EXECUTION COPY
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SALE AND SERVICING
AGREEMENT
among
CPS AUTO RECEIVABLES TRUST 1998-4, as
Issuer,
CPS RECEIVABLES CORP., as
Seller,
CONSUMER PORTFOLIO SERVICES, INC., as
Servicer
CSC LOGIC/MSA LLP
d/b/a Loan Servicing Enterprise,
as Backup Servicer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as
Standby Servicer and Trustee
Dated as of
December 1, 1998
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SALE AND SERVICING AGREEMENT dated as of December 1, 1998, among CPS
AUTO RECEIVABLES TRUST 1998-4, a Delaware business trust (the "Issuer"), CPS
RECEIVABLES CORP., a California corporation (the "Seller"), CONSUMER PORTFOLIO
SERVICES, INC., a California corporation (the "Servicer"), CSC LOGIC/MAS LLP
d/b/a LOAN SERVICING ENTERPRISE ("Loan Servicing Enterprise"), as Backup
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., Samco Acceptance Corp. or Linc
Acceptance Company LLC through motor vehicle dealers and independent finance
companies;
WHEREAS the Seller has purchased such receivables from Consumer
Portfolio Services, Inc., Samco Acceptance Corp. and Linc Acceptance Company LLC
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 on or after the Cutoff Date by Consumer Portfolio Services, Inc., Samco
Acceptance Corp., or Linc Acceptance Company LLC through motor vehicle dealers
and independent finance companies;
WHEREAS the Seller has agreements to purchase such additional
receivables from Consumer Portfolio Services, Inc., Samco Acceptance Corp. and
Linc Acceptance Company LLC 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.
"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.
"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.
"Assumption Date" shall have the meaning specified in Section 10.3(a).
"Backup Servicer" mean Loan Servicing Enterprise, in its capacity as
Backup Servicer pursuant to the terms of the Backup Servicing Agreement, dated
as of December 1, 1998, among CPS, the Loan Servicing Enterprise, the Insurer
and the Trustee.
"Backup Servicing Agreement" means that certain Backup Servicing
Agreement dated as of December 1, 1998, among Loan Servicing, Enterprise, as
Backup Servicer, CPS as Servicer, the Issuer, and Norwest Bank Minnesota,
National Association, as Trustee and Standby Servicer.
"Backup Servicing Fee" means the fee payable to the Backup Servicer so
long as the Backup Servicer is not the Servicer, on each Payment Date in the
amount specified in the Backup Servicing Agreement.
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"Bank of America" means Bank of America National Trust and Savings
Association and its successors.
"Basic Documents" means this Agreement, the Certificate of Trust, the
Trust Agreement, the Indenture, each Purchase Agreement, the Master Spread
Account Agreement, the Spread Account Supplement, the Insurance Agreement, the
Indemnification Agreement, the Lockbox Agreement 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 and the State in which the principal place of business
of the Note Insurer is located shall be authorized or obligated by law,
executive order, or governmental decree to be closed.
"Casualty" means, with respect to a Financed Vehicle, the total loss or
destruction of such Financed Vehicle.
"Certificate" has the meaning assigned to such term in the Trust
Agreement.
"Certificateholder" has the meaning assigned to such term in the Trust
Agreement.
"Class" means the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes, the Class A-4 Notes and the Class A-5 Notes, as the context requires.
"Class A Note Majority" means the Holders of Notes evidencing more than
50% of the outstanding principal amount of the Notes.
"Class A-1 Final Scheduled Payment Date" means the December 1999
Payment Date.
"Class A-1 Interest Rate" means 5.473% per annum.
"Class A-1 Noteholders' Interest Carryover Shortfall" means, with
respect to any Payment Date, the excess of the Class A-1 Noteholders' Interest
Distributable Amount for the 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-1 Noteholders' Interest Distributable Amount.
"Class A-1 Noteholders' Interest Distributable Amount" means, with
respect to any Payment Date, the sum of the Class A-1 Noteholders' Monthly
Interest Distributable Amount for such Payment Date and the Class A-1
Noteholders' Interest Carryover Shortfall for such Payment Date, plus interest
on such Class A-1 Noteholder's Interest Carryover Shortfall, to the extent
permitted by law, at the Class A-1 Interest Rate to, but excluding, the current
Payment Date.
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"Class A-1 Noteholders' Monthly Interest Distributable Amount" means an
amount equal to the product of (i) the Class A-1 Interest Rate, (ii) the
outstanding principal balance of the Class A-1 notes as of the close of the
preceding Payment Date (or, in the case of the initial Payment Date, as of the
Closing Date) after giving effect to all distributions on account of the
principal on such preceding Payment Date and (iii) a fraction, the numerator of
which is the actual number of days elapsed in the applicable Class A-1 Interest
Period and the denominator of which is 360.
"Class A-1 Notes" has the meaning assigned to such term in the
Indenture.
"Class A-1 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
Class A-1 Noteholders' pro rata share (based on the respective then-current
outstanding principal amount of all Notes) of the Pre-Funded Amount on such
Payment Date (after giving effect to any application thereof to acquire
Subsequent Receivables on such Payment Date); provided that, if the aggregate
remaining Pre-Funded Amount as of such Payment Date is $100,000 or less, then
the Class A-1 Prepayment Amount will equal the Pre-Funded Amount.
"Class A-2 Final Scheduled Payment Date" means the February 2002
Payment Date.
"Class A-2 Interest Rate" means 5.790% per annum.
"Class A-2 Noteholders' Interest Carryover Shortfall" means, with
respect to any Payment Date, the excess of the Class A-2 Noteholders' Interest
Distributable Amount for the 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-2 Noteholders' Interest Distributable Amount.
"Class A-2 Noteholders' Interest Distributable Amount" means, with
respect to any Payment Date, the sum of the Class A-2 Noteholders' Monthly
Interest Distributable Amount for such Payment Date and the Class A-2
Noteholders' Interest Carryover Shortfall for such Payment Date, plus interest
on such Class A-2 Noteholder's Interest Carryover Shortfall, to the extent
permitted by law, at the Class A-2 Interest Rate to, but excluding, the current
Payment Date.
"Class A-2 Noteholders' Monthly Interest Distributable Amount" means
(a) for the first Payment Date, an amount equal to the product of (i) the Class
A-2 Interest Rate, (ii) the initial outstanding principal amount of the Class
A-2 Notes and (iii) a fraction, the numerator of which is the number of days
from and including the Closing Date to and including December 14, 1998 (assuming
that there are 30 days in each month of the year) and the denominator of which
is 360; and (b) for any Payment Date after the first Payment Date, an amount
equal to the product of (i) one-twelfth of the Class A-2 Interest Rate and (ii)
the outstanding principal amount of the Class
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▇-▇ Notes as of the close of the preceding Payment Date (after giving effect to
all distributions on account of principal on such preceding Payment Date).
"Class A-2 Notes" has the meaning assigned to such term in the
Indenture.
"Class A-2 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
Class A-2 Noteholders' pro rata share (based on the respective then-current
outstanding principal amount of all Notes) of the Pre-Funded Amount on such
Payment Date (after giving effect to any application thereof to acquire
Subsequent Receivables on such Payment Date); provided that, if the aggregate
remaining Pre-Funded Amount as of such Payment Date is $100,000 or less, then
the Class A-2 Prepayment Amount will be zero.
"Class A-3 Final Scheduled Payment Date" means the September 2003
Payment Date.
"Class A-3 Interest Rate" means 5.740% per annum.
"Class A-3 Noteholders' Interest Carryover Shortfall" means, with
respect to any Payment Date, the excess of the Class A-3 Noteholders' Interest
Distributable Amount for the 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-3 Noteholders' Interest Distributable Amount.
"Class A-3 Noteholders' Interest Distributable Amount" means, with
respect to any Payment Date, the sum of the Class A-3 Noteholders' Monthly
Interest Distributable Amount of such Payment Date and the Class A-3
Noteholders' Interest Carryover Shortfall for such Payment Date, plus interest
on such Class A-3 Noteholder's Interest Carryover Shortfall, to the extent
permitted by law, at the Class A-3 Interest Rate to, but excluding, the current
Payment Date.
"Class A-3 Noteholders' Monthly Interest Distributable Amount" means
(a) for the first Payment Date, an amount equal to the product of (i) the Class
A-3 Interest Rate, (ii) the initial outstanding principal amount of the Class
A-3 Notes and (iii) a fraction, the numerator of which is the number of days
from and including the Closing Date to and including December 14, 1998 (assuming
that there are 30 days in each month of the year) and (ii) the denominator of
which is 360; and (b) for any Payment Date after the first Payment Date, an
amount equal to the product of (i) one-twelfth of the Class A-3 Interest Rate
and (ii) the outstanding principal amount of the Class A-3 Notes as of the close
of the preceding Payment Date (after giving effect to all distributions on
account of principal on such preceding Payment Date).
"Class A-3 Notes" has the meaning assigned to such term in the
Indenture.
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"Class A-3 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
Class A-3 Noteholders' pro rata share (based on the respective then-current
outstanding principal amount of all Notes) of the Pre-Funded Amount on such
Payment Date (after giving effect to any application thereof to acquire
Subsequent Receivables on such Payment Date); provided that, if the aggregate
remaining Pre-Funded Amount as of such Payment Date is $100,000 or less, then
the Class A-3 Prepayment Amount will be zero.
"Class A-4 Final Scheduled Payment Date" means the September 2003
Payment Date.
"Class A-4 Interest Rate" means 5.690% per annum.
"Class A-4 Noteholders' Interest Carryover Shortfall" means, with
respect to any Payment Date, the excess of the Class A-4 Noteholders' Interest
Distributable Amount for the 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-4 Noteholders' Interest Distributable Amount.
"Class A-4 Noteholders' Interest Distributable Amount" means, with
respect to any Payment Date, the sum of the Class A-4 Noteholders' Monthly
Interest Distributable Amount of such Payment Date and the Class A-4
Noteholders' Interest Carryover Shortfall for such Payment Date, plus interest
on such Class A-4 Noteholder's Interest Carryover Shortfall, to the extent
permitted by law, at the Class A-4 Interest Rate to, but excluding, the current
Payment Date.
"Class A-4 Noteholders' Monthly Interest Distributable Amount" means
(a) for the first Payment Date, an amount equal to the product of (i) the Class
A-4 Interest Rate, (ii) the initial outstanding principal amount of the Class
A-4 Notes and (iii) a fraction, the numerator of which is the number of days
from and including the Closing Date to and including December 14, 1998 (assuming
that there are 30 days in each month of the year) and (ii) the denominator of
which is 360; and (b) for any Payment Date after the first Payment Date, an
amount equal to the product of (i) one-twelfth of the Class A-4 Interest Rate
and (ii) the outstanding principal amount of the Class A-4 Notes as of the close
of the preceding Payment Date (after giving effect to all distributions on
account of principal on such preceding Payment Date).
"Class A-4 Noteholders' Percentage" means, with respect to any Payment
Date on which any principal of the Class A-4 Notes is outstanding, a percentage
equal to 100% minus the Sequential Pay Noteholders' Percentage; provided that,
if principal of any Class A-4 Notes is still outstanding after the principal
amount of the Sequential Pay Notes has been reduced to zero, the Class A-4
Noteholders' Percentage will be 100% until the Class A-4 Notes have been paid in
full.
"Class A-4 Notes" has the meaning assigned to such term in the
Indenture.
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"Class A-4 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
Class A-4 Noteholders' pro rata share (based on the respective then-current
outstanding principal amount of all Notes) of the Pre-Funded Amount on such
Payment Date (after giving effect to any application thereof to acquire
Subsequent Receivables on such Payment Date); provided that, if the aggregate
remaining Pre-Funded Amount as of such Payment Date is $100,000 or less, then
the Class A-4 Prepayment Amount will be zero.
"Class A-5 Final Scheduled Payment Date" means the September 2005
Payment Date.
"Class A-5 Interest Rate" means 5.890% per annum.
"Class A-5 Noteholders' Interest Carryover Shortfall" means, with
respect to any Payment Date, the excess of the Class A-3 Noteholders' Interest
Distributable Amount for the 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-5 Noteholders' Interest Distributable Amount.
"Class A-5 Noteholders' Interest Distributable Amount" means, with
respect to any Payment Date, the sum of the Class A-5 Noteholders' Monthly
Interest Distributable Amount of such Payment Date and the Class A-5
Noteholders' Interest Carryover Shortfall for such Payment Date, plus interest
on such Class A-5 Noteholder's Interest Carryover Shortfall, to the extent
permitted by law, at the Class A-5 Interest Rate to, but excluding, the current
Payment Date.
"Class A-5 Noteholders' Monthly Interest Distributable Amount" means
(a) for the first Payment Date, an amount equal to the product of (i) the Class
A-5 Interest Rate, (ii) the initial outstanding principal amount of the Class
A-5 Notes and (iii) a fraction, the numerator of which is the number of days
from and including the Closing Date to and including December 14, 1998 (assuming
that there are 30 days in each month of the year) and (ii) the denominator of
which is 360; and (b) for any Payment Date after the first Payment Date, an
amount equal to the product of (i) one-twelfth of the Class A-5 Interest Rate
and (ii) the outstanding principal amount of the Class A-5 Notes as of the close
of the preceding Payment Date (after giving effect to all distributions on
account of principal on such preceding Payment Date).
"Class A-5 Notes" has the meaning assigned to such term in the
Indenture.
"Class A-5 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
Class A-5 Noteholders' pro rata share (based on the respective then-current
outstanding principal amount of all Notes) of the Pre-Funded Amount on such
Payment Date (after giving effect to any application thereof to acquire
Subsequent Receivables on such Payment Date); provided that, if the aggregate
remaining
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Pre-Funded Amount as of such Payment Date is $100,000 or less, then the Class
A-5 Prepayment Amount will be zero.
"Closing Date" means December 4, 1998.
"Code" shall have the meaning specified in Section 3.2.
"Collateral" shall have the meaning assigned to such term in the
Indenture.
"Collateral Agent" means Norwest Bank Minnesota, National Association,
in its capacity as Collateral Agent under the Master Spread Account Agreement.
"Collateral Agent Fee" means the fee payable to the Collateral Agent on
each Payment Date in an amount equal to one-twelfth of 0.0075% of the aggregate
outstanding principal amount of the Notes on the last day of the second
preceding Collection Period; provided, however, that on the first Payment Date
the Collateral Agent will be entitled to receive an amount equal to the product
of (i) the percentage equivalent of a fraction the numerator of which is the
number of days from the Closing Date to but excluding the first Payment Date and
the denominator of which is 360, (ii) 0.0075% and (iii) the aggregate
outstanding principal amount of the Notes as of the Closing Date.
"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 Cutoff Date and ending on the
close of business on November 30, 1998. With respect to each subsequent Payment
Date, the preceding calendar month. Any amount stated "as of the close of
business on 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.
"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 ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇ with a copy to Bankers Trust Company, ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust and Agency Group, 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
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
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"CPS" means Consumer Portfolio Services, Inc., a California corporation
and its successors.
"CPS Purchase Agreement" means the Purchase Agreement dated as of
December 1, 1998 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" shall have the meaning specified in the CPS Purchase
Agreement.
"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 Receivable 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
Receivable Payments as so modified or restructured. A "Cram Down Loss" shall be
deemed to have occurred on the date such order is entered.
"Cutoff Date" means October 21, 1998.
"Dealer" means, with respect to a Receivable, the seller of the related
Financed Vehicle, who originated and assigned such Receivable to CPS, Samco or
Linc, who in turn sold such Receivable to the Seller.
