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EXHIBIT 10.44
PLEDGE AGREEMENT
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This PLEDGE AGREEMENT, dated as of August 11, 2000, is between
CENTRAL FINANCIAL ACCEPTANCE CORPORATION, a Delaware corporation ("Pledgor"),
and UNION BANK OF CALIFORNIA, N.A., as agent (in such capacity, and together
with its successors, the "Agent") for the Lenders (as hereafter defined) under
that certain Credit Agreement, dated as of August 11, 2000 (as amended,
restated, modified, renewed, supplemented or extended from time to time, the
"Credit Agreement"), among Central Consumer Finance Company, a Delaware
corporation ("Borrower"), and the lenders party thereto (collectively, "Lenders"
and individually, a "Lender"), and the Agent.
Recitals
A. Pledgor owns 100 shares (the "Pledged Collateral") of the
common stock of Central Consumer Finance Company, a Delaware corporation
("Issuer") which constitute not less than 100.0 percent of the issued and fully
diluted equity voting stock of Issuer;
B. Pledgor has undertaken to grant to Secured Party a first
priority security interest in the Pledged Collateral and the other Collateral
(as hereinafter defined) as security for the Secured Obligations (as hereinafter
defined) in accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises, and to induce
Secured Party to enter into and accept the Loan Documents (as hereinafter
defined) and to extend financial accommodations pursuant thereto, Pledgor hereby
warrants and represents to, and covenants and agrees with, Secured Party as
follows:
1. Definitions and Construction.
(a) Definitions. As used in this Agreement:
"Agreement" means this Pledge Agreement, together with any and
all future additions, alterations, amendments, changes, extensions,
modifications, renewals, substitutions, or supplements hereto or hereof.
"Collateral" means the Pledged Collateral, the Future Rights and
the Proceeds, collectively.
"Default" has the meaning set forth in the Loan Documents.
"Future Rights" means all shares of, all securities convertible
or exchangeable into, and all warrants, options or other rights to purchase
shares of, stock of the Issuer (other than the Pledged Collateral) from time to
time held or acquired by Pledgor in any manner, and the certificates or
instruments representing such additional shares, convertible or exchangeable
securities, warrants and other rights and all dividends, cash, options,
warrants, rights, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such shares.
"Holder" has the meaning set forth in Section 3 of this
Agreement.
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"Issuer" has the meaning set forth in the recitals to this
Agreement and shall also mean any successor thereto whether by merger or
otherwise.
"Lien" means any lien, mortgage, pledge, assignment (including
any assignment of rights to receive payments of money), security interest,
charge, or encumbrance of any kind (including any conditional sale or other
title retention agreement, any lease in the nature thereof, or any agreement to
give any security interest), and any agreement to give or refrain from giving a
lien, mortgage, pledge, assignment (including any assignment of rights to
receive payments of money), security interest, charge, or other encumbrance of
any kind.
"Loan Documents" has the meaning set forth in the Credit
Agreement.
"Permitted Dividends" means dividends permitted to be paid by
Issuer pursuant to Section 7.07 of the Credit Agreement.
"Person" means natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts, or other organizations, irrespective of whether they are legal entities,
and governments and agencies and political subdivisions thereof.
"Pledged Collateral" has the meaning set forth in the recitals to
this Agreement and includes any security entitlements with respect thereto.
"Pledgor" has the meaning set forth in the introduction to this
Agreement.
"Proceeds" means all proceeds of the Pledged Collateral, the
Future Rights and in any event shall include, but not be limited to, any and all
(i) rights, benefits, distributions, premiums, profits, dividends, interest,
cash, instruments, documents of title, accounts, inventory, equipment, general
intangibles, deposit accounts, chattel paper and other property from time to
time received, receivable, or otherwise distributed in respect of or in exchange
for, or as a replacement of or a substitution for, any of the Pledged
Collateral, Future Rights or Proceeds (including without limitation, any cash,
stock or other securities or instruments issued after any recapitalization,
readjustment, reclassification, merger or consolidation with respect to Issuer
and any claims against securities intermediaries under Division 8 of the UCC or
otherwise), (ii) "proceeds" as that term is used in Division 9 of the UCC, (iii)
proceeds of any insurance, indemnity, warranty or guarantee (including, without
limitation, guarantees of delivery) payable to Secured Party or to Pledgor from
time to time with respect to any of the Collateral, (iv) payments (in any form
whatsoever) made or due and payable to Pledgor from time to time in connection
with any requisition, confiscation, condemnation, seizure or forfeiture of all
or any part of the Collateral, and (v) other amounts from time to time paid or
payable under or in connection with any of the Collateral.
