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SALE AND SERVICING
AGREEMENT
among
CPS AUTO RECEIVABLES TRUST 199[ ],
Issuer,
CPS RECEIVABLES CORP.,
Seller,
CONSUMER PORTFOLIO SERVICES, INC.,
Servicer
and
[NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION],
Standby Servicer and Trustee
Dated as of [ ]
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SALE AND SERVICING AGREEMENT dated as of [ ], among CPS AUTO
RECEIVABLES TRUST 199[ ], a Delaware business trust (the "Issuer"), CPS
RECEIVABLES CORP., a California corporation (the "Seller"), and CONSUMER
PORTFOLIO SERVICES, INC., a California corporation (the "Servicer"), and
[NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,] a national banking association,
in its capacity as Standby Servicer and Trustee.
WHEREAS the Issuer desires to purchase a portfolio of receivables
arising in connection with motor vehicle retail installment sale contracts
acquired by Consumer Portfolio Services, Inc. or Samco Acceptance Corp. through
motor vehicle dealers and independent finance companies;
WHEREAS the Seller has purchased such receivables from Consumer
Portfolio Services, Inc. and Samco Acceptance Corp. and is willing to sell such
receivables to the Issuer;
WHEREAS the Issuer desires to purchase additional receivables arising
in connection with motor vehicle retail installment sale contracts to be
acquired by Consumer Portfolio Services, Inc. or Samco Acceptance Corp. through
motor vehicle dealers and independent finance companies;
WHEREAS the Seller has agreements to purchase such additional
receivables from Consumer Portfolio Services, Inc. and from Samco Acceptance
Corp. and is willing to sell such receivables to the Issuer;
WHEREAS the Servicer is willing to service all such receivables;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. Whenever used in this Agreement, the
following words and phrases shall have the following meanings:
"Accountants' Report" means the report of a firm of nationally
recognized independent accountants described in Section 4.11.
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"Accounting Date" means, with respect to a Payment Date, the last day
of the Collection Period immediately preceding such Payment Date.
"Addition Notice" means, with respect to any transfer of Subsequent
Receivables to the Trust pursuant to Section 2.2 of this Agreement, notice of
the Seller's election to transfer Subsequent Receivables to the Trust, such
notice to designate the related Subsequent Transfer Date and the approximate
principal amount of Subsequent Receivables to be transferred on such Subsequent
Transfer Date.
"Administrative Receivable" means, with respect to any Collection
Period, a Receivable which the Servicer is required to purchase pursuant to
Section 4.7 or which the Servicer has elected to purchase pursuant to Section
4.4(c) on the Determination Date with respect to such Collection Period.
"Affiliate" of any Person means any Person who directly or indirectly
controls, is controlled by, or is under direct or indirect common control with
such Person. For purposes of this definition, the term "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling", "controlled
by" and "under common control with" have meanings correlative to the foregoing.
"Aggregate Principal Balance" means, with respect to any date of
determination, the sum of the Principal Balances for all Receivables (other than
(i) any Receivable that became a Liquidated Receivable prior to the end of the
related Collection Period and (ii) any Receivable that became a Purchased
Receivable prior to the end of the related Collection Period) as of the date of
determination.
"Agreement" means this Sale and Servicing Agreement, as the same may be
amended and supplemented from time to time.
"Amount Financed" means, with respect to a Receivable, the aggregate
amount advanced under such Receivable toward the purchase price of the Financed
Vehicle and any related costs, including amounts advanced in respect of
accessories, insurance premiums, service and warranty contracts, other items
customarily financed as part of retail automobile installment sale contracts or
promissory notes, and related costs.
"Annual Percentage Rate" or "APR" of a Receivable means the annual
percentage rate of finance charges or service charges, as stated in the related
Contract.
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"Basic Documents" means this Agreement, the Certificate of Trust, the
Trust Agreement, the Indenture, the Master Spread Account Agreement, the Spread
Account Supplement and other documents and certificates delivered in connection
therewith.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in the City of New York, the State in which the
Corporate Trust Office is located, the State in which the executive offices of
the Servicer are located or the State in which the principal place of business
of the Credit Enhancer is located shall be authorized or obligated by law,
executive order, or governmental decree to be closed.
"Calendar Quarter" means the three-month period ending on the last day
of March, June, September or December.
"Certificate" means a Trust Certificate (as defined in the Trust
Agreement).
"Certificate Balance" equals, initially, $[ ] and thereafter equals the
initial Certificate Balance, reduced by all amounts allocable to principal
previously distributed to Certificateholders.]
"Certificateholder" has the meaning assigned to such term in the Trust
Agreement.
"Certificate Distribution Account" has the meaning assigned to such
term in Section 5.1(a) hereof.
["Certificateholders' Distributable Amount" means, with respect to any
Payment Date, the sum of the Certificateholders' Interest Distributable Amount
and the Certificateholders' Principal Distributable Amount.]
["Certificateholders' Interest Carryover Shortfall" means, with respect
to any Payment Date, the excess of the Certificateholders' Monthly Interest
Distributable Amount for the preceding Payment Date and any outstanding
Certificateholders' Interest Carryover Shortfall on such preceding Payment Date,
over the amount in respect of interest at the Certificate Rate that was actually
deposited in the Certificate Distribution Account on such preceding Payment
Date, plus interest on such excess, to the extent permitted by law, at the
Certificate Rate from and including such preceding Payment Date to but excluding
the current Payment Date.]
["Certificateholders' Interest Distributable Amount" means, with
respect to any Payment Date, the sum of the Certificateholders' Monthly Interest
Distributable Amount for
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such Payment Date and the Certificateholders' Interest Carryover Shortfall for
such Payment Date.]
["Certificateholders' Monthly Interest Distributable Amount" means,
with respect to any Payment Date, interest accrued during the related Interest
Period (including the initial Interest Period which will consist of 30 days) at
the Certificate Rate on such Payment Date. Interest shall be computed on the
basis of a 360-day year of twelve 30-day months for purposes of this
definition.]
["Certificateholders' Monthly Principal Distributable Amount" means,
with respect to any Payment Date, the Certificateholders' Percentage of the
Principal Distributable Amount.]
["Certificateholders' Percentage" means (i) for each Payment Date prior
to the Payment Date on which the Class A-3 Notes are paid in full, zero, (ii) on
the Payment Date on which the Class A-3 Notes are paid in full, the percentage
equivalent of a fraction, the numerator of which is the excess, if any, of (x)
the Principal Distributable Amount for such Payment Date over (y) the
outstanding principal amount of the Class A-3 Notes immediately prior to such
Payment Date, and the denominator of which is the Principal Distributable Amount
for such Payment Date," and the denominator of which is the Principal
Distributable Amount for such Payment Date, and (iii) for each Payment Date
thereafter to and including the Payment Date on which the Certificate Balance is
reduced to zero, 100%.]
["Certificateholders' Principal Carryover Shortfall" means, as of the
close of any Payment Date, the excess of the Certificateholders' Monthly
Principal Distributable Amount and any outstanding Certificateholders' Principal
Carryover Shortfall from the preceding Payment Date, over the amount in respect
of principal that is actually deposited in the Certificate Distribution Account
on such current Payment Date.]
["Certificateholders' Principal Distributable Amount" means, with
respect to any Payment Date, the sum of the Certificateholders' Monthly
Principal Distributable Amount for such Payment Date and the Certificateholders'
Principal Carryover Shortfall as of the close of the preceding Payment Date;
provided, however, that the Certificateholders' Principal Distributable Amount
(i) shall not exceed the Certificate Balance and (ii) shall equal the
Certificate Balance on the Final Scheduled Distribution Date for the
Certificates.]
"Certificate Pool Factor" as of the close of business on a Payment Date
means a seven-digit decimal figure equal to the
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Certificate Balance as of such Payment Date divided by the initial Certificate
Balance.
"Certificate Rate" means [ ]% per annum.
"Class" means the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes or the Class B Notes as the context requires.
"Class A Noteholders' Interest Carryover Shortfall" means, with respect
to any Payment Date, the excess of the Class A Noteholders' Interest
Distributable Amount for the preceding Payment Date and any outstanding Class A
Noteholders' Interest Carryover Shortfall on such preceding Payment Date, over
the amount that was actually deposited in the Note Distribution Account on such
preceding Payment Date on account of the Class A Noteholders' Interest
Distributable Amount, plus interest on the amount of interest due but not paid
to Class A Noteholders on the preceding Payment Date, to the extent permitted by
law, at the respective Interest Rate borne by each Class of the Class A Notes
from such preceding Payment Date to but excluding the current Payment Date.
"Class A Noteholders' Interest Distributable Amount" means, with
respect to any Payment Date, the sum of the Class A Noteholders' Monthly
Interest Distributable Amount for such Payment Date and the Class A Noteholders'
Interest Carryover Shortfall for such Payment Date. Interest shall be computed
on the basis of (i) the actual number of days elapsed in a 360-day year in the
case of the Class A-1 Notes and the Class A-2 Notes and (ii) a 360-day year of
twelve 30-day months in the case of the Class A-3 Notes.
"Class A Noteholders' Monthly Interest Distributable Amount" means,
with respect to any Payment Date, the product of (i)(A) in the case of the Class
A-1 Notes and the Class A-2 Notes, the product of the Interest Rate for such
Class and a fraction, the numerator of which is the number of days elapsed from
and including the prior Payment Date (or, in the case of the first Payment Date,
from and including the Closing Date) to but excluding such Payment Date and the
denominator of which is 360 and (B) in the case of the Class A-3 Notes,
one-twelfth of the Interest Rate for such Class (or in the case of the first
Payment Date, the Interest Rate for such Class multiplied by a fraction, the
numerator of which is the number of days elapsed from and including the Closing
Date to but excluding such Payment Date and the denominator of which is 360) and
(ii) the outstanding principal amount of the Notes of such Class immediately
preceding such Payment Date.
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"Class A Noteholders' Monthly Principal Distributable Amount" means,
with respect to any Payment Date, the Class A Noteholders' Percentage of the
Principal Distributable Amount.
"Class A Noteholders' Percentage" means with respect to any
Determination Date (i) relating to a Payment Date prior to the Payment Date on
which the principal amount of the Class A-3 Notes is reduced to zero, [ %]; (ii)
relating to the Payment Date on which the principal amount of the Class A-3
Notes is reduced to zero, the percentage equivalent of a fraction, the numerator
of which is the principal amount of the Class A-3 Notes immediately prior to
such Payment Date, and the denominator of which is the Principal Distributable
Amount; and (iii) relating to any other Payment Date, 0%.
"Class A Noteholders' Principal Carryover Shortfall" means, as of the
close of any Payment Date, the excess of the Class A Noteholders' Principal
Distributable Amount and any outstanding Class A Noteholders' Principal
Carryover Shortfall from the preceding Payment Date over the amount that was
actually paid to the Class A Noteholders [(other than from a claim on the Credit
Enhancement] on such Payment Date on account of the Class A Noteholders'
Principal Distributable Amount.
"Class A Noteholders' Principal Distributable Amount" means, with
respect to any Payment Date, (other than the Final Scheduled Payment Date for
any Class of Class A Notes), the sum of the Class A Noteholders' Monthly
Principal Distributable Amount for such Payment Date and the Noteholders'
Principal Carryover Shortfall as of the close of the preceding Payment Date. The
Class A Noteholders' Principal Distributable Amount on the Final Scheduled
Payment Date for any Class of Class A Notes will equal the sum of (i) the Class
A Noteholders' Monthly Principal Distributable Amount for such Payment Date,
(ii) the Class A Noteholders' Principal Carryover Shortfall as of the close of
the preceding Payment Date, and (iii) the excess of the outstanding principal
amount of such Class of Class A Notes, if any, over the amounts described in
clauses (i) and (ii).
"Class A Notes" means the Class A-1 Notes, the Class A-2 Notes and the
Class A-3 Notes.
"Class A-1 Final Scheduled Payment Date" means with respect to the
Class A-1 Notes, the [ ] Payment Date [(which shall be no later than 397 days
after the date on which the Notes are priced)].
"Class A-1 Notes" has the meaning assigned to such term in the
Indenture.
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"Class A-2 Notes" has the meaning assigned to such term in the
Indenture.
"Class A-3 Notes" has the meaning assigned to such term in the
Indenture.
"Class B Deficiency" shall have the meaning specified in Section
5.5(c).
"Class B Noteholders' Interest Carryover Shortfall" means, with respect
to any Payment Date, the excess of the Class B Noteholders' Interest
Distributable Amount for the preceding Payment Date and any outstanding Class B
Noteholders' Interest Carryover Shortfall on such preceding Payment Date, over
the amount that was actually deposited in the Note Distribution Account on such
preceding Payment Date on account of the Class B Noteholders' Interest
Distributable Amount, plus interest on the amount of interest due but not paid
to Class B Noteholders on the preceding Payment Date, to the extent permitted by
law, at the applicable Interest Rate from such preceding Payment Date to but
excluding the current Payment Date.
"Class B Noteholders' Interest Distributable Amount" means, with
respect to any Payment Date, the sum of the Class B Noteholders' Monthly
Interest Distributable Amount for such Payment Date and the Class B Noteholders'
Interest Carryover Shortfall for such Payment Date. Interest shall be computed
on the basis of a 360-day year of twelve 30-day months.
"Class B Noteholders' Monthly Interest Distributable Amount" means,
with respect to any Payment Date, the product of (i)the product of the Interest
Rate for such Class and a fraction, the numerator of which is the number of days
elapsed from and including the prior Payment Date (or, in the case of the first
Payment Date, from and including the Closing Date) to but excluding such Payment
Date and the denominator of which is 360 and (ii) the outstanding principal
amount of the Class B Notes immediately preceding such Payment Date.
"Class B Noteholders' Monthly Principal Distributable Amount" means,
with respect to any Payment Date, the Class B Noteholders' Percentage of the
Principal Distributable Amount.
"Class B Noteholders' Percentage" means with respect to any
Determination Date (i) relating to a Payment Date prior to the Payment Date on
which the principal amount of the Class B Notes is reduced to zero, [ ]%; (ii)
relating to the Payment Date on which the principal amount of the Class B Notes
is reduced to zero, the percentage equivalent of a fraction, the numerator of
which is the principal amount of the Class B Notes immediately prior to such
Payment Date, and the denominator of which is the
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Class B Principal Distributable Amount; and (iii) relating to any other Payment
Date, 0%.
"Class B Noteholders' Principal Carryover Shortfall" means, as of the
close of any Payment Date, the excess of the Class B Noteholders' Principal
Distributable Amount and any outstanding Class B Noteholders' Principal
Carryover Shortfall from the preceding Payment Date over the amount that was
actually paid to the Class B Noteholders on such Payment Date on account of the
Class B Principal Distributable Amount.
"Class B Noteholders' Principal Distributable Amount" means, with
respect to any Payment Date, (other than the Final Scheduled Payment Date), the
sum of the Class B Noteholders' Monthly Principal Distributable Amount for such
Payment Date and the Class B Noteholders' Principal Carryover Shortfall as of
the close of the preceding Payment Date. The Class B Noteholders' Principal
Distributable Amount on the Final Scheduled Payment Date will equal the sum of
(i) the Class B Noteholders' Monthly Principal Distributable Amount for such
Payment Date, (ii) the Class B Noteholders' Principal Carryover Shortfall as of
the close of the preceding Payment Date, and (iii) the excess of the outstanding
principal amount the Class B Notes, if any, over the amounts described in
clauses (i) and (ii).
"Class B Notes" has the meaning assigned to such term in the Indenture.
"Closing Date" means [ ].
"Code" shall have the meaning specified in Section 3.2.
"Collateral Agent" means [Norwest Bank Minnesota, National
Association], in its capacity as Collateral Agent under the Master Spread
Account Agreement.
"Collection Account" means the account designated as such, established
and maintained pursuant to Section 5.1.
"Collection Period" means, with respect to the first Payment Date, the
period beginning on the close of business on the Initial Cutoff Date and ending
on the close of business on [
]. With respect to each subsequent Payment Date, the preceding
calendar month. Any amount stated "as of the close of business of the last day
of a Collection Period" shall give effect to the following calculations as
determined as of the end of the day on such last day: (i) all applications of
collections, and (ii) all distributions.
"Confidential Information" means, in relation to any Person, any
written information delivered or made available by or on
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behalf of CPS or the Seller to such Person in connection with or pursuant to
this Agreement or the transactions contemplated hereby which is proprietary in
nature and clearly marked or identified as being confidential information, other
than information (i) which was publicly known, or otherwise known to such
Person, at the time of disclosure (except pursuant to disclosure in connection
with this Agreement), (ii) which subsequently becomes publicly known through no
act or omission by such Person, or (iii) which otherwise becomes known to such
Person other than through disclosure by CPS or the Seller.
"Contract" means a motor vehicle retail installment sale contract.
"Controlling Party" shall be determined in accordance with the
provisions of Section 13.15.
"Corporate Trust Office" means (i) with respect to the Owner Trustee,
the principal corporate trust office of the Owner Trustee, which at the time of
execution of this agreement is [ ], and (ii) with respect to the Trustee and the
Collateral Agent, the principal corporate trust office of the Trustee, which at
the time of execution of this agreement is [ ].
"CPS" means Consumer Portfolio Services, Inc. a California corporation
and its successors.
"CPS Purchase Agreement" means the Purchase Agreement dated as of
[______] by and between the Seller and CPS, as such agreement may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof, relating to the purchase of the CPS Receivables by the Seller
from CPS.
"CPS Receivables" means a Receivable purchased by the Seller from CPS.
"Cram Down Loss" means, with respect to a Receivable, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the amount owed on a Receivable or otherwise modifying or restructuring
Scheduled Payments to be made on a Receivable, an amount equal to such reduction
in Principal Balance of such Receivable or the reduction in the net present
value (using as the discount rate the lower of the contract rate or the rate of
interest specified by the court in such order) of the Scheduled Payments as so
modified or restructured. A "Cram Down Loss" shall be deemed to have occurred on
the date such order is entered.
"Credit Enhancement" means [describe credit enhancement].
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"Credit Enhancement Agreement" means [ ].
"Credit Enhancement Agreement Event of Default" means and "Event of
Default" as defined in the Credit Enhancement Agreement.
"Credit Enhancer" means [ ]in its capacity as provider of the Credit
Enhancement.
"Credit Enhancer Default" means [ ].
"Cutoff Date" means the Initial Cutoff Date or the applicable
Subsequent Cutoff Date, as the context may require.
"Dealer" means, with respect to a Receivable, the seller of the related
Financed Vehicle, who originated and assigned such Receivable to CPS, who in
turn sold such Receivable to the Seller.
"Deficiency Claim Amount" shall have the meaning set forth in Section
5.5.
"Deficiency Claim Date" means, with respect to any Payment Date, the
fourth Business Day immediately preceding such Payment Date.
"Deficiency Notice" shall have the meaning set forth in Section 5.5.
["Delivery" when used with respect to Trust Account Property means:
(a) with respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute "instruments"
within the meaning of Section 9- 105(l)(i) of the UCC and are susceptible of
physical delivery, transfer thereof to the Trustee or its nominee or custodian
by physical delivery to the Trustee or its nominee or custodian endorsed to, or
registered in the name of, the Trustee or its nominee or custodian or endorsed
in blank, and, with respect to a certificated security (as defined in Section
8-102 of the UCC) transfer thereof (i) by delivery of such certificated security
endorsed to, or registered in the name of, the Trustee or its nominee or
custodian or endorsed in blank to a financial intermediary (as defined in
Section 8-313 of the UCC) and the making by such financial intermediary of
entries on its books and records identifying such certificated securities as
belonging to the Trustee or its nominee or custodian and the sending by such
financial intermediary of a confirmation of the purchase of such certificated
security by the Trustee or its nominee or custodian, or (ii) by delivery thereof
to a "clearing corporation" (as
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defined in Section 8-102(3) of the UCC) and the making by such clearing
corporation of appropriate entries on its books reducing the appropriate
securities account of the transferor and increasing the appropriate securities
account of a financial intermediary by the amount of such certificated security,
the identification by the clearing corporation of the certificated securities
for the sole and exclusive account of the financial intermediary, the
maintenance of such certificated securities by such clearing corporation or a
"custodian bank" (as defined in Section 8-102(4) of the UCC) or the nominee of
either subject to the clearing corporation's exclusive control, the sending of a
confirmation by the financial intermediary of the purchase by the Trustee or its
nominee or custodian of such securities and the making by such financial
intermediary of entries on its books and records identifying such certificated
securities as belonging to the Trustee or its nominee or custodian (all of the
foregoing, "Physical Property"), and, in any event, any such Physical Property
in registered form shall be in the name of the Trustee or its nominee or
custodian; and such additional or alternative procedures as may hereafter become
appropriate to effect the complete transfer of ownership of any such Trust
Account Property to the Trustee or its nominee or custodian, consistent with
changes in applicable law or regulations or the interpretation thereof;
(b) with respect to any security issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or by the Federal National Mortgage
Association that is a book-entry security held through the Federal Reserve
System pursuant to Federal book-entry regulations, the following procedures, all
in accordance with applicable law, including applicable Federal regulations and
Articles 8 and 9 of the UCC: book-entry registration of such Trust Account
Property to an appropriate book-entry account maintained with a Federal Reserve
Bank by a financial intermediary which is also a "depository" pursuant to
applicable Federal regulations and issuance by such financial intermediary of a
deposit advice or other written confirmation of such book-entry registration to
the Trustee or its nominee or custodian of the purchase by the Trustee or its
nominee or custodian of such book-entry securities; the making by such financial
intermediary of entries in its books and records identifying such book-entry
security held through the Federal Reserve System pursuant to Federal book-entry
regulations as belonging to the Trustee or its nominee or custodian and
indicating that such custodian folds such Trust Account Property solely as agent
for the Trustee or its nominee or custodian; and such additional or alternative
procedures as may hereafter become appropriate to effect complete transfer of
ownership of any such Trust Account Property to the Trustee or its nominee or
custodian, consistent with changes in applicable law or regulations or the
interpretation thereof; and
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(c) with respect to any item of Trust Account Property that is an
uncertificated security under Article 8 of the UCC and that is not governed by
clause (b) above, registration on the books and records of the issuer thereof in
the name of the financial intermediary, the sending of a confirmation by the
financial intermediary of the purchase by the Trustee or its nominee or
custodian of such uncertificated security, the making by such financial
intermediary of entries on its books and records identifying such uncertificated
certificates as belonging to the Trustee or its nominee or custodian.]
"Depositor" shall mean the Seller in its capacity as Depositor under
the Trust Agreement.
"Determination Date" means the earlier of (i) the seventh Business Day
of each calendar month and (ii) the fifth Business Day preceding the related
Payment Date.
"Draw Date" means with respect to any Payment Date, the third Business
Day immediately preceding such Payment Date.
"Eligible Account" means (i) a segregated trust account that is
maintained with a depository institution acceptable to the Credit Enhancer (so
long as a Credit Enhancer Default shall not have occurred and be continuing), or
(ii) a segregated direct deposit account maintained with a depository
institution or trust company organized under the laws of the United States of
America, or any of the States thereof, or the District of Columbia, having a
certificate of deposit, short-term deposit or commercial paper rating of at
least "A-1" by Standard & Poor's and "P-1" by Moody's and (so long as a Credit
Enhancer Default shall not have occurred and be continuing) acceptable to the
Credit Enhancer..
"Eligible Investments" mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully guaranteed as to the
full and timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of the
United States of America or any State thereof (or any domestic branch of a
foreign bank) and subject to supervision and examination by Federal or State
banking or depository institution authorities; provided, however, that at the
time of the investment or contractual commitment to invest therein, the
commercial paper or other short-term unsecured debt obligations (other than such
obligations the rating of which is based on the credit of a Person other than
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such depository institution or trust company) thereof shall be rated "A-1+" by
Standard & Poor's and "P-1" by Moody's;
(c) commercial paper that, at the time of the investment or contractual
commitment to invest therein, is rated "A-1+" by Standard & Poor's and "P-1" by
Moody's;
(d) bankers' acceptances issued by any depository institution or trust
company referred to in clause (b) above;
(e) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed as to the full and timely payment by,
the United States of America or any agency or instrumentality thereof the
obligations of which are backed by the full faith and credit of the United
States of America, in either case entered into with (i) a depository institution
or trust company (acting as principal) described in clause (b) or (ii) a
depository institution or trust company whose commercial paper or other short
term unsecured debt obligations are rated "A-1+" by Standard & Poor's and "P-1"
by Moody's and long term unsecured debt obligations are rated "AAA" by Standard
& Poor's and "Aaa" by Moody's;
(f) with the prior written consent of the Credit Enhancer, money market
mutual funds registered under the Investment Company Act of 1940, as amended,
having a rating, at the time of such investment, from each of the Rating
Agencies in the highest investment category granted thereby; and
(g) any other investment as may be acceptable to the Credit Enhancer,
as evidenced by a writing to that effect, as may from time to time be confirmed
in writing to the Trustee by the Credit Enhancer.
Any of the foregoing Eligible Investments may be purchased by or
through the Owner Trustee or the Trustee or any of their respective Affiliates.
"ERISA" shall have the meaning specified in Section 3.2.
"FDIC" means the Federal Deposit Insurance Corporation.
"Final Scheduled Payment Date" means with respect to (i) the Class A-1
Notes, [ ] (the "Special A-1 Payment Date"), (ii) the Class A-2 Notes, the [ ]
Payment Date, (iii) the Class A-3 Notes, the [ ] Payment Date, and (v) the Class
B Notes, the [ ] Payment Date.
"Financed Vehicle" means a new or used automobile, light truck, van or
minivan, together with all accessions thereto, securing an Obligor's
indebtedness under a Receivable.
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"Funding Period" means the period beginning on and including the
Closing Date and ending on the first to occur of (a) the first date on which the
amount on deposit in the Pre-Funding Account (after giving effect to any
transfers therefrom in connection with the transfer of Subsequent Receivables to
the Issuer on such date) is less than $100,000, (b) the date on which an Event
of Default or a Servicer Termination Event occurs, (c) the date on which an
Insolvency Event occurs with respect to the Seller and (d) [ ].
"Indenture" means the Indenture dated as of [ ], among the Issuer and
[Norwest Bank Minnesota, National Association], as Trustee, as the same may be
amended and supplemented from time to time.
"Initial Cutoff Date" means [ ].
"Initial Receivables" means any Receivable conveyed to the Trust on the
Closing Date.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a petition against such Person or the entry of a decree or order for
relief by a court having jurisdiction in the premises in respect of such Person
or any substantial part of its property in an involuntary case under any
applicable federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official for such Person or for any substantial
part of its property, or ordering the winding-up or liquidation or such Person's
affairs, and such petition, decree or order shall remain unstayed and in effect
for a period of 60 consecutive days; or (b) the commencement by such Person of a
voluntary case under any applicable federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or the consent by such Person to
the entry of an order for relief in an involuntary case under any such law, or
the consent by such Person to the appointment of or taking possession by, a
receiver, liquidator, assignee, custodian, trustee, sequestrator, or similar
official for such Person or for any substantial part of its property, or the
making by such Person of any general assignment for the benefit of creditors, or
the failure by such Person generally to pay its debts as such debts become due,
or the taking of action by such Person in furtherance of any of the foregoing.