"Deficiency Claim Amount" shall have the meaning set forth in Section
5.5(a).
"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(a).
"Delegation Notice" shall have the meaning specified in Section 9.5.
"Delivery" means, when used with respect to Trust Account Property:
(i) the perfection and priority of a security interest in such Trust
Account Property which is governed by the law of a jurisdiction which has
adopted the 1978 Revision to Article 8 of the UCC:
(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 (1) (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
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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 (1) 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 (2) by delivery thereof to a
"clearing corporation" (as 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 holds 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
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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
(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; or
(ii) the perfection and priority of a security interest in such Trust
Account Property which is governed by the law of a jurisdiction which has
adopted the 1994 Revision to Article 8 of the UCC:
(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(1)(i) of
the UCC (other than certificated securities) and are susceptible of
physical delivery, transfer thereof to the Trustee by physical delivery
to the Trustee, indorsed to, or registered in the name of, the Trustee
or its nominee or indorsed in blank and such additional or alternative
procedures as may hereafter become appropriate to effect the complete
transfer of ownership of any such Trust Property to the Trustee free
and clear of any adverse claims, consistent with changes in applicable
law or regulations or the interpretation thereof;
(b) with respect to a "certificated security" (as defined in
Section 8-102(a)(4) of the UCC), transfer thereof:
(1) by physical delivery of such certificated
security to the Trustee, provided that if the certificated
security is in registered form, it shall be indorsed to, or
registered in the name of, the Trustee or indorsed in blank;
(2) by physical delivery of such certificated
security in registered form to a "securities intermediary" (as
defined in Section 8-102(a)(14) of the UCC) acting on behalf
of the Trustee if the certificated security has been specially
endorsed to the Trustee by an effective endorsement.
(c) 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 property to an appropriate book-entry
account maintained with a
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Federal Reserve Bank by a securities intermediary which is also a
"depositary" pursuant to applicable federal regulations and issuance by
such securities intermediary of a deposit advice or other written
confirmation of such book-entry registration to the Trustee of the
purchase by the securities intermediary on behalf of the Trustee of
such book-entry security; the making by such securities 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 and indicating that such
securities intermediary holds such book-entry security solely as agent
for the Trustee; and such additional or alternative procedures as may
hereafter become appropriate to effect complete transfer of ownership
of any such Trust Property to the Trustee free of any adverse claims,
consistent with changes in applicable law or regulations or the
interpretation thereof;
(d) with respect to any item of Trust Property that is an
"uncertificated security" (as defined in Section 8-102(a)(18) of the
UCC) and that is not governed by clause (c) above, transfer thereof:
(1)(A) by registration to the Trustee as the
registered owner thereof, on the books and records of the
issuer thereof;
(B) by another Person (not a securities intermediary)
who either becomes the registered owner of the uncertificated
security on behalf of the Trustee, or having become the
registered owner acknowledges that it holds for the Trustee;
(2) the issuer thereof has agreed that it will comply
with instructions originated by the Trustee without further
consent of the registered owner thereof;
(e) with respect to a "security entitlement" (as defined in
Section 8-102(a)(17) of the UCC)
(1) if a securities intermediary (A) indicates by
book entry that a "financial asset" (as defined in Section
8-102(a)(9) of the UCC) has been credited to the Trustee's
"securities account" (as defined in Section 8-501(a) of the
UCC), (B) receives a financial asset (as so defined) from the
Trustee or acquires a financial asset for the Trustee, and in
either case, accepts it for credit to the Trustee's securities
account (as so defined), (C) becomes obligated under other
law, regulation or rule to credit a financial asset to the
Trustee's securities account, or (D) has agreed that it will
comply with "entitlement orders" (as defined in Section
8-102(a)(8) of the UCC) originated by the Trustee, without
further consent by the "entitlement holder" (as defined in
Section 8-102(a)(7) of the UCC), of a confirmation of the
purchase and the making by such securities intermediary of
entries on its books and records identifying as belonging to
the Trustee of (I) a specific certificated security in the
securities intermediary's possession, (II) a quantity of
securities that constitute or are part of a fungible
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bulk of certificated securities in the securities
intermediary's possession, or (III) a quantity of securities
that constitute or are part of a fungible bulk of securities
shown on the account of the securities intermediary on the
books of another securities intermediary;
(f) in each case of delivery contemplated pursuant to clauses
(a) through (e) of subsection (ii) hereof, the Trustee shall make
appropriate notations on its records, and shall cause the same to be
made on the records of its nominees, indicating that such Trust
Property which constitutes a security is held in trust pursuant to and
as provided in this Agreement.
"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 Note Insurer (so long
as an Insurer 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 an Insurer Default shall
not have occurred and be continuing) acceptable to the Note Insurer.
"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
such depository institution or trust company) thereof shall be rated "A-1+" by
Standard & Poor's and "P-1" by Moody's;
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(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 Note Insurer, 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 Note Insurer, as
evidenced by a writing to that effect, as may from time to time be confirmed in
writing to the Trustee by the Note Insurer.
Any of the foregoing Eligible Investments may be purchased by or
through the Owner Trustee or the Trustee or any of their respective Affiliates.
"Eligible Servicer" means a Person approved to act as "Servicer" under
this Agreement by a Class A Note Majority.
"ERISA" shall have the meaning specified in Section 3.2.
"Extension Percentage" means the percentage equivalent of a fraction,
the numerator of which is the aggregate Principal Balance of extended
Receivables in that Collection Period and the denominator of which is the
Aggregate Principal Balance on the first day of such Collection Period.
"FDIC" means the Federal Deposit Insurance Corporation.
"Final Scheduled Payment Date" means with respect to the Class A-1
Notes, the Class A-1 Final Scheduled Payment Date, with respect to the Class A-2
Notes, the Class A-2 Final Scheduled Payment Date, with respect to the Class A-3
Notes, the Class A-3 Final Scheduled Payment Date, with respect to the Class A-4
Notes, the Class A-4 Final Scheduled
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Payment Date and with respect to the Class A-5 Notes, the Class A-5 Final
Scheduled 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.
"First LSE Payment Date" means the Payment Date occurring in the first
calendar month after the calendar month in which the LSE Assumption Date occurs.
"First LSE Servicing Fee" means with respect to the First LSE Payment
Date, an amount equal to the product of (a) $1.75 per Receivable in the Trust as
of the last day of the related Collection Period and (b) a fraction (i) the
numerator of which is the number of days in the related Collection Period from
and after the LSE Assumption Date and (ii) the denominator of which is 30.
"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) February 20, 1999.
"Holder" shall have the meaning specified in the Indenture.
"Indemnification Agreement" means the Indemnification Agreement among
the Note Insurer, CPS, the Seller and the Underwriter, dated as of December 1,
1998, as such agreement may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.
"Indenture" means the Indenture dated as of December 1, 1998, between
the Issuer and Norwest Bank Minnesota, National Association, as Trustee, as the
same may be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof.
"Initial Receivable" means each retail installment sale contract for a
Financed Vehicle which, as of the Closing Date, is listed on Schedule A (which
Schedule A may be in the form of microfiche) and all rights and obligations
thereunder except for Initial Receivables that shall have become Purchased
Receivables.
"Initial Spread Account Deposit" shall have the meaning specified in
the Spread Account Supplement.
"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
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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 Agreement" means the Insurance and Indemnity Agreement among
the Trust, CPS, the Seller, and the Note Insurer, dated as of December 1, 1998,
as such agreement may be amended, supplemented or otherwise modified from time
to time in accordance with the terms thereof.
"Insurance Agreement Event of Default" means an "Event of Default" as
defined in the Insurance Agreement.
"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.
"Insurer Default" shall mean any one of the following events shall have
occurred and be continuing:
(i) the Note Insurer fails to make a payment required under
the Policy in accordance with its terms;
(ii) the Note Insurer (A) files any petition or commences any
case or proceeding under any provision or chapter of the United States
Bankruptcy Code, the New York Department of Insurance Code or similar
Federal or State law relating to insolvency, bankruptcy,
rehabilitation, liquidation or reorganization, (B) makes a general
assignment for the benefit of its creditors or (C) has an order for
relief entered against it under the United States Bankruptcy Code or
any other similar Federal or State law relating to insolvency,
bankruptcy, rehabilitation, liquidation or reorganization which is
final and nonappealable; or
(iii) a court of competent jurisdiction, the New York
Department of Insurance or other competent regulatory authority enters
a final and nonappealable order, judgment or
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decree (A) appointing a custodian, trustee, agent or receiver for the
Note Insurer or for all or any material portion of its property or (B)
authorizing the taking of possession by a custodian, trustee, agent or
receiver of the Note Insurer (or the taking of possession of all or any
material portion of the property of the Note Insurer).
"Interest Rate" means the Class A-1 Interest Rate, the Class A-2
Interest Rate, the Class A-3 Interest Rate, the Class A-4 Interest Rate or the
Class A-5 Interest Rate, as applicable.
"Interest Reserve Account" means the account designated as such,
established and maintained pursuant to Section 5.2.
"Interest Reserve Account Initial Deposit" means $224,122.50.
"Investment Earnings" means, with respect to any Payment Date and any
Trust Account, the investment earnings on amounts on deposit in such Trust
Account on such Payment Date.
"Issuer" means CPS Auto Receivables Trust 1998-4.
"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.
"Linc" means Linc Acceptance Company LLC and its successors.
"Linc Purchase Agreement" means the Purchase Agreement, dated as of
December 1, 1998 by and between Linc 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 Linc Receivables by the
Seller from Linc.
"Linc Receivables" shall have the meaning specified in the Linc
Purchase Agreement.
"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 Receivable Payment of more than ten dollars
for 120 (or, if the related Financed Vehicle has been repossessed, 210) or more
days as of the end of a Collection Period or (iv) with respect to which proceeds
have been
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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(b).
"Lockbox Agreement" means the Three Party Agreement Relating to Lockbox
Services, dated as of December 1, 1998, by and among the Lockbox Processor, the
Servicer, the Seller and the Trustee, as such agreement may be amended,
supplemented or otherwise modified 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.
"Lockbox Processor" means Bank of America and its successors and
assigns.
"LSE Assumption Date" means the date, if any, on which Loan Servicing
Enterprise becomes the successor Servicer under this Agreement.
"LSE Servicing Fee" has the meaning specified in Section 4.8.
"Mandatory Redemption Date" means the first Payment Date on or after
the last day of the Funding Period.
"Master Spread Account Agreement" means the Master Spread Account
Agreement amended and restated as of July 15, 1998 among the Note Insurer, the
Seller and the Collateral Agent, as the same may be modified, supplemented or
otherwise amended in accordance with the terms thereof.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., or its successor.
"Net Liquidation Proceeds" (a) prior to the LSE Assumption Date, means,
with respect to a Liquidated Receivable, all amounts realized with respect to
such Receivable (other than amounts withdrawn from the Spread Account and
drawings under the Note Policy) 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 Vehicles and the cost of legal
counsel with the enforcement of a defaulted Receivable, (ii) amounts that are
required to be refunded to the Obligor on such Receivable; provided, however,
that the Net Liquidation Proceeds with respect to any Receivable shall in no
event be less than zero; and (b) on and after the LSE Assumption Date, means,
with respect to each Collection Period, the aggregate of all
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amounts realized during such Collection Period with respect to all Liquidated
Receivables (other than amounts withdrawn from the Spread Account and drawings
under the Note Policy) net of (i) the aggregate reasonable expenses incurred by
the Servicer during such Collection Period in connection with the collection of
Liquidated Receivables and the repossession and disposition of Financed
Vehicles, (ii) the aggregate portion of the amounts realized during such
Collection Period that are required to be refunded to Obligors under Liquidated
Receivables and (iii) amounts described in clauses (b)(i) and (b)(ii) relating
to prior Collection Periods which were not reimbursed in prior Collection
Periods; provided, however, that the Net Liquidation Proceeds with respect to
any Collection Period 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 Insurer" means Financial Security Assurance Inc., a stock
insurance company organized and created under the laws of the State of New York,
or its successors in interest.
"Note Policy" means the Financial Guaranty Insurance Policy issued by
the Note Insurer for the benefit of the Holders of the Notes issued under the
Indenture, including any endorsements thereto.
"Note Policy Claim Amount" with respect to any Distribution Date, has
the meaning specified in Section 6.1.
"Note Pool Factor" means as of the close of business on any Payment
Date, a seven-digit decimal figure equal to the outstanding principal amount of
the Notes divided by the original outstanding principal amount of the Notes.
"Note Prepayment Amount" means, as of the Payment Date the sum of (i)
the Class A-1 Prepayment Amount for such Payment Date, (ii) the Class A-2
Prepayment Amount for such Payment Date, (iii) the Class A-3 Prepayment Amount
for such Payment Date, (iv) the Class A-4 Prepayment Amount for such Payment
Date and (v) the Class A-5 Prepayment Amount for such Payment Date.
"Noteholder" shall have the meaning specified in the Indenture.
"Noteholders' Interest Distributable Amount" means, with respect to any
Payment Date, the sum of (i) the Class A-1 Noteholders' Interest Distributable
Amount for such Payment Date, (ii) the Class A-2 Noteholders' Interest
Distributable Amount for such Payment Date, (iii) the Class A-3 Noteholders'
Interest Distributable Amount for such Payment Date, (iv) the Class A-4
Noteholders' Interest Distributable Amount for such Payment Date and (v) the
Class A-5 Noteholders' Interest Distributable Amount for such Payment Date..
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"Noteholders' Percentage" will be 100% until the Notes are paid in
full.
"Noteholders' Principal Carryover Shortfall" means, with respect to any
Payment Date, the excess of the Noteholders' Principal Distributable Amount for
the preceding Payment Date over the amount that was actually deposited in the
Note Distribution Account on such Payment Date on account of the Noteholders'
Principal Distributable Amount.
"Noteholders' Principal Distributable Amount" means, with respect to
any Payment Date (other than the Final Scheduled Payment Date for any Class of
Notes), the Noteholders' Percentage of the Principal Distributable Amount. The
Noteholders' Principal Distributable Amount on the Final Scheduled Payment Date
for a Class of Notes will equal the greater of (i) the outstanding principal
amount of such Class of Notes and (ii) the Noteholders' Percentage of the
Principal Distributable Amount.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
Financed Vehicle and any other Person who owes payments under the Receivable.
"Officer's 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 Note Insurer and which opinion
shall be acceptable in form and substance to the Trustee and, if such opinion or
a copy thereof is required by the provisions of this Agreement to be delivered
to the Note Insurer, to the Note Insurer.
"Original Pool Balance" means the sum, as of any date, of the Pool
Balance as of the Cutoff Date, plus the initial Pre-Funded Amount.
"Other Conveyed Property" means all property conveyed by the Seller to
the Trust pursuant to Sections 2.1(b) through (i) of this Agreement and all
property described in Sections 2.2(a)(ii) through (viii) of this Agreement which
is conveyed by the Seller to the Trust pursuant to a Subsequent Transfer
Agreement.
"Outgoing Servicer Fee" means, with respect to the First LSE Payment
Date, an amount equal to the product of (a) one twelfth times 2.00% of the Pool
Balance as of the close of business on the last day of the second preceding
Collection Period and (b) a fraction (i) the numerator of which is the number of
days in the related Collection Period prior to the LSE Assumption Date and (ii)
the denominator of which is 30.
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"Owner Trustee" means Bankers Trust (Delaware), 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.
"Owner Trust Estate" has the meaning assigned to such term in 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 December 15, 1998.