"Secured Obligations" means (a) the "Obligations" as defined in
the Credit Agreement and includes all obligations, liabilities and indebtedness
of every kind and character, whether now existing or hereafter arising, whether
absolute or contingent, and whether direct or indirect, arising directly or
indirectly under or pursuant to any one or more of the Loan Documents, whether
for principal, interest (including, without limitation, interest that, but for
the filing of a petition in bankruptcy, would accrue on such obligations,
liabilities or indebtedness),
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fees (including, without limitation, reasonable attorneys' fees of outside
counsel and the reasonable allocated fees of internal counsel) or expenses, (b)
all obligations, liabilities and indebtedness of Issuer to Union Bank of
California, N.A. of every kind and character, whether now existing or hereafter
arising, whether absolute or contingent, and whether direct or indirect, arising
directly or indirectly under or pursuant to any and all transactions, agreements
or documents now existing or hereafter entered into, which provides for an
interest rate, credit, commodity or equity swap, cap, floor, collar, forward
foreign exchange transaction, currency swap, cross currency rate swap, currency
option, or any combination of, or option with respect to, these or similar
transactions, for the purpose of hedging Issuer's exposure to fluctuations in
interest or exchange rates, loan, credit exchange, security or currency
valuations or commodity prices, whether for principal, interest (including,
without limitation, interest that, but for the filing of a petition in
bankruptcy, would accrue on such obligations, liabilities or indebtedness), fees
(including, without limitation, reasonable attorneys' fees of outside counsel
and the reasonable allocated fees of internal counsel) or expenses, and (c) all
obligations, liabilities and indebtedness of Issuer to Union Bank of California,
N.A. of every kind and character, whether now existing or hereafter arising,
whether absolute or contingent, and whether direct or indirect, arising directly
or indirectly under or pursuant to any cash management or related services
including the automatic clearing house transfer of funds by the Bank for the
account of Issuer pursuant to agreement or overdrafts, whether for principal,
interest (including, without limitation, interest that, but for the filing of a
petition in bankruptcy, would accrue on such obligations, liabilities or
indebtedness), fees (including, without limitation, reasonable attorneys' fees
of outside counsel and the reasonable allocated fees of internal counsel) or
expenses.
"Secured Party" means the Agent in its capacity as secured party
hereunder.
"Securities Act" has the meaning set forth in Section 9(c) of
this Agreement.
"UCC" means the California Uniform Commercial Code, as amended
from time to time.
Capitalized terms used herein and not otherwise defined, has the
meaning set forth in the Credit Agreement.
(b) Construction.
(i) Unless the context of this Agreement clearly requires otherwise,
the plural includes the singular, the singular includes the
plural, the part includes the whole, "including" is not
limiting, and "or" has the inclusive meaning of the phrase
"and/or." The words "hereof," "herein," "hereby," "hereunder,"
and other similar terms in this Agreement refer to this
Agreement as a whole and not exclusively to any particular
provision of this Agreement.
(ii) Neither this Agreement nor any uncertainty or ambiguity herein
shall be construed or resolved against Secured Party, or
Pledgor, whether under any rule of construction or otherwise. On
the contrary, this Agreement has been reviewed by each of the
parties and their counsel and shall be construed and interpreted
according to the ordinary
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meaning of the words used so as to fairly accomplish the
purposes and intentions of all parties hereto.
2. Pledge. As security for the prompt payment and performance of the
Secured Obligations in full when due, whether at stated maturity, by
acceleration or otherwise (including amounts that would become due but for the
operation of the automatic stay under Section 362(a) of Title 11 of the United
States Code), Pledgor hereby delivers, pledges, and grants to Secured Party a
continuing first priority security interest in the Pledged Collateral, the
Future Rights and the Proceeds. The Pledgor does not, by entering into this
Agreement, assume any personal liability in respect of the Secured Obligations
and the sole recourse against Pledgor with respect to the Secured Obligations
shall be foreclosure upon the Collateral as herein provided.
3. Delivery and Registration of Collateral.
(a) All certificates or instruments representing or evidencing the
Pledged Collateral or Future Rights shall be promptly delivered
by Pledgor to Secured Party or Secured Party's designee pursuant
hereto at a location designated by Secured Party and shall be
held by or on behalf of Secured Party pursuant hereto, and shall
be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to
Secured Party.
(b) Secured Party shall have the right, at any time in its
discretion and without notice to Pledgor, to transfer to or to
register on the books of Issuer (or of any other Person
maintaining records with respect to the Collateral) in the name
of Secured Party or any of its nominees any or all of the
Collateral. In addition, Secured Party shall have the right at
any time to exchange certificates or instruments representing or
evidencing Collateral for certificates or instruments of smaller
or larger denominations.