"Insurance Policy" means, with respect to a Receivable, any insurance
policy (including the insurance policies described in Section 4.4 hereof)
benefiting the holder of the Receivable providing loss or physical damage,
credit life, credit disability, theft, mechanical breakdown or similar coverage
with respect to the Financed Vehicle or the Obligor.
-14-
"Interest Period" means, with respect to any Payment Date, the period
from and including the Closing Date (in the case of the first Payment Date) or
from and including the most recent Payment Date on which interest has been paid
to but excluding such Payment Date.
"Interest Rate" means, with respect to (i) the Class A-1 Notes, [ ]%
per annum (computed on the basis of the actual number of days elapsed in a
360-day year), (ii) the Class A-2 Notes, the London interbank offered rates for
one-month U.S. dollar deposits ("LIBOR") plus [ ]% (computed on the basis of the
actual number of days elapsed in a 360-day year), (iii) the Class A-3 Notes,
[one month] [two month] [three month] [six month] LIBOR [other] plus [ ]% per
annum (computed on the basis of a 360-day year of twelve 30-day months) and (iv)
the Class B Notes, [ ]% per annum (computed on the basis of a 360-day year of
twelve 30-day months).
"Interest Reserve Account" means the account designated as such,
established and maintained pursuant to Section 5.2.
"Interest Reserve Account Initial Deposit" means $[ ]
deposited on the Closing Date.
"Investment Earnings" means, with respect to any Payment Date and Trust
Account, the investment earnings on amounts on deposit in such Trust Account on
such Payment Date.
"Issuer" means CPS Auto Receivables Trust 19[ ].
"Lien" means a security interest, lien, charge, pledge, equity, or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Receivable by operation of law.
"Lien Certificate" means, with respect to a Financed Vehicle, an
original certificate of title, certificate of lien or other notification issued
by the Registrar of Titles of the applicable state ' to a secured party which
indicates that the lien of the secured party on the Financed Vehicle is recorded
on the original certificate of title. In any jurisdiction in which the original
certificate of title is required to be given to the obligor, the term "Lien
certificate" shall mean only a certificate or notification issued to a secured
party.
"Liquidated Receivable" means any Receivable (i) which has been
liquidated by the Servicer through the sale of the Financed Vehicle or (ii) for
which the related Financed Vehicle has been repossessed and 90 days have elapsed
since the date of such repossession or (iii) as to which an Obligor has failed
to make more than 90% of a Scheduled Payment of more than ten dollars for
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120 or more days as of the end of a Collection Period or (iv) with respect to
which proceeds have been received which, in the Servicer's judgment, constitute
the final amounts recoverable in respect of such Receivable.
"Lockbox Account" means an account maintained on behalf of the Trustee
by the Lockbox Bank pursuant to Section 4.2(c).
"Lockbox Agreement" means the Tri-Party Remittance Processing
Agreement, dated as of _________ [ ], by and among the Lockbox Processor, the
Servicer and the Trustee, as such agreement may be amended or supplemented from
time to time, unless the Trustee shall cease to be a party thereunder, or such
agreement shall be terminated in accordance with its terms, in which event
"Lockbox Agreement" shall mean such other agreement, in form and substance
acceptable to the Controlling Party, among the Servicer, the Trustee and the
Lockbox Processor.
"Lockbox Bank" means as of any date a depository institution named by
the Servicer and acceptable to the Controlling Party at which the Lockbox
Account is established and maintained as of such date.
"Mandatory Redemption Date" means the earlier of (i) the Payment Date
in [ ], and (ii) if the last day of the Funding Period occurs on or prior to the
Determination Date in [ ], then [ ].
["Master Spread Account Agreement" means the Master Spread Account
Agreement dated as of [__________] among the Credit Enhancer, the Seller and the
Collateral Agent, as the same may be modified, supplemented or otherwise amended
in accordance with the terms thereof.]
["Monthly Interest Reserve Amount" means in the case of the [ ] Payment
Dates, an amount equal to the excess of (i) the product of (x) a fraction the
numerator of which is the actual number of days elapsed in the related Interest
Period and the denominator of which is 360, (y) the weighted average of each
Interest Rate and (z) the difference between (i) the sum of the aggregate
principal amount of the Notes immediately prior to the applicable Payment Date
and (ii) the Pool Balance as of the last day of the second preceding Collection
Period, or in the case of the [ ] Payment Date, as of the Closing Date over (ii)
the Pre-Funding Earnings for such Payment Date.]
"Moody's" means Xxxxx'x Investors Service, Inc., or its successor.
"Net Liquidation Proceeds" means, with respect to a Liquidated
Receivable, all amounts realized with respect to such
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Receivable (other than amounts withdrawn from the Spread Account and drawings
under the Policies) net of (i) reasonable expenses incurred by the Servicer in
connection with the collection of such Receivable and the repossession and
disposition of the Financed Vehicle and (ii) amounts that are required to be
refunded to the obligor on such Receivable; provided, however, that the
Liquidation Proceeds with respect to any Receivable shall in no event be less
than zero.
"Note" shall have the meaning provided in Section 1.1 of the Indenture.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.1.
"Note Pool Factor" for each Class of Notes as of the close of business
on a Payment Date means a seven-digit decimal figure equal to the outstanding
principal amount of such Class of Notes divided by the original outstanding
principal amount of such Class of Notes.
"Note Prepayment Amount" means, as of the Payment Date on or
immediately following the last day of the Funding Period, after giving effect to
any transfer of Subsequent Receivables on such date, an amount equal to the
Noteholders' pro rata share (based on the respective current outstanding
principal balance of each Class of Notes and the current Certificate Balance) of
the Pre- Funded Amount as of such Payment Date; provided, that if the aggregate
remaining amount in the Pre-Funding Account is $100,000 or less, such amount
will be applied exclusively to reduce the outstanding principal balance of the
Class of Notes then entitled to receive distributions of principal.
"Notes" means the Class A Notes and the Class B Notes.
"Obligor" on a Receivable means the purchaser or co- purchasers of the
Financed Vehicle and any other Person who owes payments under the Receivable.
"Officers' Certificate" means a certificate signed by the chairman of
the board, the president, any vice chairman of the board, any vice president,
the treasurer, the controller or assistant treasurer or any assistant
controller, secretary or assistant secretary of CPS, the Seller or the Servicer,
as appropriate.
"Opinion of Counsel" means a written opinion of counsel who may but
need not be counsel to the Seller or the Servicer, which counsel shall be
reasonably acceptable to the Trustee and the Credit Enhancer and which opinion
shall be acceptable in form and substance to the Trustee and, if such opinion or
a copy thereof
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is required by the provisions of this Agreement to be delivered to the Credit
Enhancer, to the Credit Enhancer.
"Original Pool Balance" means the sum, as of any date, of the Pool
Balance as of the Initial Cutoff Date, plus the aggregate Principal Balance of
the Subsequent Receivables, if any, sold to the Trust, as of their respective
Subsequent Cutoff Dates.
"Other Conveyed Property" means all property conveyed by the Seller to
the Trust pursuant to Section 2.1(ii) through (viii) of this Agreement.
["Overfunded Interest Reserve Amount" means:
With respect to the [ ] Payment Date the excess of (a) the amount on
deposit in the Interest Reserve Account on such Payment Date (after giving
effect to the transfer of the Monthly Interest Reserve Amount to the Collection
Account on such date) over (b) the product of (i) 1/360, (ii) [ %] (iii) 30 and
(iv) the amount on deposit in the Pre-Funding Account (excluding Pre- Funding
Earnings) at the close of business on [ ].
With respect to the [ ] Payment Date, the excess of (a) the amount on
deposit in the Interest Reserve Account on such Payment Date (after giving
effect to the transfer of the Monthly Interest Reserve Amount to the Collection
Account on such date) over (b) the product of (i) 1/360, (ii) [ %] (iii) 30 and
(iv) the amount on deposit in the Pre-Funding Account (excluding Pre-Funding
Earnings) at the close of business on [ ].]
"Owner Trust Estate" has the meaning assigned to such term in the Trust
Agreement.
"Owner Trustee" means [ ], not in its individual capacity but solely as
Owner Trustee under the Trust Agreement, its successors in interest or any
successor Owner Trustee under the Trust Agreement.
"Payment Date" means, with respect to each Collection Period, the 15th
day of the following calendar month, or if such day is not a Business Day, the
immediately following Business Day, commencing on [ ]. The term "Payment Date"
insofar as it relates to the Class A-1 Notes, shall be deemed to include the
Special A-1 Payment Date.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated
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organization or government or any agency or political subdivision thereof.
["Physical Property" has the meaning assigned to such term in the
definition of "Delivery" above.]
"Pool Balance" means, as of any date of determination, the aggregate
Principal Balance of the Receivables (excluding Purchased Receivables and
Liquidated Receivables).
"Post-Office Box" means the separate post-office box in the name of the
Trustee for the benefit of the Securityholders and the Credit Enhancer,
established and maintained pursuant to Section 4.1.
"Pre-Funded Amount" means, with respect to any Payment Date, the amount
on deposit in the Pre-Funding Account, (exclusive of Pre-Funding Earnings) which
initially shall be $[_____________].
"Pre-Funding Account" has the meaning specified in Section 5.1.
"Pre-Funding Earnings" means any Investment Earnings on amounts on
deposit in the Pre-Funding Account.
"Prepayment Amount" means the amount deposited in the Collection
Account from the Pre-Funding Account on the Mandatory Redemption Date pursuant
to Section 5.7(a)(ii) hereof.
"Principal Balance" of a Receivable, as of the close of business on the
last day of a Collection Period means the Amount Financed minus the sum of the
following amounts without duplication: (i) in the case of a Rule of 78's
Receivable, that portion of all Scheduled Payments actually received on or prior
to such day allocable to principal using the actuarial or constant yield method;
(ii) in the case of a Simple Interest Receivable, that portion of all Scheduled
Payments actually received on or prior to such day allocable to principal using
the Simple Interest Method; (iii) any payment of the Purchase Amount with
respect to the Receivable allocable to principal; (iv) any Cram Down Loss in
respect of such Receivable; and (v) any prepayment in full or any partial
prepayment applied to reduce the Principal Balance of the Receivable.
"Principal Distributable Amount" means, with respect to any Payment
Date, the sum of (i)(x) the principal portion of all Scheduled Payments received
during the preceding Collection Period on Rule of 78's Receivables (excluding
Net Liquidation Proceeds) and (y) all payments of principal received on Simple
Interest Receivables during such preceding Collection Period; (ii) the principal
portion of all prepayments in full received
-19-
during the preceding Collection Period (including prepayments in full resulting
from collections with respect to a Receivable received during the preceding
Collection Period (without duplication of amounts included in clause (i) above
and clause (iv) below); (iii) the portion of the Purchase Amount allocable to
principal of each Receivable that became a Purchased Receivable as of the last
day of the preceding Collection Period and, at the option of the Credit Enhancer
the Principal Balance of each Receivable that was required to be but was not so
purchased or repurchased (without duplication of amounts referred to in clauses
(i) and (ii) above); (iv) the Principal Balance of each Receivable that first
became a Liquidated Receivable during the preceding Collection Period (without
duplication of the amounts included in clauses (i) and (ii) above); and (v) the
aggregate amount of Cram Down Losses with respect to the Receivables that have
occurred during the preceding Collection Period; and (vi) following the
acceleration of the Notes pursuant to Section 5.2 of the Indenture, the amount
of money or property collected pursuant to Section 5.4 of the Indenture since
the preceding Determination Date by the Trustee or Controlling Party for
distribution pursuant to Section 5.7 hereof.
"Program" shall have the meaning specified in Section 4.11.
"Purchase Agreement" means the CPS Purchase Agreement and/or the Samco
Purchase Agreement.
"Purchase Amount" means, with respect to a Receivable, the Principal
Balance and all accrued and unpaid interest on the Receivable, after giving
effect to the receipt of any moneys collected (from whatever source) on such
Receivable, if any.
"Purchased Receivable" means a Receivable purchased as of the close of
business on the last day of a Collection Period by the Servicer pursuant to
Section 4.7 or repurchased by the Seller or CPS pursuant to Section 3.2 or
Section 11.1(a).
"Rating Agency" means each of [Moody's and Standard & Poor's], and any
successors thereof. If no such organization or successor maintains a rating on
the Securities, "Rating Agency" shall be a nationally recognized statistical
rating organization or other comparable Person designated by the Credit Enhancer
(so long as a Credit Enhancer Default shall not have occurred and be
continuing), notice of which designation shall be given to the Trustee, the
Owner Trustee and the Servicer.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given [ ] days' (or such shorter period as shall
be acceptable to each Rating Agency) prior notice thereof and that each of the
Rating Agencies shall have notified the Seller, the Servicer, the Credit
Enhancer, the
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Owner Trustee and the Trustee in writing that such action will not result in a
reduction or withdrawal of the then current rating of any Class of Notes or the
Certificates.
"Realized Losses" means, with respect to any Receivable that becomes a
Liquidated Receivable, the excess of the Principal Balance of such Liquidated
Receivable over Net Liquidation
Proceeds to the extent allocable to principal.
"Receivable" means each retail installment sale contract for a Financed
Vehicle listed on Schedule A (which Schedule A may be in the form of microfiche)
and all rights and obligations thereunder except for Receivables that shall have
become Purchased Receivables, as such Schedule shall be amended to reflect the
transfer of Subsequent Receivables to the Trust.
"Receivable Files" means the documents specified in Section 3.3.
"Record Date" means, with respect to any Payment Date, the tenth day of
the calendar month in which such Payment Date occurs.
"Registrar of Titles" means, with respect to any state, the
governmental agency or body responsible for the registration of, and the
issuance of certificates of title relating to, motor vehicles and liens thereon.
"Rule of 78's Receivable" means any Receivable under which the portion
of a payment allocable to earned interest (which may be referred to in the
related retail installment sale contract as an add-on finance charge) and the
portion allocable to the Amount Financed is determined according to the method
commonly referred to as the "Rule of 78's" method or the "sum of the months'
digits" method or any equivalent method.
["Samco" means Samco Acceptance Corp., a subsidiary of CPS.]
["Samco Purchase Agreement" means the Purchase Agreement, dated as of [
] by and between Samco and the Seller, as such agreement may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof, relating to the purchase of the Samco Receivables by the Seller
from Samco.]
["Samco Receivables" means a Receivable purchased by the Seller from
Samco.]
"Schedule of Receivables" means the schedule of all retail installment
sales contracts and promissory notes originally held as part of the Trust which
is attached as Schedule A.
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"Scheduled Payment" means, with respect to any Collection Period for
any Receivable, the amount set forth in such Receivable as required to be paid
by the Obligor in such Collection Period (without giving effect to deferments of
payments pursuant to Section 4.2 or any rescheduling of payments in any
insolvency or similar proceedings).
"Securities" means the Notes and Certificates.
"Security Majority" means a majority by principal amount of the
Noteholders so long as the Notes are outstanding and a majority by principal
amount of the Certificateholders thereafter.
"Securityholder" means the Noteholders and the Certificateholders.
"Seller" means CPS Receivables Corp., a California corporation, and its
successors in interest to the extent permitted hereunder.
"Series [ ]Spread Account" means the account designated as such,
established and maintained pursuant to the Spread Account Supplement.
"Servicer" means Consumer Portfolio Services, Inc., as the servicer of
the Receivables, and each successor Servicer pursuant to Section 10.3.
"Servicer Termination Event" means an event specified in Section 10.1.
"Servicer's Certificate" means a certificate completed and executed by
a Servicing Officer and delivered pursuant to Section 4.9, substantially in the
form of Exhibit B.
"Servicing Assumption Agreement" means the Servicing Assumption
Agreement, dated as of [ ] among CPS, the Standby Servicer and the Trustee, as
the same may be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof.
"Servicing Fee" has the meaning specified in Section 4.8.
"Servicing Fee Rate" shall be [ %] per annum, payable monthly,
provided, however, that if the Standby Servicer becomes the successor Servicer,
the "Servicing Rate" shall be equal to a percentage per annum determined
pursuant to the Servicing Assumption Agreement not to exceed [ %] per annum.
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"Servicing Officer" means any Person whose name appears on a list of
Servicing Officers delivered to the Trustee and the Credit Enhancer, as the same
may be amended from time to time.
"Simple Interest Method" means the method of allocating a fixed level
payment between principal and interest, pursuant to which the portion of such
payment that is allocated to interest is equal to the product of the APR
multiplied by the unpaid balance multiplied by the period of time (expressed as
a fraction of a year, based on the actual number of days in the calendar month
and the actual number of days in the calendar year) elapsed since the preceding
payment of interest was made and the remainder of such payment is allocable to
principal.
"Simple Interest Receivable" means a Receivable under which the portion
of the payment allocable to interest and the portion allocable to principal is
determined in accordance with the Simple interest Method.
["Special A-1 Payment Date" means with respect to the Class A-1 Notes,
[ ] (which shall be no later than [ ] days after the date on which the Notes are
priced).]
"Specified Spread Account Requisite Amount" has the meaning specified
in the Spread Account Supplement.
"Spread Account Supplement" means the Series [ ] Supplement to the
Master Spread Account Agreement dated as of [ ] among the Credit Enhancer, the
Seller and the Collateral Agent, as the same may be modified, supplemented or
otherwise amended in accordance with the terms thereof.
"Standard & Poor's" means Standard & Poor's Ratings Services, or its
successor.
"Standby Fee" means the fee payable to the Standby Servicer so long as
CPS is the Servicer calculated in the same manner, on the same basis and for the
same period as the Servicing Fee is calculated pursuant to Section 3.8 based on
a rate of [ %] per annum rather than the Servicing Rate.
"Standby Servicer" means [Norwest Bank Minnesota, National
Association,] in its capacity as Standby Servicer pursuant to the terms of the
Servicing Assumption Agreement or such Person as shall have been appointed
Standby Servicer pursuant to Section 9.2(c).
"Subsequent Cutoff Date" means (i) the last day of the month preceding
the month in which particular Subsequent Receivables are conveyed to the Trust
pursuant to this Agreement or (ii) if
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any such Subsequent Receivable is originated in the month of the related
Subsequent Transfer Date, the date of origination.
"Subsequent Purchase Agreement" means an agreement by and between the
Seller and CPS or the Seller and Samco pursuant to which the Seller will acquire
Subsequent Receivables.
"Subsequent Receivables" means the Receivables transferred to the
Issuer pursuant to Section 2.2, which shall be listed on Schedule A to the
related Subsequent Transfer Agreement.
"Subsequent Spread Account Deposit" means, with respect to each
Subsequent Transfer Date, an amount equal to [ %] of the aggregate principal
balance of Subsequent Receivables as of the related Subsequent Cutoff Date
transferred to the Trust on such Subsequent Transfer Date from amounts released
from the Pre- Funding Account.
"Subsequent Transfer Agreement" means the agreement among the Issuer,
the Seller and the Servicer, substantially in the form of Exhibit A.
"Subsequent Transfer Date" means, with respect to Subsequent
Receivables, any date, occurring not more frequently than [ ] per month, during
the Funding Period on which Subsequent Receivables are to be transferred to the
Trust pursuant to this Agreement, and a Subsequent Transfer Agreement is
executed and delivered to the Trust.
"Total Distribution Amount" means, for each Payment Date, the sum of
the following amounts with respect to the preceding Collection Period: (i) all
collections on the Receivables, (ii) Net Liquidation Proceeds received during
the Collection Period with respect to Liquidated Receivables; (iii) all Purchase
Amounts deposited in the Collection Account during the related Collection
Period; (iv) Investment Earnings for the related Payment Date; (v) following the
acceleration of the Notes pursuant to Section 5.2 of the Indenture, the amount
of money or property collected pursuant to Section 5.7 of the Indenture since
the preceding Payment Date by the Trustee or Controlling Party for distribution
pursuant to Section 5.6 and Section 5.8 hereof, (vi) if such Payment Date is the
Mandatory Redemption Date, any Pre-Funded Amount to be deposited into the
Collection Account on such Payment Date pursuant to Section 5.7(a) hereof, and
(vii) the proceeds of any purchase or sale of the assets of the Trust described
in Section 11.1 hereof.
"Trigger Event" has the meaning assigned thereto in the Spread Account
Supplement.
"Trust" means the Issuer.
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"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), and all proceeds of the foregoing.
"Trust Accounts" has the meaning assigned thereto in Section 5.1.
"Trust Agreement" means the Trust Agreement dated as of [ ], between
the Seller and the Owner Trustee, as the same may be amended and supplemented
from time to time.
"Trustee" means the Person acting as Trustee under the Indenture, its
successors in interest and any successor trustee under the Indenture.
"Trust Officer" means, (i) in the case of the Trustee, any vice
president, any assistant vice president, any assistant secretary, any assistant
treasurer, any trust officer, or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject, and (ii) in the case of the Owner
Trustee, any officer in the corporate trust office of the Owner Trustee or any
agent of the Owner Trustee under a power of attorney with direct responsibility
for the administration of this Agreement or any of the Basic Documents on behalf
of the Owner Trustee.
"Trust Property" means the property and proceeds conveyed pursuant to
Section 2.1, together with certain monies paid on or after the Initial Cutoff
Date, the Policies, the Collection Account (including all Eligible Investments
therein and all proceeds therefrom), the Lockbox Account and certain other
rights under this Agreement. Although the Seller [and its Affiliate] has pledged
the Spread Account to the Trustee and the Credit Enhancer pursuant to the Master
Spread Account Agreement, the Spread Account shall not under any circumstances
be deemed to be a part of or otherwise includable in the Trust or the Trust
Property.
"Trust Receipt" has the meaning assigned thereto by Section 3.5.
"UCC" means the Uniform Commercial Code as in effect in the relevant
jurisdiction on the date of the Agreement.
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SECTION 1.2. Other Definitional Provisions.
(a) Capitalized terms used herein and not otherwise defined herein have
the meanings assigned to them in the Indenture or, if not defined therein, in
the Trust Agreement.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any instrument governed hereby and in any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein.
(c) Accounting terms used but not defined or partly defined in this
Agreement, in any instrument governed hereby or in any certificate or other
document made or delivered pursuant hereto, to the extent not defined, shall
have the respective meanings given to them under generally accepted accounting
principles as in effect on the date of this Agreement or any such instrument,
certificate or other document, as applicable. To the extent that the definitions
of accounting terms in this Agreement or in any such instrument, certificate or
other document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement or
in any such instrument, certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement.
(e) Section, Schedule and Exhibit references contained in this
Agreement are references to Sections, Schedules and Exhibits in or to this
Agreement unless otherwise specified; and the term "including" shall mean
"including without limitation."
(f) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
(g) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as the same may from time to time be amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments and instruments associated therewith; all
references to a Person include its permitted successors and assigns.
-26-
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.1. Conveyance of Initial Receivables. In consideration of the
Issuer's delivery to or upon the order of the Seller on the Closing Date of the
net proceeds from the sale of the Notes and the Certificates and the other
amounts to be distributed from time to time to the Seller in accordance with the
terms of this Agreement, the Seller does hereby sell, transfer, assign, set over
and otherwise convey to the Issuer, without recourse (subject to the obligations
set forth herein):
(a) all right, title and interest of the Seller in and to the
Initial Receivables listed in Schedule A hereto and, with respect to
Initial Receivables that are Rule of 78's Receivables, all monies due
or to become due thereon after the Initial Cutoff Date (including
Scheduled Payments due after the Initial Cutoff Date (including
principal prepayments relating to such Scheduled Payments) but received
by the Seller or CPS on or before the Initial Cutoff Date) and, with
respect to Initial Receivables that are Simple Interest Receivables,
all monies received thereunder after the Initial Cutoff Date and all
Net Liquidation Proceeds received with respect to such Initial
Receivables on or after the Initial Cutoff Date;
(b) all right, title and interest of the Seller in and to the
security interests in the Financed Vehicles granted by Obligors
pursuant to the Receivables and any other interest of the Seller in
such Financed Vehicles, including, without limitation, the certificates
of title or, with respect to such Financed Vehicles in the State of
Michigan, all other evidence of ownership with respect to such Financed
Vehicles;
(c) all right, title and interest of the Seller in and to any
proceeds from claims on any physical damage, credit life and credit
accident and health insurance policies or certificates relating to the
Financed Vehicles or the Obligors;
(d) all right, title and interest of the Seller in and to the
Purchase Agreements, including a direct right to cause CPS to purchase
Initial Receivables from the Trust under certain circumstances;
(e) all right, title and interest of the Seller in and to
refunds for the costs of extended service contracts with respect to
Financed Vehicles Securing Initial Receivables, refunds of unearned
premiums with respect to credit life and
-27-
credit accident and health insurance policies or certificates covering
an Obligor or Financed Vehicle or his or her obligations with respect
to a Financed Vehicle and any recourse to Dealers for any of the
foregoing;
(f) the Receivable File related to each Initial Receivable;
(g) all amounts and property from time to time held in or
credited to the Collection Account or the Lockbox Account; and
(h) the proceeds of any and all of the foregoing.
It is the intention of the Seller that the transfer and assignment
contemplated by this Agreement shall constitute a sale of the Receivables and
other Trust Property from the Seller to the Issuer and the beneficial interest
in and title to the Receivables and the other Trust Property shall not be part
of the Seller's estate in the event of the filing of a bankruptcy petition by or
against the Seller under any bankruptcy law. In the event that, notwithstanding
the intent of the Seller, the transfer and assignment contemplated hereby is
held not to be a sale, this Agreement shall constitute a grant of a security
interest in the property referred to in this Section 2.1 for the benefit of the
Securityholders and the Credit Enhancer.
SECTION 2.2. Conveyance of Subsequent Receivables.
(a) Subject to the conditions set forth in paragraph (b) below, in
consideration of the Issuer's delivery on each related Subsequent Transfer Date
to or upon the order of the Seller of the amount described in Section 5.10(a) to
be delivered to the Seller, the Seller does hereby sell, transfer, assign, set
over and otherwise convey to the Issuer without recourse (subject to the
obligations set forth herein), all right, title and interest of the Seller in
and to:
(i) all right, title and interest of the Seller in and to the
Subsequent Receivables listed in Schedule A to the related Subsequent
Transfer Agreement and, with respect to Subsequent Receivables that are
Rule of 78's Receivables, all monies due or to become due thereon after
the related Subsequent Cutoff Date (including Scheduled Payments due
after the related Subsequent Cutoff Date (including principal
prepayments relating to such Scheduled Payments) but received by the
Seller or CPS on or before the related Subsequent Cutoff Date) and,
with respect to Subsequent Receivables that are Simple Interest
Receivables, all monies received thereunder after the related
Subsequent Cutoff Date and all Liquidation Proceeds and Recoveries
received with
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respect to such Subsequent Receivables on or after the related
Subsequent Cutoff Date;
(ii) all right, title and interest of the Seller in and to the
security interests in the Financed Vehicles granted by Obligors
pursuant to the Subsequent Receivables and any other interest of the
Seller in such Financed Vehicles, including, without limitation, the
certificates of title or, with respect to such Financed Vehicles in the
State of Michigan, all other evidence of ownership with respect to such
Financed Vehicles;
(iii) all right, title and interest of the Seller in and to
any proceeds from claims on any physical damage, credit life and credit
accident and health insurance policies or certificates relating to the
Financed Vehicles or the Obligors;
(iv) all right, title and interest of the Seller in and to the
Subsequent Purchase Agreements, including a direct right to cause CPS
to purchase Receivables from the Trust under certain circumstances;
(v) all right, title and interest of the Seller in and to
refunds for the costs of extended service contracts with respect to
Financed Vehicles securing Subsequent Receivables, refunds of unearned
premiums with respect to credit life and credit accident and health
insurance policies or certificates covering an Obligor or Financed
Vehicle or his or her obligations with respect to a Financed Vehicle
and any recourse to Dealers for any of the foregoing;
(vi) the Receivable File related to each Subsequent
Receivable;
(vii) all amounts and property from time to time held in or
credited to the Collection Account, the Lockbox Account or the
Certificate Account; and
(viii) the proceeds of any and all of the foregoing.