"Person" means any individual, corporation, estate, partnership,
limited liability company, joint venture, association, joint stock company,
trust (including any beneficiary thereof), unincorporated 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
Seller for the benefit of the Securityholders and the Note Insurer, established
and maintained pursuant to Section 4.2.
"Preference Claim" shall have the meaning specified in Section 6.2(b).
"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 $34,352,728.96.
"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.
"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 Receivable 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 Receivable 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
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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) collections on Receivables (other than Liquidated
Receivables) allocable to principal including full and partial prepayments; (ii)
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 Note Insurer 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 clause (i) above);
(iii) the Principal Balance of each Receivable that first became a Liquidated
Receivable during the preceding Collection Period (without duplication of the
amounts included in clause (i) above); (iv) the aggregate amount of Cram Down
Losses with respect to the Receivables that have occurred during the preceding
Collection Period (without duplication of amounts referred to in clauses (i)
through (iii) above); and (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 5.4 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, the Samco
Purchase Agreement and/or the Linc 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 ▇▇▇▇▇'▇ 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 Note Insurer
(so long as an Insurer 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 3 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 Note Insurer,
the Owner Trustee and the Trustee in writing that such action will not result in
a reduction or withdrawal of the then current rating of the Class A Notes.
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"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 allocable to principal.
"Receivable Files" means the documents specified in Section 3.3.
"Receivables" means, collectively, the Initial Receivables and the
Subsequent Receivables.
"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.
"Requisite Reserve Amount" as of any date during the Funding Period
will equal the product of:
(i) 1/360th of the difference between
(A) the weighted average of each of the
Interest Rates for each class of Notes (based on the
outstanding principal amount of each class on such
date); and
(B) an assumed yield of 2.5% per annum on
investments of funds in the Pre-Funding Account;
(ii) the Pre-Funded Amount on such date; and
(iii) the number of days remaining until the Payment Date in
February 1999;
provided that, upon the expiration of the Funding Period, the Requisite Reserve
Amount will be zero.
"Responsible Officer" shall have the meaning specified in the Trust
Agreement.
"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, and its
successors.
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"Samco Purchase Agreement" means the Purchase Agreement, dated as of
December 1, 1998 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" shall have the meaning specified in the Samco
Purchase Agreement.
"Scheduled Receivable 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).
"Schedule of Receivables" means the schedule of all retail installment
sales contracts and promissory notes held as part of the Trust which is attached
hereto as Schedule A, as amended or supplemented from time to time.
"Securities" means the Notes and the Certificates.
"Securityholders" means the Noteholders and the Certificateholders.
"Seller" means CPS Receivables Corp., a California corporation, and its
successors in interest to the extent permitted hereunder.
"Sequential Pay Noteholders' Percentage" means, with respect to any
Payment Date on which any principal of the Sequential Pay Notes is outstanding,
the percentage equivalent of a fraction (a) the numerator of which is the
aggregate initial principal amount of the Sequential Pay Notes and (b) the
denominator of which is the aggregate of the initial principal amounts of the
Sequential Pay Notes and the Class A-4 Notes; provided that, if principal of any
Sequential Pay Notes is still outstanding after the principal amount of the
Class A-4 Notes has been reduced to zero, the Sequential Pay Noteholders'
Percentage will be 100% until the Sequential Pay Notes have been paid in full.
"Sequential Pay Notes" means the Class A-1 Notes, the Class A-2 Notes
and the Class A-3 Notes.
"Series 1998-4 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.
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"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 and Lockbox Processing Assumption Agreement" means the
Servicing and Lockbox Processing Assumption Agreement, dated as of December 1,
1998 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 Officer" means any Person whose name appears on a list of
Servicing Officers delivered to the Trustee and the Note Insurer, 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.
"Spread Account Supplement" means the Series 1998-4 Supplement to the
Master Spread Account Agreement dated as of December 1, 1998 among the Note
Insurer, 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 Group, a division
of The ▇▇▇▇▇▇-▇▇▇▇ Companies, or its successor.
"Standby Fee" means the fee payable to the Standby Servicer so long as
CPS is the Servicer, on each Payment Date in an amount equal to one-twelfth of
0.025% of the aggregate outstanding principal amount of the Notes on the last
day of the second preceding Collection Period; provided, however, that on the
first Payment Date the Standby Servicer will be entitled to receive an amount
equal to the product of (i) the percentage equivalent of a fraction the
numerator of which is the number days from the Closing Date to but excluding the
first Payment Date and the denominator of which is 360, (ii) 0.025% and (iii)
the aggregate outstanding principal amount of the Notes as of the Closing Date.
"Standby Servicer" means Norwest Bank Minnesota, National Association,
in its capacity as Standby Servicer pursuant to the terms of the Servicing and
Lockbox Processing
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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 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, the Seller and Samco, or the Seller and Linc 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 3.0% of the aggregate Principal
Balance of related 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 once 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 5.3 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; and (vi) 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 September 11,
1998, as amended and restated as of December 1, 1998, between the Seller, as
Depositor, and the Owner Trustee, as the same may be further amended or
supplemented from time to time.
"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 and Section 2.2, together with certain monies received after (i) the
Cutoff Date (with respect to Initial Receivables) and (ii) the related
Subsequent Cutoff Date (with respect to Subsequent Receivables), the Insurance
Policies, the Collection Account (including all Eligible Investments therein and
all proceeds therefrom), the Lockbox Account, the Pre-Funding Account, the
Interest Reserve Account and certain other rights under this Agreement. Although
the Seller has pledged the Series 1998-4 Spread Account to the Collateral Agent
pursuant to the Master Spread Account Agreement, the Series 1998-4 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 in Section 3.5.
"Trustee" means the Person acting as Trustee under the Indenture, its
successors in interest and any successor trustee under the Indenture.
"Trustee Fee" means (A) the fee payable to the Trustee on each Payment
Date in an amount equal to one-twelfth of 0.0075% of the aggregate outstanding
principal amount of the Notes on the last day of the second preceding Collection
Period; provided, however, that on the first Payment Date the Trustee will be
entitled to receive an amount equal to the product of (i) the percentage
equivalent of a fraction the numerator of which is the number days from the
Closing Date to but excluding the first Payment Date and the denominator of
which is 360, (ii) 0.0075% and (iii) the aggregate outstanding principal amount
of the Notes as of the Closing
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Date and/or (B) any amounts payable to the Owner Trustee pursuant to Section 8.1
of the Trust Agreement, as applicable.
"UCC" means the Uniform Commercial Code as in effect in the relevant
jurisdiction on the date of the Agreement.
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.
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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 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 all monies received
thereunder after the Cutoff Date and all Net Liquidation Proceeds
received with respect to such Initial Receivables after the 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 Initial 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 securing the Initial Receivables or the Obligors
thereunder;
(d) all right, title and interest of the Seller in and to the
Purchase Agreements, including a direct right to cause CPS to purchase
Receivables from the Trust pursuant to the CPS Purchase Agreement under
the circumstances specified therein;
(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 credit accident and health
insurance policies or certificates covering an Obligor or Financed
Vehicle under an Initial Receivable 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, the Pre-Funding Account, the
Interest Reserve Account or the Lockbox Account;
(h) the proceeds of any and all of the foregoing; and
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(i) all present and future claims, demands, causes and choices
in action in respect of any or all of the foregoing and all payments on
or under and all proceeds of every kind and nature whatsoever in
respect of any or all of the foregoing, including all proceeds of the
conversion, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every kind
and other forms of obligations and receivables, instruments and other
property which at any time constitute all or part of or are included in
the proceeds of any of the foregoing.
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 will, on the related Subsequent Transfer
Date, sell, transfer, assign, set over and otherwise convey to the Issuer
without recourse (subject to the obligations set forth herein):
(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 all monies received thereunder after the related
Subsequent Cutoff Date and all Net Liquidation Proceeds and Recoveries
received with respect to such Subsequent Receivables 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 securing the Subsequent Receivables or the Obligors
thereunder;
(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 Subsequent 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
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under a Subsequent Receivable 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) the proceeds of any and all of the foregoing; and
(viii) all present and future claims, demands, causes and
choices in action in respect of any or all of the foregoing and all
payments on or under and all proceeds of every kind and nature
whatsoever in respect of any or all of the foregoing, including all
proceeds of the conversion, voluntary or involuntary, into cash or
other liquid property, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of
any and every kind and other forms of obligations and receivables,
instruments and other property which at any time constitute all or part
of or are included in the proceeds of any 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 Note Insurer and the Rating Agencies with an Addition
Notice not later than three days prior to such Subsequent Transfer Date
and shall have provided any information reasonably requested by any of
the foregoing with respect to the related 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 related 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 related 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 then
conducted;
(v) the Funding Period shall not have terminated;
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(vi) after giving effect to any transfer of Subsequent
Receivables on a Subsequent Transfer Date, the Receivables then owned
by the Trust 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):
(a) the weighted average APR of such Receivables will not be less than
0.25% below the weighted average APR of the Initial Receivables on the
Cutoff Date, (b) the weighted average remaining term of such
Receivables will be within a range of 12 to 72 months, (c) not more
than 90% of the aggregate principal balance of such Receivables will
represent financing of used Financed Vehicles and (d) no fewer than 50
% of the Subsequent Receivables will be originated under the CPS alpha
program, (e) not more than 8% of the Subsequent Receivables will be
originated under the CPS delta program, (f) not more than 5.25% of the
Subsequent Receivables will be originated under the CPS first time
buyer program and (g) no fewer than 20% and no more than 30% of the
Subsequent Receivables will be originated under the CPS standard
program, and the Trust, the Trustee, the Owner Trustee and the Note
Insurer shall have received written confirmation from a firm of
certified independent public accountants as to the satisfaction of the
criteria in clauses (a) through (g) above;
(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 of the Issuer
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 Note Insurer 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
Noteholders;
(xii) the Seller shall have delivered (A) to the Rating
Agencies and the Note Insurer 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 Note
Insurer on the Closing Date and (B) to the Trustee the Opinion of
Counsel required by Section 13.2(i)(i);
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(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 Note Insurer (so long as no Insurer Default shall
have occurred and be continuing), in its absolute and sole discretion,
shall have approved the transfer of such Subsequent Receivables to the
Issuer and the Note Insurer shall have been reimbursed for any fees and
expenses incurred by the Note Insurer 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 Note Insurer, the
Owner Trustee 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 Issuer, at a price equal to the Purchase Amount
thereof, in the manner specified in Section 3.2.
SECTION 2.3. Transfers Intended as Sales. It is the intention of the
Seller that each transfer and assignment contemplated by this Agreement shall
constitute a sale of the related Receivables and other Trust Property from the
Seller to the Issuer and the beneficial interest in and title to the related
Receivables and 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 Section 2.1 and Section 2.2 for the benefit of the Noteholders
and the Note Insurer.
SECTION 2.4. 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
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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 all amounts due in respect of the Certificates have been
paid in full, 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 Notes 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 Note
Insurer, the Issuer and to the Trustee for the benefit of the Noteholders on
which the Issuer relies in acquiring the Receivables and on which the Note
Insurer relies in issuing the Note Policy. 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 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 and, with respect to the Linc Receivables, Linc) 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 and, with respect to the Linc Receivables, Linc) in
the Financed Vehicle, which security interest has been assigned by CPS
(or, with respect to the Samco Receivables, Samco and, with respect to
the Linc Receivables, Linc) to the Seller, which in turn has assigned
such security interest to the Trust which 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
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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
14.9%, (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 88.63% of the aggregate Principal Balance of
the Initial Receivables, constituting 91.11% of the number of Initial
Receivables, as of the Cutoff Date, represents financing of used
automobiles, light trucks, vans or minivans; the remainder of the
Initial Receivables represent financing of new vehicles; approximately
52.45% of the aggregate Principal Balance of the Initial Receivables as
of the Cutoff Date were originated under the CPS Alpha Program;
approximately 7.82% of the aggregate Principal Balance of the Initial
Receivables as of the Cutoff Date were originated under the CPS Delta
Program; approximately 5.24% of the aggregate Principal Balance of the
Initial Receivables as of the Cutoff Date were originated under the CPS
First Time Buyer Program; approximately 28.33% of the aggregate
Principal Balance of the Receivables as of the Cutoff Date were
originated under the CPS Standard Program; approximately 3.76% of the
aggregate Principal Balance of the Initial Receivables as of the Cutoff
Date were originated under the CPS Super Alpha Program; approximately
2.39% of the aggregate Principal Balance of the Initial Receivables as
of the Cutoff Date were originated under the Linc Program;
approximately 4.62% of the aggregate Principal Balance of the Initial
Receivables as of the Cutoff Date are Samco Receivables; approximately
2.39% of the Initial Receivables as of the Cutoff Date are Linc
Receivables; no Initial Receivable shall have a payment that is more
than 30 days overdue as of the Cutoff Date; 15.76% of the aggregate
Principal Balance of the Initial Receivables as of the Cutoff Date are
Rule of 78's Receivables and 84.24% of the aggregate Principal Balance
of the Initial Receivables as of the Cutoff Date are Simple Interest
Receivables; each Initial Receivable shall have a final scheduled
payment due no later than September 27, 2004; and each Initial
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 Noteholders
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 warranties or
service contracts complied at the time the related
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Receivable was originated or made and at the execution of this
Agreement (or the applicable Subsequent Transfer 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
▇▇▇▇▇▇▇▇-▇▇▇▇ 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 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, in
the case of the Initial Receivables, or after the related Subsequent
Transfer Date, in the case of the Subsequent Receivables).
(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. Except as permitted under Section 4.2, no
provision of a Receivable has been waived.
(viii) No Amendments. Except as permitted under Section 4.2,
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 (with respect to the
Initial Receivables) or the Subsequent Cutoff Date (with respect to the
related Subsequent Receivables),
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(a) 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 and (b)
there is no lien against the related Financed Vehicle for delinquent
taxes.
(xi) No Default; Repossession. Except for payment
delinquencies continuing for a period of not more than thirty days as
of the Cutoff Date (with respect to the Initial Receivables) or the
Subsequent Cutoff Date (with respect to the related Subsequent
Receivables), 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 (except
in a manner consistent with Section 4.2); and no Financed Vehicle shall
have been repossessed as of the Cutoff Date (with respect to the
Initial Receivables) or the Subsequent Cutoff Date (with respect to the
related Subsequent Receivables).
(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 with respect to the Linc
Receivables, Linc) 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 and, with respect to the Linc
Receivables, Linc) 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
Noteholders and the Note Insurer 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.
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(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 ownership interest in the Receivables
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, a "Form RD108" stamped by the Department of
Motor Vehicles) will be received within 180 days and will show, CPS
(or, with respect to the Samco Receivables, Samco or, with respect to
the Linc Receivables, Linc) 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 or, with respect to
the Linc Receivables, Linc) 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 has not yet been returned from the Registrar
of Titles, CPS (or, with respect to the Samco Receivables, Samco or,
with respect to the Linc Receivables, Linc) has received written
evidence from the related Dealer that such title document showing CPS,
Samco or Linc (as applicable) as first lienholder has been applied for.
(xix) Valid and Binding Obligation of Obligor. Each Receivable
is the legal, valid and binding obligation in writing of the Obligor
thereunder and is enforceable in accordance with its terms, except only
as such enforcement may be limited by
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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 deliver such contract and all other
documents related thereto and to grant the security interest purported
to be granted thereby.
(xx) 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.
(xxi) Origination Date. Each Receivable has an origination
date on or after November 1, 1997.