(c) If at any time and from time to time any Collateral (including
but not limited to any certificate or instrument representing or
evidencing any Collateral) is uncertificated or in the
possession or control of a Person (including a securities
intermediary) other than Secured Party or Pledgor (a "Holder"),
then Pledgor shall immediately, at Secured Party's option,
either cause such Collateral to be delivered into Secured
Party's possession, or take all other steps necessary to perfect
the security interest of Secured Party in such Collateral and to
cause Secured Party to have "control" of the Collateral
consisting of securities, security entitlements, or other
financial assets within the meaning of Section 8106 of the UCC
or other applicable law governing the perfection of Secured
Party's security interest in the Collateral in the possession of
such Holder. Each such notification/instruction and
acknowledgement shall be in form and substance satisfactory to
Secured Party.
(d) Except to the extent Pledgor is entitled to receive and retain
the Permitted Dividends pursuant to Section 5(a) hereof, any and
all Collateral (including without limitation dividends, interest
and other cash distributions) at any time received or held by
Pledgor shall be so received or held as trustee for Secured
Party, shall be segregated
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from other funds and property of Pledgor and shall be forthwith
delivered to Secured Party in the same form as so received or
held (with any necessary endorsements).
(e) If at any time and from time to time any Collateral consists of
an uncertificated security or a security in book entry form,
then Pledgor shall immediately cause such Collateral to be
registered or entered, as the case may be, in the name of
Secured Party, or otherwise cause Secured Party's security
interest thereon to be perfected in accordance with applicable
law.
4. Secured Party's Duties. The powers conferred on Secured Party
hereunder are solely to permit it to perfect and protect its interest in the
Collateral and shall not impose on it any duty or undertaking to exercise such
powers. Except as provided by Section 9207 of the UCC, Secured Party shall have
no duty as to the Collateral, and without limiting the generality of the
foregoing, Secured Party shall not have any responsibility for (i) ascertaining
or taking action or exercising rights with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Collateral,
whether or not Secured Party has or is deemed to have knowledge of such matters,
or (ii) taking any steps to preserve rights against any parties with respect to
any Collateral or (iii) selling or otherwise disposing of any Collateral if it
threatens to decline, or is declining, in value. Secured Party shall be deemed
to have exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which Secured Party, its nominee, or other holder of
the Collateral on behalf of Secured Party, as the case may be, accords its own
property.
5. Voting Rights and Dividends.
(a) So long as no Event of Default shall have occurred and is
continuing:
(i) Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Collateral or any part
thereof for any purpose not inconsistent with the terms of the
Loan Documents; provided, however, that Pledgor shall not
exercise or refrain from exercising any such right if, in
Secured Party's judgment, such action would have a material
adverse effect on the value of the Collateral or any part
thereof, and provided, further, that Pledgor shall give Secured
Party at least five days' written notice of the manner in which
it intends to exercise, or the reasons for refraining from
exercising, any such right;
(ii) Pledgor shall be entitled to receive and utilize the Permitted
Dividends for any purpose not inconsistent with the Loan
Documents; and
(iii) Secured Party shall execute and deliver (or cause to be executed
and delivered) to Pledgor all such proxies and other instruments
as Pledgor may reasonably request for the purpose of enabling
Pledgor to exercise the voting and other rights which it is
entitled to exercise pursuant to paragraph (i) above and to
receive the Permitted Dividends which it is authorized to
receive and utilize pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of a Default all
rights of Pledgor to exercise the voting and other consensual
rights which it would otherwise be entitled
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to exercise pursuant to Section 5(a) and to receive the
Permitted Dividends which it would otherwise be authorized to
receive and retain pursuant to Section 5(a) shall cease, and all
such rights shall thereupon become vested in Secured Party, who
shall thereupon have the sole right to exercise such voting or
other consensual rights and to receive and hold as Collateral
such Permitted Dividends. Pledgor shall execute and deliver (or
cause to be executed and delivered) to Secured Party all such
proxies and other instruments as Secured Party may reasonably
request for the purpose of enabling Secured Party to exercise
the voting and other rights which it is entitled to exercise
pursuant to this subparagraph (b).