(b) The Seller shall transfer to the Issuer the Subsequent Receivables
and the other property and rights related thereto described in paragraph (a)
above only upon the satisfaction of each of the following conditions on or prior
to the related Subsequent Transfer Date:
(i) the Seller shall have provided the Trustee, the Owner
Trustee, the Credit Enhancer and the Rating Agencies with an Addition
Notice not later than five days prior to
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such Subsequent Transfer Date and shall have provided any information
reasonably requested by any of the foregoing with respect to the
Subsequent Receivables;
(ii) the Seller shall have delivered to the Owner Trustee and
the Trustee a duly executed Subsequent Transfer Agreement which shall
include supplements to Schedule A, listing the Subsequent Receivables;
(iii) the Seller shall, to the extent required by Section 4.2
of this Agreement, have deposited in the Collection Account all
collections in respect of the Subsequent Receivables;
(iv) as of each Subsequent Transfer Date, (A) the Seller shall
not be insolvent and shall not become insolvent as a result of the
transfer of Subsequent Receivables on such Subsequent Transfer Date,
(B) the Seller shall not intend to incur or believe that it shall incur
debts that would be beyond its ability to pay as such debts mature, (C)
such transfer shall not have been made with actual intent to hinder,
delay or defraud any Person and (D) the assets of the Seller shall not
constitute unreasonably small capital to carry out its business as
conducted;
(v) the Funding Period shall not have terminated;
(vi) after giving effect to any transfer of Subsequent
Receivables on a Subsequent Transfer Date, the Receivables transferred
to the Trust pursuant hereto shall meet the following criteria (based
on the characteristics of the Initial Receivables on the Initial Cutoff
Date and the Subsequent Receivables on the related Subsequent Cutoff
Dates): [ ];
(vii) each of the representations and warranties made by the
Seller pursuant to Section 3.1 with respect to the Subsequent
Receivables to be transferred on such Subsequent Transfer Date shall be
true and correct as of the related Subsequent Transfer Date, and the
Seller shall have performed all obligations to be performed by it
hereunder on or prior to such Subsequent Transfer Date;
(viii) the Seller shall, at its own expense, on or prior to
the Subsequent Transfer Date indicate in its computer files that the
Subsequent Receivables identified in the Subsequent Transfer Agreement
have been sold to the Trust pursuant to this Agreement;
(ix) the Seller shall have taken any action required to
maintain the first priority perfected ownership interest
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of the Trust in the Owner Trust Estate and the first priority perfected
security interest of the Trustee in the Collateral;
(x) no selection procedures adverse to the interests of the
Securityholders or the Credit Enhancer shall have been utilized in
selecting the Subsequent Receivables;
(xi) the addition of any such Subsequent Receivables shall not
result in a material adverse tax consequence to the Trust or the
Securityholders;
(xii) the Seller shall have delivered (A) to the Rating
Agencies and the Credit Enhancer an opinion of Counsel with respect to
the transfer of such Subsequent Receivables substantially in the form
of the Opinion of Counsel delivered to the Rating Agencies and the
Credit Enhancer on the Closing Date and (B) to the Trustee the opinion
of Counsel required by Section 13.2(i)(1);
(xiii) each Rating Agency shall have confirmed that the rating
on the Notes shall not be withdrawn or reduced as a result of the
transfer of such Subsequent Receivables to the Trust;
(xiv) the Credit Enhancer (so long as no Credit Enhancer
Default shall have occurred and be continuing), in its absolute and
sole discretion, shall have approved the transfer of such Subsequent
Receivables to the Trust and the Credit Enhancer shall have been
reimbursed for any fees and expenses incurred by the Credit Enhancer in
connection with the granting of such approval;
(xv) the Seller shall simultaneously transfer the Subsequent
Spread Account Deposit to the Collateral Agent with respect to the
Subsequent Receivables transferred on such Subsequent Transfer Date;
and
(xvi) the Seller shall have delivered to the Credit Enhancer
and the Trustee an Officers' Certificate confirming the satisfaction of
each condition precedent specified in this paragraph (b).
The Seller covenants that in the event any of the foregoing conditions
precedent are not satisfied with respect to any Subsequent Receivable on the
date required as specified above, the Seller will immediately repurchase such
Subsequent Receivable from the Trust, at a price equal to the Purchase Amount
thereof, in the manner specified in Section 4.7.
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SECTION 2.3. Further Encumbrance of Trust Property.
(a) Immediately upon the conveyance to the Trust by the Seller of any
item of the Trust Property pursuant to Section 2.1 or 2.2, all right, title and
interest of the Seller in and to such item of Trust Property shall terminate,
and all such right, title and interest shall vest in the Trust, in accordance
with the Trust Agreement and Sections 3802 and 3805 of the Business Trust
Statute (as defined in the Trust Agreement).
(b) Immediately upon the vesting of the Trust Property in the Trust,
the Trust shall have the sole right to pledge or otherwise encumber, such Trust
Property. Pursuant to the Indenture, the Trust shall grant a security interest
in the Trust Property to secure the repayment of the Notes. The Certificates
shall represent beneficial ownership interests in the Trust Property, and the
Certificateholders shall be entitled to receive distributions with respect
thereto as set forth herein.
(c) Following the payment in full of the Notes and the release and
discharge of the Indenture, all covenants of the Issuer under Article III of the
Indenture shall, until payment in full of the Certificates, remain as covenants
of the Issuer for the benefit of the Certificateholders, enforceable by the
Certificateholders to the same extent as such covenants were enforceable by the
Noteholders prior to the discharge of the Indenture. Any rights of the Trustee
under Article III of the Indenture, following the discharge of the Indenture,
shall vest in the Certificateholders.
(d) The Trustee shall, at such time as there are no Securities
outstanding and all sums due to the Trustee pursuant to the Indenture and this
Agreement, have been paid, release any remaining portion of the Trust Property
to the Certificateholders.
ARTICLE III
THE RECEIVABLES
SECTION 3.1. Representations and Warranties of Seller. The Seller makes
the following representations and warranties as to the Receivables to the Credit
Enhancer, the Issuer and to the Trustee on which the Issuer relies in acquiring
the Receivables and on which the Credit Enhancer relies in issuing the Policies.
Such representations and warranties speak as of the execution and delivery of
this Agreement and as of the Closing Date, in the case of the Initial
Receivables, and as of the related Subsequent Transfer Date, in case of the
Subsequent Receivables, but shall survive the sale, transfer and assignment of
the Receivables to
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the Issuer and the pledge thereof to the Trustee pursuant to the Indenture.
(i) Characteristics of Receivables. (A) Each Receivable (1)
has been originated in the United States of America by a Dealer for the
retail sale of a Financed Vehicle in the ordinary course of such
Dealer's business, has been fully and properly executed by the parties
thereto and has been purchased by CPS (or, with respect to the Samco
Receivables, Samco) in connection with the sale of Financed Vehicles by
the Dealers, (2) has created a valid, subsisting, and enforceable first
priority perfected security interest in favor of CPS (or, with respect
to the Samco Receivables, Samco) in the Financed Vehicle, which
security interest has been assigned by CPS (or, with respect to the
Samco Receivables, Samco) to the Seller, which in turn has assigned
such security interest to the Trustee, (3) contains customary and
enforceable provisions such that the rights and remedies of the holder
or assignee thereof shall be adequate for realization against the
collateral of the benefits of the security, (4) provides for level
monthly payments that fully amortize the Amount Financed over the
original term (except for the last payment, which may be different from
the level payment) and yield interest at the Annual Percentage Rate,
(5) has an Annual Percentage Rate of not less than [ ]%, (6) that is a
Rule of 78's Receivable provides for, in the event that such contract
is prepaid, a prepayment that fully pays the Principal Balance and
includes a full month's interest, in the month of prepayment, at the
Annual Percentage Rate, (7) is a Rule of 78's Receivable or a Simple
Interest Receivable, and (8) was originated by a Dealer and was sold by
the Dealer without any fraud or misrepresentation on the part of such
Dealer.
(B) Approximately [ ]% of the aggregate Principal Balance of
the Receivables, constituting [ ]% of the number of contracts, as of
the Cutoff Date, represents financing of used automobiles, light
trucks, vans or minivans; the remainder of the Receivables represent
financing of new automobiles, light trucks, vans or minivans;
approximately [ ]% of the aggregate Principal Balance of the
Receivables as of the Cutoff Date were originated in the State of
California; approximately [ ]% of the aggregate Principal Balance of
the Receivables as of the Cutoff Date were originated under the CPS
alpha program; approximately [ ]% of the aggregate Principal Balance of
the Receivables as of the Cutoff Date were originated under the CPS
delta program; approximately [ ]% of the aggregate Principal Balance of
the Receivables as of the Cutoff Date were originated under the CPS
first time buyer program; approximately [ ]% of the
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aggregate Principal Balance of the Receivables were originated under
the CPS standard program; the remaining [ ]% of the aggregate Principal
Balance of the Receivables as of the Cutoff Date were acquired by CPS
from unaffiliated parties; approximately [ ]% of the aggregate
Principal Balance of the Receivables are Samco Receivables; no
Receivable shall have a payment that is more than [ ] days overdue as
of the Cutoff Date; [ ]% of the aggregate Principal Balance of the
Receivables are Rule of 78's Receivables and [ ]% of the aggregate
Principal Balance of the Receivables are Simple Interest Receivables;
each Receivable shall have a final scheduled payment due no later than
[ ]; each Receivable has an original term to maturity of at least [ ]
months and not more than [ ] months and a remaining term to maturity of
not less than [ ] months nor greater than [ ] months; and each
Receivable was originated on or before the Cutoff Date.
(ii) Schedule of Receivables. The information with respect to
the Receivables set forth in Schedule A to this Agreement is true and
correct in all material respects as of the close of business on the
Cutoff Date, and no selection procedures adverse to the Securityholders
have been utilized in selecting the Receivables.
(iii) Compliance with Law. Each Receivable, the sale of the
Financed Vehicle and the sale of any physical damage, credit life and
credit accident and health insurance and any extended service contracts
complied at the time the related Receivable was originated or made and
at the execution of this Agreement complies in all material respects
with all requirements of applicable Federal, State, and local laws, and
regulations thereunder including, without limitation, usury laws, the
Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the
Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the
Federal Trade Commission Act, the Xxxxxxxx-Xxxx Warranty Act, the
Federal Reserve Board's Regulations B and Z, the Soldiers' and Sailors'
Civil Relief Act of 1940, the Texas Consumer Credit Code, the
California Automobile Sales Finance Act and State adaptations of the
National Consumer Act and of the Uniform Consumer Credit Code, and
other consumer credit laws and equal credit opportunity and disclosure
laws.
(iv) No Government Obligor. None of the Receivables are due
from the United States of America or any State or from any agency,
department, or instrumentality of the United States of America or any
State.
(v) Security Interest in Financed Vehicle. Immediately
subsequent to the sale, assignment and transfer thereof to
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the Trust, each Receivable shall be secured by a validly perfected
first priority security interest in the Financed Vehicle in favor of
the Trust as secured party, and such security interest is prior to all
other liens upon and security interests in such Financed Vehicle which
now exist or may hereafter arise or be created (except, as to priority,
for any tax liens or mechanics' liens which may arise after the Closing
Date).
(vi) Receivables in Force. No Receivable has been satisfied,
subordinated or rescinded, nor has any Financed Vehicle been released
from the lien granted by the related Receivable in whole or in part.
(vii) No Waiver. No provision of a Receivable has been waived.
(viii) No Amendments. No Receivable has been amended, except
as such Receivable may have been amended to grant extensions which
shall not have numbered more than (a) one extension of one calendar
month in any calendar year or (b) three such extensions in the
aggregate.
(ix) No Defenses. No right of rescission, setoff, counterclaim
or defense exists or has been asserted or threatened with respect to
any Receivable. The operation of the terms of any Receivable or the
exercise of any right thereunder will not render such Receivable
unenforceable in whole or in part or subject to any such right of
rescission, setoff, counterclaim, or defense.
(x) No Liens. As of the Cutoff Date there are no liens or
claims existing or which have been filed for work, labor, storage or
materials relating to a Financed Vehicle that shall be liens prior to,
or equal or coordinate with, the security interest in the Financed
Vehicle granted by the Receivable.
(xi) No Default; Repossession. Except for payment
delinquencies continuing for a period of not more than thirty days as
of the Cutoff Date, no default, breach, violation or event permitting
acceleration under the terms of any Receivable has occurred; and no
continuing condition that with notice or the lapse of time would
constitute a default, breach, violation or event permitting
acceleration under the terms of any Receivable has arisen; and the
Seller shall not waive and has not waived any of the foregoing; and no
Financed Vehicle shall have been repossessed as of the Cutoff Date.
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(xii) Insurance; Other. (A) Each Obligor has obtained
insurance covering the Financed Vehicle as of the execution of the
Receivable insuring against loss and damage due to fire, theft,
transportation, collision and other risks generally covered by
comprehensive and collision coverage, and each Receivable requires the
Obligor to obtain and maintain such insurance naming CPS (or, with
respect to the Samco Receivables, Samco) and its successors and assigns
as an additional insured, (B) each Receivable that finances the cost of
premiums for credit life and credit accident and health insurance is
covered by an insurance policy or certificate of insurance naming CPS
(or with respect to the Samco Receivables, Samco) as policyholder
(creditor) under each such insurance policy and certificate of
insurance and (C) as to each Receivable that finances the cost of an
extended service contract, the respective Financed Vehicle which
secures the Receivable is covered by an extended service contract.
(xiii) Title. It is the intention of the Seller that the
transfer and assignment herein contemplated constitute a sale of the
Receivables from the Seller to the Trust and that the beneficial
interest in and title to such Receivables not be part of the Seller's
estate in the event of the filing of a bankruptcy petition by or
against the Seller under any bankruptcy law. No Receivable has been
sold, transferred, assigned, or pledged by the Seller to any Person
other than the Trust. Immediately prior to the transfer and assignment
herein contemplated, the Seller had good and marketable title to each
Receivable and was the sole owner thereof, free and clear of all liens,
claims, encumbrances, security interests, and rights of others, and,
immediately upon the transfer thereof, the Trust for the benefit of the
Securityholders and the Credit Enhancer shall have good and marketable
title to each such Receivable and will be the sole owner thereof, free
and clear of all liens, encumbrances, security interests, and rights of
others, and the transfer has been perfected under the UCC.
(xiv) Lawful Assignment. No Receivable has been originated in,
or is subject to the laws of, any jurisdiction under which the sale,
transfer, and assignment of such Receivable under this Agreement or
pursuant to transfers of the Securities shall be unlawful, void, or
voidable. The Seller has not entered into any agreement with any
account debtor that prohibits, restricts or conditions the assignment
of any portion of the Receivables.
(xv) All Filings Made. All filings (including, without
limitation, UCC filings) necessary in any jurisdiction to give the
Trust a first priority perfected
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ownership interest in the Receivables and the proceeds thereof and the
other Conveyed Property have been made, taken or performed.
(xvi) Receivable File; One Original. CPS has delivered to the
Trustee a complete Receivable File with respect to each Receivable.
There is only one original executed copy of each Receivable.
(xvii) Chattel Paper. Each Receivable constitutes "chattel
paper" under the UCC.
(xviii) Title Documents. (A) If the Receivable was originated
in a State in which notation of a security interest on the title
document of the related Financed Vehicle is required or permitted to
perfect such security interest, the title document of the related
Financed Vehicle for such Receivable shows, or if a new or replacement
title document is being applied for with respect to such Financed
Vehicle the title document (or, with respect to Receivables originated
in the State of Michigan, all other evidence of ownership with respect
to such Financed Vehicle) will be received within 180 days and will
show, CPS (or, with respect to the Samco Receivables, Samco) named as
the original secured party under the related Receivable as the holder
of a first priority security interest in such Financed Vehicle, and (B)
if the Receivable was originated in a State in which the filing of a
financing statement under the UCC is required to perfect a security
interest in motor vehicles, such filings or recordings have been duly
made and show CPS (or, with respect to the Samco Receivables, Samco)
named as the original secured party under the related Receivable, and
in either case, the Trust has the same rights as such secured party has
or would have (if such secured party were still the owner of the
Receivable) against all parties claiming an interest in such Financed
Vehicle. With respect to each Receivable for which the title document
of the related Financed Vehicle has not yet been returned from the
Registrar of Titles, CPS has received written evidence from the related
Dealer that such title document showing CPS (or, with respect to the
Samco Receivables, Samco) as first lienholder has been applied for.
(xix) Valid and Binding Obligation of Obligor. Each Receivable
is the legal, valid and binding obligation of the Obligor thereunder
and is enforceable in accordance with its terms, except only as such
enforcement may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally, and all
parties to such contract had full legal capacity to execute and
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deliver such contract and all other documents related thereto and to
grant the security interest purported to be granted thereby.
(xx) Tax Liens. As of the Cutoff Date, there is no lien
against the related Financed Vehicle for delinquent taxes.
(xxi) Characteristics of Obligors. As of the date of each
Obligor's application for the loan from which the related Receivable
arises, such Obligor (a) did not have any material past due credit
obligations or any personal or real property repossessed or wages
garnished within one year prior to the date of such application, unless
such amounts have been repaid or discharged through bankruptcy, (b) was
not the subject of any Federal, State or other bankruptcy, insolvency
or similar proceeding pending on the date of application that is not
discharged, (c) had not been the subject of more than one Federal,
State or other bankruptcy, insolvency or similar proceeding, and (d)
was domiciled in the United States.
(xxii) Origination Date. Each Receivable has an origination
date on or after [ ].
(xxiii) Maturity of Receivables. Each Receivable has an
original term to maturity of not less than [ ] months and not more than
[ ] months; the weighted average original term to maturity of the
Receivables is [ ] months as of the Cutoff Date; the remaining term to
maturity of each Receivable was [ ] months or less as of the Cutoff
Date; the weighted average remaining term to maturity of the
Receivables was [ ] months as of the Cutoff Date.
(xxiv) Scheduled Payments. Each Receivable had an original
principal balance of not less than $[ ] nor more than $[ ] had an
outstanding principal balance as of the Cutoff Date of not less than $[
] nor more than $[ ] and has a first Scheduled Payment due on or prior
to [ ].
(xxv) Origination of Receivables. Based on the billing address
of the Obligors and the Principal Balances as of the Cutoff Date,
approximately [ ]% of the aggregate Principal Balance of the
Receivables represents Receivables that were originated in California,
approximately [ ]% of the aggregate Principal Balance of the
Receivables represents Receivables that were originated in
Pennsylvania, approximately [ ]% of the aggregate Principal Balance of
the Receivables represents Receivables that were originated in Texas,
approximately [ ]% of the
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aggregate Principal Balance of the Receivables represents Receivables
that were originated in New York and the remaining [ ]% of the
aggregate Principal Balance of the Receivables represents Receivables
that were originated in other States.
(xxvi) Post-Office Box. On or prior to the next billing period
after the Cutoff Date, CPS will notify each Obligor to make payments
with respect to its respective Receivables after the Cutoff Date
directly to the Post- Office Box, and will provide each Obligor with a
monthly statement in order to enable such Obligors to make payments
directly to the Post-Office Box.
(xxvii) Location of Receivable Files. A complete Receivable
File with respect to each Receivable has been or prior to the Closing
Date will be delivered to the Trustee at the location listed in
Schedule B.
(xxviii) Casualty. No Financed Vehicle has suffered a
Casualty.
(xxix) Principal Balance/Number of Contracts. As of the Cutoff
Date, the total aggregate principal balance of the Receivables was $[
]. The Receivables are evidenced by [ ] Contracts.
(xxx) Full Amount Advanced. The full amount of each Receivable
has been advanced to each Obligor, and there are no requirements for
future advances thereunder. The Obligor with respect to the Receivable
does not have any option under the Receivable to borrow from any person
additional funds secured by the Financed Vehicle.
SECTION 3.2. Repurchase upon Breach.
(a) The Seller, the Servicer, the Credit Enhancer, the Trustee or the
Owner Trustee, as the case may be, shall inform the other parties to this
Agreement promptly, in writing, upon the discovery of any breach of the Seller's
representations and warranties made pursuant to Section 3.1 (without regard to
any limitations therein as to the Seller's knowledge). Unless the breach shall
have been cured by the last day of the second Collection Period following the
discovery thereof by the Trustee or the Credit Enhancer or receipt by the
Trustee, the Owner Trustee and the Credit Enhancer of notice from the Seller or
the Servicer of such breach, CPS shall repurchase any Receivable if such
Receivable is materially and adversely affected by the breach as of the last day
of such second Collection Period (or, at CPS's option, the last day of the first
Collection Period following the discovery) and, in the event that the breach
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relates to a characteristic of the Receivables in the aggregate, and if the
interests of the Trust, the Noteholders or the Certificateholders are materially
and adversely affected by such breach, unless the breach shall have been cured
by the last day of such second Collection Period, CPS shall purchase such
aggregate Principal Balance of Receivables, such that following such purchase
such representation shall be true and correct with respect to the remainder of
the Receivables in the aggregate. In consideration of the purchase of the
Receivable, CPS shall remit the Purchase Amount, in the manner specified in
Section 5.6. For purposes of this Section, the Purchase Amount of a Receivable
which is not consistent with the warranty pursuant to Section 3.1(i)(A)(4) or
(A)(5) shall include such additional amount as shall be necessary to provide the
full amount of interest as contemplated therein. The sole remedy of the Issuer,
the Owner Trustee, the Trustee, the Trustee, the Noteholders, the
Certificateholders or the Credit Enhancer with respect to a breach of
representations and warranties pursuant to Section 3.1 shall be to enforce CPS's
obligation to purchase such Receivables pursuant to the CPS Purchase Agreement;
provided, however, that CPS shall indemnify the Trustee, the Standby Servicer,
the Collateral Agent, the Trustee, the Credit Enhancer, the Trust and the
Securityholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third party claims
arising out of the events or facts giving rise to such breach. Upon receipt of
the Purchase Amount and written instructions from the Servicer, the Trustee
shall release to CPS or its designee the related Receivables File and shall
execute and deliver all reasonable instruments of transfer or assignment,
without recourse, as are prepared by the Seller and delivered to the Trustee and
necessary to vest in CPS or such designee title to the Receivable. If it is
determined that consummation of the transactions contemplated by this Agreement
and the other transaction documents referenced in this Agreement, the servicing
and operation of the Trust pursuant to this Agreement and such other documents,
or the ownership of a [Note or Certificate] by a Holder constitutes a violation
of the prohibited transaction rules of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or the Internal Revenue Code of 1986, as
amended (the "Code") or any successor statutes of similar impact, together with
the regulations thereunder, to which no statutory exception or administrative
exemption applies, such violation shall not be treated as a breach of the
Seller's representations and warranties made pursuant to Section 2.6 if not
otherwise such a breach.
(b) Pursuant to Section 2.1 of this Agreement, the Seller conveyed to
the Trust all of the Seller's right, title and interest in its rights and
benefits, but none of its obligations or burdens, under the Purchase Agreements
including the Seller's
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rights under the Purchase Agreements and the delivery requirements,
representations and warranties and the cure or repurchase obligations of CPS
thereunder. The Seller hereby represents and warrants to the Trust that such
assignment is valid, enforceable and effective to permit the Trust to enforce
such obligations of CPS under the Purchase Agreements.
SECTION 3.3. Custody of Receivables Files.
(a) In connection with the sale, transfer and assignment of the
Receivables and the other Conveyed Property to the Trust pursuant to this
Agreement the Trustee shall act as custodian of the following documents or
instruments in its possession which shall be delivered to the Trustee on or
before the Closing Date (with respect to each Receivable):
(i) The fully executed original of the Receivable (together
with any agreements modifying the Receivable, including without
limitation any extension agreements);
(ii) The original certificate of title in the name of CPS (or,
with respect to the Samco Receivables, Samco) or such documents that
CPS shall keep on file, in accordance with its customary procedures,
evidencing the security interest of CPS (or, with respect to the Samco
Receivables, Samco) in the Financed Vehicle or, if not yet received, a
copy of the application therefor showing CPS (or, with respect to the
Samco Receivables, Samco) as secured party.
(b) Upon payment in full of any Receivable, the Servicer will notify
the Trustee pursuant to a certificate of an officer of the Servicer (which
certificate shall include a statement to the effect that all amounts received in
connection with such payments which are required to be deposited in the
Collection Account pursuant to Section 4.1 have been so deposited) and shall
request delivery of the Receivable and Receivable File to the Servicer.
SECTION 3.4. Acceptance of Receivable Files by Trustee. The Trustee
acknowledges receipt of files which the Seller has represented are the
Receivable Files. The Trustee has reviewed the Receivable Files and has
determined that it has received a file for each Receivable identified in
Schedule A to this Agreement. The Trustee declares that it holds and will
continue to hold such files and any amendments, replacements or supplements
thereto and all other Trust Assets as Trustee in trust for the use and benefit
of all present and future Securityholders. The Trustee agrees to review each
file delivered to it no later than 45 days after the Closing Date or applicable
Subsequent Transfer Date to determine whether such Receivable Files contain the
documents referred to in
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Section 3.3(i) and (ii). If the Trustee has found or finds that a file for a
Receivable has not been received, or that a file is unrelated to the Receivables
identified in Schedule A to this Agreement or that any of the documents referred
to in Section 3.3(i) or (ii) are not contained in a Receivable File, the Trustee
shall inform CPS, the Seller, [the Owner Trustee], the [Trustee], the Standby
Servicer and the Credit Enhancer promptly, in writing, of the failure to receive
a file with respect to such Receivable (or of the failure of any of the
aforementioned documents to be included in the Receivable File) or shall return
to CPS as the Seller's designee any file unrelated to a Receivable identified in
Schedule A to this Agreement (it being understood that the Trustee's obligation
to review the contents of any Receivable File shall be limited as set forth in
the preceding sentence). Unless such defect with respect to such Receivable File
shall have been cured by the last day of the second Collection Period following
discovery thereof by the Trustee, CPS shall repurchase any such Receivable as of
such last day. In consideration of the purchase of the Receivable, CPS shall
remit the Purchase Amount, in the manner specified in Section 5.6. The sole
remedy of the Trustee, the Trust, or the Securityholders with respect to a
breach pursuant to this Section 3.4 shall be to require CPS to purchase the
applicable Receivables pursuant to this Section 3.4. Upon receipt of the
Purchase Amount and written instructions from the Servicer, the Trustee shall
release to CPS or its designee the related Receivable File and shall execute and
deliver all reasonable instruments of transfer or assignment, without recourse,
as are prepared by CPS and delivered to the Trustee and are necessary to vest in
CPS or such designee title to the Receivable. The Trustee shall make a list of
Receivables for which an application for a certificate of title but not an
original certificate of title or, with respect to Receivables originated in the
State of Michigan, a "Form RD108" stamped by the Department of Motor Vehicles,
is included in the Receivable File as of the date of its review of the
Receivable Files and deliver a copy of such list to the Servicer, the Owner
Trustee and the Credit Enhancer. On the date which is 180 days following the
Closing Date (or applicable Subsequent Transfer Date) or the next succeeding
Business Day, the Trustee shall inform CPS and the other parties to this
Agreement and the Credit Enhancer of any Receivable for which the related
Receivable File on such date does not include an original certificate of title
or, with respect to Financed Vehicles in the State of Michigan, for which the
related Receivable File on such date does not include a "Form RD108" stamped by
the Department of Motor Vehicles, and CPS shall repurchase any such Receivable
as of the last day of the current Collection Period.
