Exhibit 10.35
SALE AND SERVICING
AGREEMENT
AMONG
PAGE FUNDING LLC, AS
PURCHASER,
CONSUMER PORTFOLIO SERVICES, INC. AS
SELLER AND SERVICER,
AND
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
AS
BACKUP SERVICER AND TRUSTEE,
DATED AS OF
JUNE 30, 2004
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS.............................................................................................1
SECTION 1.1. DEFINITIONS.......................................................................................1
SECTION 1.2. OTHER DEFINITIONAL PROVISIONS.....................................................................1
SECTION 1.3. CALCULATIONS......................................................................................2
SECTION 1.4. MATERIAL ADVERSE EFFECT...........................................................................2
ARTICLE II CONVEYANCE OF RECEIVABLES..............................................................................2
SECTION 2.1. CONVEYANCE OF RECEIVABLES.........................................................................2
SECTION 2.2. TRANSFERS INTENDED AS SALES.......................................................................4
SECTION 2.3. FURTHER ENCUMBRANCE OF RECEIVABLES AND OTHER CONVEYED PROPERTY....................................5
ARTICLE III THE RECEIVABLES.......................................................................................5
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF SELLER..........................................................5
SECTION 3.2. REPURCHASE UPON BREACH...........................................................................10
SECTION 3.3. CUSTODY OF RECEIVABLES FILES.....................................................................10
SECTION 3.4. ACCEPTANCE OF RECEIVABLE FILES BY TRUSTEE........................................................11
SECTION 3.5. ACCESS TO RECEIVABLE FILES.......................................................................12
SECTION 3.6. TRUSTEE TO OBTAIN FIDELITY INSURANCE.............................................................12
SECTION 3.7. TRUSTEE TO MAINTAIN SECURE FACILITIES............................................................12
ARTICLE IV ADMINISTRATION AND SERVICING OF RECEIVABLES...........................................................12
SECTION 4.1. DUTIES OF THE SERVICER...........................................................................12
SECTION 4.2. COLLECTION OF RECEIVABLE PAYMENTS; MODIFICATIONS OF RECEIVABLES; LOCKBOX AGREEMENTS..............13
SECTION 4.3. REALIZATION UPON RECEIVABLES.....................................................................14
SECTION 4.4. INSURANCE........................................................................................14
SECTION 4.5. MAINTENANCE OF SECURITY INTERESTS IN VEHICLES....................................................15
SECTION 4.6. ADDITIONAL COVENANTS OF SERVICER.................................................................15
SECTION 4.7. PURCHASE OF RECEIVABLES UPON BREACH OF COVENANT..................................................16
SECTION 4.8. SERVICING FEE....................................................................................16
SECTION 4.9. SERVICER'S CERTIFICATE...........................................................................16
SECTION 4.10. ANNUAL STATEMENT AS TO COMPLIANCE, NOTICE OF SERVICER TERMINATION EVENT.........................16
SECTION 4.11. INDEPENDENT ACCOUNTANTS' REPORTS................................................................17
SECTION 4.12. ACCOUNTANT'S REVIEW OF RECEIVABLES FILES........................................................17
SECTION 4.13. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING RECEIVABLES...........................17
SECTION 4.14. VERIFICATION OF SERVICER'S CERTIFICATE..........................................................17
SECTION 4.15. RETENTION AND TERMINATION OF SERVICER...........................................................18
SECTION 4.16. FIDELITY BOND...................................................................................19
SECTION 4.17. LIEN SEARCHES; OPINIONS AS TO TRANSFERS AND SECURITY INTERESTS..................................19
ARTICLE V ACCOUNTS; DISTRIBUTIONS; STATEMENTS TO THE NOTEHOLDER..................................................19
SECTION 5.1. ESTABLISHMENT OF PLEDGED ACCOUNTS................................................................19
SECTION 5.2. [RESERVED].......................................................................................21
SECTION 5.3. CERTAIN REIMBURSEMENTS TO THE SERVICER...........................................................21
SECTION 5.4. APPLICATION OF COLLECTIONS.......................................................................21
SECTION 5.5. RESERVE ACCOUNT..................................................................................21
SECTION 5.6. ADDITIONAL DEPOSITS..............................................................................22
SECTION 5.7. DISTRIBUTIONS....................................................................................22
SECTION 5.8. NOTE DISTRIBUTION ACCOUNT........................................................................23
SECTION 5.9. STATEMENTS TO THE NOTEHOLDER.....................................................................24
SECTION 5.10. DIVIDEND OF INELIGIBLE RECEIVABLES..............................................................25
ARTICLE VI [RESERVED]............................................................................................25
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TABLE OF CONTENTS
(CONTINUED)
ARTICLE VII THE PURCHASER........................................................................................25
SECTION 7.1. REPRESENTATIONS OF PURCHASER.....................................................................25
ARTICLE VIII THE SELLER..........................................................................................26
SECTION 8.1. REPRESENTATIONS OF SELLER........................................................................26
SECTION 8.2. ADDITIONAL COVENANTS OF THE SELLER...............................................................29
SECTION 8.3. LIABILITY OF SELLER; INDEMNITIES.................................................................29
SECTION 8.4. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF, SELLER..........................30
SECTION 8.5. LIMITATION ON LIABILITY OF SELLER AND OTHERS.....................................................30
ARTICLE IX THE SERVICER..........................................................................................30
SECTION 9.1. REPRESENTATIONS OF SERVICER......................................................................30
SECTION 9.2. LIABILITY OF SERVICER; INDEMNITIES...............................................................32
SECTION 9.3. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF THE SERVICER OR BACKUP SERVICER..33
SECTION 9.4. [RESERVED].......................................................................................34
SECTION 9.5. DELEGATION OF DUTIES.............................................................................34
SECTION 9.6. SERVICER AND BACKUP SERVICER NOT TO RESIGN.......................................................34
SECTION 9.7. REPORTING REQUIREMENTS...........................................................................34
ARTICLE X DEFAULT................................................................................................34
SECTION 10.1. SERVICER TERMINATION EVENTS.....................................................................34
SECTION 10.2. CONSEQUENCES OF A SERVICER TERMINATION EVENT....................................................35
SECTION 10.3. APPOINTMENT OF SUCCESSOR........................................................................36
SECTION 10.4. NOTIFICATION TO THE NOTEHOLDER..................................................................37
SECTION 10.5. WAIVER OF PAST DEFAULTS.........................................................................37
SECTION 10.6. ACTION UPON CERTAIN FAILURES OF THE SERVICER....................................................37
SECTION 10.7. CONTINUED ERRORS................................................................................37
ARTICLE XI MISCELLANEOUS PROVISIONS..............................................................................38
SECTION 11.1. AMENDMENT.......................................................................................38
SECTION 11.2. PROTECTION OF TITLE TO PROPERTY.................................................................38
SECTION 11.3. NOTICES.........................................................................................40
SECTION 11.4. ASSIGNMENT......................................................................................40
SECTION 11.5. LIMITATIONS ON RIGHTS OF OTHERS.................................................................40
SECTION 11.6. SEVERABILITY....................................................................................40
SECTION 11.7. SEPARATE COUNTERPARTS...........................................................................40
SECTION 11.8. HEADINGS........................................................................................40
SECTION 11.9. GOVERNING LAW...................................................................................40
SECTION 11.10. ASSIGNMENT TO TRUSTEE..........................................................................41
SECTION 11.11. NONPETITION COVENANTS..........................................................................41
SECTION 11.12. LIMITATION OF LIABILITY OF TRUSTEE.............................................................41
SECTION 11.13. INDEPENDENCE OF THE SERVICER...................................................................41
SECTION 11.14. NO JOINT VENTURE...............................................................................41
SECTION 11.15. INTENTION OF PARTIES REGARDING DELAWARE SECURITIZATION ACT.....................................41
SECTION 11.16. SPECIAL SUPPLEMENTAL AGREEMENT.................................................................42
SECTION 11.17. LIMITED RECOURSE...............................................................................42
SECTION 11.18. ACKNOWLEDGEMENT OF ROLES.......................................................................42
SECTION 11.19. TERMINATION....................................................................................42
SECTION 11.20. SUBMISSION TO JURISDICTION.....................................................................42
SECTION 11.21. WAIVER OF TRIAL BY JURY........................................................................42
SECTION 11.22. PROCESS AGENT..................................................................................43
SECTION 11.23. NO SET-OFF.....................................................................................43
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TABLE OF CONTENTS
(CONTINUED)
SECTION 11.24. NO WAIVER; CUMULATIVE REMEDIES.................................................................43
SECTION 11.25. MERGER AND INTEGRATION.........................................................................43
SCHEDULES
Schedule A - Schedule of Receivables
Schedule B - Location for Delivery of Receivable Files
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SALE AND SERVICING AGREEMENT (this "AGREEMENT") dated as of June 30,
2004, among PAGE FUNDING LLC, a Delaware limited liability company (the
"PURCHASER"), CONSUMER PORTFOLIO SERVICES, INC., a California corporation (in
its capacities as Seller, the "SELLER" and as Servicer, the "SERVICER,"
respectively), ▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION, a national banking
association (in its capacities as Backup Servicer, the "BACKUP SERVICER" and as
Trustee, the "TRUSTEE," respectively).