6. Representations, Warranties and Covenants. Pledgor represents,
warrants, and covenants that:
(a) The Pledged Collateral have been duly authorized and validly
issued and are fully paid and nonassessable;
(b) Pledgor is and will be the sole legal and beneficial owner of
the Collateral (including the Pledged Collateral and all other
Collateral acquired by Pledgor after the date hereof) free and
clear of any adverse claim, Lien or other right, title or
interest of any party except for the first priority security
interest created in favor of Secured Party pursuant to and in
accordance with this Agreement;
(c) This Agreement, and the delivery to Secured Party of the Pledged
Collateral (or the delivery to all Holders of the Pledged
Collateral of the notification/instruction referred to in
Section 3 of this Agreement), creates a valid, perfected, and
first priority security interest in the Collateral in favor of
Secured Party securing payment of the Secured Obligations, and
all actions necessary or desirable to achieve such perfection
have been duly taken;
(d) No consent, license, permit, approval or authorization of,
exemption by, notice or report to, or registration, filing, or
declaration with any governmental authority or regulatory body,
foreign or domestic, or of, to, or with any other Person, is or
will be required either (i) for the grant by Pledgor of the
security interest granted hereby or for the execution, delivery,
or performance of this Agreement by Pledgor, or (ii) for the
exercise by Secured Party of the voting or other rights provided
for in this Agreement or the remedies in respect of the
Collateral pursuant to this Agreement (except as may be required
in connection with a disposition of the Collateral by laws
affecting the offering and sale of securities generally
including the Securities Act);
(e) Pledgor has taken all steps it deems necessary or appropriate to
be informed on a continuing basis of changes or potential
changes affecting the Collateral (including rights of conversion
and exchange, rights to subscribe, payment of dividends,
reorganizations or recapitalizations, tender offers and voting
rights), and Pledgor agrees that it will at all times keep
Secured Party informed of any such changes or potential changes
and that Secured Party shall have no responsibility or liability
for informing Pledgor of any such changes or potential changes
or for taking any action or omitting to take any action with
respect thereto;
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(f) The Pledged Collateral constitute at least the percentage of all
fully diluted issued and outstanding shares of stock of Issuer
set forth in the recitals to this Agreement;
(g) There are no presently existing Future Rights or Proceeds;
(h) Pledgor has full power and lawful authority to enter into this
Agreement and to sell, assign and transfer the Collateral to
Secured Party and to grant to Secured Party a first priority
security interest therein as herein provided, all of which have
been duly authorized by all necessary corporate action;
(i) The execution and delivery and the performance hereof are not in
violation or contravention of, and do not constitute a default
under, any corporate articles, charter or by-law provision of
Pledgor or of any indenture, agreement, undertaking, judgment,
injunction, order, decree, or other instrument or judicial or
administrative directive to which Pledgor is a party or by which
Pledgor or its property are bound, or will result in any Lien
(other than the security interest hereunder) on any assets or
property of Pledgor;
(j) This Agreement constitutes the legal, valid and binding
obligation of Pledgor enforceable in accordance with its terms,
subject, as to enforcement only, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating
to or affecting creditors' rights and to general equity
principles;
(k) Any officer, agent or representative acting for or on behalf of
Pledgor in connection with this Agreement or any aspect hereof,
or entering into or executing this Agreement on behalf of
Pledgor, has been duly authorized so to do, and is fully
empowered to act for and represent Pledgor in connection with
this Agreement and all matters related thereto or in connection
therewith; and
(l) Neither the pledge of the Collateral pursuant to this Agreement
nor the extensions of credit contemplated by the Loan Documents
violates Regulation U of the Board of Governors of the Federal
Reserve System.
7. Further Assurances.
(a) At any time and from time to time, Pledgor will promptly execute
and deliver all further instruments and documents, and take all
further action that may be necessary and desirable, or that
Secured Party may request, in order to perfect and protect any
security interest granted or purported to be granted hereby or
enable Secured Party to exercise and enforce its rights and
remedies hereunder with respect to any Collateral.
(b) Pledgor hereby authorizes Secured Party to file one or more
financing or continuation statements, and amendments thereto,
relative to all or any part of the Collateral without the
signature of Pledgor where permitted by law. A carbon,
photographic or other reproduction of this Agreement, or any
financing statement covering the Collateral, or any part
thereof, shall be sufficient as a financing statement where
permitted by law.
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(c) Pledgor will furnish to Secured Party from time to time
statements and schedules further identifying and describing the
Collateral and such other reports in connection with the
Collateral as Secured Party may reasonably request, all in
reasonable detail.
(d) Pledgor will not sell, offer to sell, transfer, assign,
hypothecate or otherwise dispose of any Collateral (including
Proceeds), or any part thereof or interest therein, unless (i)
such transfer does not result in a Change of Control (as defined
in the Credit Agreement), (ii) such transfer is made expressly
subject to the security interest hereunder and the transferee
agrees to be bound by the provisions of this Agreement pursuant
to documentation in form and substance satisfactory to Agent,
(iii) the legal status, powers and authority of the transferee
are established to the satisfaction of Agent, and (iv) Agent
receives evidence (which shall include an opinion of Pledgor's
counsel if requested by Agent) that such transfer does not in
any way alter or impair Agent's security interest in, or right
to dispose of, the Collateral.
(e) Pledgor will defend the Collateral against all claims and
demands of all persons or entities at any time claiming any
interest or Lien therein adverse to Secured Party.