SECTION 3.5. Access to Receivable Files. The Trustee shall permit the
Servicer, any Securityholder and the Credit Enhancer
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access to the Receivable Files at all reasonable times during the Trustee's
normal business hours; provided, however, that the Trustee shall provide such
access to any Securityholder only (i) in such cases where the Trustee is
required by applicable statutes or regulations (whether applicable to the
Trustee, the Servicer or to such Securityholder) to permit such Securityholder
to review the Receivable Files or (ii) if a Credit Enhancer Default shall have
occurred and be continuing. In addition, the Trustee shall provide such access
to any Securityholder at all reasonable times during the Trustee's normal
business hours if an Event of Default shall have occurred and be continuing. In
each case, such access shall be afforded without charge but only upon reasonable
request. Each Securityholder shall be deemed to have agreed by its acceptance of
a Note or Certificate to use its best efforts to hold in confidence all
Confidential Information in accordance with its then customary procedures;
provided that nothing herein shall prevent any Securityholder from delivering
copies of any financial statements and other documents whether or not
constituting Confidential Information, and disclosing other information, whether
or not Confidential Information, to (i) its directors, officers, employees,
agents and professional consultants, (ii) any other institutional investor that
holds Notes or Certificates, (iii) any prospective institutional investor
transferee in connection with the contemplated transfer of a Note or Certificate
or any part thereof or participation therein who is subject to confidentiality
arrangements at least substantially similar hereto, (iv) any governmental
authority, (v) the National Association of Insurance Commissioners or any
similar organization, (vi) any nationally recognized rating agency in connection
with the rating of the Certificates by such agency or (vii) any other Person to
which such delivery or disclosure may be necessary or appropriate (a) in
compliance with any applicable law, rule, regulation or order, (b) in response
to any subpoena or other legal process, (c) in connection with any litigation to
which such Securityholder is a party, or (d) in order to protect or enforce such
Person's investment in any Note Certificate. The Trustee shall, within two
Business Days of the request of the Servicer, the Owner Trustee or the Credit
Enhancer, execute such documents and instruments as are prepared by the
Servicer, the Owner Trustee or the Credit Enhancer and delivered to the Trustee,
as the Servicer, the Owner Trustee or the Credit Enhancer deems necessary to
permit the Servicer, in accordance with its customary servicing procedures, to
enforce the Receivable on behalf of the Trust and any related insurance policies
covering the Obligor, the Receivable or Financed Vehicle so long as such
execution in the Trustee's sole discretion does not conflict with this Agreement
and will not cause it undue risk or liability. The Trustee shall not be
obligated to release any document from any Receivable File unless it receives a
trust receipt signed by a Servicing Officer in the form of Exhibit C hereto (the
"Trust Receipt"). Such Trust Receipt shall obligate
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the Servicer to return such document(s) to the Trustee when the need therefor no
longer exists unless the Receivable shall be liquidated, in which case, upon
receipt of a certificate of a Servicing Officer substantially in the form of
Exhibit D hereto to the effect that all amounts required to be deposited in the
Collection Account with respect to such Receivable have been so deposited, the
Trust Receipt shall be released by the Trustee to the Servicer.
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.1. Duties of the Servicer. The Servicer, as agent for the
Trust, the Securityholders and the Credit Enhancer (to the extent provided
herein) shall manage, service, administer and make collections on the
Receivables with reasonable care, using that degree of skill and attention
customary and usual for institutions which service motor vehicle retail
installment contracts similar to the Receivables and, to the extent more
exacting, that the Servicer exercises with respect to all comparable automotive
receivables that it services for itself or others. The Servicer's duties shall
include collection and posting of all payments, responding to inquiries of
Obligors on such Receivables, investigating delinquencies, sending payment
statements to Obligors, reporting tax information to Obligors, accounting for
collections, furnishing monthly and annual statements to the Trustee, the
Trustee and the Credit Enhancer with respect to distributions. Without limiting
the generality of the foregoing, and subject to the servicing standards set
forth in this Agreement, the Servicer is authorized and empowered by the Trust
to execute and deliver, on behalf of itself, the Trust, the Securityholders or
any of them, any and all instruments of satisfaction or cancellation, or partial
or full release or discharge, and all other comparable instruments, with respect
to such Receivables or to the Financed Vehicles securing such Receivables and/or
the certificates of title or, with respect to Financed Vehicles in the State of
Michigan, other evidence of ownership with respect to such Financed Vehicles. If
the Servicer shall commence a legal proceeding to enforce a Receivable, the
Trust shall thereupon be deemed to have automatically assigned, solely for the
purpose of collection, such Receivable to the Servicer. If in any enforcement
suit or legal proceeding it shall be held that the Servicer may not enforce a
Receivable on the ground that it shall not be a real party in interest or a
holder entitled to enforce such Receivable, the Trust shall, at the Servicer's
expense and direction, take steps to enforce such Receivable, including bringing
suit in its name or the name of the Certificateholders. The Servicer shall
prepare and furnish and the Trustee and the
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Owner Trustee shall execute, any powers of attorney and other documents
reasonably necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder.
SECTION 4.2. Collection of Receivable Payments; Modifications of
Receivables; Lockbox Agreements.
(a) Consistent with the standards, policies and procedures required by
this Agreement, the Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Receivables as and
when the same shall become due and shall follow such collection procedures as it
follows with respect to all comparable automotive receivables that it services
for itself or others; provided, however, that the Servicer shall notify each
Obligor to make all payments with respect to the Receivables to the Post-Office
Box. The Servicer will provide each Obligor with a monthly statement in order to
notify such Obligors to make payments directly to the Post-Office Box. The
Servicer shall allocate collections between principal and interest in accordance
with the customary servicing procedures it follows with respect to all
comparable automotive receivables that it services for itself or others and in
accordance with the terms of this Agreement. Except as provided below, the
Servicer, for so long as CPS is the Servicer, may grant extensions on a
Receivable; provided, however, that the Servicer may not grant more than one
extension per calendar year with respect to a Receivable or grant an extension
with respect to a Receivable for more than one calendar month or grant more than
three extensions in the aggregate with respect to a Receivable without the prior
written consent of the Credit Enhancer and provided, further, that if the
Servicer extends the date for final payment by the Obligor of any Receivable
beyond the last day of the penultimate Collection Period preceding the Final
Scheduled Payment Date, it shall promptly purchase the Receivable from the Trust
in accordance with the terms of Section 4.7 hereof (and for purposes thereof,
the Receivable shall be deemed to be materially and adversely affected by such
breach). If the Servicer is not CPS, the Servicer may not make any extension on
a Receivable without the prior written consent of the Credit Enhancer. The
Servicer may in its discretion waive any late payment charge or any other fees
that may be collected in the ordinary course of servicing a Receivable.
Notwithstanding anything to the contrary contained herein, the Servicer shall
not agree to any alteration of the interest rate on any Receivable or of the
amount of any Scheduled Payment on Receivables.
(b) The Trustee shall establish the Lockbox Account in the name of the
Trustee for the benefit of the Securityholders and the Credit Enhancer, provided
that pursuant to the Lockbox
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Agreement, the Lockbox Processor and no other Person, save the Trustee, has
authority to direct disposition of funds on deposit in the Lockbox Account
consistent with the provisions of this Agreement and the Lockbox Agreement. The
Trustee shall have no liability or responsibility with respect to the Lockbox
Processor's directions or activities as set forth in the preceding sentence. The
Lockbox Account shall be established pursuant to and maintained in accordance
with the Lockbox Agreement and shall be a demand deposit account initially
established and maintained with Bank of America, or at the request of the
Certificate Credit Enhancer (unless a Credit Enhancer Default shall have
occurred and be continuing) an Eligible Account satisfying clause (i) of the
definition thereof; provided, however, that the Trustee shall give the Servicer
prior written notice of any change made at the request of the Credit Enhancer in
the location of the Lockbox Account. The Trustee shall establish and maintain
the Post-Office Box at a United States Post Office Branch in the name of the
Trustee for the benefit of the Securityholders and the Credit Enhancer.
(c) Notwithstanding any Lockbox Agreement, or any of the provisions of
this Agreement relating to the Lockbox Agreement, the Servicer shall remain
obligated and liable to the Trust, the Trustee and Securityholders for servicing
and administering the Receivables and the other Conveyed Property in accordance
with the provisions of this Agreement without diminution of such obligation or
liability by virtue thereof.
(d) In the event the Servicer shall for any reason no longer be acting
as such, the Standby Servicer or a successor Servicer shall thereupon assume all
of the rights and obligations of the outgoing Servicer under the Lockbox
Agreement. In such event, the successor Servicer shall be deemed to have assumed
all of the outgoing Servicer's interest therein and to have replaced the
outgoing Servicer as a party to the Lockbox Agreement to the same extent as if
such Lockbox Agreement had been assigned to the successor Servicer, except that
the outgoing Servicer shall not thereby be relieved of any liability or
obligations on the part of the outgoing Servicer to the Lockbox Bank under such
Lockbox Agreement. The outgoing Servicer shall, upon request of the Trustee, but
at the expense of the outgoing Servicer, deliver to the successor Servicer all
documents and records relating to the Lockbox Agreement and an accounting of
amounts collected and held by the Lockbox Bank and otherwise use its best
efforts to effect the orderly and efficient transfer of any Lockbox Agreement to
the successor Servicer. In the event that the Certificate Credit Enhancer (so
long as a Credit Enhancer Default shall not have occurred and be continuing) or
Holders of Class A Notes evidencing more than 50% of the outstanding principal
balance of the Class A Notes (if a Credit Enhancer Default shall have occurred
and be continuing) shall elect to change the identity of
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the Lockbox Bank, the Servicer, at its expense, shall cause the Lockbox Bank to
deliver, at the direction of the Certificate Credit Enhancer (so long as a
Credit Enhancer Default shall not have occurred and be continuing) or Holders of
Class A Notes evidencing more than 50% of the outstanding principal balance of
the Class A Notes (if a Credit Enhancer Default shall have occurred and be
continuing) to the Trustee or a successor Lockbox Bank, all documents and
records relating to the Receivables and all amounts held (or thereafter
received) by the Lockbox Bank (together with an accounting of such amounts) and
shall otherwise use its best efforts to effect the orderly and efficient
transfer of the Lockbox arrangements.
(e) On each Business Day, pursuant to the Lockbox Agreement, the
Lockbox Processor will transfer any payments from Obligors received in the
Post-Office Box to the Lockbox Account. Within two Business Days of receipt of
funds into the Lockbox Account, the Servicer shall cause the Lockbox Bank to
transfer funds from the Lockbox Account to the Collection Account. In addition,
the Servicer shall remit all payments by or on behalf of the Obligors received
by the Servicer with respect to the Receivables (other than Purchased
Receivables), and all Liquidation Proceeds no later than the Business Day
following receipt directly (without deposit into any intervening account) into
the Lockbox Account or the Collection Account.
SECTION 4.3. Realization Upon Receivables. On behalf of the Trust, the
Securityholders and the Credit Enhancer, the Servicer shall use its best
efforts, consistent with the servicing procedures set forth herein, to repossess
or otherwise convert the ownership of the Financed Vehicle securing any
Receivable as to which the Servicer shall have determined eventual payment in
full is unlikely. The Servicer shall commence efforts to repossess or otherwise
convert the ownership of a Financed Vehicle on or prior to the date that an
Obligor has failed to make more than 90% of a Scheduled Payment thereon in
excess of $10 for 120 days or more; provided, however, that the Servicer may
elect not to commence such efforts within such time period if in its good faith
judgment it determines either that it would be impracticable to do so or that
the proceeds ultimately recoverable with respect to such Receivable would be
increased by forbearance. The Servicer shall follow such customary and usual
practices and procedures as it shall deem necessary or advisable in its
servicing of automotive receivables, consistent with the standards of care set
forth in Section 4.2, which may include reasonable efforts to realize upon any
recourse to Dealers and selling the Financed Vehicle at public or private sale.
The foregoing shall be subject to the provision that, in any case in which the
Financed Vehicle shall have suffered damage, the Servicer shall not expend funds
in connection with the repair or the repossession of such Financed Vehicle
unless it shall
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determine in its discretion that such repair and/or repossession will increase
the proceeds ultimately recoverable with respect to such Receivable by an amount
greater than the amount of such expenses.
SECTION 4.4. Insurance.
(a) The Servicer, in accordance with the servicing procedures and
standards set forth herein, shall require that (i) each Obligor shall have
obtained insurance covering the Financed Vehicle, as of the date of the
execution of the Receivable, insuring against loss and damage due to fire,
theft, transportation, collision and other risks generally covered by
comprehensive and collision coverage and each Receivable requires the Obligor to
maintain such physical loss and damage insurance naming CPS (or, with respect to
the Samco Receivables, Samco) and its successors and assigns as an additional
insured, (ii) each Receivable that finances the cost of premiums for credit life
and credit accident and health insurance is covered by an insurance policy or
certificate naming CPS (or, with respect to the Samco Receivables, Samco) as
policyholder (creditor) and (iii) as to each Receivable that finances the cost
of an extended service contract, the respective Financed Vehicle which secures
the Receivable is covered by an extended service contract.
(b) To the extent applicable, the Servicer shall not take any action
which would result in noncoverage under any of the insurance policies referred
to in Section 4.4(a) which, but for the actions of the Servicer, would have been
covered thereunder. The Servicer, on behalf of the Trust, shall take such
reasonable action as shall be necessary to permit recovery under any of the
foregoing insurance policies. Any amounts collected by the Servicer under any of
the foregoing insurance policies shall be deposited in the Collection Account
pursuant to Section [5.4].
SECTION 4.5. Maintenance of Security Interests in Vehicles.
(a) Consistent with the policies and procedures required by this
Agreement, the Servicer shall take such steps on behalf of the Trust as are
necessary to maintain perfection of the security interest created by each
Receivable in the related Financed Vehicle, including but not limited to
obtaining the execution by the Obligors and the recording, registering, filing,
rerecording, re-filing, re-recording, re-registering and refiling of all
security agreements, financing statements and continuation statements or
instruments as are necessary to maintain the security interest granted by the
Obligors under the respective Receivables. The Trustee hereby authorizes the
Servicer, and the Servicer agrees, to take any and all steps necessary to re-
perfect or continue the perfection of such security interest on behalf of the
Trust as necessary because of the relocation of a
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Financed Vehicle or for any other reason. In the event that the assignment of a
Receivable to the Trust is insufficient, without a notation on the related
Financed Vehicle's certificate of title, or without fulfilling any additional
administrative requirements under the laws of the state in which the Financed
Vehicle is located, to perfect a security interest in the related Financed
Vehicle in favor of the Trust, the Servicer hereby agrees that CPS's designation
as the secured party on the certificate of title is in its capacity as Servicer
as agent of the Trust.
(b) Upon the occurrence of an Insurance Agreement Event of Default, the
Credit Enhancer may (so long as a Credit Enhancer Default shall not have
occurred and be continuing) instruct the Trustee and the Servicer to take or
cause to be taken, or, if a Credit Enhancer Default shall have occurred, upon
the occurrence of a Servicer Termination Event, the Trustee and the Servicer
shall take or cause to be taken such action as may, in the opinion of counsel to
the Trustee, which opinion shall not be an expense of the Trustee, be necessary
to perfect or re-perfect the security interests in the Financed Vehicles
securing the Receivables in the name of the Trust by amending the title
documents of such Financed Vehicles or by such other reasonable means as may, in
the opinion of counsel to the Trustee, which opinion shall not be an expense of
the Trustee, be necessary or prudent. CPS hereby agrees to pay all expenses
related to such perfection or reperfection and to take all action necessary
therefor. The Servicer hereby agrees to pay all expenses related to such
perfection or reperfection and to take all action necessary therefor. In
addition, prior to the occurrence of an Insurance Agreement Event of Default,
the Controlling Party may instruct the Trustee and the Servicer to take or cause
to be taken such action as may, in the opinion of counsel to the Controlling
Party, be necessary to perfect or re-perfect the security interest in the
Financed Vehicles underlying the Receivables in the name of the Trust, including
by amending the title documents of such Financed Vehicles or by such other
reasonable means as may, in the opinion of counsel to the Controlling Party, be
necessary or prudent; provided, however, that if the Controlling Party requests
(unless a Credit Enhancer Default shall have occurred and be continuing) that
the title documents be amended prior to the occurrence of an Insurance Agreement
Event of Default, the out-of-pocket expenses of the Servicer or the Trustee in
connection with such action shall be reimbursed to the Servicer or the Trustee,
as applicable, by the Controlling Party.
SECTION 4.6. Covenants, Representations, and Warranties of Servicer.
The Servicer shall not release the Financed Vehicle securing each Receivable
from the security interest granted by such Receivable in whole or in part except
in the event of
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payment in full by the Obligor thereunder or repossession, nor shall the
Servicer impair the rights of the Securityholders in such Receivables, nor shall
the Servicer amend a Receivable, except that extensions may be granted in
accordance with Section 4.2.
SECTION 4.7. Purchase of Receivables Upon Breach of Covenant. Upon
discovery by any of the Servicer, the Credit Enhancer, the Trustee, the Owner
Trustee or the Trustee of a breach of any of the covenants set forth in Section
4.2(a), 4.4, 4.5(a) or 4.6, the party discovering such breach shall give prompt
written notice to the others; provided, however, that the failure to give any
such notice shall not affect any obligation of the Servicer under this Section
4.7. Unless the breach shall have been cured by the last day of the second
Collection Period following such discovery (or, at the Servicer's election, the
last day of the first following Collection Period), the Servicer shall purchase
any Receivable materially and adversely affected by such breach. In
consideration of the purchase of such Receivable, the Servicer shall remit the
Purchase Amount in the manner specified in Section 5.6. The sole remedy of the
Trustee, the Trust, the Owner Trustee, the Credit Enhancer or the
Securityholders with respect to a breach of Section 4.2, 4.4, 4.5(a) or 4.6
shall be to require the Servicer to repurchase Receivables pursuant to this
Section 4.7; provided, however, that the Servicer shall indemnify the Trustee,
the Trustee, the Standby Servicer, the Collateral Agent, the Credit Enhancer,
the Owner Trustee the Trust and the Securityholders against all costs, expenses,
losses, damages, claims and liabilities, including reasonable fees and expenses
of counsel, which may be asserted against or incurred by any of them as a result
of third party claims arising out of the events or facts giving rise to such
breach. If it is determined that the management, administration and servicing of
the Receivables and operation of the Trust pursuant to this Agreement
constitutes a violation of the prohibited transaction rules of ERISA or the Code
to which no statutory exception or administrative exemption applies, such
violation shall not be treated as a breach of Section 4.2, 4.4, 4.5(a) or 4.6 if
not otherwise such a breach.
SECTION 4.8. Servicing Fee. (a) The Servicing Fee for the initial
Payment Date shall equal the product of (i) one twelfth of the Servicing Fee
Rate, (ii) the Original Pool Balance and (iii) a fraction, the numerator of
which is the number of days from and including the Closing Date to and including
the last day of the initial Collection Period and the denominator of which is
30. Thereafter, the Servicing Fee for a Payment Date shall equal the product of
(x) one twelfth of the Servicing Fee Rate and (y) the Pool Balance as of the
last day of the second preceding Collection Period. The Servicing Fee shall also
include all late fees, prepayment charges including, in the case of a Rule of
78's
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Receivable that is prepaid in full, to the extent not required by law to be
remitted to the related Obligor, the difference between the Principal Balance of
such Rule of 78's Receivable (plus accrued interest to the date of prepayment)
and the principal balance of such Receivable computed according to the "Rule of
78's", and other administrative fees or similar charges allowed by applicable
law with respect to Receivables, collected (from whatever source) on the
Receivables.
SECTION 4.9. Servicer's Certificate. By 10:00 a.m., Minneapolis time,
on each Determination Date, the Servicer shall deliver to the Trustee, the
Trustee, the Credit Enhancer, the Rating Agencies and the Seller a Servicer's
Certificate containing all information necessary to make the distributions
pursuant to Section 4.6 (including, if required, withdrawals from the Spread
Account) for the Collection Period preceding the date of such Servicer's
Certificate and all information necessary for the Trustee to send statements to
the Securityholders and the Certificate Credit Enhancer pursuant to Section 4.8.
Receivables to be purchased by the Servicer or to be purchased by CPS shall be
identified by the Servicer by account number with respect to such Receivable (as
specified in Schedule A).
SECTION 4.10. Annual Statement as to Compliance, Notice of Servicer
Termination Event.
(a) The Servicer shall deliver to the Trustee, the Owner Trustee, the
Trustee, the Standby Servicer, the Credit Enhancer and each Rating Agency, on or
before July 31 of each year beginning July 31, 199[ ], an Officer's Certificate,
dated as of March 31 of such year, stating that (i) a review of the activities
of the Servicer during the preceding 12-month period (or, in the case of the
first such certificate, the period from the Cutoff Date to March 31, 199[ ]) and
of its performance under this Agreement has been made under such officer's
supervision and (ii) to the best of such officer's knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement
throughout such year (or, in the case of the first such certificate, such
shorter period), or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof. The Trustee shall send a copy of such certificate and the
report referred to in Section 4.11 to the Rating Agencies. The Trustee shall
forward a copy of such certificate as well as the report referred to in Section
4.11 to each Securityholder.
(b) The Servicer shall deliver to the Trustee, the Owner Trustee, the
Trustee, the Standby Servicer, the Credit Enhancer, the Collateral Agent, and
each Rating Agency, promptly after having obtained knowledge thereof, but in no
event later than two (2) Business Days thereafter, written notice in an
Officer's
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Certificate of any event which with the giving of notice or lapse of time, or
both, would become a Servicer Termination Event under Section 10.1.
SECTION 4.11. Annual Independent Accountants' Report. The Servicer
shall cause a firm of nationally recognized independent certified public
accountants (the "Independent Accountants"), who may also render other services
to the Servicer or to the Seller, to deliver to the Trustee, the Owner Trustee,
the Trustee, the Standby Servicer, the Credit Enhancer and each Rating Agency,
on or before July 31 of each year beginning July 31, [ ], a report dated as of
March 31 of such year (the "Accountants' Report") and reviewing the Servicer's
activities during the preceding 12-month period (or, in the case of the first
such report, the period from the Cutoff Date to March 31, [ ]), addressed to the
Board of Directors of the Servicer, to the Trustee, the Owner Trustee, the
Trustee, the Standby Servicer and to the Credit Enhancer, to the effect that
such firm has examined the financial statements of the Servicer and issued its
report therefor and that such examination (1) was made in accordance with
generally accepted auditing standards, and accordingly included such tests of
the accounting records and such other auditing procedures as such firm
considered necessary in the circumstances; (2) included tests relating to auto
loans serviced for others in accordance with the requirements of the Uniform
Single Audit Program for Mortgage Bankers (the "Program"), to the extent the
procedures in the Program are applicable to the servicing obligations set forth
in this Agreement; (3) included an examination of the delinquency and loss
statistics relating to the Servicer's portfolio of automobile and light truck
installment sales contracts; and (4) except as described in the report,
disclosed no exceptions or errors in the records relating to automobile and
light truck loans serviced for others that, in the firm's opinion, paragraph
four of the Program requires such firm to report. The accountant's report shall
further state that (1) a review in accordance with agreed upon procedures was
made of three randomly selected Servicer Certificates; (2) except as disclosed
in the report, no exceptions or errors in the Servicer Certificates were found;
and (3) the delinquency and loss information, relating to the Receivables
contained in the Servicer Certificates were found to be accurate.
The Report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
SECTION 4.12. Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to representatives of the Trustee, the
Owner Trustee, the Trustee, the Standby Servicer and the Credit Enhancer
reasonable access to the documentation regarding the Receivables. In each case,
such
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access shall be afforded without charge but only upon reasonable request and
during normal business hours. Nothing in this Section shall derogate from the
obligation of the Servicer to observe any applicable law prohibiting disclosure
of information regarding the Obligors, and the failure of the Servicer to
provide access as provided in this Section as a result of such obligation shall
not constitute a breach of this Section.
SECTION 4.13. Verification of Servicer's Certificate. (a) On or before
the fifth calendar day of each month, the Servicer will deliver to the Trustee
and the Standby Servicer a computer diskette (or other electronic transmission)
in a format acceptable to the Trustee and the Standby Servicer containing
information with respect to the Receivables as of the close of business on the
last day of the preceding Collection Period which information is necessary for
preparation of the Servicer's Certificate. The Standby Servicer shall use such
computer diskette (or other electronic transmission) to verify certain
information specified in Section 4.13(b) contained in the Servicer's Certificate
delivered by the Servicer, and the Standby Servicer shall notify the Servicer
and the Credit Enhancer of any discrepancies on or before the second Business
Day following the Determination Date. In the event that the Standby Servicer
reports any discrepancies, the Servicer and the Standby Servicer shall attempt
to reconcile such discrepancies prior to the second Business Day prior to the
related Payment Date, but in the absence of a reconciliation, the Servicer's
Certificate shall control for the purpose of calculations and distributions with
respect to the related Payment Date. In the event that the Standby Servicer and
the Servicer are unable to reconcile discrepancies with respect to a Servicer's
Certificate by the related Payment Date, the Servicer shall cause a firm of
independent certified public accountants, at the Servicer's expense, to audit
the Servicer's Certificate and, prior to the fifth calendar day of the following
month, reconcile the discrepancies. The effect, if any, of such reconciliation
shall be reflected in the Servicer's Certificate for such next succeeding
Determination Date. Other than the duties specifically set forth in this
Agreement, the Standby Servicer shall have no obligations hereunder, including,
without limitation, to supervise, verify, monitor or administer the performance
of the Servicer. The Standby Servicer shall have no liability for any actions
taken or omitted by the Servicer. The duties and obligations of the Standby
Servicer shall be determined solely by the express provisions of this Agreement
and no implied covenants or obligations shall be read into this Agreement
against the Standby Servicer.