WHEREAS, the Purchaser desires to purchase, from time to time, a
portfolio of receivables arising in connection with motor vehicle retail
installment sale contracts acquired by Consumer Portfolio Services, Inc., from
motor vehicle dealers and independent finance companies;
WHEREAS, the Purchaser intends to finance such purchases by issuing the
Note, secured by the Receivables and the Other Conveyed Property, pursuant to
the Indenture (as defined below);
WHEREAS, the Seller is willing to sell such Receivables and the Other
Conveyed Property to the Purchaser from time to time; and
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. Capitalized terms used in this Agreement and
not otherwise defined in this Agreement, shall have the meanings set forth in
Annex A attached hereto.
SECTION 1.2. OTHER DEFINITIONAL PROVISIONS.
(a) 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.
(b) 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 U.S.
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 U.S.
generally accepted accounting principles, the definitions contained in
this Agreement or in any such instrument, certificate or other document
shall control.
(c) 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.
(d) 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."
(e) 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.
(f) 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.
SECTION 1.3. CALCULATIONS. Other than as expressly set forth herein or
in any of the other Basic Documents, all calculations of the amount of the
Servicing Fee, Backup Servicing Fee and the Trustee Fee shall be made on the
basis of a 360-day year consisting of twelve 30-day months. All calculations of
the Unused Facility Fee and the Noteholder's Monthly Interest Distributable
Amount shall be made on the basis of the actual number of days in the Accrual
Period and 360 days in the calendar year. All references to the Principal
Balance of a Receivable as of the last day of an Accrual Period shall refer to
the close of business on such day.
SECTION 1.4. MATERIAL ADVERSE EFFECT. Whenever a determination is to be
made under this Agreement whether a breach of a representation, warranty or
covenant has or could have a material adverse effect on a Receivable or the
interest therein of the Purchaser and the Noteholder (or any similar or
analogous determination), such determination shall be made by the Noteholder in
its sole and reasonable discretion.
ARTICLE II
----------
CONVEYANCE OF RECEIVABLES
-------------------------
SECTION 2.1. CONVEYANCE OF RECEIVABLES.
(a) In consideration of the Purchaser's delivery to or upon
the order of the Seller on any Funding Date of the Purchase Price
therefor, the Seller does hereby sell, transfer, assign, set over and
otherwise convey to the Purchaser, without recourse (subject to the
obligations set forth herein) all right, title and interest of the
Seller, whether now existing or hereafter arising, in, to and under:
(i) the Receivables listed in the Schedule of Receivables from
time to time;
(ii) all monies received under the Receivables on and after
the related Cutoff Date and all Net Liquidation Proceeds received with
respect to the Receivables after the related Cutoff Date;
(iii) the security interests in the Financed Vehicles granted
by Obligors pursuant to the related Contracts and any other interest of
the Seller in such Financed Vehicles, including, without limitation,
the certificates of title or, with respect to such Receivables that
finance a vehicle in the States listed in Annex B, other evidence of
title issued by the applicable Department of Motor Vehicles or similar
authority in such States, with respect to such Financed Vehicles;
(iv) any proceeds from claims on any Receivables Insurance
Policies or certificates relating to the Financed Vehicles securing the
Receivables or the Obligors thereunder;
(v) all proceeds from recourse against Dealers with respect to
the Receivables;
(vi) refunds for the costs of extended service contracts with
respect to Financed Vehicles securing the 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 Receivable or his or her obligations with
respect to a Financed Vehicle and any recourse to Dealers for any of
the foregoing;
(vii) the Receivable File related to each Receivable and all
other documents that the Seller keeps on file in accordance with its
customary procedures relating to the Receivables for Obligors of the
Financed Vehicles;
(viii) all amounts and property from time to time held in or
credited to the Collection Account or the Lockbox Account;
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(ix) all property (including the right to receive future Net
Liquidation Proceeds) that secures a Receivable that has been acquired
by or on behalf of the Purchaser pursuant to a liquidation of such
Receivable; and
(x) all present and future claims, demands, causes and choses
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 Purchaser the Receivables
and the other property and rights related thereto described in
PARAGRAPH (A) above only upon the satisfaction of each of the
conditions set forth below on or prior to the related Funding Date. In
addition to constituting conditions precedent to any purchase hereunder
and under each Assignment, the following shall also be conditions
precedent to any Advance on any Funding Date under the terms of the
Note Purchase Agreement:
(i) the Seller shall have provided the Purchaser, Trustee and
the Noteholder with an Addition Notice substantially in the form of
EXHIBIT G hereto (which shall include supplements to the Schedule of
Receivables) not later than three Business Days prior to such Funding
Date and shall have provided any information reasonably requested by
any of the foregoing with respect to the Related Receivables;
(ii) the Seller shall, to the extent required by SECTION 4.2
of this Agreement, have deposited in the Collection Account all
collections received after the Cutoff Date in respect of the Related
Receivables to be purchased on such Funding Date;
(iii) as of each Funding Date, (A) the Seller shall not be
insolvent and shall not become insolvent as a result of the transfer of
Related Receivables on such Funding 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;
(iv) the Facility Termination Date shall not have occurred;
(v) the Servicer shall have established a Lockbox Account
acceptable to the Noteholder;
(vi) each of the representations and warranties made by the
Seller pursuant to SECTION 3.1 and the other Basic Documents with
respect to the Related Receivables to be purchased on such Funding Date
shall be true and correct as of the related Funding Date and the Seller
shall have performed all obligations to be performed by it hereunder or
in any Assignment on or prior to such Funding Date;
(vii) the Seller shall, at its own expense, on or prior to the
Funding Date, indicate in its computer files that the Related
Receivables to be purchased on such Funding Date have been sold to the
Purchaser pursuant to this Agreement or an Assignment, as applicable;
(viii) the Seller shall have taken any action required to
maintain (i) the first priority perfected ownership interest of the
Purchaser in the Related Receivables and Other Conveyed Property and
(ii) the first priority perfected security interest of the Trustee in
the Collateral;
(ix) no selection procedures adverse to the interests of the
Noteholder shall have been utilized in selecting the Related
Receivables to be sold on such Funding Date;
3
(x) the addition of any such Related Receivables to be
purchased on such Funding Date shall not result in a material adverse
tax consequence to the Noteholder or the Purchaser;
(xi) the Seller shall have delivered to the Noteholder and the
Trustee an Officers' Certificate confirming the satisfaction of each
condition precedent specified in this paragraph (b);
(xii) no Funding Termination Event, Servicer Termination
Event, or any event that, with the giving of notice or the passage of
time, would constitute a Funding Termination Event or Servicer
Termination Event, shall have occurred and be continuing;
(xiii) the Trustee shall have confirmed receipt of the related
Receivable File for each Related Receivable included in the Borrowing
Base calculation and shall have delivered a copy to the Noteholder of a
Trust Receipt with respect to the Receivable Files related to the
Related Receivables to be purchased on such Funding Date;
(xiv) the Seller shall have filed or caused to be filed all
necessary UCC-l financing statements (or amendments thereto) necessary
to maintain (in each case assuming for purposes of this clause (xiv)
that such perfection may be achieved by making the appropriate
filings), or taken any other steps necessary to maintain, (1) the
first, priority, perfected ownership interest of Purchaser and (2) the
first priority, perfected security interest of the Trustee, with
respect to the Related Receivables and Other Conveyed Property and the
Collateral, respectively to be transferred on such Funding Date;
(xv) the Seller shall have executed and delivered an
Assignment in the form of EXHIBIT F; and
(xvi) each of the conditions precedent to such Advance set
forth in the Indenture and the Note Purchase Agreement shall have been
satisfied.