(f) Pledgor will comply in all material respects with all laws,
rules and regulations relating to, and shall pay prior to
delinquency all license fees, registration fees, taxes and
assessments, and all other charges, (including, without
limitation, non-governmental levies or assessments that may be
levied upon, or assessed against, or that may become security
interests, Liens or other encumbrances) on, the ownership or
possession of any part of the Collateral, or that create or may
create a Lien upon any part of the Collateral; provided,
however, that Pledgor shall not be required to comply with any
such law, rule or regulation, or to pay any such tax, fee,
assessment or other charge, the validity of which is being
contested by Pledgor in good faith by appropriate proceedings
promptly instituted and diligently conducted, so long as neither
the value nor the title of any material part of the Collateral,
nor the security interest of Secured Party therein, will be
materially impaired by the failure of Pledgor either to comply
with any such law, rule or regulation, or to pay any such tax,
fee, assessment or other charge, during the period of such
contest.
(g) To the extent it may lawfully do so, Pledgor shall use its best
efforts to prevent Issuer from issuing Future Rights or
Proceeds, except for the declaration of the Permitted Dividends,
and to the extent such Future Rights or Proceeds are pledged to
Secured Party.
(h) Upon receipt by Pledgor of any notice, report or other
communication from Issuer or any Holder relating to all or any
part of the Collateral, Pledgor shall immediately deliver such
notice, report or other communication to Secured Party.
8. Consent and Waiver. Pledgor's duty to perform and observe the
agreements and covenants on its part contained herein shall be absolute and
unconditional. Pledgor hereby consents that, from time to time, prior to or
following the occurrence of a Default, with or without notice to or assent from
Pledgor, any other security at any time held by or available to Secured Party
for any of the Secured Obligations or any other security at any time held by or
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available to Secured Party of any other Person secondarily or
otherwise liable for any of the Secured Obligations, may be
exchanged, surrendered, or released and any of the Secured
Obligations may be changed, altered, renewed, extended,
continued, surrendered, compromised, waived or released, in
whole or in part, as Secured Party may see fit, and Pledgor
shall remain bound under this Agreement notwithstanding any such
exchange, surrender, or release, or any such change, alteration,
renewal, extension, continuance, surrender, compromise, waiver,
release, or inaction, or extension of further credit. Pledgor
hereby waives (a) the right, if any, to require Secured Party to
proceed against any Person liable for the payment of any of the
Secured Obligations as a condition to proceeding hereunder; and
(b) the right, if any, to require Secured Party to marshal,
foreclose upon, sell, or otherwise realize upon or collect or
apply any particular portion of the Collateral or any other
property, real or personal, securing any of the Secured
Obligations, as a condition to proceeding hereunder. Secured
Party may, at its election, exercise or decline or fail to
exercise any right or remedy it may have against Borrower or any
security held by Secured Party, including without limitation the
right to foreclose upon any such security by judicial or
nonjudicial sale, without affecting or impairing in any way the
liability of Pledgor hereunder. Pledgor unconditionally and
irrevocably waives any rights and defenses that Pledgor may have
because any of the Secured Obligations are secured by real
property, including but not limited to, any rights or defenses
based upon Section 580a, 580b, 580d, or 726 of the California
Code of Civil Procedure. Pledgor waives any defense arising by
reason of any disability or other defense of Borrower or by
reason of the cessation from any cause whatsoever of the
liability of Borrower. Pledgor waives any setoff, defense or
counterclaim that Borrower may have against Secured Party.
Pledgor waives any defense arising out of the absence,
impairment or loss of any right of reimbursement or subrogation
or any other rights against Borrower. Until all of the amounts
that Borrower owes to Secured Party have been paid in full,
Pledgor shall have no right of subrogation or reimbursement for
claims arising out of or in connection with this Agreement,
contribution or other rights against Borrower, and Pledgor
waives any right to enforce any remedy that Secured Party now
has or may hereafter have against Borrower. Pledgor waives all
rights to participate in any security now or hereafter held by
Secured Party. Pledgor waives all presentments, demands for
performance, notices of nonperformance, protests, notices of
protest, notices of dishonor, and notices of acceptance of this
Agreement and of the existence, creation, or incurring of new or
additional indebtedness. Pledgor assumes the responsibility for
being and keeping itself informed of the financial condition of
Borrower and of all other circumstances bearing upon the risk of
nonpayment of any indebtedness or nonperformance of any
obligation of Borrower, warrants to Secured Party that it will
keep so informed, and agrees that absent a request for
particular information by Pledgor, Secured Party shall have no
duty to advise Pledgor of information known to Secured Party
regarding such condition or any such circumstances. Pledgor
waives any rights and defenses that are or may become available
to it by reason of Sections 2787 to 2855, inclusive of the
California Civil Code.