(xxii) Maturity of Receivables. Each Receivable has an
original term to maturity of not more than 72 months; the weighted
average original term to maturity of the Initial Receivables was 57.84
months as of the Cutoff Date; the remaining term to maturity of each
Receivable was 72 months or less as of the Cutoff Date (in the case of
the Initial Receivables) or the Subsequent Cutoff Date (in the case of
the related Subsequent Receivables); the weighted average remaining
term to maturity of the Initial Receivables was 55.87 months as of the
Cutoff Date.
(xxiii) Scheduled Receivable Payments. Each Initial Receivable
had an original principal balance of not less than $0 nor more than
$30,000.00.
(xxiv) Origination of Receivables. Based on the billing
address of the Obligors and the Principal Balances as of the Cutoff
Date, approximately 17.84% of the aggregate Principal Balance of the
Initial Receivables represents Receivables that were originated in
California.
(xxv) Post-Office Box. On or prior to the next billing period
after the Cutoff Date (in the case of the Initial Receivables) or the
Subsequent Cutoff Date (in the case of the related Subsequent
Receivables), CPS will notify each Obligor to make payments with
respect to its respective Receivables after the Cutoff Date (in the
case of the Initial Receivables) or the Subsequent Cutoff Date (in the
case of the related Subsequent Receivables) 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.
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(xxvi) Location of Receivable Files. A complete Receivable
File with respect to each Receivable has been or prior to the Closing
Date or the related Subsequent Transfer Date, as applicable, will be
delivered to the Trustee at the location listed in Schedule B.
(xxvii) Casualty. No Financed Vehicle has suffered a Casualty.
(xxviii) Principal Balance/Number of Contracts. As of the
Cutoff Date, the total aggregate principal balance of the Initial
Receivables was $275,647,271.04. The Initial Receivables are evidenced
by 21,655 Contracts.
(xxix) 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 Note Insurer, the Trustee or (upon
actual knowledge of a Responsible Officer thereof) 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 Note Insurer or receipt by the Trustee, the Owner Trustee
and the Note Insurer of notice from the Seller or the Servicer of such breach,
CPS (pursuant to the CPS Purchase Agreement) shall repurchase any Receivable if
the value of 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 relates to a characteristic of the Receivables in the
aggregate, and if the interests of the Trust or the Noteholders 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 (pursuant to the CPS
Purchase Agreement) 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)(5) or (A)(6) 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
Securityholders or the Note Insurer 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 Owner Trustee, the Standby
Servicer, the Collateral Agent, the Note Insurer, 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
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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 including a Trustee's Certificate in
the form of Exhibit F-1. 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 3.1 if not otherwise such a breach.
(b) Pursuant to Section 2.1 of this Agreement, the Seller has 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 rights under the Purchase Agreements and the delivery
requirements, representations and warranties and the cure or repurchase
obligations of CPS under the CPS Purchase Agreement. 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
CPS Purchase Agreement.
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 and, with respect to the
Linc Receivables, Linc) 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 and,
with respect to the Linc Receivables, Linc) 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 and, with respect to
the Linc Receivables, Linc) as secured party.
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(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 4.2 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 for the Initial Receivables. The Trustee has reviewed such
Receivable Files and has determined that it has received a file for each Initial
Receivable identified in Schedule A to this Agreement. Prior to each Subsequent
Transfer Date, the Seller will cause to be delivered to the Trustee the
Receivable Files for the Subsequent Receivables to be transferred to the Trust
on such Subsequent Transfer Date. 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 Sections 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 the
applicable Subsequent Transfer 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 and the Note Insurer 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; provided, however, that CPS shall indemnify the
Trustee, the Owner Trustee, the Standby Servicer, the Collateral Agent, the Note
Insurer, 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
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 including a Trustee's Certificate in the form of Exhibit F-1. 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,
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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 Note Insurer. On
the date which is 180 days following the Closing Date (or applicable Subsequent
Transfer Date) or, if such day is not a Business Day, the next succeeding
Business Day, the Trustee shall inform CPS and the other parties to this
Agreement and the Note Insurer 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 and the Note Insurer access to the Receivable Files at all reasonable
times during the Trustee's normal business hours. The Trustee shall, within two
Business Days of the request of the Servicer, the Owner Trustee or the Note
Insurer, execute such documents and instruments as are prepared by the Servicer,
the Owner Trustee or the Note Insurer and delivered to the Trustee, as the
Servicer, the Owner Trustee or the Note Insurer 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 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. Prior to the LSE Assumption Date,
the Servicer, as agent for the Trust, the Securityholders and the Note Insurer
(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. From and after the LSE
Assumption Date, the Servicer agrees that its servicing of the Receivables shall
be carried out in accordance with customary and usual procedures of institutions
which service motor vehicle retail installment sales contracts and, to the
extent more exacting, the degree of skill and attention that the Servicer
exercises from time
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to time with respect to all comparable Motor Vehicle receivables that it
services for itself. In performing such duties, the Servicer shall comply with
its current servicing policies and procedures, as such servicing policies and
procedures may be amended from time to time, so long as such amendments will not
materially adversely affect the interests of the Noteholders. 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 Owner Trustee and the Note Insurer 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 or the
Securityholders, 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
Securityholders. The Servicer shall prepare and furnish, and the Trustee and the
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) Prior to the LSE Assumption Date, 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 promptly after the Closing Date (or the Subsequent Transfer Date, as
applicable) the Servicer shall notify each Obligor to make all payments with
respect to the Receivables to the Post-Office Box. From and after the LSE
Assumption Date, 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 the Receivables and Insurance Policies in such manner
as will, in the reasonable judgment of the Servicer, maximize the amount to be
received by the Issuer with respect thereto. The Servicer is authorized in its
discretion to waive any prepayment charge, late payment charge or any other
similar fees that may be collected in the ordinary course of servicing any
Receivable. The Servicer will provide each Obligor with a monthly statement in
order to notify such Obligors to
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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
Note Insurer. From and after the LSE Assumption Date, the Servicer may grant
extensions, rebates or adjustments on a Receivable, or modify the original due
date of a Receivable (i) if such extensions are limited to two (2), one (1)
month extensions in any consecutive twelve (12) month period, (ii) six (6)
consecutive payments have been made by the Obligor at the time such extension is
made, (iii) a sufficient amount of interest due shall have been collected to
forward the due date and (iv) the percentage equivalent of a fraction, the
numerator of which is the sum of the Extension Percentages for each of the
current Collection Period and the three preceding Collection perdiods and the
denominator of which is 4, is less than or equal to 3.5%. From and after the LSE
Assumption Date, 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. In no event shall the principal balance of a Receivable
be reduced, except in connection with a settlement in the event the Receivable
becomes a Defaulted Receivable. Notwithstanding anything to the contrary
contained herein, if the Servicer (whether or not the LSE Assumption Date has
occurred) extends the date for final payment by the Obligor of any Receivable
beyond the last day of the penultimate Collection Period preceding the Class A-5
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 or Loan Servicing Enterprise, the
Servicer may not make any extension on a Receivable without the prior written
consent of the Note Insurer. 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 Receivable Payment on
Receivables.
(b) The Trustee shall establish the Lockbox Account in the name of the
Seller for the benefit of the Trustee for the further benefit of the
Securityholders and the Note Insurer. Pursuant to the Lockbox Agreement, the
Trustee has authorized the Servicer to direct dispositions of funds on deposit
in the Lockbox Account to the Collection Account (but not to any other account),
and no other Person, save the Lockbox Processor and the Trustee, has authority
to direct disposition of funds on deposit in the Lockbox Account. 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 Note
Insurer (unless an Insurer Default shall have occurred and be continuing) an
Eligible Account
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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 Note Insurer 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 Seller for the benefit of the Securityholders and the
Note Insurer.
(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 Note Insurer (so long as an
Insurer Default shall not have occurred and be continuing) or Holders of Notes
evidencing more than 50% of the outstanding principal balance of the Notes (if
an Insurer Default shall have occurred and be continuing) shall elect to change
the identity of the Lockbox Bank, the Servicer, at its expense, shall cause the
Lockbox Bank to deliver, at the direction of the Note Insurer (so long as an
Insurer Default shall not have occurred and be continuing) or Holders of Notes
evidencing more than 50% of the outstanding principal balance of the Notes (if
an Insurer 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.
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SECTION 4.3. Realization Upon Receivables. On behalf of the Trust, the
Securityholders and the Note Insurer, 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 Receivable 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 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 (if CPS is 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, with respect to the Linc Receivables, Linc)
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 and, with respect to the Linc
Receivables, Linc) 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, prior to the LSE Assumption Date, 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) (the "Insurance
Policies") which, but for the actions of the Servicer, would have been covered
thereunder. From and after the LSE Assumption Date, to the extent applicable,
the Servicer shall use reasonable efforts not to take any action which would
result in noncoverage under any of the Insurance Policies which, but for the
actions of the Servicer, would have been covered thereunder. The Servicer, on
behalf of the Trust, shall take such
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reasonable action as shall be necessary to permit recovery under any of the
Insurance Policies. Any amounts collected by the Servicer under any of the
Insurance Policies shall be deposited in the Collection Account pursuant to
Section 5.2.
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,
re-recording, 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 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 the CPS's designation as the secured party on the
certificate of title is in its capacity as Servicer as agent of the Trust.
(b) After the LSE Assumption Date, consistent with the policies and
procedures required by this Agreement, the Servicer shall take such steps on
behalf of the Trust as are customary 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, re-recording, 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 reasonable
steps to re-perfect or continue the perfection of such security interest on
behalf of the Trust as customary because of the relocation of a Financed Vehicle
(if LSE receives notice from the applicable motor vehicle registration
authority) or for any other reason.
(c) Upon the occurrence of an Insurance Agreement Event of Default, the
Note Insurer may (so long as an Insurer Default shall not have occurred and be
continuing) instruct the Trustee and the Servicer to take or cause to be taken,
or, if an Insurer 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
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perfection or re-perfection and to take all action necessary therefor. The
Servicer hereby agrees to pay all expenses related to such perfection or
re-perfection 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 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. Additional Covenants 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 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 and waivers 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 Note Insurer, the Owner Trustee or the
Trustee of a breach of any of the covenants of the applicable Servicer set forth
in Section 4.2(a), 4.4, 4.5 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 Note Insurer or the
Securityholders with respect to a breach of Section 4.2(a), 4.4, 4.5 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 Standby Servicer, the Collateral Agent, the Note Insurer, 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(a), 4.4, 4.5 or 4.6 if not otherwise such a
breach.
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SECTION 4.8. Servicing Fee. The "Servicing Fee" for each Payment Date
prior to the First LSE Payment Date shall be equal to the result of one twelfth
times 2.00% of the Pool Balance as of the close of business on the last day of
the second preceding Collection Period; provided, however, that with respect to
the first Payment Date the Servicer will be entitled to receive a Servicing Fee
equal to the result of one-twelfth times 2.00% of the Pool Balance as of the
Cutoff Date. The "LSE Servicing Fee" for each Payment Date after the first LSE
Payment Date shall be equal to $1.75 per Receivable in the Trust as of the last
day of the related Collection Period. On the First LSE Payment Date, the
Servicing Fee payable to the outgoing Servicer shall be equal to the Outgoing
Servicer Fee and the LSE Servicing Fee payable to Loan Servicing Enterprise
shall be equal to the First LSE Servicing Fee. The Servicing Fee and the LSE
Servicing Fee shall also include all late fees, prepayment charges including, in
the case of a Rule of 78's 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. The LSE Servicing Fee also shall include
expenses for special forms including late notices, specially requested letters
and notices, freight, tapes, postage on special forms, letters and late notices,
communications, lock-box charges and any other expenses approved by the
Controlling Party. If the Standby Servicer becomes the successor Servicer, the
"Servicing Fee" payable to the Standby Servicer as successor Servicer shall be
determined in accordance with the Servicing and Lockbox Processing Assumption
Agreement.
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 Owner
Trustee, the Note Insurer, the Rating Agencies and the Seller a Servicer's
Certificate containing all information necessary to make the distributions
pursuant to Section 5.7 (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 Noteholders and the Note Insurer pursuant to Sections 5.8(b) and for the
Owner Trustee to send statements to Certificateholders pursuant to Section
5.5(c) of the Trust Agreement. 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 Owner Trustee, the Trustee, the
Standby Servicer, the Note Insurer and each Rating Agency, on or before July 31
of each year beginning July 31, 1999, 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, 1999) 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
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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 Noteholder and the Owner Trustee shall forward a copy to each
Certificateholder.
(b) The Servicer shall deliver to the Owner Trustee, the Trustee, the
Standby Servicer, the Note Insurer, 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
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. Unless Loan
Servicing Enterprise is the Servicer, 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 Standby Servicer, the
Note Insurer and each Rating Agency, on or before July 31 of each year beginning
July 31, 1999, 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, 1999), addressed to the Board of Directors of the Servicer, to
the Owner Trustee, the Trustee, the Standby Servicer and to the Note Insurer, 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 and the
stated amount of Liquidated Receivables, if any, contained in the Servicer
Certificates were found to be accurate. In the event such firm requires the
Trustee, the Owner Trustee and/or the Standby Servicer to agree to the
procedures performed by such firm, the Servicer shall direct the Trustee, the
Owner Trustee and/or the Standby Servicer, as applicable, in writing to so
agree; it being understood and agreed that the Trustee, the Owner Trustee and/or
the Standby Servicer will deliver such letter of agreement in conclusive
reliance upon the direction of the Servicer, and neither the Trustee, the Owner
Trustee nor the Standby Servicer makes any independent
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inquiry or investigation as to, and shall have no obligation or liability in
respect of, the sufficiency, validity or correctness of such procedures.
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. Annual Independent Accountants' Report. If Loan Servicing
Enterprise is the Servicer, 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 to deliver to
the Issuer, the Trustee, the Backup Servicer, the Note Insurer and each Rating
Agency, on or before April 30 (or 120 days after the end of the Servicer's
fiscal year, if other than December 31) of each year, beginning on April 30,
1999, with respect to the twelve months ended the immediately preceding December
31 (or other applicable date) (or such other period as shall have elapsed from
the LSE Assumption Date to the date of such certificate), a statement (the
"Accountants' Report") addressed to the management of the Servicer, to the
Issuer, the Trustee, the Backup Servicer and to the Note Insurer, to the effect
that such firm has audited the books and records of the Servicer and issued its
report thereon, and that (1) such audit 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) the firm is independent of the Servicer
within the meaning of the Code of Professional Ethics of the American Institute
of Certified Public Accountants, and (3) certain agreed upon procedures were
performed pursuant to "SAS 70" with respect to certain randomly selected
Servicer's Certificates and except as disclosed in the Accountants' Report, no
exceptions or errors in the Servicer's Certificates were found.
SECTION 4.13. Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to representatives of the Trustee, the
Owner Trustee, the Standby Servicer and the Note Insurer reasonable access to
the documentation regarding the Receivables. In each case, such 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 4.14. 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 Note Insurer of any discrepancies on or before the second Business
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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.