Unless waived by the Noteholder in writing, the Seller covenants that
in the event any of the foregoing conditions precedent are not satisfied with
respect to any Related Receivable on the date required as specified above, the
Seller will immediately repurchase such Related Receivable from the Purchaser,
at a price equal to the Purchase Amount thereof, in the manner specified in
SECTION 3.2 and SECTION 4.7. Except with respect to ITEM (XIII) above, the
Trustee may rely on the accuracy of the Officers' Certificate delivered pursuant
to ITEM (XI) above without independent inquiry or verification.
(c) PAYMENT OF PURCHASE PRICE. In consideration for the sale
of the Related Receivables and Other Conveyed Property described in
SECTION 2.1(a) or the related Assignment, the Purchaser shall, on each
Funding Date on which Related Receivables are transferred hereunder,
pay to or upon the order of the Seller the applicable Purchase Price in
the following manner: (i) cash in an amount equal to the amount of the
Advance received by the Purchaser under the Note on such Funding Date
and (ii) to the extent the Purchase Price for the related Receivables
and Other Conveyed Property exceeds the amount of cash described in
(i), such excess shall be treated as a capital contribution by the
Seller to the Purchaser. On any Funding Date on which funds are on
deposit in the Principal Funding Account, the Purchaser may direct the
Trustee to withdraw therefrom an amount equal to the lesser of (i) the
Purchase Price to be paid to the Seller for Related Receivables and
Other Conveyed Property to be conveyed to the Purchaser and pledged to
the Trustee on such Funding Date (or a portion thereof) and (ii) the
amount on deposit in the Principal Funding Account, and, subject to the
satisfaction of the conditions set forth in SECTION 2.1(B) after giving
effect to such withdrawal, pay such amount to or upon the order of the
Seller in consideration for the sale of the Related Receivables and
Other Conveyed Property on such Funding Date.
SECTION 2.2. TRANSFERS INTENDED AS SALES. It is the intention of the
Seller that each transfer and assignment contemplated by this Agreement and each
Assignment shall constitute a sale of the Related Receivables and Other Conveyed
Property from the Seller to the Purchaser free and clear of all liens and rights
of others and it is intended that the beneficial interest in and title to the
Related Receivables and Other Conveyed Property shall not be part of the
Seller's estate in the event of the filing of a bankruptcy petition by or
4
against the Seller under any bankruptcy law. In the event that, notwithstanding
the intent of the Seller, the transfer and assignment contemplated hereby or by
any Assignment is held not to be a sale, this Agreement and each Assignment
shall constitute a grant of a security interest in the property referred to in
SECTION 2.1 and each Assignment to the Purchaser which security interest has
been assigned to the Trustee, acting on behalf of the Noteholder.
SECTION 2.3. FURTHER ENCUMBRANCE OF RECEIVABLES AND OTHER CONVEYED
PROPERTY.
(a) Immediately upon the conveyance to the Purchaser by the
Seller of the Related Receivables and any item of the related Other
Conveyed Property pursuant to SECTION 2.1 and the related Assignment,
all right, title and interest of the Seller in and to such Related
Receivables and Other Conveyed Property shall terminate, and all such
right, title and interest shall vest in the Purchaser.
(b) Immediately upon the vesting of any Related Receivables
and the related Other Conveyed Property in the Purchaser, the Purchaser
shall have the sole right to pledge or otherwise encumber such Related
Receivables and the related Other Conveyed Property. Pursuant to the
Indenture, the Purchaser shall grant a security interest in the
Collateral to secure the repayment of the Note.
(c) The Trustee shall, at such time as (i) the Facility
Termination Date has occurred, (ii) there is no Note outstanding and
(iii) all sums due to the Trustee pursuant to the Basic Documents have
been paid, release any remaining portion of the Receivables and the
Other Conveyed Property to the Purchaser.
ARTICLE III
-----------
THE RECEIVABLES
---------------
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF SELLER. (a) The Seller
makes the following representations and warranties as to the Receivables to the
Purchaser and to the Trustee for the benefit of the Noteholder on which the
Purchaser relies in acquiring the Receivables and on which the Noteholder has
relied in purchasing the Note and will rely in paying the Advance Amount to the
Purchaser. Such representations and warranties speak as of the Closing Date and
as of each Funding Date; PROVIDED that to the extent such representations and
warranties relate to the Receivables conveyed on any Funding Date, such
representations and warranties shall speak as of the related Funding Date, but
shall survive the sale, transfer and assignment of the Receivables to the
Purchaser and the pledge thereof by the Purchaser hereunder to the Trustee
pursuant to the Indenture.
(i) CHARACTERISTICS OF RECEIVABLES. 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 and without any fraud or misrepresentation on the
part of the Dealer, such Dealer had all necessary licenses and permits
to originate such Receivables in the state where such Dealer was
located, has been fully and properly executed by the parties thereto,
has been purchased by the Seller directly from the Dealer in connection
with the sale of Financed Vehicles by the Dealers and has been validly
assigned without any intervening assignments by such Dealer to the
Seller in accordance with its terms, (2) has created a valid,
subsisting, and enforceable first priority perfected security interest
in favor of the Seller in the Financed Vehicle, which security interest
has been validly assigned by the Seller to the Purchaser and by the
Purchaser to the Trustee, (3) contains customary and enforceable
provisions such that the rights and remedies of the holder or assignee
thereof shall be adequate for realization against the collateral of the
benefits of the security including without limitation a right of
repossession following a default, (4) provides for level weekly,
bi-weekly, semi-monthly or 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 but in no event shall
exceed three times such level payment) and yield interest at the Annual
Percentage Rate, (5) if such Receivable 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,
(6) is a Rule of 78's Receivable or a Simple Interest Receivable, (7)
was originated by a Dealer to an Obligor and was sold by the Dealer to
the Seller without any fraud or misrepresentation on the part of such
Dealer, the Obligor or the Seller, (8) is denominated in U.S. dollars
and (9) contains no future funding obligation.