9. Remedies Upon Default.
(a) Upon the occurrence of a Default, Secured Party may exercise in
respect to the Collateral, in addition to other rights and
remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the
UCC, and Secured Party may also without notice (except as
specified below) sell the Collateral or any part thereof in one
or more blocks at public or private sale, at any exchange,
broker's board or at any of Secured Party's offices or
elsewhere, for cash,
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on credit or for future delivery, at such time or times and at
such price or prices and upon such other terms as Secured Party
may deem commercially reasonable, irrespective of the impact of
any such sales on the market price of the Collateral. To the
maximum extent permitted by applicable law, Secured Party may be
the purchaser of any or all of the Collateral at any such sale
and shall be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any
portion of the Collateral sold at any such public sale, to use
and apply all or any part of the Secured Obligations as a credit
on account of the purchase price of any Collateral payable by
Secured Party at such sale. Each purchaser at any such sale
shall acquire the property sold absolutely free from any claim
or right on the part of Pledgor. Pledgor agrees that, to the
extent notice of sale shall be required by law, at least five
days' notice to Pledgor of the time and place of any public sale
or the time after which a private sale is to be made shall
constitute reasonable notification. Secured Party shall not be
obligated to make any sale of Collateral regardless of notice of
sale having been given. Secured Party may adjourn any public or
private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
Pledgor hereby waives any claims against Secured Party arising
because the price at which any Collateral may have been sold at
such a private sale was less than the price that might have been
obtained at a public sale, even if Secured Party accepts the
first offer received and does not offer such Collateral to more
than one of offeree.
(b) Pledgor hereby agrees that any sale or other disposition of the
Collateral conducted in conformity with reasonable commercial
practices of major banks, insurance companies, or other
financial institutions in the City and County of San Francisco,
California, in disposing of property similar to the Collateral
shall be deemed to be commercially reasonable.
(c) Pledgor hereby acknowledges that the sale by Secured Party of
any Collateral pursuant to the terms hereof in compliance with
the Securities Act of 1933 as now in effect or as hereafter
amended, or any similar statute hereafter adopted with similar
purpose or effect (the "Securities Act"), as well as applicable
Blue Sky or other state securities laws may require strict
limitations as to the manner in which Secured Party or any
subsequent transferee of the Collateral may dispose thereof.
Pledgor acknowledges and agrees that in order to protect Secured
Party's interest it may be necessary to sell the Collateral at a
price less than the maximum price attainable if a sale were
delayed or were made in another manner, such as a public
offering under the Securities Act. Pledgor has no objection to
sale in such a manner and agrees that Secured Party shall have
no obligation to obtain the maximum possible price for the
Collateral. Without limiting the generality of the foregoing,
Pledgor agrees that, upon the occurrence and during the
continuation of a Default, Secured Party may, subject to
applicable law, from time to time attempt to sell all or any
part of the Collateral by a private placement, restricting the
bidders and prospective purchasers to those who will represent
and agree that they are purchasing for investment only and not
for distribution. In so doing, Secured Party may solicit offers
to buy the Collateral or any part thereof for cash, from a
limited number of investors deemed by Secured Party, in its
reasonable judgment, to be institutional investors or other
responsible parties who
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might be interested in purchasing the Collateral. If Secured
Party shall solicit such offers, then the acceptance by Secured
Party of one of the offers shall be deemed to be a commercially
reasonable method of disposition of the Collateral.
(d) If Secured Party shall determine to exercise its right to sell
all or any of the Collateral pursuant to this Section, Pledgor
agrees that upon request of Secured Party, Pledgor will, at its
own expense:
(i) use its best efforts to execute and deliver, and cause Issuer
and the directors and officers thereof to execute and deliver,
all such instruments and documents, and to do or cause to be
done all such other acts and things, as may be necessary or, in
the opinion of Secured Party, advisable to register such
Collateral under the provisions of the Securities Act, and to
cause the registration statement relating thereto to become
effective and to remain effective for such period as
prospectuses are required by law to be furnished, and to make
all amendments and supplements thereto and to the related
prospectuses which, in the opinion of Secured Party, are
necessary or advisable, all in conformity with the requirements
of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto;
(ii) use its best efforts to qualify the Collateral under the state
securities laws or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Collateral, as
requested by Secured Party;
(iii) cause Issuer to make available to its security holders, as soon
as practicable, an earnings statement which will satisfy the
provisions of Section 11(a) of the Securities Act; and
(iv) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Collateral or any part
thereof valid and binding and in compliance with applicable law.
Pledgor further acknowledges the impossibility of ascertaining the
amount of damages which would be suffered by Secured Party by reason of the
failure by Pledgor to perform any of the covenants contained in this Section
9(d) and, consequently, agrees that, if Pledgor shall fail to perform any such
covenants, it shall pay, as liquidated damages and not as a penalty, an amount
equal to the value of the Collateral (not in excess of the aggregate amount of
the Secured Obligations) on the date Secured Party shall demand compliance with
this Section, to be held by Secured Party as additional Collateral securing the
Secured Obligations. Nothing in this Section 9(d) shall in any way alter the
rights of Secured Party under Section 9(c). Pledgor acknowledges that there is
no adequate remedy at law for failure by it to comply with the provisions of
this Section and that such failure would not be adequately compensable in
damages, and therefore agrees that its agreements contained in this Section 9
may be specifically enforced.
