of all of the Basic Documents, the Issuer shall observe
and comply
with the applicable legal requirements for the recognition of the
Issuer as a
legal entity separate and apart from its Affiliates, including
without
limitation, those requirements set forth in SECTION 9(b)(iv) of the
Issuer's
Limited Liability Company Agreement. Without limiting the
foregoing, the Issuer
shall, and CPS shall cause itself and any other Affiliates of the
Issuer to,
maintain the truth and accuracy of all facts assumed by Andrews
Kurth LLP in the
true sale and non consolidation opinions of Andrews Kurth LLP;
provided that in
the event that any request is made for the Administrative Agent to
consent to or
approve any matter that, if effectuated or consummated, would
result in a change
to the continuing truth and accuracy of any of the factual
assumptions in the
true sale or non consolidation opinions of Andrews Kurth LLP, such
request shall
be accompanied by an opinion of Andrews Kurth LLP, or such other
counsel as may
be reasonably satisfactory to the Administrative Agent, that the
conclusions set
forth in the true sale and non consolidation opinions of Andrews
Kurth LLP will
be unaffected by such change.
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<PAGE>
(k) OTHER LIENS OR INTERESTS. Except for the conveyances under
the Sale and Contribution Agreement prior to the Effective Date,
CPS shall not
sell, pledge, assign or transfer to any other Person, or grant,
create, incur,
assume or suffer to exist any lien on or any interest in, the
Residual Interest
Assets or any other Collateral. Except for the pledge pursuant to
the Indenture,
the Issuer shall not sell, pledge, assign or transfer to any other
Person, or
grant, create, incur, assume or suffer to exist any lien on or any
interest in,
the Residual Interest Assets or any other Collateral. CPS and the
Issuer shall,
at their own expense, defend the Collateral against, and will take
such other
action as is necessary to remove, any Lien, security interest or
claim on, in or
to the Collateral, other than the security interests created under
the Sale and
Contribution Agreement and the Indenture, respectively, and CPS and
the Issuer
will defend the right, title and interest of the Issuer Secured
Parties in and
to any of the Collateral against the claims and demands of all
Persons
whomsoever. From time to time, each of CPS and the Issuer shall
cause to be
taken such actions as are necessary to continue and maintain the
perfection of
the first priority security interest of the Trustee on behalf of
the Issuer
Secured Parties in the Collateral, including, without limitation,
the filing of
financing statements, amendments thereto and continuation
statements.
(l) BOOKS AND RECORDS; OTHER INFORMATION.
(i) Each of CPS and the Issuer shall maintain
accounts and records as to each of the Pledged Residual
Interest
Certificates accurately and in sufficient detail to permit the
reader
thereof to know at any time the status of such Pledged Residual
Interest Certificate, including all distributions made in respect
of
such Pledged Residual Interest Certificate. CPS shall maintain
accurate
and complete books and records with respect to the Pledged
Residual
Interest Certificates and with respect to CPS's business. The
Issuer
shall maintain accurate and complete books and records with respect
to
the Collateral
and the Issuer's business. All accounting books and
records shall be maintained in accordance with GAAP.
(ii) Each of CPS and the Issuer shall, and shall
cause each of its Affiliates to, permit any representative of
the
Administrative Agent, a Noteholder or the Trustee to visit and
inspect
any of the properties of CPS, the Issuer and such Affiliates to
examine
the books and records of CPS, the Issuer and such Affiliates,
as
applicable, and to make copies and take extracts therefrom, and
to
discuss the business, operations, properties, condition (financial
or
otherwise) or prospects of CPS, the Issuer and each such Affiliate,
as
applicable, or any of the Collateral with the officers and
independent
public accountants thereof and as often as the Administrative
Agent, a
Noteholder or the Trustee may reasonably request, and so long as
no
Default or Event of Default shall have occurred and be continuing,
all
at such reasonable times during normal b