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(b) The Standby Servicer shall review each Servicer's Certificate
delivered pursuant to Section 4.13(a) and shall:
(i) confirm that such Servicer's Certificate is complete on
its face;
(ii) load the computer diskette (which shall be in a format
acceptable to the Standby Servicer) received from the Servicer pursuant
to Section 4.13(a) hereof, confirm that such computer diskette is in a
readable form and calculate and confirm the Principal Balance of each
Receivable for the most recent Payment Date;
(iii) confirm that the Total Distribution Amount, the
Principal Distributable Amount, the Class A Noteholders' Distributable
Amount, the Class B Noteholders' Distributable Amount, the Class A
Principal Distributable Amount, the Class A Interest Distributable
Amount, the Class B Distributable Amount, the Class B Interest
Distributable Amount, the Class B Principal Distributable Amount, the
Certificateholders' Distributable Amount, the Certificateholders'
Interest Distributable Amount, the Certificateholders' Principal
Distributable Amount, the Standby Fee, the Servicing Fee, the Trustee
Fee, the amount on deposit in the Spread Account, and the Premium in
the Servicer's Certificate are accurate based solely on the
recalculation of the Servicer's Certificate; and
(iv) confirm the calculation of the performance tests set
forth in the Spread Account Agreement.
SECTION 4.14. Retention and Termination of Servicer. The Servicer
hereby covenants and agrees to act as such under this Agreement for an initial
term commencing on the Closing Date and ending on [ ], which term shall be
automatically extended by the Credit Enhancer for successive terms of ninety
(90) days each as specified in a writing delivered by the Credit Enhancer prior
to the expiration of each current term to the Servicer and the Trustee which
provides that the Servicer will be automatically extended for a succeeding
ninety (90) day term unless an Event of Default shall have occurred and be
continuing, in which case the Credit Enhancer may extend the Servicer in its
sole discretion (or, at the discretion of the Credit Enhancer exercised pursuant
to revocable written standing instructions from time to time to the Servicer and
the Trustee, for any specified number of terms greater than one), until the
Notes and the Certificates are paid in full. Each such notice (including each
notice pursuant to standing instructions, which shall be deemed delivered at
successive ninety (90) day intervals for so long as such instructions are in
effect) (a "Servicer Extension Notice") shall be delivered by the Credit
Enhancer to the Trustee
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and the Servicer. The Servicer hereby agrees that, upon its receipt of any such
Servicer Extension Notice, the Servicer shall become bound, for the duration of
the term covered by such Servicer Extension Notice, to continue as the Servicer
subject to and in accordance with the other provisions of this Agreement. If a
Credit Enhancer Default has occurred and is continuing, the term of the
Servicer's appointment hereunder shall be deemed to have been extended until
such time, if any, as such Credit Enhancer Default has been cured unless such
appointment is terminated sooner in accordance with the terms of this
Agreement).
SECTION 4.15. Fidelity Bond. The Servicer shall maintain a fidelity
bond in such form and amount as is customary for entities acting as custodian of
funds and documents in respect of consumer contracts on behalf of institutional
investors.
ARTICLE V
TRUST ACCOUNTS; DISTRIBUTIONS;
STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS
SECTION 5.1. Establishment of Trust Accounts.
(a) The Trustee, on behalf of the Securityholders and the Credit
Enhancer, shall establish and maintain in its own name an Eligible Account (the
"Collection Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Trustee on behalf of the
Securityholders and the Credit Enhancer.
(i) The Trustee, on behalf of the Noteholders, shall establish
and maintain in its own name an Eligible Account (the "Note Distribution
Account"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Trustee on behalf of the Noteholders and
the Credit Enhancer. The Note Distribution Account shall initially be
established with the Trustee.
(ii) The Trustee, on behalf of the Certificateholders, shall
establish and maintain in its own name an Eligible Account (the "Certificate
Distribution Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Trustee on behalf of the
Certificateholders and the Credit Enhancer. The Certificate Distribution Account
shall initially be established with the Trustee.
(iii) The Trustee, on behalf of the Securityholders and the
Credit Enhancer, shall establish and maintain in its own name an Eligible
Account (the "Pre-Funding Account"), bearing a
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designation clearly indicating that the funds deposited therein are held for the
benefit of the Trustee on behalf of the Securityholders and the Credit Enhancer.
(b) Funds on deposit in the Collection Account, the Pre- Funding
Account, the Note Distribution Account, the Certificate Distribution Account and
the Interest Reserve Account (collectively, the "Trust Accounts") and the
Lockbox Accounts shall be invested by the Trustee (or any custodian with respect
to funds on deposit in any such account) in Eligible Investments selected in
writing by the Servicer (pursuant to standing instructions or otherwise). All
such Eligible Investments shall be held by or on behalf of the Trustee for the
benefit of the Noteholders and/or the Certificateholders and the Credit
Enhancer, as applicable. Other than as permitted by the Rating Agencies and the
Credit Enhancer, funds on deposit in any Account shall be invested in Eligible
Investments that will mature so that such funds will be available at the close
of business on the Business Day immediately preceding the following Payment
Date. Funds deposited in a Trust Account on the day immediately preceding a
Payment Date upon the maturity of any Eligible Investments are not required to
be invested overnight. All Eligible investments will be held to maturity.
(c) All investment earnings of moneys deposited in the Trust Accounts
shall be deposited (or caused to be deposited) by the Trustee in the Collection
Account for distribution pursuant to Section 5.7(b), and any loss resulting from
such investments shall be charged to such account. The Servicer will not direct
the Trustee to make any investment of any funds held in any of the Trust
Accounts unless the security interest granted and perfected in such account will
continue to be perfected in such investment, in either case without any further
action by any Person, and, in connection with any direction to the Trustee to
make any such investment, if requested by the Trustee, the Servicer shall
deliver to the Trustee an opinion of Counsel, acceptable to the Trustee, to such
effect.
(d) The Trustee shall not in any way be held liable by reason of any
insufficiency in any of the Trust Accounts resulting from any loss on any
Eligible Investment included therein except for losses attributable to the
Trustee's negligence or bad faith or its failure to make payments on such
Eligible Investments issued by the Trustee, in its commercial capacity as
principal obligor and not as trustee, in accordance with their terms.
(e) If (i) the Servicer shall have failed to give investment directions
for any funds on deposit in the Trust Accounts to the Trustee by 2:00 p.m.
Eastern Time (or such other time as may be agreed by the Issuer and Trustee) on
any Business
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Day; or (ii) a Default or Event of Default shall have occurred and be continuing
with respect to the Notes but the Notes shall not have been declared due and
payable, or, if such Notes shall have been declared due and payable following an
Event of Default, amounts collected or receivable from the Trust Property are
being applied as if there had not been such a declaration; then the Trustee
shall, to the fullest extent practicable, invest and reinvest funds in the Trust
Accounts in one or more Eligible Investments.
(f) The Trustee shall possess all right, title and interest in all
funds on deposit from time to time in the Trust Accounts and in all proceeds
thereof (including all Investment Earnings on the Collection Account) and all
such funds, investments, proceeds and income shall be part of the Owner Trust
Estate. Except as otherwise provided herein, the Trust Accounts shall be under
the sole dominion and control of the Trustee for the benefit of the Noteholders
and the Certificateholders, as the case may be, and the Credit Enhancer. If at
any time any of the Trust Accounts ceases to be an Eligible Account, the
Servicer with the consent of the Credit Enhancer shall within five Business Days
establish a new Trust Account as an Eligible Account and shall transfer any cash
and/or any investments to such new Trust Account. The Servicer shall promptly
notify the Rating Agencies of any change in the location of any of the
aforementioned accounts. In connection with the foregoing, the Servicer agrees
that, in the event that any of the Trust Accounts are not accounts with the
Trustee, the Servicer shall notify the Trustee in writing promptly upon any of
such Trust Accounts ceasing to be an Eligible Account.
(i) With respect to the Trust Account Property, the Trustee agrees
that:
(A) any Trust Account Property or any property in
the Certificate Distribution Account that is held in deposit accounts shall be
held solely in the Eligible Accounts; and, except as otherwise provided herein,
each such Eligible Account shall be subject to the exclusive custody and control
of the Trustee, and the Trustee shall have sole signature authority with respect
thereto;
(B) any Trust Account Property that constitutes
Physical Property shall be delivered to the Trustee in accordance with paragraph
(a) of the definition of "Delivery" and shall be held, pending maturity or
disposition, solely by the Trustee or a financial intermediary (as such term is
defined in Section B- 313(4) of the UCC) acting solely for the Trustee;
(C) any Trust Account Property that is a book-
entry security held through the Federal Reserve System pursuant
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to Federal book-entry regulations shall be delivered in accordance with
paragraph (b) of the definition of "Delivery" and shall be maintained by the
Trustee, pending maturity or disposition, through continued book-entry
registration of such Trust Account Property as described in such paragraph; and
(D) any Trust Account Property that is an
"uncertificated security" under Article 8 of the UCC and that is not governed by
clause (C) above shall be delivered to the Trustee in accordance with paragraph
(c) of the definition of "Delivery" and shall be maintained by the Trustee,
pending maturity or disposition, through continued registration of the Trustee's
(or its nominees) ownership of such security.
(g) The Servicer shall have the power, revocable by the Credit Enhancer
or, with the consent of the Credit Enhancer by the Trustee or by the Owner
Trustee with the consent of the Trustee, to instruct the Trustee to make
withdrawals and payments from the Trust Accounts for the purpose of permitting
the Servicer and the Trustee to carry out its respective duties hereunder.
SECTION 5.2. Interest Reserve Account.
(a) The Servicer shall cause the Trustee to establish and maintain an
Eligible Account (the "Interest Reserve Account") with the Trustee, bearing a
designation clearly indicating that the funds deposited therein are held in
trust for the benefit of the Noteholders, Certificateholders and the Credit
Enhancer.
On or prior to the Closing Date, the Seller shall deposit an amount
equal to the Interest Reserve Account Initial Deposit into the Interest Reserve
Account.
(b) On the Payment Dates occurring in [ ] the Trustee shall withdraw
from the Interest Reserve Account the Monthly Interest Reserve Amount for such
Payment Date and deposit such amount in the Collection Account as further
provided in Section 5.7.
(i) on the Payment Dates occurring in [ ] the Servicer shall instruct
the Trustee to withdraw from the Interest Reserve Account and pay to the Seller
on such Payment Date an amount equal to the Overfunded Interest Reserve Amount
for such Payment Date. Any amounts remaining in the Interest Reserve Account on
the Payment Date which immediately follows the end of the Funding Period after
taking into account the transfer pursuant to Section 5.7(a)(i) shall be remitted
by the Trustee to the Seller. Upon any such distributions to the Seller, the
Noteholders, the Certificateholders and the Credit Enhancer will have no further
rights in, or claims to, such amounts.
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SECTION 5.3. Certain Reimbursements to the Servicer. The Servicer will
be entitled to be reimbursed from amounts on deposit in the Collection Account
with respect to a Collection Period for amounts previously deposited in the
Collection Account but later determined by the Servicer to have resulted from
mistaken deposits or postings or checks returned for insufficient funds. The
amount to be reimbursed hereunder shall be paid to the Servicer on the related
Payment Date pursuant to Section 5.7(b)(i) upon certification by the Servicer of
such amounts and the provision of such information to the Trustee and the Credit
Enhancer as may be necessary in the opinion of the Credit Enhancer to verify the
accuracy of such certification. In the event that the Credit Enhancer has not
received evidence satisfactory to it of the Servicer's entitlement to
reimbursement pursuant to this Section, the Credit Enhancer shall (unless a
Credit Enhancer Default shall have occurred and be continuing) give the Trustee
notice to such effect, following receipt of which the Trustee shall not make a
distribution to the Servicer in respect of such amount pursuant to Section 5.7,
or if the Servicer prior thereto has been reimbursed pursuant to Section 5.7,
the Trustee shall withhold such amounts from amounts otherwise distributable to
the Servicer on the next succeeding Payment Date.
SECTION 5.4. Application of Collections. All collections for each
Collection Period shall be applied by the Servicer as follows:
With respect to each Receivable (other than a Purchased Receivable),
payments by or on behalf of the Obligor shall be applied, in the case of a Rule
of 78's Receivable, first, to the Scheduled Payment of such Rule of 78's
Receivable and, second, to any late fees accrued with respect to such Rule of
78's Receivable and, in the case of a Simple Interest Receivable, to interest
and principal in accordance with the Simple Interest Method.
SECTION 5.5. Withdrawals from Spread Account. (a) In the event that the
Servicer's Certificate with respect to any Determination Date shall state that
the Total Distribution Amount with respect to such Determination Date is
insufficient (taking into account the application of the Distribution Amount to
the payment required to be made on the related Payment Date pursuant to Section
5.7(b)(vi)) to make the payments required to be made on the related Payment Date
pursuant to Section 5.7(b)(i), (ii), (iii), (iv), (v), (vii) or (viii) (such
deficiency being a "Deficiency Claim Amount"), then on the fourth Business Day
immediately preceding the related Payment Date, the Trustee shall deliver to the
Collateral Agent, the Owner Trustee, the Credit Enhancer, and the Servicer, by
hand delivery, telex or facsimile transmission, a written notice (a "Deficiency
Notice") specifying
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the Deficiency Claim Amount for such Payment Date. Such Deficiency Notice shall
direct the Collateral Agent to remit such Deficiency Claim Amount (to the extent
of the funds available to be distributed pursuant to the Spread Account
Agreement) to the Trustee for deposit in the Collection Account and distribution
pursuant to Sections 5.7(b)(i), (ii), (iii), (iv), (v), (vii) and/or (viii), as
applicable.
(b) Any Deficiency Notice shall be delivered by 10:00 a.m., New York
City time, on the fourth Business Day preceding such Payment Date. The amounts
distributed by the Collateral Agent to the Trustee pursuant to a Deficiency
Notice shall be deposited by the Trustee into the Collection Account pursuant to
Section 5.6.
(c) In the event that the Servicer's Certificate with respect to any
Determination Date shall state that the Total Distribution Amount with respect
to such Payment Date is insufficient to make the payments required to be made on
the related Payment Date pursuant to Section 5.7(b)(vi) or (x) (such deficiency
being a "Class B Deficiency"), then on the fourth Business Day immediately
preceding the related Payment Date, the Trustee shall deliver to the Collateral
Agent, the Owner Trustee and the Servicer, by hand delivery, telex or facsimile
transmission, a written notice specifying the amount of the Class B Deficiency
for such Payment Date. Such notice shall direct the Collateral Agent to remit to
the Trustee an amount equal to such Class B Deficiency (but only to the extent
that, pursuant to the Spread Account Agreement, funds are required to be
released from the Spread Account to the Seller on the related Payment Date) for
deposit into the Collection Account and distribution pursuant to Section
5.7(b)(vi) and/or Section 5.7(b)(x), as applicable, and any funds so remitted to
the Trustee shall be deemed to have been released to the Seller and paid to the
Trustee at the direction of the Seller.
SECTION 5.6. Additional Deposits.
(a) The Servicer or CPS, as the case may be, shall deposit or cause to
be deposited in the Collection Account the aggregate Purchase Amount with
respect to Purchased Receivables and the Servicer shall deposit therein all
amounts to be paid under Section 4.8(b) or 11.1. All such deposits shall be
made, in immediately available funds, on the Business Day preceding the
Determination Date. On or before the third Business Day preceding each Payment
Date, the Trustee shall remit to the Collection Account any amounts delivered to
the Trustee by the Collateral Agent pursuant to Section 5.5.
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SECTION 5.7. Distributions.
(a) On each Payment Date, the Trustee shall (based solely on the
information contained in the Servicer's Certificate delivered on the related
Determination Date)cause to be made the following transfers and distributions in
the amounts set forth in the Servicer's Certificate for such Payment Date:
(i) During the Funding Period, from the Interest Reserve
Account to the Collection Account, in immediately available funds, the Monthly
Interest Reserve Amount for such Payment Date; and
(ii) If such Payment Date is the Mandatory Redemption Date,
from the Pre-Funding Account to the Collection Account, in immediately available
funds, the Pre-Funded Amount after giving effect to the purchase of Subsequent
Receivables, if any, on the Mandatory Redemption Date.
(b) On each Payment Date, the Trustee (based on the information
contained in the Servicer's Certificate delivered on the related Determination
Date) shall make the following distributions in the following order of priority:
[(i) to the Servicer, from the Total Distribution Amount, the
Servicing Fee and all unpaid Servicing Fees from prior Collection
Periods; provided, however, that as long as CPS is the Servicer and
[Norwest Bank Minnesota, National Association] is the Standby Servicer,
the Indenture Trustee will first pay to the Standby Servicer out of the
Servicing Fee otherwise payable to CPS an amount equal to the Standby
Fee;
(ii) in the event the Standby Servicer or any other party
becomes the successor Servicer, to the Standby Servicer or such other
successor servicer, from the Total Distribution Amount (as such Total
Distribution Amount has been reduced by payments pursuant to clause (i)
above), to the extent not previously paid by the predecessor Servicer
pursuant to the Sale and Servicing Agreement, reasonable transition
expenses (up to a maximum of $50,000) incurred in acting as successor
Servicer;
(iii) to the Trustee and the Owner Trustee, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) and (ii) above), the fees payable
thereto for services pursuant to the Indenture and the Trust Agreement
(the "Trustee Fee") and reasonable out-of-pocket expenses thereof,
(including counsel fees and expenses) and all unpaid Trustee Fees and
all unpaid reasonable out-of-pocket expenses (including
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counsel fees and expenses) from prior Collection Periods; provided,
however, that unless an Event of Default shall have occurred and be
continuing, expenses payable to the Trustee pursuant to this clause
(iii) and expenses payable to the Collateral Agent pursuant to clause
(iv) below shall be limited to a total of $50,000 per annum;
(iv) to the Total Collateral Agent, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) through (iii) above), all fees and
expenses payable to the Collateral Agent with respect to such Payment
Date;
(v) to the Note Distribution Account, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant Total to clauses (i) through (iv) above, the Class
A Noteholders' Interest Distributable Amount for such Payment Date;
(vi) to the Note Distribution Account, from the Total
Distribution Amount (as such Distribution Amount has been reduced by
payments pursuant to clauses (i) through (v) above) the Class B
Noteholders' Interest Distributable
Amount for such Distribution Date;
(vii) to the Note Distribution Account, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) through (vi) above), the Class A
Noteholders' Principal Distributable Amount plus, on the Mandatory
Redemption Date, the Class A Note Prepayment Amount for such
Distribution Date;
(viii) to the Credit Enhancer, from the Total Distribution
Amount (as such Total Distribution Amount has been reduced by payments
made pursuant to clauses (i) through (vii) above), any amounts owing to
the Credit Enhancer under this Agreement and the Insurance Agreement
and not paid;
(ix) in the event any Person other than the Standby Servicer
becomes the successor Servicer, to such successor Servicer, from the
Total Distribution Amount (as such Total Distribution Amount has been
reduced by payments pursuant to clauses (i) through (viii) above) to
the extent not previously paid by the predecessor Servicer, reasonable
transition expenses (up to a maximum of $50,000) incurred in acting as
successor Servicer;
(x) to the Note Distribution Account, from the Total
Distribution Amount (as such Total Distribution Amount has
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been reduced by payments pursuant to Clauses (i) through (ix) above,
the Class B Noteholders' Principal Distributable Amount for such
Payment Date;
(xi) to the Certificate Distribution Account, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) through (x) above, the
Certificateholders' Distributable Amount for such Payment Date;
(xii) to the Collateral Agent, for deposit into the Spread
Account, the remaining Total Distribution Amount, if any;
provided, however, that, (A) following an acceleration of the Notes or, (B) if a
Credit Enhancer Default shall have occurred and be continuing and an Event of
Default pursuant to Section 5.1(i), 5.1(ii), 5.1(iv), 5.1(v) or 5.1(vi) of the
Indenture shall have occurred and be continuing, or (C) the receipt of
Insolvency Proceeds pursuant to Section 11.1(b), amounts deposited in the Note
Distribution Account and the Certificate Distribution Account (including any
such Insolvency Proceeds) shall be paid to the Noteholders and the
Certificateholders, pursuant to Section 5.6 of the Indenture.]
(c) In the event that the Collection Account is maintained with an
institution other than the Trustee, the Servicer shall instruct and cause such
institution to make all deposits and distributions pursuant to Section 5.7(b) on
the related Payment Date.
SECTION 5.8. Note Distribution Account.
(a) On each Payment Date, the Trustee shall distribute all amounts on
deposit in the Note Distribution Account to Noteholders in respect of the Notes
to the extent of amounts due and unpaid on the Notes for principal and interest
in the following amounts and in the following order of priority:
(i) to the Holders of the Class A Notes the Class A Interest
Distributable Amount; provided that if there are not sufficient funds in the
Note Distribution Account to pay the entire then due on each Class of Class A
Notes, the amount in the Note Distribution Account shall be applied to the
payment of such interest on each Class of Class A Notes pro rata on the basis of
the amount of accrued and unpaid interest due on each Class of Class A Notes;
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(ii) to the Holders of the Class B Notes, the Class B
Noteholders' Interest Distributable Amount; provided that if there are not
sufficient funds remaining in the Note Distribution Account to pay the entire
Class B Interest Distributable Amount, the amount in the Note Distribution
Account shall be applied to the payment of such interest on the Class B Notes
pro rata on the basis of the amount of accrued and unpaid interest due on the
Class B Notes;
(iii) any amounts deposited in the Note Distribution Account
with respect to the Note Prepayment Amount, shall be distributed first to the
Holders of the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the
Class B Notes, respectively, based upon the pro rata share as represented by the
relative outstanding Amount of each Class of Notes;
(iv) to the Holders of the Class A-1 Notes, the Class A
Noteholders' Principal Distributable Amount until the outstanding principal
balance of the Class A-1 Notes is reduced to zero;
(v) to the Holders of the Class A-2 Notes, the Class A
Noteholders' Principal Distributable Amount until the outstanding principal
balance of the Class A-2 Notes is reduced to zero; and
(vi) to the Holders of the Class A-3 Notes, the Class A
Noteholders' Principal Distributable Amount until the outstanding principal
balance of the Class A-3 Notes is reduced
to zero.
(vii) to the holders of the Class B Notes, the Class B
Noteholders' Principal Distributable Amount until the outstanding principal
amount of the Class B Notes is reduced to zero.
(b) The rights of the Class B Noteholders to receive distributions in
respect of the Class B Notes pursuant to Section 5.8(a)(ii) on a Payment Date
shall be and hereby are subordinated to the payment of the amounts distributable
pursuant to Section 5.8(a)(i). The rights of the Class B Noteholders to receive
distributions in respect of the Class B Notes pursuant to Section 5.8(a)(vi) on
a Payment Date shall be and hereby are subordinated to the payment of the
amounts distributable pursuant to Sections 5.8(a)(i) through (v). At such time
as the Class A Notes are paid in full and the Credit Enhancer has received
payment in full for all amounts owed to the Credit Enhancer, the Class B
Noteholders shall be entitled to exercise all rights granted to the Class A
Noteholders under this Agreement to the extent that the exercise of such rights
does not conflict with the provisions of the Spread Account Agreement.
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(c) On each Payment Date, the Trustee shall send to each Noteholder the
statement provided to the Trustee by the Servicer pursuant to Section 5.11
hereof on such Payment Date.
(d) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to a Noteholder, such tax shall reduce the
amount otherwise distributable to the Noteholder in accordance with this
Section. The Trustee is hereby authorized and directed to retain from amounts
otherwise distributable to the Noteholders sufficient funds for the payment of
any tax that is legally owed by the Trust (but such authorization shall not
prevent the Trustee from contesting any such tax in appropriate proceedings, and
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings). The amount of any withholding tax imposed with respect to a
Noteholder shall be treated as cash distributed to such Noteholder at the time
it is withheld by the Trust and remitted to the appropriate taxing authority. If
there is a possibility that withholding tax is payable with respect to a
distribution (such as a distribution to a non-US Noteholder), the Trustee may in
its sole discretion withhold such amounts in accordance with this clause (f). In
the event that a Noteholder wishes to apply for a refund of any such withholding
tax, the Trustee shall reasonably cooperate with such Noteholder in making such
claim so long as such Noteholder agrees to reimburse the Trustee for any
out-of-pocket expenses incurred.
(e) Distributions required to be made to Noteholders on any Payment
Date shall be made to each Noteholder of record on the preceding Record Date
either by wire transfer, in immediately available funds, to the account of such
Holder at a bank or other entity having appropriate facilities therefor, if (i)
such Noteholder shall have provided to the Note Registrar appropriate written
instructions at least five Business Days prior to such Payment Date and such
Holder's Notes in the aggregate evidence a denomination of not less than
$1,000,000 or (ii) such Noteholder is the Seller, or an Affiliate thereof, or,
if not, by check mailed to such Noteholder at the address of such holder
appearing in the Note Register; provided, however, that, unless Definitive Notes
have been issued pursuant to Section 3.13 of the Trust Agreement, with respect
to Notes registered on the Record Date in the name of the nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.), distributions will
be made by wire transfer in immediately available funds to the account
designated by such nominee. Notwithstanding the foregoing, the final
distribution in respect of any Note (whether on the Final Scheduled Payment Date
or otherwise) will be payable only upon presentation and surrender of such Note
at the office or agency maintained for that purpose by the Note Registrar
pursuant to Section 2.4 of the Indenture.
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[SECTION 5.9. Certificate Distribution Account.
(a) On each Payment Date, the Trustee shall distribute all
amounts on deposit in the Certificate Distribution Account to Certificateholders
in respect of the Certificates to the extent of amounts due and unpaid on the
Certificates for principal and interest in the following amounts and in the
following order of priority:
(i) accrued and unpaid interest on the Certificates; provided that if
there are not sufficient funds in the Certificate Distribution Account to pay
the entire amount of accrued and unpaid interest then due on the Certificates,
the amount in the Certificate Distribution Account shall be applied to the
payment of such interest on the Certificates pro rata on the basis of the amount
of accrued and unpaid interest due on the Certificates;
(ii) to the Holders of the Certificates, the Certificateholders'
Principal Distributable Amount and the Accelerated Principal Amount until the
outstanding principal balance of the Certificates is reduced to zero.
(b) On each Payment Date, the Trustee shall send to each
Certificateholder the statement provided to the Trustee by the Servicer pursuant
to Section 5.11 hereof on such Payment Date.
(i) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to a Certificateholder, such tax shall reduce
the amount otherwise distributable to the Certificateholder in accordance with
this Section. The Trustee is hereby authorized and directed to retain from
amounts otherwise distributable to the Certificateholders sufficient funds for
the payment of any tax that is legally owed by the Trust (but such authorization
shall not prevent the Trustee from contesting any such tax in appropriate
proceedings, and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings). The amount of any withholding tax imposed with
respect to a Certificateholder shall be treated as cash distributed to such
Certificateholder at the time it is withheld by the Trust and remitted to the
appropriate taxing authority. If there is a possibility that withholding tax is
payable with respect to a distribution (such as a distribution to a non-US
Certificateholder), the Trustee may in its sole discretion withhold such amounts
in accordance with this clause (c). In the event that an Certificateholder
wishes to apply for a refund of any such withholding tax, the Trustee shall
reasonably cooperate with such Certificateholder in making such claim so long as
such Certificateholder agrees to reimburse the Trustee for any out-of-pocket
expenses incurred.]