(e) PLEDGOR EXPRESSLY WAIVES TO THE MAXIMUM EXTENT PERMITTED BY LAW
(i) ANY CONSTITUTIONAL OR OTHER RIGHT TO A JUDICIAL HEARING
PRIOR TO THE TIME THE SECURED PARTY TAKES POSSESSION OF OR
DISPOSES OF ALL OR ANY PART OF THE COLLATERAL AS PROVIDED IN
THIS SECTION 9, (ii) ALL RIGHTS OF REDEMPTION, STAY AND/OR
APPRAISAL THAT IT NOW HAS OR MAY AT ANY TIME IN THE FUTURE HAVE
UNDER ANY RULE OF LAW OR STATUTE NOW EXISTING
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OR HEREAFTER ENACTED, AND (iii) EXCEPT AS SET FORTH IN SECTION
9(a), ANY REQUIREMENT OF NOTICE, DEMAND OR ADVERTISEMENT FOR
SALE.
10. Application of Proceeds. After and during the continuance of a
Default, any cash held by Secured Party as Collateral and all cash Proceeds
received by Secured Party in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral pursuant to the exercise by
Secured Party of its remedies as a secured creditor hereunder shall be applied
from time to time by Secured Party as follows:
First: To the payment of the costs and expenses of such sale,
collection or other realization, and all expenses, liabilities and advances made
or incurred by Secured Party in connection therewith and in connection with this
Agreement, including without limitation, reasonable attorneys' fees;
Second: After payment in full of the amounts specified in the
preceding subparagraph, to the payment of the Secured Obligations in the order,
if any, specified in the Loan Documents; and
Third: After payment in full of the amounts specified in the
preceding subparagraphs, to the payment to whomsoever may be lawfully entitled
to receive the same, or as a court of competent jurisdiction may direct, of any
surplus then remaining from such Proceeds.
11. Expenses. All obligations of Pledgor hereunder shall be performed by
Pledgor at Pledgor's sole cost and expense, and Pledgor shall indemnify and hold
Secured Party harmless from any and all such costs and expenses as provided in
Section 20 hereof. The amount of any and all expenses, including the reasonable
fees and expenses of its counsel (including, without limitation, reasonable
allocated fees and expenses of its internal counsel) and any experts and agents,
and out-of-pocket expenses of its officers and employees, which Secured Party
may at any time incur in connection with (i) the administration of this
Agreement, (ii) the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of Secured Party hereunder, or (iv) the failure
by Pledgor to perform or observe any of the provisions hereof, or (v) the
preparation, negotiation, delivery and execution of this Agreement including any
amendments or modifications hereto, shall become part of the Secured Obligations
and shall be payable from the proceeds of the Collateral.
12. Secured Party May Perform. If Pledgor fails to perform any agreement
contained herein, Secured Party may itself perform, or cause performance of,
such agreement, and the expenses of Secured Party incurred in connection
therewith shall be payable by Pledgor under Section 11 hereof.
13. Secured Party as Pledgor's Attorney-in-Fact. Pledgor hereby
irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with full
authority in the place and stead of Pledgor and in the name of Pledgor or
otherwise, from time to time at Secured Party's discretion to take any action
and to execute any instrument which Secured Party may deem necessary or
advisable to accomplish the purposes of this Agreement, including without
limitation: (a) to receive,
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endorse and collect all instruments made payable to Pledgor representing any
dividend, interest payment or other distribution in respect of the Collateral or
any part thereof to the extent permitted hereunder and to give full discharge
for the same and to execute and file governmental notifications and reporting
forms, (b) to issue any notifications/instructions Secured Party deems necessary
pursuant to Section 3 of this Agreement, or (c) to arrange for the transfer of
the Collateral on the books of Issuer or any other Person to the name of Secured
Party or to the name of Secured Party's nominee.
14. Notices. Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement shall be in writing and either
personally served or sent by certified mail, return receipt requested, postage
prepaid, to Pledgor or to Secured Party, as the case may be, at the address set
forth below its signature on the execution page hereof. The parties hereto may
change the address at which they are to receive notices hereunder, by notice in
the foregoing manner given to the other parties. All notices or demands sent in
accordance with this Section shall be deemed received on the earlier of the date
of actual receipt or five (5) days after the deposit thereof in the mail with
postage prepaid.