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(ii) ADDITIONAL RECEIVABLES CHARACTERISTICS. As of the related
Funding Date, as applicable:
(A) each Related Receivable has (1) an original term
of 24 to 72 months; (2) an original Amount Financed of at
least $3,000 and not more than $35,000; and (3) had an APR of
at least 8% and not more than 30% (subject to applicable
laws);
(B) each Related Receivable is not more than 30 days
past due with respect to more than 10% of any Scheduled
Receivable Payment as of the related Cutoff Date and no funds
have been advanced by the Seller, any Dealer or anyone acting
on their behalf in order to cause any Related Receivable to
satisfy such requirement;
(C) no Related Receivable has been extended beyond
its original term, except in accordance with the Seller's
Contract Purchase Guidelines regarding deferments or
extensions; and
(D) each Related Receivable satisfies in all material
respects the Seller's Contract Purchase Guidelines as in
effect on the Closing Date or as otherwise amended from time
to time; provided, that such amendments do not have a material
adverse effect on the Noteholder.
(iii) SCHEDULE OF RECEIVABLES. The information with respect to
the Related Receivables set forth in Schedule A to the related
Assignment is true and correct in all material respects as of the close
of business on the related Cutoff Date, and no selection procedures
adverse to the Noteholder have been utilized in selecting the Related
Receivables to be sold hereunder.
(iv) COMPLIANCE WITH LAW. Each Related 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 Receivable was
originated or made and at the execution of the applicable Assignment
complies in all material respects with all requirements of applicable
Federal, State, and local laws, including, without limitation, Consumer
Laws, and regulations thereunder.
(v) NO GOVERNMENT OBLIGOR. None of the Related 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.
(vi) SECURITY INTEREST IN FINANCED VEHICLE. Immediately
subsequent to the sale, assignment and transfer thereof to the
Purchaser, each Related Receivable shall be secured by a validly
perfected first priority security interest in the Financed Vehicle in
favor of the Seller as secured party which has been validly assigned to
the Purchaser, and such assigned 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 related
Funding Date as a result of an Obligor's failure to pay its
obligations, as applicable).
(vii) RECEIVABLES IN FORCE. No Related Receivable has been
satisfied, subordinated or rescinded, nor has any related Financed
Vehicle been released from the lien granted by the related Receivable
in whole or in part.
(viii) NO WAIVER. Except as permitted under SECTION 4.2 and
CLAUSE (ix) below, no provision of a Related Receivable has been
waived, altered or modified in any respect since its origination. No
Related Receivable has been modified as a result of application of the
Servicemembers Civil Relief Act, as amended.
(ix) NO AMENDMENTS. Except as permitted under SECTION 4.2, no
Related Receivable has been amended, modified, waived or refinanced
except as such Related 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 and in accordance with the Seller's Contract Purchase
Guidelines.
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(x) NO DEFENSES. No right of rescission, setoff, counterclaim
or defense exists or has been asserted or threatened with respect to
any Related Receivable. The operation of the terms of any Related
Receivable or the exercise of any right thereunder will not render such
Related Receivable unenforceable in whole or in part and such
Receivable is not subject to any such right of rescission, setoff,
counterclaim, or defense.
(xi) NO LIENS. As of the related Cutoff Date, (a) there are no
liens or claims existing or which have been filed for work, labor,
storage or materials relating to a Financed Vehicle financed under a
Related Receivable that shall be liens prior to, or equal or coordinate
with, the security interest in the Financed Vehicle granted by the
Related Receivable and (b) there is no lien against the Financed
Vehicle financed under a Related Receivable for delinquent taxes.
(xii) NO DEFAULT; REPOSSESSION. Except for payment
delinquencies continuing for a period of not more than 30 days as of
the related Cutoff Date, no default, breach, violation or event
permitting acceleration under the terms of any Related 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 Related 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 financed under a Related Receivable shall have been
repossessed.
(xiii) INSURANCE; OTHER. (A) Each Obligor under the Related
Receivables has obtained an insurance policy covering the Financed
Vehicle as of the execution of such Receivable insuring against loss
and damage due to fire, theft, transportation, collision and other
risks generally covered by comprehensive and collision coverage, the
Seller and its successors and assigns are named the loss payee or an
additional insured of such insurance policy, such insurance policy is
in an amount at least equal to the lesser of (i) the Financed Vehicle's
actual cash value or (ii) the remaining Principal Balance of the
Related Receivable, and each Related Receivable requires the Obligor to
obtain and maintain such insurance naming the Seller and its successors
and assigns as loss payee or an additional insured, (B) each Related
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 the Seller as policyholder
(creditor) under each such insurance policy and certificate of
insurance and (C) as to each Related Receivable that finances the cost
of an extended service contract, the respective Financed Vehicle which
secures the Related Receivable is covered by an extended service
contract. As of the related Cutoff Date, no Financed Vehicle is or had
previously been insured under a policy of forced-placed insurance.
(xiv) TITLE. It is the intention of the Seller that each
transfer and assignment herein contemplated constitutes a sale of the
Related Receivables and the related Other Conveyed Property from the
Seller to the Purchaser and that the beneficial interest in and title
to such Related Receivables and related Other Conveyed Property 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 Related
Receivable or related Other Conveyed Property has been sold,
transferred, assigned, or pledged by the Seller to any Person other
than the Purchaser and by the Purchaser to any Person other than the
Trustee. Immediately prior to each transfer and assignment herein
contemplated, the Seller had good and marketable title to each Related
Receivable and related Other Conveyed Property 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 to the Purchaser and the concurrent pledge to the Trustee under
the Indenture, the Trustee for the benefit of the Noteholder shall have
a valid and enforceable security interest in the Collateral, free and
clear of all liens, encumbrances, security interests, and rights of
others, and such transfer has been perfected under the UCC. No Dealer
has a participation in, or other right to receive, proceeds of any
Receivable.
(xv) LAWFUL ASSIGNMENT. No Related Receivable has been
originated in, or is subject to the laws of, any jurisdiction under
which the sale, transfer, and assignment of such Related Receivable
under this Agreement or pursuant to transfers of the Note 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 Related Receivables.
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(xvi) ALL FILINGS MADE. All filings (including, without
limitation, UCC filings or other actions) necessary in any jurisdiction
to give: (a) the Purchaser a first priority perfected ownership
interest in the Receivables and the Other Conveyed Property, including,
without limitation, the proceeds of the Receivables (to the extent that
the Purchaser can obtain such first priority perfected security
interest pursuant to one or more filings) and (b) the Trustee, for the
benefit of the Noteholder, a first priority perfected security interest
in the Collateral have been made, taken or performed.
(xvii) RECEIVABLE FILE; ONE ORIGINAL. The Seller has delivered
to the Trustee, at the location specified in SCHEDULE B hereto, a
complete Receivable File with respect to each Related Receivable, and
the Trustee has delivered to the Purchaser and the Noteholder a copy of
the Trust Receipt therefor. There is only one original executed copy of
each Receivable.