(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' Principal
Distributable Amount, the Class A-1 Noteholders' Interest Distributable
Amount, the Class A-2 Noteholders' Interest Distributable Amount, the
Class A-3 Noteholders' Interest Distributable Amount, the Class A-4
Noteholders' Interest Distributable Amount, the Class A-5 Noteholders'
Interest Distributable Amount, the Certificateholders' Principal
Distributable Amount, the Standby Fee, the Servicing Fee, the Trustee
Fee, the Collateral Agent 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 4.15. 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 March 31, 1999, which term
shall be extendible by the Note Insurer for successive quarterly terms ending on
each successive March 31, June 30, September 30 and
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December 31 (or, at the discretion of the Note Insurer 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 such
time as the Notes have been paid in full, all amounts due to the
Certificateholders have been paid and until the termination of the Trust. Each
such notice (including each notice pursuant to standing instructions, which
shall be deemed delivered at the end of successive terms for so long as such
instructions are in effect) (a "Servicer Extension Notice") shall be delivered
by the Note Insurer to the Trustee 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 an Insurer 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 Insurer Default has been
cured unless such appointment is terminated sooner in accordance with the terms
of this Agreement). Until such time as an Insurer Default shall have occurred
and be continuing, the Trustee agrees that if as of the fifteenth day prior to
the last day of any term of the Servicer, the Trustee shall not have received
any Servicer Extension Notice from the Note Insurer, the Trustee shall, within
five days thereafter, give written notice of such non-receipt to the Note
Insurer.
SECTION 4.16. 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.
SECTION 4.17. Costs and Expenses.
After the LSE Assumption Date, except as set forth in Section
9.4(b)(i)(D), all costs and expenses incurred by the Loan Servicing Enterprise
as Servicer in carrying out its duties hereunder shall be paid or caused to be
paid by Loan Servicing Enterprise out of the Servicing Fee to be paid to LSE as
Servicer pursuant to Section 5.7(b).
ARTICLE V
TRUST ACCOUNTS; DISTRIBUTIONS;
STATEMENTS TO SECURITYHOLDERS
SECTION 5.1. Establishment of Trust Accounts.
(a) (i) The Trustee, on behalf of the Securityholders and the Note
Insurer, 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 Note Insurer.
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(ii) 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 Note Insurer. The Note Distribution Account shall initially
be established with the Trustee.
(iii) The Trustee, on behalf of the Noteholders and the Note
Insurer, shall establish and maintain in its own name an Eligible Account (the
"Pre-Funding 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 Note Insurer.
(b) Funds on deposit in the Collection Account, the Pre-Funding
Account, the Note Distribution Account and the Interest Reserve Account
(collectively, the "Trust 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 or, after the LSE Assumption
Date, by the Controlling Party (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 Note
Insurer, as applicable. Other than as permitted by the Rating Agencies and the
Note Insurer, funds on deposit in any Trust 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. If Loan Servicing Enterprise becomes the successor Servicer hereunder,
Loan Servicing Enterprise shall not be responsible for directing the investment
of funds in any Trust Account.
(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.
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(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 Day; or (ii) an 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 Trust Accounts) and all such
funds, investments, proceeds and income shall be part of the Trust Property.
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/or
the Certificateholders, as the case may be, and the Note Insurer. If at any time
any of the Trust Accounts ceases to be an Eligible Account, the Servicer with
the consent of the Note Insurer 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 and the Owner Trustee 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.
(g) With respect to the Trust Account Property, the Trustee agrees
that:
(A) any Trust Account Property that is held in deposit
accounts shall be held solely in 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 or "certificated securities" shall be delivered to the Trustee
in accordance with paragraph (i)(a) or (ii)(b), as applicable, of the
definition of "Delivery" and shall be held, pending maturity or
disposition, solely by the Trustee or (x) in any jurisdiction governed
by the 1978 Revision to Article 8 of the UCC, a financial intermediary
(as such term is defined in Section 8-313(4) of the UCC) acting solely
for the Trustee or (y) in any jurisdiction that has adopted the 1994
Revision to Article 8 of the UCC, a securities intermediary (as such
term is defined in Section 8-102(a)(14) of the UCC) acting on behalf of
the Trustee;
(C) any Trust Account Property that is a book-entry security
held through the Federal Reserve System pursuant to Federal book-entry
regulations shall be delivered in accordance with paragraph (i)(b) or
(ii)(c), as applicable, of the definition of "Delivery" and shall be
maintained by the Trustee, pending maturity or disposition, through
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continued book-entry registration of such Trust Account Property as
described in such paragraph;
(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 (i)(c) or (ii)(d), as applicable, 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
nominee's) ownership of such security; and
(E) The Servicer shall have the power, revocable by the Note
Insurer or, with the consent of the Note Insurer 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
their 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 and the Note Insurer.
(b) 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.
(c) On the Determination Date for each of the December 1998 and January
1999 Payment Dates, to the extent that the Servicer's Certificate indicates that
the funds on deposit in the Interest Reserve Account are in excess of the
Requisite Reserve Amount for such Payment Date, the Trustee will withdraw such
excess from the Interest Reserve Account and deposit such amount in the
Collection Account for distribution pursuant to Section 5.7(b) on the related
Payment Date. Any amounts remaining in the Interest Reserve Account on the first
Payment Date occurring on or after 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 distribution to the Seller, the
Noteholders, the Certificateholders and the Note Insurer will have no further
rights in, or claims to, such amounts.
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)(ii) upon certification by the Servicer
of such amounts and the provision of such information to the Trustee and the
Note Insurer as may be necessary in
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the opinion of the Note Insurer to verify the accuracy of such certification. In
the event that the Note Insurer has not received evidence satisfactory to it of
the Servicer's entitlement to reimbursement pursuant to this Section, the Note
Insurer shall (unless an Insurer 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 prior thereto the Servicer 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 Receivable 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 to make the payments required to be made on the related Payment
Date pursuant to Sections 5.7(b)(i) through (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 Note Insurer, and the Servicer, by hand delivery,
telex or facsimile transmission, a written notice (a "Deficiency Notice")
specifying 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) through (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.
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 or cause to be
deposited therein all amounts to be paid under Section 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
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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.
SECTION 5.7. Distributions.
(a) On each Payment Date during the Funding Period, the Trustee (based
on the information contained in the Servicer's Certificate delivered on the
related Determination Date) shall make the following transfers and
distributions:
(i) from the Interest Reserve Account to the Collection
Account, in immediately available funds, the amount withdrawn from the
Interest Reserve Account pursuant to Section 5.2(c) with respect to
such Payment 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 Standby Servicer, from the Total Distribution
Amount, any amount deposited in the Collection Account pursuant to
Section 5.5(a) and any amount deposited in the Collection Amount
pursuant to Section 5.12(a) in respect of Standby Fees, so long as CPS
is the Servicer and Norwest Bank Minnesota, National Association is the
Standby Servicer, the Standby Fee and all unpaid Standby Fees from
prior Collection Periods;
(ii) to the Backup Servicer, from the Total Distribution
Amount (as such Total Distribution Amount has been reduced by payments
pursuant to clause (i) above, any amount deposited in the Collection
Account pursuant to Section 5.5(a) and any amount deposited in the
Collection Amount pursuant to Section 5.12(a) in respect of Backup
Servicing Fees, so long as the Backup Servicer is not the Servicer, the
Backup Servicing Fee and all unpaid Backup Servicing Fees from prior
Collection Periods;
(iii) to the Servicer, from the Total Distribution Amount (as
such Total Distribution Amount has been reduced by payments pursuant to
clauses (i) through (iii) above), any amount deposited in the
Collection Account pursuant to Section 5.5(a) and any amount deposited
in the Collection Account pursuant to Section 5.12(a) in respect of
Servicing Fees or LSE Servicing Fee, if applicable, the Servicing Fee
and all unpaid Servicing Fees and LSE Servicing Fees from prior
Collection Periods and all reimbursements to which the Servicer is
entitled pursuant to Section 5.3;
(iv) to any successor Servicer from the Total Distribution
Amount (as such Total Distribution Amount has been reduced by payments
pursuant to clauses (i) through (iii) above), any amount deposited in
the Collection Account pursuant to Section 5.5(a) and any amount
deposited in the Collection Account pursuant to Section 5.12(a) in
respect of Servicing Fees, to the extent not previously paid by the
predecessor Servicer pursuant to
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this Agreement, reasonable transition expenses (up to a maximum of
$75,000 for all such expenses) incurred in becoming the successor
Servicer;
(v) to the Trustee and the Owner Trustee, pro rata, from the
Total Distribution Amount (as such Total Distribution Amount has been
reduced by payments pursuant to clauses (i) through (iv) above), any
amount deposited in the Collection Account pursuant to Section 5.5(a)
and any amount deposited in the Collection Account pursuant to Section
5.12(a) in respect of Trustee Fees, the Trustee Fees and reasonable
out-of-pocket expenses thereof (including counsel fees and expenses)
and all unpaid Trustee Fees and unpaid reasonable out-of-pocket
expenses (including 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 and the
Owner Trustee pursuant to this clause (v) and expenses payable to the
Collateral Agent pursuant to clause (vi) below shall be limited to a
total of $50,000 per annum;
(vi) to the Collateral Agent, from the Total Distribution
Amount (as such Total Distribution Amount has been reduced by payments
pursuant to clauses (i) through (v) above), any amount deposited in the
Collection Account pursuant to Section 5.5(a) and any amount deposited
in the Collection Account pursuant to Section 5.12(a) in respect of
fees and expenses of the Collateral Agent, all fees and expenses
payable to the Collateral Agent with respect to such Payment 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) and any amount
deposited in the Collection Account pursuant to Section 5.5(a) and
Sections 5.12(a)(iii), the Noteholders' Interest Distributable Amount
for such Payment Date;
(viii) 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 (vii) above) and any amount
deposited in the Collection Account pursuant to Section 5.5(a) and
Section 5.12(a)(ii) and (iii), the Noteholders' Principal Distributable
Amount plus the Noteholders' Principal Carryover Shortfall, if any;
(ix) to the Note Insurer, from the Total Distribution Amount
(as such Total Distribution Amount has been reduced by payments made
pursuant to clauses (i) through (viii) above), amounts advanced
pursuant to Section 9.4(b)(i)(D), and any amount deposited in the
Collection Account pursuant to Section 5.5(a), any amounts owing to the
Note Insurer under this Agreement and the Insurance Agreement and not
paid;
(x) to the Collateral Agent, for deposit into the Spread
Account, the remaining Total Distribution Amount, if any;
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provided, however, that, (A) following an acceleration of the Notes or, (B) if
an Insurer Default shall have occurred and be continuing and an Event of Default
pursuant to Sections 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, the Total Distribution Amount
shall be paid pursuant to Section 5.6(a) 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 Notes the Class A Interest
Distributable Amount; provided that if there are not sufficient funds
in the Note Distribution Account to pay the entire amount then due on
each Class of Notes, the amount in the Note Distribution Account shall
be applied to the payment of such interest on each Class of Notes pro
rata on the basis of the amount of accrued and unpaid interest due on
each Class of Notes;
(ii) to the Class A-1 Noteholders on account of the Class A-1
Prepayment Amount, to the Class A-2 Noteholders on account of the Class
A-2 Prepayment Amount, to the Class A-3 Noteholders on account of the
Class A-3 Prepayment Amount, to the Class A-4 Noteholders on account of
the Class A-4 Prepayment Amount, to the Class A-5 Noteholders on
account of the Class A-5 Prepayment Amount, pro rata, on the basis of
the Class A-1 Prepayment Amount, the Class A-2 Prepayment Amount, the
Class A-3 Prepayment Amount, the Class A-4 Prepayment Amount, the Class
A-5 Prepayment Amount and any amounts deposited in the Note
Distribution Account pursuant to Section 5.10(b);
(iii) concurrently, to the Holders of (x) the Sequential Pay
Notes, the Sequential Pay Noteholders' Percentage of the Noteholders'
Principal Distributable Amount, sequentially, first to pay principal of
the Class A-1 Notes until the outstanding principal amount of the Class
A-1 Notes has been reduced to zero, then to pay principal of the Class
A-2 Notes until the outstanding principal amount of the Class A-2 Notes
has been reduced to zero and then to pay principal of the Class A-3
Notes until the outstanding principal amount of the Class A-3 Notes has
been reduced to zero and (y) the Class A-4 Notes, the Class A-4
Noteholders' Percentage of the Noteholders' Principal Distributable
Amount; and
(iv) then, on the Payment Date on which the outstanding
principal amount of the Sequential Pay Notes and the Class A-4 Notes is
reduced to zero, the remaining portion
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of the Noteholders' Principal Distributable Amount to pay principal of
the Class A-5 Notes and then, on each Payment Date thereafter, the
Noteholders' Principal Distributable Amount to pay principal of the
Class A-5 Notes until the outstanding principal amount of the Class A-5
Notes has been reduced to zero.
(b) On each Payment Date, the Trustee shall send to each Noteholder the
statement or statements provided to the Trustee by the Servicer pursuant to
Section 5.11 hereof on such Payment Date.
(c) 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
5.8. 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, after consultations with experienced counsel, the Trustee determines that
there is a reasonable likelihood 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 (c).
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.
(d) 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 2.12 of the Indenture, 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. [RESERVED].
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 $37,352,728.96 from the proceeds of the sale
of the Notes. On each Subsequent Transfer Date, the Servicer shall instruct the
Trustee to withdraw from the Pre-Funding Account (i) an amount equal to 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 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.
(c) All Pre-Funding Earnings will be deposited in the Collection
Account on each Payment Date and deemed to be part of the Total Distribution
Amount.
SECTION 5.11. Statements to Securityholders. (a) On or prior to each
Payment Date, the Servicer shall provide to the Trustee and the Owner Trustee
(with a copy to the Note Insurer and the Rating Agencies) for the Trustee and
Owner Trustee to forward to each Securityholder 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
the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the
Class A-4 Notes and the Class A-5 Notes, respectively;
(ii) the amount of such distribution allocable to interest on
or with respect to the Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes, the Class A-4 Notes and the Class A-5 Notes, respectively;
(iii) the amount of such distribution payable out of amounts
withdrawn from the Spread Account or pursuant to a claim on the Note
Policy;
(iv) the Pool Balance as of the close of business on the last
day of the preceding Collection Period;
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(v) the aggregate outstanding principal amount of each Class
of Notes, the Note Pool Factor for each Class of Notes after giving
effect to payments allocated to principal reported under clause (i)
above;
(vi) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period, and the amount of any unpaid
Servicing Fees and the change in such amount from the prior Payment
Date;
(vii) the amount of each of the Standby Fee, the Trustee Fee
and the Collateral Agent Fee paid to the Standby Servicer, the Trustee
and the Collateral Agent, as applicable, with respect to the related
Collection Period, and the amount of any unpaid Standby Fees, Trustee
Fees and Collateral Agent Fees and the change in such amount from the
prior Payment Date;
(viii) the Class A-1 Noteholders' Interest Carryover
Shortfall, the Class A-2 Noteholders' Interest Carryover Shortfall, the
Class A-3 Noteholders' Interest Carryover Shortfall, the Class A-4
Noteholders' Interest Carryover Shortfall, the Class A-5 Noteholders'
Interest Carryover Shortfall and the Noteholders' Principal Carryover
Shortfall;
(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 Receivable Payments for (a) 31 to 59 days, (b) 60 to 89 days,
(c) 90 to 119 days, (d) 120 to 149 days, (e) 150 to 179 days, (f) 180
to 209 days and (g) 210 days or more;
(x) the amount of the aggregate Realized Losses, if any, for
the second preceding Collection Period;
(xi) the amount of any payments made with respect to the
related Payment Date pursuant to Sections 5.12(a)(i), (ii) and (iii),
respectively;
(xii) 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;
(xiii) for Payment Dates during the Funding Period (if any),
the remaining Pre-Funded Amount;
(xiv) 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; and
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(xv) the cumulative amount of Realized Losses, from the
Initial Cutoff Date to the last day of the related Collection Period.
Each amount set forth pursuant to paragraphs (i), (ii), (iii), (vi), (vii),
(viii) and (xi) above shall be expressed as a dollar amount per $1,000 of the
initial principal balance of the Notes (or Class thereof) or Certificates, as
applicable.