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(c) Any funds remaining in the Certificate Distribution Account after
distribution of all amounts specified in this Section shall be distributed to
the Depositor.
(d) Distributions required to be made to Certificateholders on any
Payment Date shall be made to each Certificateholder of record on the preceding
Record Date either by wire transfer, in immediately available funds, to the
account of such Holder at a bank or other entity having appropriate facilities
therefor, if (i) such Certificateholder shall have provided to the Certificate
Registrar appropriate written instructions at least five Business Days prior to
such Payment Date and such Holder's certificates in the aggregate evidence a
denomination of not less than $1,000,000 or (ii) such Certificateholder is the
Depositor, or an Affiliate thereof, or, if not, by check mailed to such
Certificateholder at the address of such holder appearing in the Certificate
Register; provided, however, that, unless Definitive Certificates have been
issued pursuant to Section 3.13 of the Trust Agreement, with respect to
Certificates registered on the Record Date in the name of the nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.), distributions will
be made by wire transfer in immediately available funds to the account
designated by such nominee. Notwithstanding the foregoing, the final
distribution in respect of any Certificate (whether on the Final Scheduled
Payment Date or otherwise) will be payable only upon presentation and surrender
of such Certificate at the office or agency maintained for that purpose by the
Certificate Registrar pursuant to Section 3.8 of the Trust Agreement.
(i) Subject to Section 5.1 and this section, monies received by the
Trustee hereunder need not be segregated in any manner except to the extent
required by law and may be deposited under such general conditions as may be
prescribed by law, and the Trustee shall not be liable for any interest
thereon.]
SECTION 5.10. Pre-Funding Account.
(a) On the Closing Date, the Trustee will deposit, on behalf of the
Seller, in the Pre-Funding Account $[ ] from the proceeds of the sale of the
Notes and the Certificates. On each Subsequent Transfer Date, the Servicer shall
instruct the Trustee to withdraw from the Pre-Funding Account (i) an amount
equal to [ ]% of the Principal Balance of the Subsequent Receivables transferred
to the Issuer on such Subsequent Transfer Date and to distribute such amount to
or upon the order of the Seller upon satisfaction of the conditions set forth in
this Agreement with respect to such transfer and (ii) an amount equal to the
Subsequent Spread Account Deposit on such Subsequent
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Transfer Date upon satisfaction of the conditions set forth in this Agreement
with respect to such transfer.
(b) If the Pre-Funded Amount has not been reduced to zero on the date
on which the Funding Period ends after giving effect to any reductions in the
Pre-Funded Amount on such date, the Servicer shall instruct the Trustee to
withdraw from the Pre- Funding Account on the Mandatory Redemption Date the
Pre-Funded Amount (exclusive of any Pre-Funding Earnings) and deposit an amount
equal to the Note Prepayment Amount in the Note Distribution Account.
SECTION 5.11. Statements to Certificateholders and Noteholders.
Statements to Certificateholders and Noteholders. On or prior to each Payment
Date, the Servicer shall provide to the Trustee (with a copy to the Credit
Enhancer and the Rating Agencies) for the Trustee to forward to each Noteholder
of record, and to each Certificateholder of record, a statement setting forth at
least the following information as to the Notes and the Certificates to the
extent applicable:
(i) the amount of such distribution allocable to principal of each
Class of Notes and to the Certificate Balance of the Certificates;
(ii) the amount of such distribution allocable to interest on or with
respect to each Class of Notes [and to the Certificates];
(iii) the amount of such distribution payable out of amounts withdrawn
from the Spread Account or pursuant to a claim on the Credit Enhancement or the
Certificate Policy;
(iv) the Pool Balance as of the close of business on the last day of
the preceding Collection Period;
(v) the aggregate outstanding principal amount of each Class of Notes,
the Note Pool Factor for each such Class after giving effect to payments
allocated to principal reported under clause (i) above;
(vi) the amount of the Servicing Fee (inclusive of the Standby Fee paid
to the Standby Servicer) paid to the Servicer with respect to the related
Collection Period, and the amount of any unpaid Servicing Fees (inclusive of the
Standby Fee) and the change in such amount from that of the prior Payment Date;
(vii) the Class A Noteholders' Interest Carryover Shortfall, the Class
B Noteholders' Interest Carryover Shortfall, the Class A Noteholders' Principal
Carryover Shortfall, and the Class B Noteholders' Principal Carryover Shortfall;
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(viii) the amount distributable to the Certificate Credit Enhancer on
such Payment Date;
(ix) the number of Receivables and the aggregate gross amount scheduled
to be paid thereon, including unearned finance and other charges, for which the
related Obligors are delinquent in making scheduled payments between 31 and 59
days and 60 days or more;
(x) the amount of the aggregate Realized Losses, if any, for the second
preceding Collection Period;
(xi) the number and the aggregate Purchase Amounts for Receivables, if
any, that were repurchased in such period and summary information as to losses
and delinquencies with respect to the Receivables;
(xii) for Payment Dates during the Funding Period (if any), the
remaining Pre-Funded Amount; and
(xiii) for the final Subsequent Transfer Date, the amount of any
remaining Pre-Funded Amount that has not been used to fund the purchase of
Subsequent Receivables.
(xiv) the cumulative amount of Realized Losses, since the Initial
Cutoff Date to the last day of the related Collection Period.
Each amount set forth pursuant to paragraph (i), (ii), (iii), (vi), (vii), (xi)
and (xii) above shall be expressed as a dollar amount per $1,000 of the initial
principal balance of the Notes (or Class thereof) or the initial Certificate
Balance, as applicable.
ARTICLE VI
[CREDIT ENHANCEMENT]
ARTICLE VII
[Reserved]
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ARTICLE VIII
THE SELLER
SECTION 7.1. Representations of Seller. The Seller makes the following
representations on which the Credit Enhancer shall be deemed to have relied in
executing and delivering the Policies and on which the Issuer is deemed to have
relied in acquiring the Receivables. The representations speak as of the
execution and delivery of this Agreement and as of the Closing Date, in the case
of Initial Receivables, and as of the applicable subsequent Transfer Date, in
the case of Subsequent Receivables, and shall survive the sale of the
Receivables to the Issuer and the pledge thereof to the Trustee pursuant to the
Indenture.
(a) Organization and Good Standing. The Seller has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of California, with power and authority to
own its properties and to conduct its business as such properties are
currently owned and such business is currently conducted, and had at
all relevant times, and now has, power, authority and legal right to
acquire, own and sell the Receivables and the other Conveyed Property
transferred to the Trust.
(b) Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business shall
require such qualifications.
(c) Power and Authority. The Seller has the power and
authority to execute and deliver this Agreement and the Basic Documents
to which it is a party and to carry out its terms and their terms,
respectively; the Seller has full power and authority to sell and
assign the Receivables and the Other Conveyed Property to be sold and
assigned to and deposited with the Trust by it and has duly authorized
such sale and assignment to the Trust by all necessary corporate
action; and the execution, delivery and performance of this Agreement
and the Basic Documents to which the Seller is a party have been duly
authorized by the Seller by all necessary corporate action.
(d) Valid Sale, Binding Obligations. This Agreement effects a
valid sale, transfer and assignment of the Receivables and the Other
Conveyed Property, enforceable against the Seller and creditors of and
purchasers from the Seller; and this Agreement and the Basic Documents
to which the Seller is a party, when duly executed and delivered,
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shall constitute legal, valid and binding obligations of the Seller
enforceable in accordance with their respective 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.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the Basic Documents and the
fulfillment of the terms of this Agreement and the Basic Documents
shall not conflict with, result in any breach of any of the terms and
provisions of or constitute (with or without notice, lapse of time or
both) a default under the certificate of incorporation or by-laws of
the Seller, or any indenture, agreement, mortgage, deed of trust or
other instrument to which the Seller is a party or by which it is
bound, or result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, other than this Agreement,
or violate any law, order, rule or regulation applicable to the Seller
of any court or of any federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over
the Seller or any of its properties.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the Seller's knowledge, threatened against the Seller,
before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality having jurisdiction over the
Seller or its properties (A) asserting the invalidity of this
Agreement, the Securities or any of the Basic Documents, (B) seeking to
prevent the issuance of the Securities or the consummation of any of
the transactions contemplated by this Agreement or any of the Basic
Documents, (C) seeking any determination or ruling that might
materially and adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability of, this Agreement
or any of the Basic Documents, or (D) relating to the Seller and which
might adversely affect the federal or state income, excise, franchise
or similar tax attributes of the Securities.
(g) No Consents. No consent, approval, authorization or order
of or declaration or filing with any governmental authority is required
for the issuance or sale of the Securities or the consummation of the
other transactions
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contemplated by this Agreement, except such as have been duly made or
obtained.
(h) The Seller has filed on a timely basis all tax returns
required to be filed by it and paid all taxes, to the extent that such
taxes have become due.
(i) Chief Executive Office. The chief executive office of the
Seller is at 2 Xxx, Xxxxxx, Xxxxxxxxxx 00000.
SECTION 7.2. [Reserved].
SECTION 7.3. Liability of Seller; Indemnities. The Seller shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement.
(a) The Seller shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Trust, the Credit Enhancer and the Trustee from and
against any taxes that may at any time be asserted against any such Person with
respect to the transactions contemplated in this Agreement and any of the Basic
Documents (except any income taxes arising out of fees paid to the Owner
Trustee, the Trustee and the Credit Enhancer and except any taxes to which the
Owner Trustee, or the Trustee may otherwise be subject to), including any sales,
gross receipts, general corporation, tangible personal property, privilege or
license taxes (but, in the case of the Issuer, not including any taxes asserted
with respect to, federal or other income taxes arising out of distributions on
the Certificates and the Notes) and costs and expenses in defending against the
same.
(b) The Seller shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Trustee, the Credit Enhancer, the Certificateholders and
the Noteholders from and against any loss, liability or expense incurred by
reason of (i) the Seller's willful misfeasance, bad faith or negligence in the
performance of its duties under this Agreement, or by reason of reckless
disregard of its obligations and duties under this Agreement and (ii) the
Seller's or the Issuer's violation of Federal or state securities laws in
connection with the offering and sale of the Notes and the Certificates.
(c) The Seller shall indemnify, defend and hold harmless the Owner
Trustee, the Trustee, and the Standby Servicer and its officers, directors,
employees and agents from and against any and all costs, expenses, losses,
claims, damages and liabilities arising out of, or incurred in connection with
the acceptance or performance of the trusts and duties set forth herein and in
the Basic Documents except to the extent that such cost, expense, loss, claim,
damage or liability shall be due to the willful
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misfeasance, bad faith or negligence (except for errors in judgment) of the
Owner Trustee.
Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Trustee and the termination of this
Agreement or the Indenture or the Trust Agreement, as applicable, and shall
include reasonable fees and expenses of counsel and other expenses of
litigation. If the Seller shall have made any indemnity payments pursuant to
this Section and the Person to or on behalf of whom such payments are made
thereafter shall collect any of such amounts from others, such Person shall
promptly repay such amounts to the Seller, without interest.
SECTION 7.4. Merger or Consolidation of, or Assumption of the
Obligations of, Seller. Any Person (a) into which the Seller may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Seller shall be a party or (c) which may succeed to the properties and assets of
the Seller substantially as a whole, which Person in any of the foregoing cases
executes an agreement of assumption to perform every obligation of the Seller
under this Agreement, shall be the successor to the Seller hereunder without the
execution or filing of any document or any further act by any of the parties to
this Agreement; provided, however, that (i) the Seller shall have received the
written consent of the Credit Enhancer prior to entering into any such
transaction, (ii) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Section 3.1 shall have been breached
and no Servicer Termination Event, and no event which, after notice or lapse of
time, or both, would become a Servicer Termination Event shall have happened and
be continuing, (iii) the Seller shall have delivered to the Owner Trustee, the
Trustee and the Credit Enhancer an Officers' Certificate and an Opinion of
Counsel each stating that such consolidation, merger or succession and such
agreement of assumption comply with this Section and that all conditions
precedent, if any, provided for in this Agreement relating to such transaction
have been complied with, (iv) the Rating Agency Condition shall have been
satisfied with respect to such transaction and (v) the Seller shall have
delivered to the Owner Trustee, the Trustee and the Credit Enhancer an Opinion
of Counsel stating that, in the opinion of such counsel, either (A) all
financing statements and continuation statements and amendments thereto have
been executed and filed that are necessary fully to preserve and protect the
interest of the Owner Trustee and the Trustee, respectively, in the Receivables
and reciting the details of such filings or (B) no such action shall be
necessary to preserve and protect such interest. Notwithstanding anything herein
to the contrary, the execution of the foregoing agreement of assumption and
compliance with clauses (i), (ii), (iii), (iv) and (v) above shall be conditions
to the
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consummation of the transactions referred to in clauses (a), (b) or (c) above.
SECTION 7.5. Limitation on Liability of Seller and Others. The Seller
and any director or officer or employee or agent of the Seller may rely in good
faith on the advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
under any Basic Document. The Seller shall not be under any obligation to appear
in, prosecute or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
SECTION 7.6. Seller May Own Certificates or Notes. The Seller and any
Affiliate thereof may in its individual or any other capacity become the ,owner
or pledgee of Certificates or Notes with the same rights as it would have if it
were not the Seller or an Affiliate thereof, except as expressly provided herein
or in any Basic Document. Notes or Certificates so owned by the Seller or such
Affiliate shall have an equal and proportionate benefit under the provisions of
the Basic Documents, without preference, priority, or distinction as among all
of the Notes or Certificates; provided, however, that any Notes or Certificates
owned by the Seller or any Affiliate thereof during the time such Notes or
Certificates are owned by them, shall be without voting rights for any purpose
set forth in the Basic Documents and All not be entitled to the benefits of the
Policies. The Seller shall notify the Owner Trustee, the Trustee and the Credit
Enhancer promptly after it or any of its Affiliates become the owner of a
Certificate or a Note.
ARTICLE VIII
THE SERVICER
SECTION 8.1. Representations of Servicer. The Servicer makes the
following representations on which the Credit Enhancer shall be deemed to have
relied in executing and delivering the Policies and on which the Issuer is
deemed to have relied in acquiring the Receivables. The representations speak as
of the execution and delivery of this Agreement and as of the Closing Date, in
the case of the Initial Receivables, and as of the applicable Subsequent
Transfer Date, in the case of the Subsequent Receivables, and shall survive the
sale of the Receivables to the Issuer and the pledge thereof to the Trustee
pursuant to the Indenture.
(a) Organization and Good Standing. The Servicer has been duly
organized and is validly existing and in good standing under the laws
of its jurisdiction of organization,
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with power, authority and legal right to own its properties and to
conduct its business as such properties are currently owned and such
business is presently conducted, and had at all relevant times, and
shall have, power, authority and legal right to acquire, own and
service the Receivables;
(b) Due Qualification. The Servicer is duly qualified to do
business as a foreign corporation in good standing and has obtained all
necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business
(including the servicing of the Receivables as required by this
Agreement) requires or shall require such qualification;
(c) Power and Authority. The Servicer has the power and
authority to execute and deliver this Agreement and its Basic Documents
and to carry out its terms and their terms, respectively, and the
execution, delivery and performance of this Agreement and the
Servicer's Basic Documents have been duly authorized by the Servicer by
all necessary corporate action;
(d) Binding Obligation. This Agreement and the Basic Documents
to which to the Servicer is a party shall constitute legal, valid and
binding obligations of the Servicer enforceable in accordance with
their respective 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;
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the Basic Documents to which to the
Servicer is a party, and the fulfillment of the terms of this Agreement
and the Basic Documents to which the Servicer is a party, shall not
conflict with, result in any breach of any of the terms and provisions
of, or constitute (with or without notice or lapse of time) a default
under, the articles of incorporation or bylaws of the Servicer, or any
indenture, agreement, mortgage, deed of trust or other instrument to
which the Servicer is a party or by which it is bound or any of its
properties are subject, or result in the creation or imposition of any
Lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument,
other than this Agreement, or violate any law, order, rule or
regulation applicable to the Servicer of any court or of any federal or
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state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or any of its
properties;
(f) No Proceedings. There are no proceedings or investigations
pending or, to the Servicer's knowledge, threatened against the
Servicer, before any court, regulatory body, administrative agency or
other tribunal or governmental instrumentality having jurisdiction over
the Servicer or its properties (A) asserting the invalidity of this
Agreement or any of the Basic Documents, (B) seeking to prevent the
issuance of the Securities or the consummation of any of the
transactions contemplated by this Agreement or any of the Basic
Documents, or (C) seeking any determination or ruling that might
materially and adversely affect the performance by the Servicer of its
obligations under, or the validity or enforceability of, this
Agreement, the Securities or any of the Basic Documents or (D) relating
to the Servicer and which might adversely affect the federal or state
income, excise, franchise or similar tax attributes of the Securities;
(g) No Consents. No consent, approval, authorization or order
of or declaration or filing with any governmental authority is required
for the issuance or sale of the Securities or the consummation of the
other transactions contemplated by this Agreement, except such as have
been duly made or obtained.
(h) Taxes. The Servicer has filed on a timely basis all tax
returns required to be filed by it and paid all taxes, to the extent
that such taxes have become due.
(i) Chief Executive Office. The Servicer hereby represents and
warrants to the Trustee that the Servicer's principal place of business
and chief executive office is, and for the four months preceding the
date of this Agreement has been, located at: 0 Xxx, Xxxxxx, Xxxxxxxxxx.
SECTION 8.2. Liability of Servicer; Indemnities.
(a) The Servicer (in its capacity as such) shall be liable hereunder
only to the extent of the obligations in this Agreement specifically undertaken
by the Servicer and the representations made by the Servicer.
(i) The Servicer shall defend, indemnify and hold harmless the
Trust, the Trustee, the Owner Trustee, the Standby Servicer, the Credit
Enhancer, and the Securityholders from and against any and all costs, expenses,
losses, damages, claims and liabilities, arising out of or resulting from the
use, ownership
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or operation by the Servicer or any Affiliate thereof of any Financed Vehicle;
(ii) The Servicer shall indemnify, defend and hold harmless
the Trust, the Trustee, the Owner Trustee, the Standby Servicer, the Credit
Enhancer, and the Securityholders from and against any taxes that may at any
time be asserted against any of such parties with respect to the transactions
contemplated in this Agreement, including, without limitation, any sales, gross
receipts, general corporation, tangible personal property, privilege or license
taxes (but not including any federal or other income taxes, including franchise
taxes asserted with respect to, and as of the date of, the sale of the
Receivables and the Other Conveyed Property to the Trust or the issuance and
original sale of the Securities) and costs and expenses in defending against the
same;
(iii) The Servicer shall indemnify, defend and hold harmless
the Trust, the Trustee, the Owner Trustee, the Standby Servicer, the Credit
Enhancer, their respective officers, directors, agents and employees and the
Securityholders from and against any and all costs, expenses, losses, claims,
damages, and liabilities to the extent that such cost, expense, loss, claim,
damage, or liability arose out of, or was imposed upon the Trust, the Trustee,
the Standby Servicer, the Credit Enhancer or the Securityholders through the
negligence, willful misfeasance or bad faith of the Servicer in the performance
of its duties under this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement.
(iv) The Servicer shall indemnify, defend, and hold harmless
the Trustee, the Standby Servicer and the Collateral Agent from and against all
costs, expenses, losses, claims, damages, and liabilities arising out of or
incurred in connection with the acceptance or performance of the trusts and
duties herein contained, if any, except to the extent that such cost, expense,
loss, claim, damage or liability: (A) shall be due to the willful misfeasance,
bad faith, or negligence (except for errors in judgment) of the Trustee, the
Standby Servicer or Collateral Agent, as applicable or (B) relates to any tax
other than the taxes with respect to which the Servicer shall be required to
indemnify the Trustee, the Standby Servicer or the Collateral Agent.
(b) Notwithstanding the foregoing, the Servicer shall not be obligated
to defend, indemnify, and hold harmless any Securityholder for any losses,
claims, damages or liabilities incurred by any Securityholders arising out of
claims, complaints, actions and allegations relating to Section 406 of ERISA or
Section 4975 of the Code as a result of the purchase or holding of a Security by
such Securityholder with the assets of a
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plan subject to such provisions of ERISA or the Code or the servicing,
management and operation of the Trust.
(c) For purposes of this Section 9.2, in the event of the termination
of the rights and obligations of the Servicer (or any successor thereto pursuant
to Section 9.3) as Servicer pursuant to Section 10.1, or a resignation by such
Servicer pursuant to this Agreement, such Servicer shall be deemed to be the
Servicer pending appointment of a successor Servicer pursuant to Section 10.2.
The provisions of this Section 9.2(b) shall in no way affect the survival
pursuant to Section 9.2(c) of the indemnification by the Servicer provided by
Section 9.2(a).
(d) Indemnification under this Section 9.2 shall survive the
termination of this Agreement and any resignation or removal of CPS as Servicer
and shall include reasonable fees and expenses of counsel and expenses of
litigation. If the Servicer shall have made any indemnity payments pursuant to
this Section and the recipient thereafter collects any of such amounts from
others, the recipient shall promptly repay such amounts to the Servicer, without
interest.
SECTION 8.3. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer or Standby Servicer.
(a) CPS shall not merge or consolidate with any other person, convey,
transfer or lease substantially all its assets as an entirety to another Person,
or permit any other Person to become the successor to CPS's business unless,
after the merger, consolidation, conveyance, transfer, lease or succession, the
successor or surviving entity shall be capable of fulfilling the duties of CPS
contained in this Agreement and shall be acceptable to the Controlling Party,
and, if a Credit Enhancer Default shall have occurred and be continuing, shall
be an Eligible Servicer. Any corporation (i) into which CPS may be merged or
consolidated, (ii) resulting from any merger or consolidation to which CPS shall
be a party, (iii) which acquires by conveyance, transfer, or lease substantially
all of the assets of CPS, or (iv) succeeding to the business of CPS, in any of
the foregoing cases shall execute an agreement of assumption to perform every
obligation of CPS under this Agreement and, whether or not such assumption
agreement is executed, shall be the successor to CPS under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties to this Agreement, anything in this Agreement to the contrary
notwithstanding; provided, however, that nothing contained herein shall be
deemed to release CPS from any obligation. CPS shall provide notice of any
merger, consolidation or succession pursuant to this Section to the Owner
Trustee, the Trustee, the Securityholders, the Credit Enhancer and each Rating
Agency. Notwithstanding the foregoing, CPS shall not merge or consolidate
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with any other Person or permit any other Person to become a successor to CPS's
business, unless (x) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Section 4.6 shall have been breached
(for purposes hereof, such representations and warranties shall speak as of the
date of the consummation of such transaction) and no event that, after notice or
lapse of time, or both, would become an Insurance Agreement Event of Default
shall have occurred and be continuing, (y) CPS shall have delivered to the Owner
Trustee, the Trustee, the Rating Agencies and the Credit Enhancer an officer's
Certificate and an Opinion of Counsel each stating that such consolidation,
merger or succession and such agreement of assumption comply with this Section
and that all conditions precedent, if any, provided for in this Agreement
relating to such transaction have been complied with, and (z) CPS shall have
delivered to the Owner Trustee, the Trustee, the Rating Agencies and the Credit
Enhancer an opinion of Counsel, stating in the opinion of such counsel, either
(A) all financing statements and continuation statements and amendments thereto
have been executed and filed that are necessary to preserve and protect the
interest of the Trust in the Receivables and the Other Conveyed Property and
reciting the details of the filings or (B) no such action shall be necessary to
preserve and protect such interest.
(b) Any corporation (i) into which the Standby Servicer may be merged
or consolidated, (ii) resulting from any merger or consolidation to which the
Standby Servicer shall be a party, (iii) which acquires by conveyance, transfer
or lease substantially all of the assets of the Standby Servicer, or (iv)
succeeding to the business of the Standby Servicer, in any of the foregoing
cases shall execute an agreement of assumption to perform every obligation of
the Standby Servicer under this Agreement and, whether or not such assumption
agreement is executed, shall be the successor to the Standby Servicer under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties to this Agreement, anything in this Agreement to the
contrary notwithstanding; provided, however, that nothing contained herein shall
be deemed to release the Standby Servicer from any obligation.
SECTION 8.4. Limitation on Liability of Servicer, Standby Servicer and
Others.
Neither the Servicer, the Standby Servicer nor any of the directors or
officers or employees or agents of the Servicer or Standby Servicer shall be
under any liability to the Trust or the Securityholders, except as provided in
this Agreement, for any action taken or for refraining from the taking of any
action pursuant to this Agreement; provided, however, that this provision shall
not protect the Servicer, the Standby Servicer or
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any such person against any liability that would otherwise be imposed by reason
of a breach of this Agreement or willful misfeasance, bad faith or negligence in
the performance of duties. CPS, the Standby Servicer and any director, officer,
employee or agent of CPS or Standby Servicer may rely in good faith on the
written advice of counsel or on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising under this
Agreement.
SECTION 8.5. Delegation of Duties. The Servicer may at any time
delegate duties under this Agreement to sub-contractors who are in the business
of servicing automotive receivables with the prior written consent of the
controlling party as determined pursuant to Section 13.15 and (unless an
Insurance Agreement Event of Default shall have occurred and be continuing or
Norwest Bank Minnesota, National Association shall then be the Servicer) the
Holders of Class B Notes evidencing more than 50% of the outstanding principal
balance of the Class B Notes; provided, however, that no such delegation or
sub-contracting of duties by the Servicer shall relieve the Servicer of its
responsibility with respect to such duties; and provided further, that the
consent of the Holders of the requisite percentage of the outstanding principal
balance of the Class B Notes shall not be unreasonably withheld or delayed and
shall be deemed to have been given unless, on or before the Objection Date (as
defined below), the Trustee shall have received Objection Notices (as defined
below) from Holders of Class B Notes representing more than 50% of the
outstanding principal balance of the Class B Notes. Upon written request of the
Servicer, the Trustee shall deliver to each Class B Noteholder of record as of
the most recent Record Date a notice (a "Delegation Notice") prepared by the
Servicer (i) specifying the duties the Servicer proposes to delegate, (ii)
identifying the sub-contractor to whom it proposes to delegate such duties and
(iii) informing such Class B Noteholder that if it wishes to object to the
proposed delegation of duties, it must deliver a written notice of objection
(specifying in reasonable detail the reasons for its objection; such notice of
objection an "Objection Notice") on or before the date specified in such
Delegation Notice (the "Objection Date"), which Objection Date shall be a date
which is not more than 10 Business Days after the date the Servicer delivers
such Delegation Notice to the Trustee.