(xviii) CHATTEL PAPER. Each Related Receivable constitutes
"TANGIBLE CHATTEL PAPER" under the UCC.
(xix) TITLE DOCUMENTS. (A) If the Related 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 Related 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 Related
Receivables that finance a vehicle in the States listed in Annex B,
other evidence of title issued by the applicable Department of Motor
Vehicles or similar authority in such States) will be received within
180 days and will show, the Seller 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 Related 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 the
Seller named as the original secured party under the Related
Receivable, and in either case, the Trustee 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 Related Receivable for
which the title document has not yet been returned from the Registrar
of Titles, the Seller has received written evidence from the related
Dealer that such title document showing the Seller as first lienholder
has been applied for.
(xx) VALID AND BINDING OBLIGATION OF OBLIGOR. Each Related
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 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. Each Related Receivable is not subject to any right of
set-off by the Obligor.
(xxi) CHARACTERISTICS OF OBLIGORS. As of the date of each
Obligor's application for the loan from which the Related Receivable
arises, such Obligor (a) did not have any material past due credit
obligations or any personal or real property repossessed or wages
garnished within one year prior to the date of such application, unless
such amounts have been repaid or discharged through bankruptcy, (b) was
not the subject of any Federal, State or other bankruptcy, insolvency
or similar proceeding pending on the date of application that has not
completed a 341 Hearing, (c) had not been the subject of more than one
Federal, State or other bankruptcy, insolvency or similar proceeding,
(d) was domiciled in the United States and (e) was not self-employed.
(xxii) POST-OFFICE BOX. On or prior to the next billing period
after the related Cutoff Date, the Servicer will notify each Obligor to
make payments with respect to its respective Related Receivables after
the related Cutoff Date directly to the Post-Office Box, and will
provide each Obligor with a monthly statement in order to enable such
Obligor to make payments directly to the Post-Office Box.
8
(xxiii) CASUALTY. No Financed Vehicle financed under a Related
Receivable has suffered a Casualty.
(xxiv) NO AGREEMENT TO LEND. The Obligor with respect to each
Related Receivable does not have any option under the Receivable to
borrow from any person any funds secured by the Financed Vehicle.
(xxv) OBLIGATION TO DEALERS OR OTHERS. The Purchaser and its
assignees will assume no obligation to Dealers or other originators or
holders of the Related Receivables (including, but not limited to under
dealer reserves) as a result of its purchase of the Related
Receivables.
(xxvi) NO IMPAIRMENT. Neither Seller nor the Purchaser has
done anything to convey any right to any Person that would result in
such Person having a right to payments due under any Related
Receivables or otherwise to impair the rights of the Purchaser, the
Trustee or the Noteholder in any Related Receivable or the proceeds
thereof.
(xxvii) RECEIVABLES NOT Assumable. No Related Receivable is
assumable by another Person in a manner which would release the Obligor
thereof from such Obligor's obligations to the Purchaser or Seller with
respect to such Related Receivable.
(xxviii) SERVICING. The servicing of each Related Receivable
and the collection practices relating thereto have been lawful and in
accordance with the standards set forth in this Agreement; and other
than Seller and the Back-up Servicer pursuant to the Basic Documents,
no other person has the right to service the Receivable.
(xxix) CREATION OF SECURITY INTEREST. This Agreement creates a
valid and continuing security interest (as defined in the UCC) in the
Receivables and the Other Conveyed Property in favor of the Purchaser,
which security interest is prior to all other Liens and is enforceable
as such as against creditors of and purchasers from the Seller.
(xxx) PERFECTION OF SECURITY INTEREST IN TRUST ESTATE. The
Seller has caused the filing of all appropriate financing statements in
the proper filing office in the appropriate jurisdictions under
applicable law in order to perfect the security interest in the
Receivables and the Other Conveyed Property granted to the Purchaser
hereunder pursuant to SECTION 2.1 and the related Assignment.
(xxxi) NO OTHER SECURITY INTERESTS. Other than the security
interest granted to the Purchaser for pursuant to SECTION 2.1 and the
related Assignment, the Seller has not pledged, assigned, sold, granted
a security interest in, or otherwise conveyed any of the Receivables or
the Other Conveyed Property, other than such security interests as are
released at or before the conveyance thereof. The Seller has not
authorized the filing of and is not aware of any financing statements
filed against the Seller that include a description of collateral
covering any portion of the Receivables and the Other Conveyed Property
other than any financing statement relating to the security interest
granted to the Purchaser hereunder or that has been terminated or
released as to the Receivables and the Other Conveyed Property. The
Seller is not aware of any judgment or tax lien filings against the
Seller.
(xxxii) NOTATIONS ON CONTRACTS; FINANCING STATEMENT
DISCLOSURE. The Servicer has in its possession copies of all Contracts
that constitute or evidence the Receivables. The Contracts that
constitute or evidence the Receivables do not have any marks or
notations indicating that they have been pledged, assigned or otherwise
conveyed to any Person other than the Purchaser and/or the Trustee for
the benefit of the Noteholder. All financing statements filed or to be
filed against the Seller in favor of the Purchaser in connection
herewith describing the Trust Estate contain a statement to the
following effect: "A purchase of or security interest in any collateral
described in this financing statement will violate the rights of the
secured party."
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(xxxiii) STATE CONCENTRATION OPINIONS. If Eligible Receivables
originated in any one state exceed 10% of the Aggregate Principal
Balance of the Eligible Receivables, the Seller shall deliver to each
Rating Agency and the Noteholder an Opinion of Counsel with respect to
the security interest in the Financed Vehicles with respect to such
state on or prior to the related Funding Date.
(xxxiv) RECORDS. On or prior to each Funding Date, the Seller
will have caused its records (including electronic ledgers) relating to
each Related Receivable to be conveyed by it on such Funding Date to be
clearly and unambiguously marked to reflect that such Related
Receivable was conveyed by it to the Purchaser.
(xxxv) COMPUTER INFORMATION. The computer diskette, computer
tape or other electronic transmission made available by the Seller to
the Purchaser on each Funding Date is, as of the related Cutoff Date,
complete and accurate and includes a description of the same
Receivables described in Schedule A to the related Assignment.
(xxxvi) REMAINING PRINCIPAL BALANCE. As of the related Cutoff
Date, each Related Receivable has a remaining Principal Balance of at
least $3,000 and the Principal Balance of each Receivable set forth in
Schedule A to the related Assignment is true and accurate in all
respects.
SECTION 3.2. REPURCHASE UPON BREACH.
(a) The Seller, the Servicer, the Noteholder or the 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 next Accrual
Period following the discovery thereof by the Trustee or receipt by the
Trustee of notice from the Seller or the Servicer of such breach, the
Seller 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 next Accrual Period (or, at the Seller's option, the last day
of the first Accrual Period following the discovery). In consideration
of the purchase of any Receivable, the Seller shall remit the Purchase
Amount, in the manner specified in SECTION 5.6. The sole remedy of the
Purchaser, the Trustee or the Noteholder with respect to a breach of
representations and warranties pursuant to SECTION 3.1 shall be to
enforce the Seller's obligation to purchase such Receivables; PROVIDED,
HOWEVER, that the Seller shall indemnify the Trustee, the Backup
Servicer, the Purchaser and the Noteholder 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
in respect of any Defective Receivables and written instructions from
the Servicer, the Trustee shall release to the Seller 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 the Seller or such designee title to such Defective
Receivables.