(b) Within 60 days after the end of each calendar year, the Servicer
shall deliver to the Trustee a statement setting forth the amounts paid during
such preceding calendar year in respect of (i) principal of the Notes, (ii)
interest on the Notes and (iii) Servicing Fees. The Trustee shall mail to each
person who at any time during such preceding calendar year shall have been a
Noteholder of record and received any payment in respect of such Notes.
(c) Within ten days of each Payment Date, the Servicer (or after the
Assumption Date, the Issuer) shall cause to be filed with the United States
Securities and Exchange Commission under cover of Form 8-K the statement
prepared for Securityholders pursuant to Section 5.11(a). The Servicer (or after
the Assumption Date, the Issuer) shall provide notice thereof to the Trustee
within five days of such filing. If the Trustee shall not have received such
notice within eleven days after any Payment Date, the Trustee shall notify the
Servicer (or after the Assumption Date, the Issuer) of such failure. If after
such notification to the Servicer (or after the Assumption Date, the Issuer) the
Trustee shall not have received notice of the Servicer's (or after the
Assumption Date, the Issuer's) compliance with this Section 5.11(c) as of the
close of business on the fifteenth day after a Payment Date, the Trustee shall
immediately notify the Controlling Party of such failure. The Servicer (if CPS
is not the Servicer) shall deliver to the Owner Trustee a copy of such statement
on each Determination Date.
(d) Within 60 days after the close of each calendar year, the Servicer
(or after the Assumption Date, the Issuer) shall cause to be filed with the
United States Securities and Exchange Commission an annual report with respect
to the Trust on Form 10-K, which shall contain the information required by
Section 5.11(b). The Servicer (or after the Assumption Date, the Issuer) shall
provide notice thereof within five days of such filing. If the Trustee shall not
have received such notice within 65 days after the end of any calendar year, the
Trustee shall notify the Servicer (or after the Assumption Date, the Issuer) of
such failure. If after such notification to the Servicer the Trustee shall not
have received notice of the Servicer's (or after the Assumption Date, the
Issuer's) compliance with this Section 5.11(d) as of the close of business on
the 90th day after the close of the calendar year, the Trustee shall immediately
notify the Controlling Party of such failure.
SECTION 5.12. Optional Deposits by the Note Insurer; Notice of Waivers.
(a) The Note Insurer shall at any time, and from time to time, with respect to a
Payment Date, have the option (but shall not be required, except as provided in
Section 6.1(a)) to deliver amounts to the Trustee for deposit into the
Collection Account for any of the following purposes: (i) to provide funds in
respect of the payment of fees or expenses of any provider of services to the
Trust with respect to such Payment Date, (ii) to distribute as a component of
the Class A Noteholders'
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Principal Distributable Amount to the extent that the principal balance of the
Notes as of the Determination Date preceding such Payment Date exceeds the Class
A Noteholders' Percentage of the Pool Balance as of such Determination Date, or
(iii) to include such amount as part of the Total Distribution Amount for such
Payment Date to the extent that without such amount a draw would be required to
be made on the Policy.
(b) If the Note Insurer waives the satisfaction of any of the events
that might trigger an event of default under the Insurance Agreement and so
notifies the Trustee in writing pursuant to Section 5.02(d) of the Insurance
Agreement, the Trustee shall notify ▇▇▇▇▇'▇ of such waiver.
ARTICLE VI
THE NOTE POLICY
SECTION 6.1. Claims Under Note Policy.
(a) In the event that the Trustee has delivered a Deficiency Notice
with respect to any Determination Date pursuant to Section 5.5 hereof, the
Trustee shall on the related Draw Date determine whether the application of
funds in accordance with Section 5.7(b), together with any amounts deposited by
the Note Insurer pursuant to Section 5.12 and the application of any Deficiency
Claim Amount pursuant to Section 5.5 would result in a shortfall in amounts
distributable pursuant to Sections 5.7(b)(vi) and 5.7(b)(vii) on any Payment
Date (any such shortfall, a "Note Policy Claim Amount"). If the Note Policy
Claim Amount for such Payment Date is greater than zero, the Trustee shall
furnish to the Note Insurer no later than 12:00 noon New York City time on the
related Draw Date a completed Notice of Claim (as defined in clause (b) below)
in the amount of the Note Policy Claim Amount. Amounts paid by the Note Insurer
pursuant to a claim submitted under this Section 6.1. shall be deposited by the
Trustee into the Note Distribution Account for payment to Noteholders on the
related Payment Date.
(b) Any notice delivered by the Trustee to the Note Insurer pursuant to
Section 6.1(a) shall specify the Note Policy Claim Amount claimed under the Note
Policy and shall constitute a "Notice of Claim" (as defined in the Note Policy)
under the Note Policy. In accordance with the provisions of the Note Policy, the
Note Insurer is required to pay to the Trustee the Note Policy Claim Amount
properly claimed thereunder by 12:00 noon, New York City time, on the later of
(i) the third Business Day (as defined in the Note Policy) following receipt on
a Business Day of the Notice of Claim, and (ii) the applicable Payment Date. Any
payment made under the Note Policy by the Note Insurer shall be applied solely
to the payment of the Notes, and for no other purpose.
(c) The Trustee shall (i) receive as attorney-in-fact of each
Noteholder any Note Policy Claim Amount from the Note Insurer and (ii) deposit
the same in the Note Distribution Account for distribution to Noteholders. Any
and all Note Policy Claim Amounts disbursed by the Trustee from claims made
under the Note Policy shall not be considered payment by the Trust or
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from the Series 1998-4 Spread Account with respect to such Notes, and shall not
discharge the obligations of the Trust with respect thereto. The Note Insurer
shall, to the extent it makes any payment with respect to the Notes, become
subrogated to the rights of the recipients of such payments to the extent of
such payments. Subject to and conditioned upon any payment with respect to the
Notes by or on behalf of the Note Insurer, the Trustee and the Noteholders shall
assign to the Note Insurer all rights to the payment of interest or principal
with respect to the Notes which are then due for payment to the extent of all
payments made by the Note Insurer, and the Note Insurer may exercise any option,
vote, right, power or the like with respect to the Notes to the extent that it
has made payment pursuant to the Note Policy. To evidence such subrogation, the
Note Registrar (as defined in the Indenture) shall note the Note Insurer's
rights as subrogee upon the register of Noteholders upon receipt from the Note
Insurer of proof of payment by the Note Insurer of any Noteholders' Interest
Distributable Amount or Noteholders' Principal Distributable Amount. The
foregoing subrogation shall in all cases be subject to the rights of the
Noteholders to receive all Scheduled Payments (as defined in the Note Policy) in
respect of the Notes.
(d) The Trustee shall keep a complete and accurate record of all funds
deposited by the Note Insurer into the Note Distribution Account and the
allocation of such funds to payment of interest on and principal paid in respect
of any Note. The Note Insurer shall have the right to inspect such records at
reasonable times upon one Business Day's prior notice to the Trustee.
(e) The Trustee shall be entitled to enforce on behalf of the
Noteholders the obligations of the Note Insurer under the Note Policy.
Notwithstanding any other provision of this Agreement or any Basic Documents,
the Noteholders are not entitled to make any claims under the Note Policy or
institute proceedings directly against the Note Insurer.
SECTION 6.2. Preference Claims.
(a) In the event that the Trustee has received a certified copy of an
order of the appropriate court that any Scheduled Payment (as defined in the
Note Policy) paid on a Note has been avoided in whole or in part as a preference
payment under applicable bankruptcy law, the Trustee shall so notify the Note
Insurer, shall comply with the provisions of the Note Policy to obtain payment
by the Note Insurer of such avoided payment, and shall, at the time it provides
notice to the Note Insurer, notify Holders of the Notes by mail that, in the
event that any Noteholder's payment is so recoverable, such Noteholder will be
entitled to payment pursuant to the terms of the Note Policy. The Trustee shall
furnish to the Note Insurer its records evidencing the payments of principal of
and interest on Notes, if any, which have been made by the Trustee and
subsequently recovered from Noteholders, and the dates on which such payments
were made. Pursuant to the terms of the Note Policy, the Note Insurer will make
such payment on behalf of the Noteholder to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the order (as defined in
the Note Policy) and not to the Trustee or any Noteholder directly (unless a
Noteholder has previously paid such payment to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy, in which case the Note Insurer
will
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make such payment to the Trustee for distribution to such Noteholder upon proof
of such payment reasonably satisfactory to the Note Insurer).
(b) The Trustee shall promptly notify the Note Insurer of any
proceeding or the institution of any action (of which the Trustee has actual
knowledge) seeking the avoidance as a preferential transfer under applicable
bankruptcy, insolvency, receivership, rehabilitation or similar law (a
"Preference Claim") of any distribution made with respect to the Notes. Each
Holder, by its purchase of Notes, and the Trustee hereby agrees that so long as
an Insurer Default shall not have occurred and be continuing, the Note Insurer
may at any time during the continuation of any proceeding relating to a
Preference Claim direct all matters relating to such Preference Claim including,
without limitation, (i) the direction of any appeal of any order relating to any
Preference Claim and (ii) the posting of any surety, supersedeas or performance
bond pending any such appeal at the expense of the Note Insurer, but subject to
reimbursement as provided in the Insurance Agreement. In addition, and without
limitation of the foregoing, as set forth in Section 6.1(c), the Note Insurer
shall be subrogated to, and each Noteholder and the Trustee hereby delegate and
assign, to the fullest extent permitted by law, the rights of the trustee and
each Noteholder in the conduct of any proceeding with respect to a Preference
Claim, including, without limitation, all rights of any party to an adversary
proceeding action with respect to any court order issued in connection with any
such Preference Claim.
SECTION 6.3. Surrender of Note Policy. The Trustee shall surrender the
Note Policy to the Note Insurer for cancellation upon the expiration of such
policy in accordance with the terms thereof.
ARTICLE VII
[RESERVED]
ARTICLE VIII
THE SELLER
SECTION 8.1. Representations of Seller. The Seller makes the following
representations on which the Note Insurer shall be deemed to have relied in
executing and delivering the Note Policy 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
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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.
(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 the Basic Documents, 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
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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) Tax Returns. 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 ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
SECTION 8.2. [RESERVED].
SECTION 8.3. 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 Note Insurer, the Standby Servicer 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, the Standby Servicer and the Note Insurer and except any
taxes to which the Owner Trustee, or the Trustee may otherwise be subject),
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 Notes and the Certificates) 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 Note Insurer and the Securityholders 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.
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(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 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 8.4. 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 Note Insurer 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 occurred and be continuing,
(iii) the Seller shall have delivered to the Owner Trustee, the Trustee and the
Note Insurer 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 Note Insurer 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 the Other Conveyed Property 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 consummation of
the transactions referred to in clauses (a), (b) or (c) above.
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SECTION 8.5. 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 8.6. 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 owned by the Seller
or any Affiliate thereof, during the time such Notes are so owned by them, shall
be without voting rights for any purpose set forth in the Basic Documents and
the Notes shall not be entitled to the benefits of the Note Policy. The Seller
shall notify the Owner Trustee, the Trustee and the Note Insurer promptly after
it or any of its Affiliates become the owner of a Certificate or a Note.
ARTICLE IX
THE SERVICER
SECTION 9.1. Representations of Servicer. The Servicer makes the
following representations on which the Note Insurer shall be deemed to have
relied in executing and delivering the Note Policy 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 Servicer has been duly
organized and is validly existing as a corporation and in good standing under
the laws of the State of California, 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
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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 the Basic Documents to which it is a
party and to carry out its terms and their terms, respectively, and the
execution, delivery and performance of this Agreement and the Basic Documents to
which it is a party have been duly authorized by the Servicer by all necessary
corporate action.
(d) Binding Obligation. This Agreement and the Basic Documents to which
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 the Basic Documents, or violate
any law, order, rule or regulation applicable to the Servicer of any court or of
any federal or 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.
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(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: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
(j) Year 2000 Compliance. The Servicer covenants that its computer and
other systems used in servicing the Receivables will be modified to operate in a
manner such that on and after January 1, 2000 (i) the Servicer can service the
Receivables in accordance with the terms of this Agreement and (ii) the Servicer
can operate its business in substantially the same manner as it is operating on
the date hereof. The Servicer shall certify in writing to the Standby Servicer
no later than June 30, 1999 that it is in compliance with this Section 9.1(j).
This Section 9.1(j) shall not be applicable to Loan Servicing Enterprise if Loan
Servicing Enterprise becomes the successor Servicer.
SECTION 9.2. 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 Note
Insurer, and the Noteholders from and against any and all costs,
expenses, losses, damages, claims and liabilities, arising out of or
resulting from the use, ownership, repossession or operation by the
Servicer or any Affiliate thereof of any Financed Vehicle;
(ii) The Servicer (unless Loan Servicing Enterprise is the
Servicer) shall indemnify, defend and hold harmless the Trust, the
Trustee, the Owner Trustee, the Standby Servicer, the Note Insurer, and
the Noteholders 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 Notes)
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
Note Insurer, their respective officers, directors, agents and
employees and the Noteholders from and against any and all costs,
expenses, losses, claims, damages, and liabilities to the extent that
such cost,
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expense, loss, claim, damage, or liability arose out of, or was imposed
upon the Trust, the Trustee, the Owner Trustee, the Standby Servicer,
the Note Insurer or the Noteholders 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 Owner 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 or
in the Trust Agreement, 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 Owner Trustee, the Standby Servicer or
the 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 Owner 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 Noteholders 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
Noteholder with the assets of a 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(c) shall in no way affect the survival
pursuant to Section 9.2(d) 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 9.3. 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,
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lease or succession, the successor or surviving entity shall be capable of
fulfilling the duties of CPS contained in this Agreement. 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 Note Insurer
and each Rating Agency. Notwithstanding the foregoing, CPS shall not merge or
consolidate 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 9.1 shall
have been breached (for purposes hereof, such representations and warranties
shall be deemed made 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
Note Insurer 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 Note Insurer 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 Owner Trustee and the Trustee, respectively, 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.
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SECTION 9.4. Limitation on Liability of Servicer, Standby Servicer and
Others.
(a) 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 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 the 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.
(b) In the event Loan Servicing Enterprise shall become successor
Servicer, it shall not be bound by any of the provisions in Sections 9.2 or 9.4.
Notwithstanding anything in this Agreement to the contrary, the liability of
Loan Servicing Enterprise for performance of its obligations as Servicer under
this Agreement shall be limited as follows:
(i) Loan Servicing Enterprise nor any of its directors or
officers or employees or agents shall be under any liability to the
Trust or the Security holders, 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 Loan Servicing Enterprise against any liability that
would otherwise be imposed by reason of a breach of this Agreement or
willful misfeasance, bad faith or gross negligence in the performance
of duties. Loan Servicing Enterprise and any director, officer,
partner, employee or agent of Loan Servicing Enterprise may rely in
good faith on the written advice of counsel or, absent actual knowledge
that such document has not been properly executed and submitted or that
the contents thereof are not true in any material respect, on any
document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising under this Agreement.
(A) Loan Servicing Enterprise shall be strictly
accountable for all payments actually received by such
parties, respectively, on the Receivables under the Contracts.
(B) In no event shall Loan Servicing Enterprise be
liable for any consequential or special damages, including,
but not limited to, damages for loss of profits, goodwill or
prospective business opportunity.
(C) All software from third parties, whether provided
by the Servicer or any party to the Agreement or another Basic
Document, is without warranty by Loan Servicing Enterprise,
which only assumes the duty to review such software and to
subject it to reasonable testing prior to use. The only
warranties made by Loan Servicing Enterprise are to perform
the obligations contained in this
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Agreement and there are no other warranties, express or
implied, including but not limited to merchantability or
fitness for a particular purpose.