15. Choice of Law and Venue; Waiver of Jury Trial. THE VALIDITY OF THIS
AGREEMENT, ITS CONSTRUCTION, INTERPRETATION AND ENFORCEMENT, AND THE RIGHTS OF
THE PARTIES HERETO, SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW, EXCEPT ONLY TO THE EXTENT THAT THE EXISTENCE,
PERFECTION OR ENFORCEMENT OF THE SECURITY INTEREST HEREUNDER IN RESPECT OF ANY
PART OF THE COLLATERAL AS TO ANY PERSON WHO IS NOT A PARTY TO, AND IS NOT
OTHERWISE BOUND BY, THIS AGREEMENT IS GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THAT STATE OF CALIFORNIA. TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE
PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS
AGREEMENT SHALL BE TRIED AND DETERMINED ONLY IN THE STATE AND FEDERAL COURTS
LOCATED IN THE CITY AND COUNTY OF SAN FRANCISCO, STATE OF CALIFORNIA OR, AT THE
SOLE OPTION OF SECURED PARTY, AND SO LONG AS SECURED PARTY MAINTAINS THE
COLLATERAL IN THE STATE OF CALIFORNIA, IN ANY OTHER COURT IN WHICH SECURED PARTY
SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER
JURISDICTION OVER THE MATTER IN CONTROVERSY. TO THE EXTENT THEY MAY LAWFULLY DO
SO, SECURED PARTY AND PLEDGOR EACH WAIVE THE RIGHT TO A TRIAL BY JURY AND ANY
RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT
TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION.
16. Effectiveness. This Agreement shall be binding and deemed effective
when executed by Pledgor and accepted and executed by Secured Party.
17. Successors and Assigns. This Agreement shall bind and inure to the
benefit of the respective successors and assigns of Pledgor, and Secured Party;
provided, however, that, except in connection with a transfer permitted by
Section 7(d) hereof, Pledgor may not assign this
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Agreement or any rights hereunder without Secured Party's prior written consent
and any prohibited assignment shall be absolutely void. No consent by Secured
Party to an assignment shall release Pledgor from its obligations hereunder.
Secured Party may assign its rights and duties hereunder in accordance with the
Loan Documents.
18. Section Headings. The subject headings and the sections and
subsections of this Agreement and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each section of this Agreement applies equally to this entire
Agreement.
19. No Implied Waiver; Cumulative Rights. No failure on the part of
Secured Party to exercise, and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by Secured Party of any
right, power or remedy hereunder preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. The remedies herein
provided are to the fullest extent permitted by law cumulative and are not
exclusive of any remedies provided by law.
20. Indemnification. Pledgor hereby agrees to indemnify Secured Party
for any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements (including, without
limitation, reasonable fees and expenses of its counsel and reasonable allocated
fees and expenses of internal counsel) of any kind and nature whatsoever which
may be imposed on, incurred by or asserted against Secured Party in any way
relating to or arising out of this Agreement; Provided, however, that Pledgor
shall not be liable for any of the foregoing to the extent they arise from the
gross negligence or willful misconduct of Secured Party. The provisions set
forth in this Section shall survive the payment of the Secured Obligations and
the termination of this Agreement.
21. Severability of Provisions. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
22. Entire Agreement. This Agreement constitutes the entire agreement
between Pledgor and Secured Party pertaining to the subject matter contained
herein. No waiver of any provision of this Agreement, nor any consent to any
departure by Pledgor herefrom, shall in any event be effective unless the same
shall be in writing and signed by Secured Party, and no amendment to any
provisions of this Agreement shall be effective unless the same shall be in
writing and signed by both Pledgor and Secured Party, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
23. Termination. This Agreement shall create a continuing security
interest in the Collateral and shall remain in full force and effect until
indefeasible payment and performance in full of the Secured Obligations,
whereupon the security interests granted hereby shall automatically terminate
and all rights to such portion of the Collateral that has not been sold or
otherwise applied pursuant hereto shall revert to Pledgor or other party then
thereto entitled.
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Upon any such termination, Secured Party will, at Pledgor's expense, execute
and deliver to Pledgor such documents as Pledgor shall reasonably request to
evidence such termination.
24. Counterparts and Duplicates. This Agreement may be signed in any
number of counterparts or duplicates, each of which shall be an original, and
all of which taken together shall constitute the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date and year first written above.
PLEDGOR: CENTRAL FINANCIAL ACCEPTANCE
CORPORATION
By /S/
--------------------------------------
Name: Howard Weitzman
Title: Chief Financial Officer
Address for Notices:
Attn: Gary Cypres
5480 East Ferguson Drive
Commerce, CA 90022
Telephone: 323.720.8608
Facsimile: 323.720.8729
SECURED PARTY: UNION BANK OF CALIFORNIA, N.A., as
Agent
By /S/
--------------------------------------
Name: Robert C. Nagel
Title: President
Address for Notices:
Attn: Robert C. Nagel
350 California Street, 6th Floor
San Francisco, CA 94104
Telephone: 415.705.7189
Facsimile: 415.705.5093
15