SECTION 8.6. Servicer and Standby Servicer Not to Resign. Subject to
the provisions of Section 9.3, neither the Servicer nor the Standby Servicer
shall resign from the obligations and duties imposed on it by this Agreement as
Servicer or Standby Servicer except upon a determination that by reason of a
change in legal requirements the performance of its duties under this Agreement
would cause it to be in violation of such legal requirements in a manner which
would have a material adverse effect on the Servicer or the Standby Servicer, as
the case may
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be, and the Credit Enhancer (so long as a Credit Enhancer Default shall not have
occurred and be continuing) or a Security Majority (if a Credit Enhancer Default
shall have occurred and be continuing) does not elect to waive the obligations
of the Servicer or the Standby Servicer, as the case may be, to perform the
duties which render it legally unable to act or to delegate those duties to
another Person. Any such determination permitting the resignation of the
Servicer or Standby Servicer shall be evidenced by an opinion of Counsel to such
effect delivered and acceptable to the Trustee, the Owner Trustee and the
Security Credit Enhancer (unless a Credit Enhancer Default shall have occurred
and be continuing). No resignation of the Servicer shall become effective until,
so long as no Credit Enhancer Default shall have occurred and be continuing, the
Standby Servicer or an entity acceptable to the Security Credit Enhancer shall
have assumed the responsibilities and obligations of the Servicer or, if a
Credit Enhancer Default shall have occurred and be continuing, the Standby
Servicer or a successor Servicer that is an Eligible Servicer shall have assumed
the responsibilities and obligations of the Standby Servicer. No resignation of
the Standby Servicer shall become effective until, so long as no Credit Enhancer
Default shall have occurred and be continuing, an entity acceptable to the
Security Credit Enhancer shall have assumed the responsibilities and obligations
of the Standby Servicer or, if a Credit Enhancer Default shall have occurred and
be continuing a Person that is an Eligible Servicer shall have assumed the
responsibilities and obligations of the Standby Servicer; provided, however,
that in the event a successor Standby Servicer is not appointed within 60 days
after the Standby Servicer has given notice of its resignation and has provided
the Opinion of Counsel required by this Section 9.6, the Standby Servicer may
petition a court for its removal.
ARTICLE IX
DEFAULT
SECTION 9.1. Servicer Termination Event. For purposes of this
Agreement, each of the following shall constitute a "Servicer Termination
Event":
(a) Any failure by the Servicer to deliver to the Trustee for
distribution to Securityholders any proceeds or payment required to be so
delivered under the terms of this Agreement that continues unremedied for a
period of two Business Days (one Business Day with respect to payment of
Purchase Amounts) after written notice is received by the Servicer from the
Trustee or (unless a Credit Enhancer Default shall have occurred and be
continuing) the Credit Enhancer or after discovery of such failure by a
Responsible officer of the Servicer;
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(b) Failure by the Servicer to deliver to the Trustee and (so long as a
Credit Enhancer Default shall not have occurred and be continuing) the Credit
Enhancer the Servicer's Certificate within five days after the date on which
such Servicer's Certificate is required to be delivered, or failure on the part
of the Servicer to observe its covenants and agreements set forth in Section
9.3(a);
(c) Failure on the part of the Servicer duly to observe or perform any
other covenants or agreements of the Servicer set forth in this Agreement, which
failure (i) materially and adversely affects the rights of Securityholders
(determined without regard to the availability of funds under the Policy), or of
the Credit Enhancer (unless a Credit Enhancer Default shall have occurred and be
continuing), and (ii) continues unremedied for a period of 30 days after the
date on which written notice of such failure, requiring the same to be remedied,
shall have been given (1) to the Servicer by the Trustee or the Credit Enhancer
or (2) to the Servicer and to the Trustee and the Credit Enhancer by the Holders
of Class A Notes evidencing not less than 25% of the outstanding principal
balance of the Class A Notes or, after the Class A Notes have been paid in full
and all outstanding Reimbursement Obligations and other amounts due to the
Credit Enhancer have been paid in full, by the Holders of Class B Notes
evidencing not less than 25% of the outstanding principal balance of the Class B
Notes;
(d) The entry of a decree or order by a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
conservator, receiver, or liquidator for the Servicer or the Seller (or, so long
as CPS is Servicer, any of the Servicer's Affiliates) in any bankruptcy,
insolvency, readjustment of debt, marshalling of assets and liabilities, or
similar proceedings, or for the winding up or liquidation of its affairs, and
the continuance of any such decree or order unstayed and in effect for a period
of 60 consecutive days; or
(e) The consent by the Servicer or the Seller (or, so long as CPS is
Servicer, any of the Servicer's Affiliates) to the appointment of a conservator,
trustee, receiver or liquidator in any bankruptcy, insolvency, readjustment of
debt, marshalling of assets and liabilities, or similar proceedings of or
relating to the Servicer or the Seller (or, so long as CPS is Servicer, any of
the Servicer's Affiliates) of or relating to substantially all of its property;
or the Servicer or the Seller (or, so long as CPS is Servicer, any of the
Servicer's Affiliates) shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or
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(f) Any representation, warranty or statement of the Servicer made in
this Agreement or any certificate, report or other writing delivered pursuant
hereto shall prove to be incorrect in any material respect as of the time when
the same shall have been made, and the incorrectness of such representation,
warranty or statement has a material adverse effect on the Trust or the
Securityholders and, within 30 days after written notice thereof shall have been
given (1) to the Servicer by the Trustee or the Credit Enhancer or (2) to the
Servicer and to the Trustee and the Credit Enhancer by the Holders of Class A
Notes evidencing not less than 25% of the outstanding principal balance of the
Class A Notes or, after the Class A Notes have been paid in full and all
outstanding Reimbursement Obligations and other amounts due to the Credit
Enhancer have been paid in full, by the Holders of Class B Notes evidencing not
less than 25% of the outstanding principal balance of the Class B Notes, the
circumstances or condition in respect of which such representation, warranty or
statement was incorrect shall not have been eliminated or otherwise cured; or
(g) So long as a Credit Enhancer Default shall not have occurred and be
continuing, the Credit Enhancer shall not have delivered a Servicer Extension
Notice pursuant to Section 4.14; or
(h) So long as a Credit Enhancer Default shall not have occurred and be
continuing, an Insurance Agreement Event of Default or under any other Insurance
and Indemnity Agreement relating to any Series an Event of Default thereunder
shall have occurred; or
(i) A claim is made under the Credit Enhancement.
SECTION 9.2. Consequences of a Servicer Termination Event. If a
Servicer Termination Event shall occur and be continuing, the Credit Enhancer
(or, if a Credit Enhancer Default shall have occurred and be continuing either
the Trustee or (to the extent it has knowledge thereof) a Security Majority), by
notice given in writing to the Servicer (and to the Trustee if given by the
Credit Enhancer or the Securityholders) or by non-extension of the term of the
Servicer as referred to in Section 4.14 may terminate all of the rights and
obligations of the Servicer under this Agreement. The Servicer shall be entitled
to its pro rata share of the Servicing Fee for the number of days in the
Collection Period prior to the effective date of its termination. On or after
the receipt by the Servicer of such written notice or upon termination of the
term of the Servicer, all authority, power, obligations and responsibilities of
the Servicer under this Agreement, whether with respect to the Notes, the
Certificates or the Other Conveyed Property or otherwise, automatically shall
pass to, be vested in and become obligations
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and responsibilities of the Standby Servicer (or such other successor Servicer
appointed by the Controlling Party under Section 10.3); provided, however, that
the successor Servicer shall have no liability with respect to any obligation
which was required to be performed by the terminated Servicer prior to the date
that the successor Servicer becomes the Servicer or any claim of a third party
based on any alleged action or inaction of the terminated Servicer. The
successor Servicer is authorized and empowered by this Agreement to execute and
deliver, on behalf of the terminated Servicer, as attorney-in-fact or otherwise,
any and all documents and other instruments and to do or accomplish all other
acts or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of the Receivables
and the other Conveyed Property and related documents to show the Trust as
lienholder or secured party on the related Lien Certificates, or otherwise. The
terminated Servicer agrees to cooperate with the successor Servicer in effecting
the termination of the responsibilities and rights of the terminated Servicer
under this Agreement, including, without limitation, the transfer to the
successor Servicer for administration by it of all cash amounts that shall at
the time be held by the terminated Servicer for deposit, or have been deposited
by the terminated Servicer, in the Collection Account or thereafter received
with respect to the Receivables and the delivery to the successor Servicer of
all Receivable Files and a computer tape in readable form as of the most recent
Business Day containing all information necessary to enable the successor
Servicer or a successor Servicer to service the Receivables and the Other
Conveyed Property. All reasonable costs and expenses (including attorneys' fees)
incurred in connection with transferring the Receivable Files to the successor
Servicer and amending this Agreement to reflect such succession as Servicer
pursuant to this Section 10.1 shall be paid by the predecessor Servicer upon
presentation of reasonable documentation of such costs and expenses. In
addition, any successor Servicer shall be entitled to payment from the immediate
predecessor Servicer for reasonable transition expenses incurred in connection
with acting as successor Servicer, and to the extent not so paid, such payment
shall be made pursuant to Section 5.7(b) hereof. Upon receipt of notice of the
occurrence of Servicer Termination Event, the Trustee shall give notice thereof
to the Rating Agencies. If requested by the Controlling Party, the successor
Servicer shall terminate the Lockbox Agreement and direct the Obligors to make
all payments under the Receivables directly to the successor Servicer (in which
event the successor Servicer shall process such payments in accordance with
Section 4.2(e)), or to a lockbox established by the successor Servicer at the
direction of the Controlling Party, at the successor Servicer's expense. The
terminated Servicer shall grant the Trustee, the successor Servicer and the
Controlling
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Party reasonable access to the terminated Servicer's premises at the terminated
Servicer's expense.
SECTION 9.3. Appointment of Successor.
(a) On and after the time the Servicer receives a notice of termination
pursuant to Section 10.2, upon non-extension of the servicing term as referred
to in Section 4.14, or upon the resignation of the Servicer pursuant to Section
9.6, the predecessor Servicer shall continue to perform its functions as
Servicer under this Agreement, in the case of termination, only until the date
specified in such termination notice or, if no such date is specified in a
notice of termination, until receipt of such notice and, in the case of
expiration and non-renewal of the term of the Servicer upon the expiration of
such term, and, in the case of resignation, until the later of (x) the date 45
days from the delivery to the Trustee of written notice of such resignation (or
written confirmation of such notice) in accordance with the terms of this
Agreement and (y) the date upon which the predecessor Servicer shall become
unable to act as Servicer, as specified in the notice of resignation and
accompanying Opinion of Counsel. In the event of termination of the Servicer,
Norwest Bank Minnesota, National Association, as Standby Servicer, shall assume
the obligations of Servicer hereunder on the date specified in such written
notice (the "Assumption Date") pursuant to the Servicing Assumption Agreement
or, in the event that the Credit Enhancer shall have determined that a Person
other than the Standby Servicer shall be the successor Servicer in accordance
with Section 10.2, on the date of the execution of a written assumption
agreement by such Person to serve as successor Servicer. Notwithstanding the
Standby Servicer's assumption of, and its agreement to perform and observe, all
duties, responsibilities and obligations of CPS as Servicer under this Agreement
arising on and after the Assumption Date, the Standby Servicer shall not be
deemed to have assumed or to become liable for, or otherwise have any liability
for, any duties, responsibilities, obligations or liabilities of CPS or any
predecessor Servicer arising on or before the Assumption Date, whether provided
for by the terms of this Agreement, arising by operation of law or otherwise,
including, without limitation, any liability for, any duties, responsibilities,
obligations or liabilities of CPS or any predecessor Servicer arising on or
before the Assumption Date under Section 4.7 or 9.2 of this Agreement,
regardless of when the liability, duty, responsibility or obligation of CPS or
any predecessor Servicer therefore arose, whether provided by the terms of this
Agreement, arising by operation of law or otherwise. Notwithstanding the above,
if the Standby Servicer shall be legally unable or unwilling to act as Servicer,
and a Credit Enhancer Default shall have occurred and be continuing, the Standby
Servicer, the Trustee or a Security Majority may petition a court of competent
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jurisdiction to appoint any Eligible Servicer as the successor to the Servicer.
Pending appointment pursuant to the preceding sentence, the Standby Servicer
shall act as successor Servicer unless it is legally unable to do so, in which
event the outgoing Servicer shall continue to act as Servicer until a successor
has been appointed and accepted such appointment. Subject to Section 9.6, no
provision of this Agreement shall be construed as relieving the Standby Servicer
of its obligation to succeed as successor Servicer upon the termination of the
Servicer pursuant to Section 10.2, the resignation of the Servicer pursuant to
Section 9.6 or the non-extension of the servicing term of the Servicer, as
referred to in Section 4.14. If upon the termination of the Servicer pursuant to
Section 10.2 or the resignation of the Servicer pursuant to Section 9.6, the
Controlling Party appoints a successor Servicer other than the Standby Servicer,
the Standby Servicer shall not be relieved of its duties as Standby Servicer
hereunder.
(b) Any successor Servicer shall be entitled to such compensation
(whether payable out of the Collection Account or otherwise) as the Servicer
would have been entitled to under this Agreement if the Servicer had not
resigned or been terminated hereunder. [If any successor Servicer is appointed
as a result of the Standby Servicer's refusal (in breach of the terms of this
Agreement) to act as Servicer although it is legally able to do so, the Credit
Enhancer and such successor Servicer may agree on reasonable additional
compensation to be paid to such successor Servicer by the Standby Servicer,
which additional compensation shall be paid by such breaching Standby Servicer
in its individual capacity and solely out of its own funds. If any successor
Servicer is appointed for any reason other than the Standby Servicer's refusal
to act as Servicer although legally able to do so the Credit Enhancer and such
successor Servicer may agree on additional compensation to be paid to such
successor Servicer, which additional compensation shall be payable as provided
in the Master Spread Account Agreement and shall in no event exceed $150,000. In
addition, any successor Servicer shall be entitled, as provided in the Master
Spread Account Agreement, to reasonable transition expenses incurred in acting
as successor Servicer.]
SECTION 9.4. Notification to Noteholders and Certificateholders. Upon
any termination of, or appointment of a successor to, the Servicer, the Trustee
shall give prompt written notice thereof to each Securityholder and to the
Rating Agencies.
SECTION 9.5. Waiver of Past Defaults. So long as no Credit Enhancer
Default shall have occurred and be continuing, the Credit Enhancer (or, if a
Credit Enhancer Default shall have occurred and be continuing, the Security
Majority) may, on behalf of all Noteholders and Certificateholders, waive any
default by
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the Servicer in the performance of its obligations hereunder and its
consequences. Upon any such waiver of a past default, such default shall cease
to exist, and any Servicer Termination Event arising therefrom shall be deemed
to have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent
thereto.
SECTION 9.6. Action Upon Certain Failures of the Servicer. In the event
that the Trustee shall have knowledge of any failure of the Servicer specified
in Section 10.1 which would give rise to a right of termination under such
Section upon the Servicer's failure to remedy the same after notice, the Trustee
shall give notice thereof to the Servicer and the Credit Enhancer. For all
purposes of this Agreement (including, without limitation, Section 6.2(b) and
this Section 10.6), the Trustee shall not be deemed to have knowledge of any
failure of the Servicer as specified in Section 10.1 unless notified thereof in
writing by the Servicer, the Credit Enhancer or by a Securityholder. The Trustee
shall be under no duty or obligation to investigate or inquire as to any
potential failure of the Servicer specified in Section 10.1.
ARTICLE X
TERMINATION
SECTION 10.1. Optional Purchase of All Receivables.
(a) On the last day of any Collection Period as of which the Pool
Balance shall be less than or equal to 10% of the original Pool Balance, the
Servicer and the Seller each shall have the option to purchase the Owner Trust
Estate, other than the Trust Accounts (with the consent of the Credit Enhancer
if such purchase would result in a claim on the Credit Enhancement or would
result in any amount owing to the Credit Enhancer under the Insurance Agreement
remaining unpaid); provided, however, that the amount to be paid for such
purchase (as set forth in the following sentence) shall be sufficient to pay the
full amount of principal, premium, if any, and interest then due and payable on
the Notes and the Certificates. To exercise such option, the Servicer or the
Seller, as the case may be, shall deposit pursuant to Section 5.6 in the
Collection Account an amount equal to the aggregate Purchase Amount for the
Receivables (including Liquidated Receivables), plus the appraised value of any
other property held by the Trust, such value to be determined by an appraiser
mutually agreed upon by the Servicer, the Credit Enhancer and the Trustee, and
shall succeed to all interests in and to the Trust.
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(b) Upon any sale of the assets of the Trust pursuant to Section 9.2 of
the Trust Agreement, the Servicer shall instruct the Trustee to deposit the
proceeds from such sale after all payments and reserves therefrom (including the
expenses of such sale) have been made (the "Insolvency Proceeds") in the
Collection Account.
(c) Notice of any termination of the Trust shall be given by the
Servicer to the Owner Trustee, the Trustee, the Trustee, the Credit Enhancer and
the Rating Agencies as soon as practicable after the Servicer has received
notice thereof.
(d) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder and
the Owner Trustee will succeed to the rights of, and assume the obligations of,
the Trustee to this Agreement.
ARTICLE XI
ADMINISTRATIVE DUTIES OF THE SERVICER
SECTION 11.1. Administrative Duties.
(a) Duties with Respect to the Indenture. The Servicer shall perform
all its duties and the duties of the Issuer under the Indenture. In addition,
the Servicer shall consult with the Owner Trustee as the Servicer deems
appropriate regarding the duties of the Issuer under the Indenture. The Servicer
shall monitor the performance of the Issuer and shall advise the Owner Trustee
when action is necessary to comply with the Issuer's duties under the Indenture.
The Servicer shall prepare for execution by the Issuer or shall cause the
preparation by other appropriate Persons of all such documents, reports,
filings, instruments, certificates and opinions as it shall be the duty of the
Issuer to prepare, file or deliver pursuant to the Indenture. In furtherance of
the foregoing, the Servicer shall take all necessary action that is the duty of
the Issuer to take pursuant to the Indenture, including, without limitation,
pursuant to Sections 2.7, 3.5, 3.6, 3.7, 3.9, 3.10, 3.17, 5.1, 5.4, 7.3, 8.3,
9.2, 9.3, 11.1 and 11.15 of the Indenture.
(b) Duties with Respect to the Issuer.
(i) In addition to the duties of the Servicer set forth in
this Agreement or any of the Basic Documents, the Servicer shall perform such
calculations and shall prepare for execution by the Issuer or the Owner Trustee
or shall cause the preparation by other appropriate Persons of all such
documents,
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reports, filings, instruments, certificates and opinions as it shall be the duty
of the Issuer or the Owner Trustee to prepare, file or deliver pursuant to this
Agreement or any of the Basic Documents or under state and federal tax and
securities laws, and at the request of the Owner Trustee shall take all
appropriate action that it is the duty of the Issuer to take pursuant to this
Agreement or any of the Basic Documents, including, without limitation, pursuant
to Sections 2.6 and 2.11 of the Trust Agreement. In accordance with the
directions of the Issuer or the Owner Trustee, the Servicer shall administer,
perform or supervise the performance of such other activities in connection with
the Collateral (including the Basic Documents) as are not covered by any of the
foregoing provisions and as are expressly requested by the Issuer or the Owner
Trustee and are reasonably within the capability of the Servicer.
(ii) Notwithstanding anything in this Agreement or any of the
Basic Documents to the contrary, the servicer shall be responsible for promptly
notifying the Owner Trustee and the Trustee in the event that any withholding
tax is imposed on the Issuer's payments (or allocations of income) to an owner
(as defined in the Trust Agreement) as contemplated this Agreement. Any such
notice shall be in writing and specify the amount of any withholding tax
required to be withheld by the Owner Trustee or the Trustee pursuant to such
provision.
(iii) Notwithstanding anything in this Agreement or the Basic
Documents to the contrary, the Servicer shall be responsible for performance of
the duties of the Issuer or the Seller set forth in Section 5.6(a), (b), (c) and
(d) of the Trust Agreement with respect to, among other things, accounting and
reports to owners (as defined in the Trust Agreement); provided, however, that
once prepared by the Servicer the Owner Trustee shall retain responsibility for
the distribution of the Schedule K-1s necessary to enable each Certificateholder
to prepare its federal and state income tax returns.
(iv) The Servicer shall perform the duties of the Servicer
specified in Section 10.2 of the Trust Agreement required to be performed in
connection with the resignation or removal of the Owner Trustee, and any other
duties expressly required to be performed by the Servicer under this Agreement
or any of the Basic Documents.
(v) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Servicer may enter into transactions with
or otherwise deal with any of its Affiliates; provided, however, that the terms
of any such transactions or dealings shall be in accordance with any directions
received from the Issuer and shall be, in the
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Servicer's opinion, no less favorable to the Issuer in any material respect.
(c) Tax Matters. The Servicer shall prepare and file, on behalf of the
Seller, all tax returns, tax elections, financial statements and such annual or
other reports of the Issuer as are necessary for preparation of tax reports as
provided in Article V of the Trust Agreement, including without limitation forms
1099 and 1066. All tax returns will be signed by the Seller.
(d) Non-Ministerial Matters. With respect to matters that in the
reasonable judgment of the Servicer are non-ministerial, the Servicer shall not
take any action pursuant to this Article XII unless within a reasonable time
before the taking of such action, the Servicer shall have notified the Owner
Trustee and the Trustee of the proposed action and the Owner Trustee and, with
respect to items (A), (B), (C) and (D) below, the Trustee shall not have
withheld consent or provided an alternative direction. For the purpose of the
preceding sentence, "non- ministerial matters" shall include:
(i) the amendment of or any supplement to the
Indenture;
(ii) the initiation of any claim or lawsuit by the Issuer and
the compromise of any action, claim or lawsuit brought by or against the Issuer
(other than in connection with the collection of the Receivables);
(iii) the amendment, change or modification of this
Agreement or any of the Basic Documents;
(iv) the appointment of successor Note Registrars, successor
Paying Agents and successor Trustees pursuant to the Indenture or the
appointment of Successor Servicers or the consent to the assignment by the Note
Registrar, Paying Agent or Trustee of its obligations under the Indenture; and
(v) the removal of the Trustee or the Trustee.
(e) Exceptions. Notwithstanding anything to the contrary in this
Agreement except as expressly provided herein or in the other Basic Documents,
the Servicer, in its capacity hereunder, shall not be obligated to, and shall
not, (1) make any payments to the Noteholders or Certificateholders under the
Basic Documents, (2) sell the Indenture Trust Property pursuant to Section 5.5
of the Indenture, (3) take any other action that the Issuer directs the Servicer
not to take on its behalf or (4) in connection with its duties hereunder assume
any indemnification obligation of any other Person.
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(f) Limitation of Standby Servicer's Obligations. The Standby Servicer
or any successor Servicer shall not be responsible for any obligations or duties
of the servicer under Section 12.1.
SECTION 11.2. Records. The Servicer shall maintain appropriate books of
account and records relating to services performed under this Agreement, which
books of account and records shall be accessible for inspection by the Issuer at
any time during normal business hours.
SECTION 11.3. Additional Information to be Furnished to the Issuer. The
Servicer shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.1. Amendment.
(a) This Agreement may be amended from time to time by the parties
hereto, with the consent of the Trustee (which consent may not be unreasonably
withheld), with the prior written consent of the Credit Enhancer (so long as no
Credit Enhancer Default has occurred and is continuing) but without the consent
of any of the Noteholders or the Certificateholders, to cure any ambiguity, to
correct or supplement any provisions in this Agreement, to comply with any
changes in the Code, or to make any other provisions with respect to matters or
questions arising under this Agreement which shall not be inconsistent with the
provisions of this Agreement or the Insurance Agreement; provided, however, that
such action shall not, as evidenced by an Opinion of Counsel delivered to Owner
Trustee and the Trustee, adversely affect in any material respect the interests
of any Noteholder or Certificateholder; provided further that if a Credit
Enhancer Default has occurred and is continuing, such action shall not
materially adversely affect the interests of the Credit Enhancer.
This Agreement may also be amended from time to time by the parties
hereto, with the consent of the Credit Enhancer, the consent of the Trustee, the
consent of the Holders of Notes evidencing not less than a majority of the
outstanding principal amount of the Notes and the consent of the Holders (as
defined in the Trust Agreement) of Certificates evidencing not less than a
majority of the Certificate Percentage Interest [or Certificate Balance] for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or of modifying in any manner the rights of
the
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Noteholders or the Certificateholders; provided, however, that no such amendment
shall (a) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, collections of payments on Receivables or distributions that
shall be required to be made for the benefit of the Noteholders or the
Certificateholders or (b) reduce the aforesaid percentage of the outstanding
principal amount of the Notes and the Certificate Balance, the Holders of which
are required to consent to any such amendment, without the consent of the
Holders of all the outstanding Notes and the Holders (as defined in the Trust
Agreement) of all the outstanding Certificates, of each class affected thereby;
provided further, that if a Credit Enhancer Default has not occurred and is
continuing, such action shall not materially adversely affect the interest of
the Credit Enhancer.
Promptly after the execution of any such amendment or consent, the
Trustee shall furnish written notification of the substance of such amendment or
consent to each Securityholder and the Rating Agencies.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents (and any
other consents of Noteholders or Certificateholders provided for in this
Agreement) and of evidencing the authorization of any action by Noteholders or
Certificateholders shall be subject to such reasonable requirements as the
Trustee or the Owner Trustee, as applicable, may prescribe.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee and the Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or permitted
by this Agreement and the Opinion of Counsel referred to in Section 13.2(i)(1)
has been delivered. The Owner Trustee, the Trustee, the Standby Servicer and the
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Issuer's, the Owner Trustee's, the Trustee's, the Standby Servicer's
or the Trustee's, as applicable, own rights, duties or immunities under this
Agreement or otherwise.
[(b) Notwithstanding anything to the contrary contained in Section
13.1(a) above, the provisions of the Agreement relating to (i) the Spread
Account Supplement, the Spread Account, the Specified Spread Account Requisite
Amount, a Trigger Event or any component definition of a Trigger Event and (ii)
any additional sources of funds which may be added to the Spread Account or uses
of funds on deposit in the Spread Account may be amended in any respect by the
Seller, the Servicer, the Credit Enhancer and the
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Collateral Agent (the consent of which shall not be withheld or delayed with
respect to any amendment that does not adversely affect the Collateral Agent)
without the consent of, or notice to, the Noteholders or the
Certificateholders.]
SECTION 12.2. Protection of Title to Trust.
(a) The Seller or Servicer or both shall execute and file such
financing statements and cause to be executed and filed such continuation
statements, all in such manner and in such places as may be required by law
fully to preserve, maintain and protect the interest of the Issuer and the
interests of the Trustee in the Receivables and in the proceeds thereof. The
Seller shall deliver (or cause to be delivered) to the Credit Enhancer, the
Owner Trustee and the Trustee file-stamped copies of, or filing receipts for,
any document filed as provided above, as soon as available following such
filing.