(D) In the event of the assumption of servicing
duties by Loan Servicing Enterprise under this Agreement, Loan
Servicing Enterprise shall accept and rely on accounting and
operations records of the predecessor servicer, without any
obligation to audit or otherwise examine such records (except
to the extent provided in the Backup Servicing Agreement), and
neither shall have any duty, responsibility, obligation or
liability (herein the foregoing are together referred to as
"Liabilities", or individually, as a "Liability") for the acts
or omissions of the predecessor servicer. In the event that
the records of the predecessor servicer shall contain any
error, inaccuracy or omission (herein referred to together as
"Errors") and Loan Servicing Enterprise shall determine that
such Errors could cause or materially contribute to Loan
Servicing Enterprise's inability to perform its obligations
hereunder in accordance with the standard of care specified in
this Agreement and Loan Servicing Enterprise shall have relied
upon such data or information contained in such records in its
performance hereunder (herein referred to as "Continued
Errors"), Loan Servicing Enterprise shall not incur Liability
for such Errors or Continued Errors, or for any error,
inaccuracy or omission in work performed by Loan Servicing
Enterprise to the extent that such error, inaccuracy or
omission was caused by such Error in predecessor servicer's
records. In the event that Loan Servicing Enterprise becomes
aware of Errors or Continued Errors, and Loan Servicing
Enterprise determines that such Errors or Continued Errors
impair in a material respect its ability to continue
performance under this Agreement, Loan Servicing Enterprise
shall, with the prior consent of the Note Insurer (so long as
no Insurer Default shall have occurred and be continuing), use
its best efforts to reconstruct and reconcile such data as it
deems necessary at the expense of the Note Insurer (if the
Note Insurer shall have given the aforementioned consent).
Reimbursement for expenses incurred by Loan Servicing
Enterprise in connection with reconstruction of such data, or
correction of such Errors or Continued Errors shall be payable
by the Note Insurer promptly upon receipt of an invoice for
such amounts delivered by Loan Servicing Enterprise to the
Note Insurer.
(ii) Loan Servicing Enterprise shall not be bound by any of
the Basic Documents other than this Agreement and the Lockbox
Agreement.
(iii) Loan Servicing Enterprise shall not be liable for any
taxes of any kind asserted against the Trust, except for any taxes
asserted against the Trust as a result of Loan Servicing Enterprise's
gross negligence, bad faith, willful misconduct or breach of its
obligations or unlawful acts.
SECTION 9.5. 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
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receivables with the prior written consent of the Controlling Party as
determined pursuant to Section 13.15; 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.
SECTION 9.6. 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 be, and the Note Insurer (so long as an Insurer Default shall not
have occurred and be continuing) or a Class A Note Majority (if an Insurer
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
Note Insurer (unless an Insurer Default shall have occurred and be continuing).
No resignation of the Servicer shall become effective until, so long as no
Insurer Default shall have occurred and be continuing, the Standby Servicer or
an entity acceptable to the Note Insurer shall have assumed the responsibilities
and obligations of the Servicer or, if an Insurer 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 Insurer Default shall have occurred and be continuing, an
entity acceptable to the Note Insurer shall have assumed the responsibilities
and obligations of the Standby Servicer or, if an Insurer 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. Notwithstanding anything to the
contrary contained herein, if Loan Servicing Enterprise is the Servicer, the
Servicer may terminate its appointment as Servicer if it does not receive the
portion of the LSE Servicing Fee defined in the second sentence of Section 4.8
(the "Backup Fee Component"), which failure continues unremedied for a period of
90 days after receipt by the Controlling Party of written notice of such failure
and that it intends to terminate its appointment if such failure to pay is not
remedied within such 90 day period. which written notice shall explicitly state
that failure to pay the Backup Fee Component, if not cured within 90 days of the
date thereof, will give Loan Servicing Enterprise the right to terminate its
appointment as Servicer.
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ARTICLE X
DEFAULT
SECTION 10.1. 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 Noteholders 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 the Note
Insurer (unless an Insurer Default shall have occurred and be continuing) or
after discovery of such failure by a Responsible officer of the Servicer; or
(b) Failure by the Servicer to deliver to the Trustee and the Note
Insurer (so long as an Insurer Default shall not have occurred and be
continuing), 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); or
(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 Noteholders
(determined without regard to the availability of funds under the Policy), or of
the Note Insurer (unless an Insurer 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 Note Insurer or
(2) to the Servicer, the Trustee and the Note Insurer by the Holders of Notes
evidencing not less than 25% of the outstanding principal amount of the Notes
or, after the Notes have been paid in full and all outstanding Reimbursement
Obligations and other amounts due to the Note Insurer have been paid in full, by
the Holders of Certificates evidencing not less than 25% of the outstanding
principal balance of the Certificates; or
(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, marshaling 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) or the Seller shall admit in
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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
(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
Noteholders and, within 30 days after written notice thereof shall have been
given (1) to the Servicer by the Trustee or the Note Insurer or (2) to the
Servicer and to the Trustee and the Note Insurer by the Holders of Notes
evidencing not less than 25% of the outstanding principal amount of the Notes
or, after the Notes have been paid in full and all outstanding Reimbursement
Obligations and other amounts due to the Note Insurer have been paid in full, by
the Holders of Certificates evidencing not less than 25% of the outstanding
principal balance of the Certificates, 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) Failure of the Servicer (i) to perform the filing required by
Section 5.11(c) by the close of business on the fifteenth day after any Payment
Date or (ii) to perform the filing required by Section 5.11(d) by the close of
business on the 90th day after the close of any calendar year; or
(h) So long as an Insurer Default shall not have occurred and be
continuing, the Note Insurer shall not have delivered a Servicer Extension
Notice pursuant to Section 4.14; or
(i) So long as an Insurer Default shall not have occurred and be
continuing, an Insurance Agreement Event of Default shall have occurred; or
(j) A claim is made under the Note Policy.
SECTION 10.2. Consequences of a Servicer Termination Event. If a
Servicer Termination Event shall occur and be continuing, the Note Insurer (or,
if an Insurer Default shall have occurred and be continuing either the Trustee
(to the extent it has knowledge thereof) or Holders of Notes evidencing not less
than 25% of the outstanding principal amount of the Notes, by notice given in
writing to the Servicer (and to the Trustee if given by the Note Insurer or the
Noteholders) 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 outgoing 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 and responsibilities of the Standby Servicer (or such other
successor Servicer appointed by the Controlling Party under Section 10.3);
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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 that shall at the time be held
by the terminated Servicer and a computer tape in readable form as of the most
recent Business Day containing all information necessary to enable the successor
Servicer to service the Receivables and the Other Conveyed Property. All
reasonable costs and expenses (including attorneys' fees) incurred in connection
with transferring any Receivable Files to the successor Servicer and amending
this Agreement to reflect such succession as Servicer pursuant to this Section
10.2 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 Party
reasonable access to the terminated Servicer's premises at the terminated
Servicer's expense.
SECTION 10.3. 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
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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; provided, however, that the
Servicer shall not be relieved of its duties, obligations and liabilities as
Servicer until a successor Servicer has assumed such duties, obligations and
liabilities. Notwithstanding the preceding sentence, if neither the Standby
Servicer nor any other successor Servicer shall have assumed the duties,
obligations and liabilities of Servicer within 45 days of the termination,
non-extension or resignation described in this Section 10.3, the Servicer may
petition a court of competent jurisdiction to appoint any Eligible Servicer as
the successor to the Servicer. Pending appointment as successor Servicer, the
Standby Servicer (or such other Person as shall have been appointed by the Note
Insurer) 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. 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 and Lockbox Processing Assumption Agreement or, in the event that the
Note Insurer 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 therefor 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 an
Insurer Default shall have occurred and be continuing, the Standby Servicer, the
Trustee or a Class A Note Majority may petition a court of competent
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.
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(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.
SECTION 10.4. 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, the Owner
Trustee and to the Rating Agencies.
SECTION 10.5. Waiver of Past Defaults. Subject to the approval of the
Note Insurer (unless an Insurer Default shall have occurred and be continuing),
a Class A Note Majority may, on behalf of all the Securityholders, waive any
default by the Servicer in the performance of its obligations under this
Agreement and the consequences thereof (except a default in making any required
deposits to or payments from any of the Trust Accounts in accordance with the
terms of this Agreement. 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 10.6. 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 Note Insurer. 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 Sections 10.1(c) though (i) unless
notified thereof in writing by the Servicer, the Note Insurer 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 XI
TERMINATION
SECTION 11.1. Optional Purchase of All Receivables.
(a) (i) 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 shall have the option to purchase the Owner Trust Estate, other than
the Trust Accounts (with the consent of the Note Insurer if such purchase would
result in a claim on the Note Policy or would result in any amount owing to the
Note Insurer under the Insurance Agreement remaining unpaid). To exercise such
option, the Servicer shall (subject to the proviso below) deposit in the
Collection Account pursuant to Section 5.6 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
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value to be determined by an appraiser mutually agreed upon by the Servicer, the
Note Insurer and the Trustee, and shall succeed to all interests in and to the
Trust; provided, however, that the amount to be paid for such purchase shall be
sufficient to pay the full amount of principal and interest, if any, then due
and payable on the Notes.
(b) Notice of any termination of the Trust shall be given by the
Servicer, which notice shall include, among other things, the items specified in
Section 9.1(c) of the Trust Agreement, to the Owner Trustee, the Trustee, the
Note Insurer and the Rating Agencies as soon as practicable after the Servicer
has received notice thereof.
(c) 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 under this Agreement.
ARTICLE XII
ADMINISTRATIVE DUTIES OF THE SERVICER
SECTION 12.1. 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(b), 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, 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
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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 a Noteholder 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 5.1 of the Trust Agreement with respect to, among other things,
accounting and reports to Certificateholders; 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 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 (i), (ii), (iii) and (iv) below, the Trustee shall not have
withheld consent or
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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.
(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 as such 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 Trust Estate 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.
(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 12.2. 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,
the Trustee and the Note Insurer at any time during normal business hours.
SECTION 12.3. 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.
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ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.1. 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 Note Insurer (so long as no
Insurer 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 the Owner
Trustee and the Trustee, adversely affect in any material respect the interests
of any Noteholder or Certificateholder; provided, further that if an Insurer
Default has occurred and is continuing, such action shall not materially
adversely affect the interests of the Note Insurer.
This Agreement may also be amended from time to time by the parties
hereto, with the consent of the Note Insurer, the Trustee, and a Class A Note
Majority 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 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 each Class of Notes or the
Certificates, the Holders of which are required to consent to any such
amendment, without the consent of the Holders of all the outstanding Notes
affected thereby and the Holders (as defined in the Trust Agreement) of all the
outstanding Certificates affected thereby; provided, further that if an Insurer
Default has occurred and is continuing, such action shall not materially
adversely affect the interests of the Note Insurer.
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.
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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)(i)
has been delivered. The Owner 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 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 this Agreement relating to (i) the Spread
Account Supplement, the Spread Account, the Requisite Amount (as defined in the
Master Spread Account Agreement or the Spread Account Supplement), 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 Note Insurer and the 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 13.2. 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 Note Insurer, 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 Note Insurer, the Owner 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 to the Issuer, the Owner
Trustee, the Trustee and the Note Insurer, in form and substance reasonably
satisfactory to the Note Insurer, 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 Note Insurer, the Owner Trustee and the Trustee at least 60 days' prior
written notice of any relocation of its
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principal executive office if, as 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.
(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
Note Insurer 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 Note Insurer, 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 Note Insurer, the Owner Trustee
and the Trustee:
(i) promptly after the execution and delivery of this
Agreement and, if required pursuant to Section 13.1, of each amendment,
an Opinion of Counsel, in form and substance satisfactory to the Note
Insurer, stating that, in the opinion of such counsel, either (A) all
financing statements and continuation statements have been executed and
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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 13.3. Notices. All demands, notices and communications upon or
to the Seller, the Backup Servicer, 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., ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, (b) in the
case of the Servicer to Consumer Portfolio Services, Inc.,16355 Laguna Canyon,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, 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 Note Insurer, to ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ Attention: Senior Vice President, Surveillance (Telecopy: (212)
339-3547); (f) in the case of Moody's, to ▇▇▇▇▇'▇ Investors Service, Inc., ABS
Monitoring Department, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; (g) in the
case of the Backup Servicer to Loan Servicing Enterprise at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇ ▇▇▇▇▇▇▇; and (h) in the case of Standard
& Poor's Ratings Group, to Standard & Poor's, a Division of The McGraw Hill
Companies, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Asset
Backed Surveillance Department. Any notice 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 13.4. 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
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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 Note Insurer (or if an Insurer Default shall have
occurred and be continuing the Holders of Notes evidencing not less than 66% of
the principal amount of the outstanding Notes.
SECTION 13.5. 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 Owner Trustee, the Certificateholders (including the Seller), the Trustee
and the Noteholders, as third-party beneficiaries. The Note Insurer 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 Insurer Default shall have occurred
and be continuing. Except as expressly stated otherwise, any right of the Note
Insurer to direct, appoint, consent to, approve of, or take any action under
this Agreement, shall be a right exercised by the Note Insurer in its sole and
absolute discretion. The Note Insurer may disclaim any of its rights and powers
under this Agreement (but not its duties and obligations under the Note Policy)
upon delivery of a written notice to the Owner Trustee and the 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 13.6. 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
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 13.7. 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 13.8. 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 13.9. 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 13.10. 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 all right, title and interest of the
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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 13.11. 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, 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 13.12. Limitation of Liability of Owner Trustee and Trustee.
(a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by Bankers Trust (Delaware) not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Bankers Trust (Delaware) 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.
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(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 13.13. 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.
SECTION 13.14. 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 13.15. Note Insurer 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 Note Policy, has agreed that the Note
Insurer shall have certain rights hereunder for so long as no Insurer Default
shall have occurred and be continuing. So long as an Insurer Default has
occurred and is continuing, any provision giving the Note Insurer 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 Insurer Default and
such right shall instead vest in the Trustee acting, unless otherwise specified,
at the direction of a Class A Note Majority. From and after such time as the
Notes have been paid in full, any provision giving the Note Insurer or the
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,
unless otherwise specified. The Note Insurer 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 Note Insurer 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 1998-4
by BANKERS TRUST (DELAWARE),
not in its individual capacity, but solely
as Owner Trustee on behalf of the Trust
By:
Name:
Title:
CPS RECEIVABLES CORP., as Seller
By:
Name:
Title:
CONSUMER PORTFOLIO SERVICES, INC.,
as Servicer
By:
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its individual capacity, but
solely as Standby Servicer and Trustee
By:
Name:
Title:
CSC LOGIC/MSA LLP, d/b/a/ LOAN
SERVICING ENTERPRISE, as Backup Servicer
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 December 1, 1998, among THE CPS AUTO
RECEIVABLES TRUST 1998-4, a Delaware business trust (the "Issuer"), CPS
RECEIVABLES CORP., a California corporation (the "Seller"), CONSUMER PORTFOLIO
SERVICES, INC. a California corporation (the "Servicer"), LOAN SERVICING
ENTERPRISE, as Backup Servicer (the "Backup Servicer") and NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION, a national banking association, in its capacity
as Trustee (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 to the Issuer the Subsequent Receivables listed on Schedule A hereto;
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:
SECTION 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, [ ], 199[ ].
"Subsequent Transfer Date" shall mean, with respect to the Subsequent
Receivables conveyed hereby, [ ], 199[ ].