(b) If the Insolvency Event related to a 341 Hearing has not
been discharged by the bankruptcy court or other similar court
presiding over such Insolvency Event within 90 days of the conveyance
of the related Receivable by the Seller to the Purchaser pursuant to
SECTION 2.1(a), the Seller shall repurchase such Receivable as of the
last day of such next Accrual Period.
SECTION 3.3. CUSTODY OF RECEIVABLES FILES.
(a) In connection with each sale, transfer and assignment of
Receivables and related Other Conveyed Property to the Purchaser
pursuant to this Agreement and each Assignment, and each pledge thereof
by the Purchaser to the Trustee pursuant to the Indenture, 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 or the related Funding Date in accordance with SECTION 3.4
(with respect to each Receivable):
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(i) The fully executed original of the Receivable (together
with any agreements modifying or assigning the Receivable, including
without limitation any extension agreements); and
(ii) The original certificate of title in the name of the
Obligor with a notation on such certificate of title evidencing
Seller's security interest therein or such documents that the Seller
shall keep on file, in accordance with its customary procedures,
evidencing the security interest of the Seller in the Financed Vehicle
or, if not yet received, a copy of the application therefor showing the
Seller as secured party, or a dealer guarantee of title.
(b) Upon payment in full of any Receivable, the Servicer will
notify the Trustee pursuant to a certificate of a Servicing Officer in
the form of EXHIBIT C and shall request delivery of the Receivable and
Receivable File to the Servicer.
SECTION 3.4. ACCEPTANCE OF RECEIVABLE FILES BY TRUSTEE. In connection
with any Funding Date, the Seller shall cause to be delivered to the Trustee the
Receivable Files for the Related Receivables to be purchased not less than four
Business Days prior to the related Funding Date. The Trustee declares that it
will hold and will continue to hold such files and any amendments, replacements
or supplements thereto and all Other Conveyed Property as Trustee, custodian,
agent and bailee in trust for the use and benefit of the Noteholder. The Trustee
shall within three Business Days after receipt of such files, execute and
deliver to the Noteholder, a receipt substantially in the form of EXHIBIT B
hereto (a "TRUST RECEIPT") for the Receivable Files received by the Trustee. By
its delivery of a Trust Receipt, the Trustee shall be deemed to have (a)
acknowledged receipt of the files (or the Receivables) which the Seller has
represented are and contain the Receivable Files for the Related Receivables
purchased by the Purchaser on the related Funding Date, (b) reviewed such files
or Receivables and (c) determined that it has received the items referred to in
SECTION 3.3(a)(i) and (ii) for each Related Receivable identified in Schedule A
to the related Assignment. If in its examination of the files delivered to it by
the Seller pursuant to this SECTION 3.4, the Trustee 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 the related Assignment or that any of the documents
referred to in SECTION 3.3(a)(i) or (ii) are not contained in a Receivable File,
the Trustee shall inform the Purchaser, the Seller and the Noteholder pursuant
to an exception report attached to the Trust Receipt as SCHEDULE I of the
failure to receive a file with respect to such Receivable (or the failure of any
of the aforementioned documents to be included in the Receivable File) or shall
return to the Purchaser, as the Seller's designee any file unrelated to a
Receivable identified in Schedule A to the related Assignment (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 next Accrual Period following discovery thereof by the Trustee,
the Trustee shall cause the Seller to repurchase any such Receivable as of such
last day. In consideration of the purchase of the Receivable, the Seller shall
remit the Purchase Amount for such Receivable, in the manner specified in
SECTION 5.6. The sole remedy of the Trustee, the Purchaser and the Noteholder
with respect to a breach pursuant to this SECTION 3.4 shall be to require the
Seller to purchase the applicable Receivables pursuant to this SECTION 3.4;
PROVIDED, HOWEVER, that the Seller shall indemnify the Trustee, the Backup
Servicer, the Purchaser and the Noteholder 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 for a Receivable and written
instructions from the Servicer, the Trustee shall release to the Seller 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 the Seller and delivered to the Trustee and are necessary to vest in
the Seller or such designee title to the Receivable. The Trustee shall make a
list of Receivables for which an application for a certificate of title but not
an original certificate of title or, with respect to Receivables that finance a
vehicle in the States listed in Annex B, other evidence of title issued by the
applicable Department of Motor Vehicles or similar authority in such States, 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 and the Noteholder. On the
date which is 180 days following the related Funding Date, and monthly
thereafter, the Trustee shall inform the Seller and the other parties to this
Agreement and the Noteholder 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 States listed in Annex B, other evidence of
title issued by the applicable Department of Motor Vehicles or similar authority
in such States, and the Seller shall repurchase any such Receivable as of the
last Business Day of the Accrual Period in which the expiration of such 180 days
occurs. In consideration of the purchase of the Receivable, the Seller shall
remit the Purchase Amount for such Receivable, in the manner specified in
SECTION 5.6.
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SECTION 3.5. ACCESS TO RECEIVABLE FILES. The Trustee shall permit the
Servicer and Noteholder 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 or the Noteholder, execute such
documents and instruments as are prepared by the Servicer or the Noteholder and
delivered to the Trustee, as the Servicer or the Noteholder deems necessary to
permit the Servicer, in accordance with its customary servicing procedures, to
enforce the Receivable on behalf of the Purchaser 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 or the Indenture 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 release request signed by a Servicing Officer in the form
of EXHIBIT C hereto (the "RELEASE REQUEST"). Such Release Request 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, the
Servicer shall certify in the Release Request that all amounts required to be
deposited in the Collection Account with respect to such Receivable have been so
deposited.
SECTION 3.6. TRUSTEE TO OBTAIN FIDELITY INSURANCE. The Trustee shall
maintain a fidelity bond in the form and amount as is customary for entities
acting as a trustee of funds and documents in respect of consumer contracts on
behalf of institutional investors.
SECTION 3.7. TRUSTEE TO MAINTAIN SECURE FACILITIES. The Trustee shall
maintain or cause to be maintained continuous custody of the Receivables Files
in secure and fire resistant facilities in accordance with customary standards
for such custody.
ARTICLE IV
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ADMINISTRATION AND SERVICING OF RECEIVABLES
-------------------------------------------
SECTION 4.1. DUTIES OF THE SERVICER. The Servicer, as agent for the
Purchaser and the Noteholder 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 sale 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. 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 Noteholder, or otherwise with the prior written consent of the
Noteholder (which consent shall not be unreasonably withheld), and notice of
such amendments is given to the Noteholder prior to the effectiveness thereof.
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 and the Noteholder with respect to distributions.
Without limiting the generality of the foregoing, and subject to the servicing
standards set forth in this Agreement including, without limitation, the
restrictions set forth in SECTION 4.6, the Servicer is authorized and empowered
by the Purchaser to execute and deliver, on behalf of itself, the Purchaser or
the Noteholder, 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 States listed in Annex B, other evidence of title issued by the
applicable Department of Motor Vehicles or similar authority in such States with
respect to such Financed Vehicles. If the Servicer shall commence a legal
proceeding to enforce a Receivable, the Purchaser 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 Purchaser 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 Noteholder. The Servicer shall prepare and furnish, and the 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.
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SECTION 4.2. COLLECTION OF RECEIVABLE PAYMENTS; MODIFICATIONS OF
RECEIVABLES; LOCKBOX AGREEMENTS.