(b) Neither the Seller nor the Servicer shall change its name, identity
or corporate structure in any manner that would, could or might make any
financing statement or continuation statement filed in accordance with paragraph
(a) above seriously misleading within the meaning of section 9-402(7) of the
UCC, unless it shall have given the Credit Enhancer, the Owner Trustee, the
Trustee and the Trustee at least five days' prior written notice thereof and
shall have promptly filed appropriate amendments to all previously filed
financing statements or continuation statements. Promptly upon such filing, the
Seller or the Servicer, as the case may be, shall deliver an Opinion of Counsel
in form and substance reasonably satisfactory to the Credit Enhancer, stating
either (A) all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the interest
of the Trust and the Trustee in the Receivables, and reciting the details of
such filings or referring to prior opinions of Counsel in which such details are
given, or (B) no such action shall be necessary to preserve and protect such
interest.
(c) Each of the Seller and the Servicer shall have an obligation to
give the Credit Enhancer, the Owner Trustee, the Trustee and the Trustee at
least 60 days' prior written notice of any relocation of its principal executive
office if, a; a result of such relocation, the applicable provisions of the UCC
would require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement and shall promptly file
any such amendment. The Servicer shall at all times maintain each office from
which it shall service Receivables, and its principal executive office, within
the United States of America.
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(d) The servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection Account
in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables to the Issuer,
the Servicer's master computer records (including any backup archives) that
refer to a Receivable shall indicate clearly the interest of the Trust in such
Receivable and that such Receivable is owned by the Trust. Indication of the
Trust's interest in a Receivable shall be deleted from or modified on the
Servicer's computer systems when, and only when, the related Receivable shall
have been paid in full or repurchased.
(f) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender or other transferee, the
Servicer shall give to such prospective purchaser, lender or other transferee
computer tapes, records or printouts (including any restored from backup
archives) that, if they shall refer in any manner whatsoever to any Receivable,
shall indicate clearly that such Receivable has been sold and is owned by the
Trust.
(g) The Servicer shall permit the Trustee, the Standby Servicer and the
Credit Enhancer and its agents at any time during normal business hours to
inspect, audit, and make copies of and abstracts from the Servicer's records
regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Credit Enhancer,
the Owner Trustee or to the Trustee, within five Business Days, a list of all
Receivables (by contract number and name of Obligor) then held as part of the
Trust, together with a reconciliation of such list to the Schedule of
Receivables and to each of the Servicer's Certificates furnished before such
request indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Credit Enhancer, the Owner
Trustee and the Trustee:
(i) promptly after the execution and delivery of the Agreement
and, if required pursuant to Section 13.1, of each amendment, an opinion of
Counsel stating that, in the opinion of such Counsel, in form and substance
reasonably satisfactory to
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the Credit Enhancer, either (A) all financing statements and continuation
statements have been executed and filed that are necessary fully to preserve and
protect the interest of the Trust and the Trustee in the Receivables, and
reciting the details of such filings or referring to prior opinions of Counsel
in which such details are given, or (B) no such action shall be necessary to
preserve and protect such interest; and
(ii) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months after
the Cutoff Date, an Opinion of Counsel, dated as of a date during such 90-day
period, stating that, in the opinion of such counsel, either (A) all financing
statements and continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Trust and the
Trustee in the Receivables, and reciting the details of such filings or
referring to prior Opinions of counsel in which such details are given, or (B)
no such action shall be necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (i) or (ii) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
SECTION 12.3. Notices. All demands, notices and communications upon or
to the Seller, the Servicer, the Owner Trustee, the Trustee or the Rating
Agencies under this Agreement shall be in writing, personally delivered, or
mailed by certified mail, return receipt requested, and shall be deemed to have
been duly given upon receipt (a) in the case of the Seller to CPS Receivables
Funding Corp., 2 Ada, Xxxxxx, Xxxxxxxxxx 00000, (b) in the case of the Servicer
to Consumer Portfolio Services, Inc., 2 Ada, Irvine, California, Attention:
Chief Financial officer, (c) in the case of the Issuer or the Owner Trustee, at
the Corporate Trust Office of the Owner Trustee, (d) in the case of the Trustee
or the Collateral Agent, at the Corporate Trust office, (e) in the case of the
Credit Enhancer, to [ ] (in each case in which notice or other communication to
the Credit Enhancer refers to a Servicer Termination Event, a claim on a Policy,
a Deficiency Notice pursuant to Section 5.5 of this Agreement or with respect to
which failure on the part of the Credit Enhancer to respond shall be deemed to
constitute consent or acceptance, then a copy of such notice or other
communication should also be sent to [ ]; (f) in the case of Moody's, to Xxxxx'x
Investors Service, Inc., ABS Monitoring Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000; and (g) in the case of Standard & Poor's, to Standard & Poor's
Ratings Group, 00 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Asset Backed Surveillance Department. Any notice
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required or permitted to be mailed to a Noteholder or Certificateholder shall be
given by first class mail, postage prepaid, at the address of such Holder as
shown in the Certificate Register or Note Register, as applicable. Any notice so
mailed within the time prescribed in the Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder or
Noteholder shall receive such notice.
SECTION 12.4. Assignment. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
permitted assigns. Notwithstanding anything to the contrary contained herein,
except as provided ln Sections 8.4 and 9.3 and as provided in the provisions of
this Agreement concerning the resignation of the Servicer, this Agreement may
not be assigned by the Seller or the Servicer without the prior written consent
of the Owner Trustee, the Trustee, the Standby Servicer, the Trustee and the
Credit Enhancer (or if a Credit Enhancer Default shall have occurred and be
continuing the Holders of Notes evidencing not less than 66% of the principal
amount of the outstanding Notes and the Holders of Certificates evidencing not
less than 66% of the Certificate Balance).
SECTION 12.5. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the parties hereto and for the benefit
of the Certificateholders (including the Seller), the Trustee and the
Noteholders, as third-party beneficiaries. The Credit Enhancer and its
successors and assigns shall be a third-party beneficiary to the provisions of
this Agreement, and shall be entitled to rely upon and directly enforce such
provisions of this Agreement so long as no Credit Enhancer Default shall have
occurred and be continuing. Except as expressly stated otherwise, any right of
the Credit Enhancer to direct, appoint, consent to, approve of, or take any
action under this Agreement, shall be a right exercised by the Credit Enhancer
in its sole and absolute discretion. The Credit Enhancer may disclaim any of its
rights and powers under this Agreement (but not its duties and obligations under
the Credit Enhancement) upon delivery of a written notice to the Owner Trustee.
Nothing in this Agreement, whether express or implied, shall be construed to
give to any other Person any legal or equitable right, remedy or claim in the
Owner Trust Estate or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.
SECTION 12.6. Severability. Any provision of this Agreement that 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, and any such prohibition or
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unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 12.7. Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 12.8. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 12.9. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 12.10. Assignment to Trustee. The Seller hereby acknowledges
and consents to any mortgage, pledge, assignment and grant of a security
interest by the Issuer to the Trustee pursuant to the Indenture for the benefit
of the Noteholders of ail right, title and interest of the Issuer in, to and
under the Receivables and/or the assignment of any or all of the Issuer's rights
and obligations hereunder to the Trustee.
SECTION 12.11. Nonpetition Covenants.
(a) Notwithstanding any prior termination of this Agreement, the
Servicer and the Seller shall not, prior to the date which is one year and one
day after the termination of this Agreement with respect to the Issuer,
acquiesce, petition or otherwise invoke or cause the Issuer to invoke the
process of any court or government authority for the purpose of commencing or
sustaining a case against the Issuer under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Issuer or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Issuer.
(b) Notwithstanding any prior termination of this Agreement, the
Servicer shall not, prior to the date that is one year and one day after the
termination of this Agreement with respect to the Seller, acquiesce to, petition
or otherwise invoke or cause the Seller to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case against
the Seller under any federal or state bankruptcy, insolvency or similar law,
appointing a receiver, liquidator,
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assignee, trustee, custodian, sequestrator, or other similar official of the
Seller or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Seller.
SECTION 12.12. Limitation of Liability of Owner Trustee and Trustee.
(a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by [ ] not in its individual capacity but
solely in its capacity as Owner Trustee of the Issuer and in no event shall [ ]
in its individual capacity or, except as expressly provided in the Trust
Agreement, as Owner Trustee have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder
or in any of the certificates, notices or agreements delivered pursuant hereto,
as to all of which recourse shall be had solely to the assets of the Issuer. For
all purposes of this Agreement, in the performance of its duties or obligations
hereunder or in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles VI, VII and VIII of the Trust
Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been executed and delivered by [Norwest Bank Minnesota, National
Association], not in its individual capacity but solely as Trustee and Standby
Servicer and in no event shall [Norwest Bank Minnesota, National Association],
have any liability for the representations, warranties, covenants, agreements or
other obligations of the Issuer hereunder or in any of the certificates, notices
or agreements delivered pursuant hereto, as to all of which recourse shall be
had solely to the assets of the Issuer.
(c) In no event shall [Norwest Bank Minnesota, National Association],
in any of its capacities hereunder, be deemed to have assumed any duties of the
Owner Trustee under the Delaware Business Trust Statute, common law, or the
Trust Agreement.
SECTION 12.13. Independence of the Servicer. For all purposes of this
Agreement, the Servicer shall be an independent contractor and shall not be
subject to the supervision of the Issuer, the Trustee and Standby Servicer or
the Owner Trustee with respect to the manner in which it accomplishes the
performance of its obligations hereunder. Unless expressly authorized by this
Agreement, the Servicer shall have no authority to act for or represent the
Issuer or the Owner Trustee in any way and shall not otherwise be deemed an
agent of the Issuer or the Owner Trustee.
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SECTION 12.14. No Joint Venture. Nothing contained in this Agreement
(i) shall constitute the Servicer and either of the Issuer or the Owner Trustee
as members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
[SECTION 12.15. Credit Enhancer as Controlling Party. Each Noteholder
by purchase of the Notes held by it acknowledges that the Trustee, as partial
consideration of the issuance of the Credit Enhancement, has agreed that the
Credit Enhancer shall have certain rights hereunder for so long as no Credit
Enhancer Default shall have occurred and be continuing. So long as a Credit
Enhancer Default has occurred and is continuing, any provision giving the Credit
Enhancer the right to direct, appoint or consent to, approve of, or take any
action under this Agreement shall be inoperative during the period of such
Credit Enhancer Default and such right shall instead vest in the Trustee acting
at the direction of the holders of Class A Notes evidencing, unless otherwise
specified, more than 50% of the principal balance of the Class A Notes. From and
after such time as the Class A Notes have been paid in full and all outstanding
amounts due to the Credit Enhancer have been paid in full, any provision giving
the Credit Enhancer or the Class A Noteholders the right to direct, appoint or
consent to, approve of, or take any action under this Agreement shall be
inoperative and such right shall instead vest in the Trustee acting at the
direction of the Holders of Class B Notes evidencing, unless otherwise
specified, more than 50% of the principal balance of the Class B Notes. From and
after such time as the Class A Notes and Class B Notes have been paid in full,
any provision giving the Credit Enhancer or the Class A Noteholders the right to
direct, appoint or consent to, approve of, or take any action under this
Agreement shall be inoperative and such right shall instead vest in the Trustee
acting at the direction of the holders of the Certificates evidencing, unless
otherwise specified, more than 50% of the Certificate Percentage Interest [or
Certificate Balance]. The Credit Enhancer may disclaim any of its rights and
powers under this Agreement (but not its duties and obligations under the
Policy) upon delivery of a written notice to the Trustee. The Credit Enhancer
may give or withhold any consent hereunder in its sole and absolute discretion.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective duly authorized officers as of
the day and the year first above written.
CPS AUTO RECEIVABLES
TRUST 1997-[ ]
By
[ ]
not in its individual
capacity, but solely as Owner
Trustee on behalf of the Trust
By ___________________________
Name:
Title:
CPS RECEIVABLES CORP., Seller
By ___________________________
Name:
Title:
CONSUMER PORTFOLIO SERVICES, INC.,
Servicer
By ___________________________
Name:
Title:
[NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,]
not in its individual
capacity, but solely as
Standby Servicer and Trustee,
By ___________________________
Name:
Title:
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SCHEDULE A
SCHEDULE OF RECEIVABLES
EXHIBIT A
SUBSEQUENT TRANSFER AGREEMENT
TRANSFER No. OF SUBSEQUENT Receivables pursuant to a Sale and Servicing
Agreement dated as of [ ], among THE CPS AUTO RECEIVABLES TRUST [ ], a Delaware
business trust (the "Issuer"), CPS RECEIVABLES CORP., a California corporation
(the "Seller"), CONSUMER PORTFOLIO SERVICES, INC. a California corporation (the
"Servicer"), and [NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION], a national
banking association (the "Trustee").
W I T N E S S E T H:
WHEREAS pursuant to the Sale and Servicing Agreement, the Seller wishes
to convey the Subsequent Receivables to the Issuer; and
WHEREAS, the Issuer is willing to accept such conveyance subject to the
terms and conditions hereof.
NOW, THEREFORE, the Issuer, the Seller, the Servicer and the Trustee
hereby agree as follows:
1. Defined Terms. Capitalized terms used herein shall have the meanings
ascribed to them in the Sale and Servicing Agreement unless otherwise defined
herein.
"Subsequent Cutoff Date" shall mean, with respect to the Subsequent
Receivables conveyed hereby, [ ].
"Subsequent Transfer Date" shall mean, with respect to the Subsequent
Receivables conveyed hereby, [ ].
2. Schedule of Receivables. Annexed hereto is a supplement to Schedule
A to the Sale and Servicing Agreement listing the Receivables that constitute
the Subsequent Receivables to be conveyed pursuant to this Agreement on the
Subsequent Transfer Date.
3. Conveyance of Subsequent Receivables. In consideration of the
Issuer's delivery to or upon the order of the Seller of $____________, the
Seller does hereby sell, transfer, assign, set over and otherwise convey to the
Issuer, without recourse (except as expressly provided in the Sale and Servicing
Agreement), all right, title and interest of the Seller in and to:
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(i) all right, title and interest of the Seller in and to the
Subsequent Receivables listed in Schedule A to the related Subsequent
Transfer Agreement and, with respect to Subsequent Receivables that are
Rule of 78's Receivables, all monies due or to become due thereon after
the Subsequent Cutoff Date (including Scheduled Payments due after the
Subsequent Cutoff Date (including principal prepayments relating to
such Scheduled Payments) but received by the Seller or CPS on or before
the Subsequent Cutoff Date) and, with respect to Subsequent Receivables
that are Simple Interest Receivables, all monies received thereunder
after the Subsequent Cutoff Date and all Liquidation Proceeds and
Recoveries received with respect to such Subsequent Receivables on or
after the Subsequent Cutoff Date;
(ii) all right, title and interest of the Seller in and to the
security interests in the Financed Vehicles granted by Obligors
pursuant to the Subsequent Receivables and any other interest of the
Seller in such Financed Vehicles, including, without limitation, the
certificates of title or, with respect to such Financed Vehicles in the
State of Michigan, all other evidence of ownership with respect to such
Financed Vehicles;
(iii) all right, title and interest of the Seller in and to
any proceeds from claims on any physical damage, credit life and credit
accident and health insurance policies or certificates relating to the
Financed Vehicles or the Obligors;
(iv) all right, title and interest of the Seller in and to the
Subsequent Purchase Agreements, including a direct right to cause CPS
to purchase Receivables from the Trust under certain circumstances;
(v) all right, title and interest of the Seller in and to
refunds for the costs of extended service contracts with respect to
Financed Vehicles securing Subsequent Receivables, refunds of unearned
premiums with respect to credit life and credit accident and health
insurance policies or certificates covering an Obligor or Financed
Vehicle or his or her obligations with respect to a Financed Vehicle
and any recourse to Dealers for any of the foregoing;
(vi) the Receivable File related to each Subsequent
Receivable;
(vii) all amounts and property from time to time held in or
credited to the Collection Account, the Lockbox Account or the
Certificate Account; and
A-2
(viii) the proceeds of any and all of the foregoing.
4. Representations and Warranties of the Seller. The Seller hereby
represents and warrants to the Issuer as of the date of this Agreement and as of
the Subsequent Transfer Date that:
(a) Organization and Good Standing. The Seller has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of California, with power and authority to
own its properties and to conduct its business as such properties are
currently owned and such business is currently conducted, and had at
all relevant times, and now has, power, authority and legal right to
acquire, own and sell the Receivables and the other Conveyed Property
transferred to the Trust.
(b) Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business shall
require such qualifications.
(c) Power and Authority. The Seller has the power and
authority to execute and deliver this Agreement and the Basic Documents
to which it is a party and to carry out its terms and their terms,
respectively; the Seller has full power and authority to sell and
assign the Receivables and the Other Conveyed Property to be sold and
assigned to and deposited with the Trust by it and has duly authorized
such sale and assignment to the Trust by all necessary corporate
action; and the execution, delivery and performance of this Agreement
and the Basic Documents to which the Seller is a party have been duly
authorized by the Seller by all necessary corporate action.
(d) Valid Sale, Binding Obligations. This Agreement effects a
valid sale, transfer and assignment of the Receivables and the Other
Conveyed Property, enforceable against the Seller and creditors of and
purchasers from the Seller; and this Agreement and the Basic Documents
to which the Seller is a party, when duly executed and delivered, shall
constitute legal, valid and binding obligations of the Seller
enforceable in accordance with their respective 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.
A-3
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the Basic Documents and the
fulfillment of the terms of this Agreement and the Basic Documents
shall not conflict with, result in any breach of any of the terms and
provisions of or constitute (with or without notice, lapse of time or
both) a default under the certificate of incorporation or by-laws of
the Seller, or any indenture, agreement, mortgage, deed of trust or
other instrument to which the Seller is a party or by which it is
bound, or result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, other than this Agreement,
or violate any law, order, rule or regulation applicable to the Seller
of any court or of any federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over
the Seller or any of its properties.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the Seller's knowledge, threatened against the Seller,
before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality having jurisdiction over the
Seller or its properties (A) asserting the invalidity of this
Agreement, the Securities or any of the Basic Documents, (B) seeking to
prevent the issuance of the Securities or the consummation of any of
the transactions contemplated by this Agreement or any of the Basic
Documents, (C) seeking any determination or ruling that might
materially and adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability of, this Agreement
or any of the Basic Documents, or (D) relating to the Seller and which
might adversely affect the federal or state income, excise, franchise
or similar tax attributes of the Securities.
(g) No Consents. No consent, approval, authorization or order
of or declaration or filing with any governmental authority is required
for the issuance or sale of the Securities or the consummation of the
other transactions contemplated by this Agreement, except such as have
been duly made or obtained.
(h) The Seller has filed on a timely basis all tax returns
required to be filed by it and paid all taxes, to the extent that such
taxes have become due.
(i) Chief Executive Office. The chief executive office of the
Seller is at 2 Xxx, Xxxxxx, Xxxxxxxxxx 00000.
A-4
(j) Principal Balance. The aggregate Principal Balance of the
Receivables listed on the supplement to Schedule A annexed hereto and
conveyed to the Issuer pursuant to this Agreement as of the Subsequent
Cutoff Date is $____________.
5. Conditions Precedent. The obligation of the Issuer to acquire the
Receivables hereunder is subject to the satisfaction, on or prior to the
Subsequent Transfer Date, of the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Seller in Section 4 of this
Agreement and in Section 6.1 of the Sale and Servicing Agreement shall
be true and correct as of the date of this Agreement and as of the
Subsequent Transfer Date.
(b) Sale and Servicing Agreement Conditions. Each of the
conditions set forth in Section 2.2(b) of the Sale and Servicing
Agreement shall have been satisfied.
(c) Additional Information. The Seller shall have delivered to
the Issuer such information as was reasonably requested by the Issuer
to satisfy itself as to (i) the accuracy of the representations and
warranties set forth in Section 4 of this Agreement and in Section 6.1
of the Sale and Servicing Agreement and (ii) the satisfaction of the
conditions set forth in this Section 5.
6. Ratification of Agreement. As supplemented by this Agreement, the
Sale and Servicing Agreement is in all respects ratified and confirmed and the
Sale and Servicing Agreement as so supplemented by this Agreement shall be read,
taken and construed as one and the same instrument.
7. Counterparts. This Agreement may be executed in two or more
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the same
instrument.
8. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
A-5
IN WITNESS WHEREOF, the Issuer, the Seller and the Servicer have caused this
Agreement to be duly executed and delivered by their respective duly authorized
officers as of day and the year first above written.
CPS AUTO RECEIVABLES
TRUST [ ]
by [ ]
not in its individual capacity
but solely as Owner Trustee on
behalf of the Trust,
by ___________________________
Name:
Title:
CPS RECEIVABLES CORP., Seller,
by ___________________________
Name:
Title:
CONSUMER PORTFOLIO SERVICES, INC.,
Servicer,
by ___________________________
Name:
Title:
Acknowledged and Accepted:
[NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,]
not in its individual
capacity but solely as
Trustee
by ___________________________
Name:
Title:
A-6
EXHIBIT B
SERVICER'S CERTIFICATE
EXHIBIT C
FORM OF TRUST RECEIPT
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions..................................................1
SECTION 1.2. Other Definitional Provisions...............................24
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.1. Conveyance of Initial Receivables...........................25
SECTION 2.2. Conveyance of Subsequent Receivables........................26
SECTION 2.3. Further Encumbrance of Trust Property.......................30
ARTICLE III
THE RECEIVABLES
SECTION 3.1. Representations and Warranties of Seller....................31
SECTION 3.2. Repurchase upon Breach......................................38
SECTION 3.3. Custody of Receivables Files................................39
SECTION 3.4. Acceptance of Receivable Files by Trustee...................40
SECTION 3.5. Access to Receivable Files..................................41
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.1. Duties of the Servicer......................................42
SECTION 4.2. Collection of Receivable Payments; Modifications
of Receivables; Lockbox Agreements..........................43
SECTION 4.3. Realization Upon Receivables................................45
SECTION 4.4. Insurance...................................................46
SECTION 4.5. Maintenance of Security Interests in Vehicles...............47
TABLE OF CONTENTS
(continued)
Page
SECTION 4.6. Covenants, Representations, and Warranties of Servicer......48
SECTION 4.7. Purchase of Receivables Upon Breach of Covenant.............48
SECTION 4.8. Servicing Fee...............................................49
SECTION 4.9. Servicer's Certificate......................................49
SECTION 4.10. Annual Statement as to Compliance, Notice of
Servicer Termination Event..................................49
SECTION 4.11. Annual Independent Accountants' Report......................50
TABLE OF CONTENTS
(continued)
Page
SECTION 4.12. Access to Certain Documentation and Information
Regarding Receivables......................................51
SECTION 4.13. Verification of Servicer's Certificate.....................51
SECTION 4.14. Retention and Termination of Servicer......................52
SECTION 4.15. Fidelity Bond..............................................53
ARTICLE V
TRUST ACCOUNTS; DISTRIBUTIONS;
STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS
SECTION 5.1. Establishment of Trust Accounts.............................53
SECTION 5.2. Interest Reserve Account....................................56
SECTION 5.3. Certain Reimbursements to the Servicer......................57
SECTION 5.4. Application of Collections..................................57
SECTION 5.5. Withdrawals from Spread Account.............................58
SECTION 5.6. Additional Deposits.........................................59
SECTION 5.7. Distributions...............................................59
SECTION 5.8. Note Distribution Account...................................61
SECTION 5.9. Pre-Funding Account.........................................64
SECTION 5.10. Statements to Certificateholders and Noteholders............64
ARTICLE VI
[CREDIT ENHANCEMENT]
SECTION 6.1. [Credit Enhancement Provisions to be added]..................66
ARTICLE VII
THE SELLER
SECTION 7.1. Representations of Seller...................................66
(a) Organization and Good Standing.......................66
(b) Due Qualification....................................66
(c) Power and Authority..................................66
(d) Valid Sale, Binding Obligations......................67
(e) No Violation.........................................67
(f) No Proceedings.......................................67
(g) No Consents..........................................68
(h) .....................................................68
(i) Chief Executive Office...............................68
TABLE OF CONTENTS
(continued)
Page
SECTION 7.2. [Reserved].................................................68
SECTION 7.3. Liability of Seller; Indemnities...........................68
SECTION 7.4. Merger or Consolidation of, or Assumption of the
Obligations of, Seller.....................................69
SECTION 7.5. Limitation on Liability of Seller and Others...............70
SECTION 7.6. Seller May Own Certificates or Notes.......................70
ARTICLE VIII
THE SERVICER
SECTION 8.1. Representations of Servicer................................71
(a) Organization and Good Standing......................71
(b) Due Qualification...................................71
(c) Power and Authority.................................71
(d) Binding Obligation..................................71
(e) No Violation........................................72
(f) No Proceedings......................................72
(g) No Consents.........................................72
(h) Taxes...............................................73
(i) Chief Executive Office..............................73
SECTION 8.2. Liability of Servicer; Indemnities.........................73
SECTION 8.3. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer or Standby Servicer...........74
SECTION 8.4. Limitation on Liability of Servicer, Standby
Servicer and Others........................................76
SECTION 8.5. Delegation of Duties.......................................76
SECTION 8.6. Servicer and Standby Servicer Not to Resign................77
ARTICLE IX
DEFAULT
SECTION 9.1. Servicer Termination Event.................................78
SECTION 9.2. Consequences of a Servicer Termination Event...............80
SECTION 9.3. Appointment of Successor...................................81
SECTION 9.4. Notification to Noteholders and Certificateholders.........83
SECTION 9.5. Waiver of Past Defaults....................................83
SECTION 9.6. Action Upon Certain Failures of the Servicer...............83
TABLE OF CONTENTS
(continued)
Page
ARTICLE X
TERMINATION
SECTION 10.1. Optional Purchase of All Receivables.......................84
ARTICLE XI
ADMINISTRATIVE DUTIES OF THE SERVICER
SECTION 11.1. Administrative Duties......................................85
(a) Duties with Respect to the Indenture................85
(b) Duties with Respect to the Issuer...................85
(c) Tax Matters.........................................86
(d) Non-Ministerial Matters.............................86
(e) Exceptions..........................................87
(f) Limitation of Standby Servicer's Obligations........87
SECTION 11.2. Records....................................................87
SECTION 11.3. Additional Information to be Furnished to the Issuer.......87
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.1. Amendment..................................................88
SECTION 12.2. Protection of Title to Trust...............................89
SECTION 12.3. Notices....................................................92
SECTION 12.4. Assignment.................................................92
SECTION 12.5. Limitations on Rights of Others............................93
SECTION 12.6. Severability...............................................93
SECTION 12.7. Separate Counterparts......................................93
SECTION 12.8. Headings...................................................93
SECTION 12.9. Governing Law..............................................93
SECTION 12.10. Assignment to Trustee......................................94
SECTION 12.11. Nonpetition Covenants......................................94
SECTION 12.12. Limitation of Liability of Owner Trustee
and Trustee..................................94
SECTION 12.13. Independence of the Servicer..............................95
SECTION 12.14. No Joint Venture..........................................95
[SECTION 12.15. Credit Enhancer as Controlling Party......................95
TABLE OF CONTENTS
(continued)
Page
SCHEDULES
Schedule A - Schedule of Receivables
EXHIBITS
Exhibit A - Form of Subsequent Transfer Agreement
Exhibit B - Form of Servicer's Certificate
Exhibit C - Form of Trust Receipt