SECTION 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 Subsequent
Transfer agreement on the Subsequent Transfer Date.
SECTION 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
A-1
expressly provided in the Sale and Servicing Agreement), all right, title and
interest of the Seller in and to:
(a) all right, title and interest of the Seller in and to the
Subsequent Receivables listed in Schedule A to this Subsequent Transfer
Agreement and all monies received thereunder after the Subsequent
Cutoff Date and all Net Liquidation Proceeds received with respect to
such Subsequent Receivables after the Subsequent 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 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;
(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 securing the Subsequent Receivables or the Obligors
thereunder;
(d) 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;
(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 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 under a Subsequent Receivable 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 Subsequent Receivable;
(g) the proceeds of any and all of the foregoing;
(h) all present and future claims, demands, causes and choices
in action in respect of any or all of the foregoing and all payments on
or under and all proceeds of every kind and nature whatsoever in
respect of any or all of the foregoing, including all proceeds of the
conversion, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every kind
and other forms of obligations and receivables, instruments and other
property which at any time constitute all or part of or are included in
the proceeds of any of the foregoing.
A-2
It is the intention of the Seller that the transfer and assignment
contemplated by this Subsequent Transfer Agreement shall constitute a sale of
the Subsequent Receivables and Other Conveyed Property from the Seller to the
Issuer and the beneficial interest in and title to the Subsequent Receivables
and the Other Conveyed 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
Subsequent Transfer Agreement shall constitute a grant of a security interest in
the property referred to in this Section 3 for the benefit of the
Securityholders and the Note Insurer.
SECTION 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 Subsequent Receivables and the related 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 Subsequent Transfer 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 Subsequent Receivables and the related 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 Subsequent Transfer 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 Subsequent Transfer
Agreement effects a valid sale, transfer and assignment of the
Subsequent Receivables and the related Other Conveyed Property,
enforceable against the Seller and creditors of and purchasers from the
Seller; and this Subsequent Transfer 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,
A-3
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 Subsequent Transfer Agreement and the Basic
Documents and the fulfillment of the terms of this Subsequent Transfer
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 the Basic Documents, 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
Subsequent Transfer Agreement, the Securities or any of the Basic
Documents, (B) seeking to prevent the consummation of any of the
transactions contemplated by this Subsequent Transfer 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
Subsequent Transfer 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) Tax Returns. 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 ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
(j) Principal Balance. The aggregate Principal Balance of the
Subsequent Receivables listed on the supplement to Schedule A annexed
hereto and conveyed to the
A-4
Issuer pursuant to this Subsequent Transfer Agreement as of the
Subsequent Cutoff Date is $____________.
SECTION 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
Subsequent Transfer Agreement and with respect to the Subsequent
Receivables in Section 3.1 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 with respect to
the Subsequent Receivables in Section 3.1 of the Sale and Servicing
Agreement and (ii) the satisfaction of the conditions set forth in this
Section 5.
SECTION 6. Acceptance of Receivable Files by Trustee. The Trustee
acknowledges receipt of files which the Seller has represented are the
Receivable Files for the Subsequent Receivables. The Trustee has reviewed such
Receivable Files and has determined that it has received a file for each
Subsequent Receivable identified in Schedule A to this Subsequent Transfer
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.
SECTION 7. 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.
SECTION 8. 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.
SECTION 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,
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RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
A-6
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 the day and year first above written.
CPS AUTO RECEIVABLES
TRUST 1998-4
By BANKERS TRUST (DELAWARE),
not in its individual capacity, but solely
as Owner Trustee on behalf of the Trust
By ___________________________
Name:
Title:
CPS RECEIVABLES CORP., as Seller
By ___________________________
Name:
Title:
CONSUMER PORTFOLIO SERVICES, INC.,
as Servicer
By ___________________________
Name:
Title:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual capacity, but solely as
Trustee
By ___________________________
Name:
Title:
LOAN SERVICING ENTERPRISE, as Backup
Servicer
By:
Name:
Title:
A-7
EXHIBIT B
SERVICER'S CERTIFICATE
EXHIBIT C
TRUST RECEIPT
PURSUANT TO SECTION 3.5 OF
THE SALE AND SERVICING AGREEMENT
Consumer Portfolio Services, Inc., as Servicer (the "Servicer") of the
CPS Auto Receivables Trust 1998-4 (the "Trust") under the Sale and Servicing
Agreement (the "Sale and Servicing Agreement"), dated as of December 1, 1998,
among CPS Auto Receivables Trust 1998-4, CPS Receivables Corp., as Seller,
Consumer Portfolio Services, Inc., as Servicer, Loan Servicing Enterprise, as
Backup Servicer and Norwest Bank Minnesota, National Association, as Trustee and
Standby Servicer, does hereby acknowledge receipt of the documents relating to
the Receivables, each of which documents and the Receivables to which they are
related are listed on the attached Schedule 1 hereto. The Servicer furthermore
agrees to return such documents to the Trustee in accordance with the terms of
the Sale and Servicing Agreement.
IN WITNESS WHEREOF I have hereunto set my hand this __ day of ____,
19__.
CONSUMER PORTFOLIO SERVICES, INC.,
as Servicer
By:
Name:
Title:
Acknowledged By:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Trustee
By:
Name:
Title:
EXHIBIT D
SERVICING OFFICER'S CERTIFICATE
PURSUANT TO SECTION 3.5
OF THE SALE AND SERVICING AGREEMENT
The undersigned, ______________, hereby certifies that (s)he is a duly
elected and qualified officer of the Servicer, and hereby further certifies as
follows:
The Receivable described below has been fully liquidated and all
amounts required to be deposited in the Collection Account with respect to the
Receivable and the Obligor described below have been so deposited.
Servicer
Loan No.: ____________________________________
Obligor's Name: ____________________________________
Capitalized terms used herein which are not defined herein shall have
the meanings ascribed to them in the Sale and Servicing Agreement dated as of
December 1, 1998 among CPS Auto Receivables Trust 1998-4, Consumer Portfolio
Services, Inc., as servicer, CPS Receivables Corp., as seller, Loan Servicing
Enterprise, as Backup Servicer, and Norwest Bank Minnesota, National
Association, as trustee and Standby Servicer.
IN WITNESS WHEREOF, I have hereunto set my hand on and as of this ___
day of ______________, 19___.
-----------------------------
Name:
Title:
EXHIBIT E
FORM OF MONTHLY SECURITYHOLDER STATEMENT
EXHIBIT F-1
TRUSTEE'S CERTIFICATE
PURSUANT TO SECTIONS 3.2 OR 3.4 OF
THE SALE AND SERVICING AGREEMENT
Norwest Bank Minnesota, National Association, as trustee (the
"Trustee") of the CPS Auto Receivables Trust 1998-4 (the "Trust") under the Sale
and Servicing Agreement (the "Sale and Servicing Agreement"), dated as of
December 1, 1998, among the Trust, CPS Receivables Corp., as Seller, Consumer
Portfolio Services, Inc., as Servicer, Loan Servicing Enterprise, as Backup
Servicer, and Norwest Bank Minnesota, National Association, as Trustee and
Standby Servicer, does hereby sell, transfer, assign, and otherwise convey to
Consumer Portfolio Services, Inc., without recourse, representation, or
warranty, all of the Trustee's right, title, and interest in and to all of the
Receivables (as defined in the Sale and Servicing Agreement) identified in the
attached Servicer's Certificate as "Purchased Receivables," which are to be
repurchased by Consumer Portfolio Services, Inc. pursuant to Section 3.2 or
Section 3.4 of the Sale and Servicing Agreement and all security and documents
relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this __ day of ____,
19__.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By:
Name:
Title:
Exhibit F-2
TRUSTEE'S CERTIFICATE
PURSUANT TO SECTIONS 4.7 OR 11.1 OF
THE SALE AND SERVICING AGREEMENT
Norwest Bank Minnesota, National Association, as trustee (the
"Trustee") of the CPS Auto Receivables Trust 1998-4 (the "Trust") under the Sale
and Servicing Agreement (the "Sale and Servicing Agreement"), dated as of
December 1, 1998, among the Trust, CPS Receivables Corp., as Seller, Consumer
Portfolio Services, Inc., as Servicer (the "Servicer"), Loan Servicing
Enterprise, as Backup Servicer, and Norwest Bank Minnesota, National
Association, as Trustee and Standby Servicer, does hereby sell, transfer,
assign, and otherwise convey to the Servicer, without recourse, representation,
or warranty, all of the Trustee's right, title, and interest in and to all of
the Receivables (as defined in the Sale and Servicing Agreement) identified in
the attached Servicer's Certificate as "Purchased Receivables," which are to be
repurchased by the Servicer pursuant to Section 4.7 or Section 11.1 of the Sale
and Servicing Agreement and all security and documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this __ day of ____,
19__.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By:
Name:
Title:
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions....................................................1
SECTION 1.2. Other Definitional Provisions.................................27
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.1. Conveyance of Initial Receivables.............................28
SECTION 2.2. Conveyance of Subsequent Receivables..........................29
SECTION 2.3. Transfers Intended as Sales...................................32
SECTION 2.4. Further Encumbrance of Trust Property.........................33
ARTICLE III
THE RECEIVABLES
SECTION 3.1. Representations and Warranties of Seller......................33
SECTION 3.2. Repurchase upon Breach........................................39
SECTION 3.3. Custody of Receivables Files..................................40
SECTION 3.4. Acceptance of Receivable Files by Trustee.....................41
SECTION 3.5. Access to Receivable Files....................................42
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.1. Duties of the Servicer........................................43
SECTION 4.2. Collection of Receivable Payments; Modifications
of Receivables; Lockbox Agreements...........................43
SECTION 4.3. Realization Upon Receivables..................................46
SECTION 4.4. Insurance.....................................................46
SECTION 4.5. Maintenance of Security Interests in Vehicles.................47
SECTION 4.6. Additional Covenants 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
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TABLE OF CONTENTS
(continued)
Page
SECTION 4.10. Annual Statement as to Compliance, Notice of
Servicer Termination Event..................................49
SECTION 4.11. Annual Independent Accountants' Report.......................50
SECTION 4.12. Annual Independent Accountants' Report.......................51
SECTION 4.13. Access to Certain Documentation and Information
Regarding Receivables.......................................51
SECTION 4.14. Verification of Servicer's Certificate.......................51
SECTION 4.15. Retention and Termination of Servicer........................52
SECTION 4.16. Fidelity Bond................................................53
SECTION 4.17. Costs and Expenses...........................................53
ARTICLE V
TRUST ACCOUNTS; DISTRIBUTIONS;
STATEMENTS TO SECURITYHOLDERS
SECTION 5.1. Establishment of Trust Accounts...............................54
SECTION 5.2. Interest Reserve Account......................................57
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...........................................58
SECTION 5.7. Distributions.................................................58
SECTION 5.8. Note Distribution Account.....................................60
SECTION 5.9. [RESERVED]....................................................62
SECTION 5.10. Pre-Funding Account..........................................62
SECTION 5.11. Statements to Securityholders................................63
SECTION 5.12. Optional Deposits by the Note Insurer; Notice of Waivers.....65
ARTICLE VI
THE NOTE POLICY
SECTION 6.1. Claims Under Note Policy......................................65
SECTION 6.2. Preference Claims.............................................67
SECTION 6.3. Surrender of Note Policy......................................68
ARTICLE VII
[RESERVED]
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TABLE OF CONTENTS
(continued)
Page
ARTICLE VIII
THE SELLER
SECTION 8.1. Representations of Seller.....................................68
(a) Organization and Good Standing...............68
(b) Due Qualification............................68
(c) Power and Authority..........................68
(d) Valid Sale, Binding Obligations..............69
(e) No Violation.................................69
(f) No Proceedings...............................69
(g) No Consents..................................69
(h) Tax Returns..................................69
(i) Chief Executive Office.......................69
SECTION 8.2. [RESERVED]....................................................70
SECTION 8.3. Liability of Seller; Indemnities..............................70
SECTION 8.4. Merger or Consolidation of, or Assumption of the
Obligations of, Seller.......................................70
SECTION 8.5. Limitation on Liability of Seller and Others..................71
SECTION 8.6. Seller May Own Certificates or Notes..........................71
ARTICLE IX
THE SERVICER
SECTION 9.1. Representations of Servicer...................................72
(a) Organization and Good Standing...............72
(b) Due Qualification............................72
(c) Power and Authority..........................72
(d) Binding Obligation...........................72
(e) No Violation.................................72
(f) No Proceedings...............................73
(g) No Consents..................................73
(h) Taxes........................................73
(i) Chief Executive Office.......................73
SECTION 9.2. Liability of Servicer; Indemnities............................74
SECTION 9.3. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer or Standby Servicer.............75
SECTION 9.4. Limitation on Liability of Servicer, Standby
Servicer and Others..........................................76
SECTION 9.5. Delegation of Duties..........................................78
SECTION 9.6. Servicer and Standby Servicer Not to Resign...................78
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TABLE OF CONTENTS
(continued)
Page
ARTICLE X
DEFAULT
SECTION 10.1. Servicer Termination Event...................................79
SECTION 10.2. Consequences of a Servicer Termination Event.................80
SECTION 10.3. Appointment of Successor.....................................82
SECTION 10.4. Notification to Noteholders and Certificateholders...........83
SECTION 10.5. Waiver of Past Defaults......................................83
SECTION 10.6. Action Upon Certain Failures of the Servicer.................83
ARTICLE XI
TERMINATION
SECTION 11.1. Optional Purchase of All Receivables.........................84
ARTICLE XII
ADMINISTRATIVE DUTIES OF THE SERVICER
SECTION 12.1. Administrative Duties........................................84
(a) Duties with Respect to the Indenture.........84
(b) Duties with Respect to the Issuer............85
(c) Tax Matters..................................86
(d) Non-Ministerial Matters......................86
(e) Exceptions...................................86
(f) Limitation of Standby Servicer's
Obligations.................................87
SECTION 12.2. Records......................................................87
SECTION 12.3. Additional Information to be Furnished to the Issuer.........87
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.1. Amendment....................................................87
SECTION 13.2. Protection of Title to Trust.................................88
SECTION 13.3. Notices......................................................90
SECTION 13.4. Assignment...................................................91
SECTION 13.5. Limitations on Rights of Others..............................91
SECTION 13.6. Severability.................................................91
SECTION 13.7. Separate Counterparts........................................91
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TABLE OF CONTENTS
(continued)
Page
SECTION 13.8. Headings.....................................................92
SECTION 13.9. Governing Law................................................92
SECTION 13.10. Assignment to Trustee........................................92
SECTION 13.11. Nonpetition Covenants........................................92
SECTION 13.12. Limitation of Liability of Owner Trustee and Trustee.........92
SECTION 13.13. Independence of the Servicer.................................93
SECTION 13.14. No Joint Venture.............................................93
SECTION 13.15. Note Insurer as Controlling Party............................93
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TABLE OF CONTENTS
SCHEDULES
Schedule A - Schedule of Receivables
Schedule B - Location for Delivery of Receivable Files
EXHIBITS
Exhibit A - Form of Subsequent Transfer Agreement
Exhibit B - Form of Servicer's Certificate
Exhibit C - Form of Trust Receipt
Exhibit D - Form of Servicing Officer's Certificate
Exhibit E - Form of Monthly Securityholder Statement
Exhibit F-1 - Form of Trustee's Certificate Pursuant to
Section 3.2 or 3.4
Exhibit F-2 - Form of Trustee's Certificate Pursuant to
Section 4.7 or 11.1
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