(a) Consistent with the standards, policies and procedures
required by this Agreement, the Servicer shall make reasonable efforts
to collect all payments called for under the terms and provisions of
the Receivables as and when the same shall become due and shall follow
such collection procedures as it follows with respect to all comparable
automotive receivables that it services for itself or others; PROVIDED,
HOWEVER, that promptly after the Closing Date (or the related Funding
Date, as applicable) the Servicer shall notify each Obligor to make all
payments with respect to the Receivables to the Post-Office Box. The
Servicer will provide each Obligor with a monthly statement in order to
notify such Obligors to make payments directly to the Post-Office Box.
The Servicer shall allocate collections between principal and interest
in accordance with the customary servicing procedures it follows with
respect to all comparable automotive receivables that it services for
itself or others and in accordance with the terms of this Agreement.
Except as provided below, the Servicer, for as long as the Seller is
the Servicer, may in accordance with the Seller's Contract Purchase
Guidelines grant extensions on a Receivable; PROVIDED, HOWEVER, that
the Servicer may not grant more than one (1) extension per calendar
year with respect to a Receivable or grant an extension with respect to
a Receivable for more than one (1) calendar month or grant more than
three (3) extensions in the aggregate with respect to a Receivable
without the prior written consent of the Noteholder. 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. If the Servicer is not the Seller or the Backup Servicer,
the Servicer may not make any extension on a Receivable without the
prior written consent of the Noteholder. The Servicer may in its
discretion waive any prepayment charge, late payment charge or any
other similar 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, other than to the extent that such
alteration is required by applicable law.
(b) The Servicer shall establish the Lockbox Account in the
name of the Purchaser for the benefit of the Trustee, acting on behalf
of the Noteholder. 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, except the Lockbox Processor and the
Trustee, has authority to direct disposition of funds on deposit in the
Lockbox Account. However, the Lockbox Agreement shall provide that
Lockbox Banks will comply with instructions originated by the Trustee
relating to the disposition of the funds in the Lockbox Account without
further consent by the Seller, the Servicer or the Purchaser. 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
One, N.A., or at the request of the Noteholder an Eligible Account
satisfying clause (i) of the definition thereof; provided, HOWEVER,
that the Trustee shall give the Servicer prior written notice of any
change made at the request of the Noteholder 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 Purchaser for the benefit of the Noteholder.
(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 Purchaser, the
Trustee and the Noteholder 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 Seller shall for any reason no longer be
acting as the Servicer hereunder, the Backup 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
Backup Servicer or a 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 Backup
Servicer or a successor Servicer, except that the outgoing Servicer
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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 Backup
Servicer or a 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 assignment of any Lockbox Agreement to the Backup
Servicer or a successor Servicer. In the event that the Noteholder
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 Noteholder, 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. The Servicer shall cause
the Lockbox Bank to transfer cleared 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), all Net
Liquidation Proceeds and any amounts remitted to the Servicer by the
Hedge Counterparty pursuant to the Hedge Agreement no later than two
Business Days following receipt directly (without deposit into any
intervening account) into the Lockbox Account or the Collection
Account. The Servicer shall not commingle its assets and funds with
those on deposit in the Lockbox Account.
SECTION 4.3. REALIZATION UPON RECEIVABLES. On behalf of the Purchaser
and the Noteholder, 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, 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 the Seller 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 the Seller 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 (each, a "RECEIVABLES INSURANCE POLICY").
(b) To the extent applicable, the Servicer shall not take any
action which would result in noncoverage under any Receivables
Insurance Policy which, but for the actions of the Servicer, would have
been covered thereunder. The Servicer, on behalf of the Purchaser,
shall take such reasonable action as shall be necessary to permit
recovery under each Receivables Insurance Policy. Any amounts collected
by the Servicer under any Receivables Insurance Policy, including,
without limitation, proceeds thereof, shall be deposited in the
Collection Account within two (2) Business Days of receipt.
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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
Purchaser 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 authorization or execution
by the Obligors and the recording, registering, 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
Purchaser and the Noteholder 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 Purchaser, and the pledge thereof by
the Purchaser to the Trustee 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 Trustee, each
of the Trustee and the Seller hereby agrees that the Seller's
designation as the secured party on the certificate of title is in
respect of the Seller's capacity as Servicer as agent of the Trustee
for the benefit of the Noteholder.
(b) 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 Trustee on behalf of the Noteholder 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. The Seller hereby agrees to pay all expenses related to such
perfection or re-perfection and to take all action necessary therefor.
In addition, the Noteholder 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 Noteholder, be necessary to perfect or re-perfect the
security interest in the Financed Vehicles underlying the Receivables
in the name of the Trustee on behalf of the Noteholder, 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 Noteholder,
be necessary or prudent; PROVIDED, HOWEVER, that if the Noteholder
requests that the title documents be amended prior to the occurrence of
a Servicer Termination Event, the Trustee or Servicer, as the case may
be, shall carry out such action only to the extent that the
out-of-pocket expenses of the Servicer or the Trustee, as the case may
be, shall be reimbursed by the Noteholder.
SECTION 4.6. ADDITIONAL COVENANTS OF SERVICER.
(a) 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 or other liquidation of the
Financed Vehicle, nor shall the Servicer impair the rights of the
Noteholder in such Receivables, nor shall the Servicer amend or
otherwise modify a Receivable, except as permitted in accordance with
SECTION 4.2.
(b) The Servicer shall obtain and/or maintain all necessary
licenses, approvals, authorizations, orders or other actions of any
person, corporation or other organization, or of any court,
governmental agency or body or official, required in connection with
the execution, delivery and performance of this Agreement and the other
Basic Documents.
(c) The Servicer shall not make any material changes to its
collection policies unless the Noteholder expressly consents in writing
prior to such changes (which consent shall not be unreasonably
withheld).
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(d) The Servicer shall provide written notice to the
Noteholder of any default, event of default or servicer termination
event under any other warehouse financing facility or securitization
that has occurred and which default, event of default or servicer
termination shall not have been waived or otherwise cured within the
applicable cure period.
SECTION 4.7. PURCHASE OF RECEIVABLES UPON BREACH OF COVENANT. Upon
discovery by any of the Servicer, the Purchaser or the Trustee of a breach of
any of the covenants of the 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 next Accrual Period following such
discovery, 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 for such Receivable in the manner
specified in SECTION 5.6. The sole remedy of the Trustee, the Purchaser or the
Noteholder 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 Backup
Servicer, the Purchaser and the Noteholder 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.
SECTION 4.8. SERVICING FEE. The "SERVICING FEE" for each Settlement
Date shall be equal to the product of one twelfth times the Servicing Fee
Percentage times the average of the Aggregate Principal Balance on the first day
of the related Accrual Period and on the last day of such Accrual Period. The
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. If the Backup Servicer becomes the
successor Servicer, the "Servicing Fee" payable to the Backup Servicer as
successor Servicer shall be determined in accordance with the Servicing and
Lockbox Processing Assumption Agreement.
SECTION 4.9. SERVICER'S CERTIFICATE. No later than 12:00 noon New York
City time on each Determination Date, the Servicer shall deliver (facsimile
delivery being acceptable) to the Trustee, the Rating Agencies, the Noteholder
and the Purchaser, a certificate substantially in the form of EXHIBIT A hereto
(a "SERVICER'S CERTIFICATE") containing among other things, (i) all information
necessary to enable the Trustee to make any withdrawal and deposit required by
SECTION 5.5 and to make the distributions required by SECTION 5.7, (ii) all
information necessary for the Trustee to send statements to the Noteholder
pursuant to SECTION 5.8(b) and 5.9, (iii) a listing of all Purchased Receivables
purchased as of the related Accounting Date, identifying the Receivables so
purchased, (iv) the calculation of the Borrowing Base and (v) all information
necessary to enable the Backup Servicer to verify the information specified in
SECTION 4.14(b) and to complete the accounting required by SECTION 5.9.
SECTION 4.10. ANNUAL STATEMENT AS TO COMPLIANCE, NOTICE OF SERVICER
TERMINATION EVENT.
(a) The Servicer shall deliver to the Purchaser, to the
Trustee for delivery to the Noteholder, the Backup Servicer and each
Rating Agency, on or before February 28 of each year beginning February
28, 2005, an Officer's Certificate, dated as of December 31 of the
preceding 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 initial Cutoff Date to
December 31, 2004) and of its performance under this Agreement has been
made under such officer's supervision and (ii) to the best of such
officer's knowledge, based on such review, the Servicer has fulfilled
all its obligations under this Agreement throughout such year (or, in
the case of the first such certificate, such shorter period), or, if
there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and
status thereof.
(b) The Servicer shall deliver to the Trustee, the Noteholder,
the Backup Servicer 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.
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SECTION 4.11. INDEPENDENT ACCOUNTANTS' REPORTS. 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 Purchaser, to deliver to the Trustee, the Backup Servicer,
the Noteholder and each Rating Agency, on or before March 31 of each year
beginning March 31, 2005, a report dated as of December 31 of the preceding year
in form and substance reasonably acceptable to the Noteholder (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 with respect to Receivables transferred to the Purchaser on the initial
Funding Date to December 31, 2004), addressed to the Board of Directors of the
Servicer, to the Trustee, the Backup Servicer and to the Noteholder, 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 Attestation 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 sale 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's Certificates; (2) except as disclosed in the
report, no exceptions or errors in the Servicer's 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's
Certificates were found to be accurate. In the event such firm requires the
Trustee and/or the Backup Servicer to agree to the procedures performed by such
firm, the Servicer shall direct the Trustee and/or the Backup Servicer, as
applicable, in writing to so agree; it being understood and agreed that the
Trustee and/or the Backup Servicer will deliver such letter of agreement in
conclusive reliance upon the direction of the Servicer, and neither the Trustee
nor the Backup Servicer makes any independent 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. INDEPENDENT ACCOUNTANTS' REVIEW OF RECEIVABLES FILES.
Commencing on September 30, 2004 and, thereafter on each December 31, March 31,
June 30 and September 30 prior to the Final Scheduled Settlement Date, to the
extent that the Invested Amount on any day in the calendar quarter then ending
was greater than $25 million (or such other dates as the Noteholder may
determine in its reasonable discretion from time to time by prior written notice
to the Seller, the Servicer and the Trustee), the Seller at its own expense
shall cause Independent Accountants reasonably acceptable to the Noteholder to
conduct a post-funding review of the Seller's compliance with its stated
underwriting policies and verify certain characteristics of the Receivables as
of each Funding Date. The Independent Accountants shall within ten Business Days
complete such physical inspection and limited review and execute and deliver to
Seller, the Servicer, the Trustee and the Noteholder a report summarizing the
findings. If such review reveals, in the Noteholder's reasonable opinion, an
unsatisfactory number of exceptions, the Noteholder, in its reasonable
discretion, may require a full review of a larger sample of the Receivables by
the Independent Accounts at the expense of the Seller
SECTION 4.13. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
RECEIVABLES. The Servicer shall provide to representatives of the Trustee, the
Backup Servicer and the Noteholder 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.
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(a) Concurrently with the delivery by the Servicer of the
Servicer's Certificate each month, the Servicer will deliver to the
Trustee and the Backup Servicer a computer diskette (or other
electronic transmission) in a format acceptable to the Trustee and the
Backup Servicer containing information with respect to the Receivables
as of the close of business on the last day of the preceding Interest
Period which information is necessary for preparation of the Servicer's
Certificate. The Backup Servicer shall use such computer diskette (or
other electronic transmission) to verify certain information specified
in SECTION 4.14(b) contained in the Servicer's Certificate delivered by
the Servicer, and the Backup Servicer shall notify the Servicer and the
Noteholder of any discrepancies on or before the second Business Day
following the Determination Date. In the event that the Backup Servicer
reports any discrepancies, the Servicer and the Backup Servicer shall
attempt to reconcile such discrepancies by the related Settlement 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 Settlement Date. In the event that the Backup
Servicer and the Servicer are unable to reconcile discrepancies with
respect to a Servicer's Certificate by the related Settlement Date, the
Backup Servicer shall notify the Noteholder thereof in writing and 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 day of the following calendar
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 Backup Servicer shall
have no obligations hereunder, including, without limitation, to
supervise, verify, monitor or administer the performance of the
Servicer. The Backup Servicer shall have no liability for any actions
taken or omitted by the Servicer. The duties and obligations of the
Backup 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 Backup Servicer.
(b) The Backup Servicer shall review each Servicer's
Certificate delivered pursuant to Section 4.14(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 Backup Servicer) received from the Servicer pursuant
to SECTION 4.14(A) hereof, confirm that such computer diskette is in a
readable form and calculate and confirm the Aggregate Principal Balance
of the Receivables for the most recent Settlement Date; and
(iii) confirm that Available Funds, the Noteholder's Principal
Distributable Amount, the Noteholder's Interest Distributable Amount,
the Servicing Fee, the Backup Servicing Fee, the Trustee Fee, Loss
Ratio and Servicer Delinquency Ratio in the Servicer's Certificate are
accurate based solely on the recalculation of the Servicer's
Certificate.
(c) Within 90 days of the Closing Date, the Backup Servicer
will cause an affiliate of the Backup Servicer to data map to its
servicing system all servicing/loan file information, including all
relevant borrower contact information such as address and phone numbers
as well as loan balance and payment information, including comment
histories and collection notes. On or before the fifth calendar day of
each month, the Servicer will provide to an affiliate of the Backup
Servicer an electronic transmission of all servicing/loan information,
including all relevant borrower contact information such as address and
phone numbers as well as loan balance and payment information,
including comment histories and collection notes, and the Backup
Servicer will cause such affiliate to review each file to ensure that
it is in readable form and verify that the data balances conform to the
trial balance reports received from the Servicer. Additionally, the
Backup Servicer shall cause such affiliate to store each such file.
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 September 30, 2004, which term
may be extended by the Noteholder for successive quarterly terms ending on each
successive December 31, March 31, June 30 and September 30 pursuant to written
instructions delivered by the Noteholder to the Servicer and the Trustee (or, at
the discretion of the Noteholder 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 Note has
been paid in full (each such notice, including each notice pursuant to standing
18
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"). 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. 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
Noteholder, the Trustee shall, within five days thereafter, give written notice
of such non-receipt to the Noteholder and the Servicer and the Servicer's term
shall not be extended unless an Servicer Extension Notice is received on or
before the last day of such term.
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. LIEN SEARCHES; OPINIONS AS TO TRANSFERS AND SECURITY
INTERESTS. The Servicer shall, on the Closing Date and, thereafter annually on
or before each anniversary of the Closing Date, deliver (or cause to be
delivered) to the Trustee and the Noteholder an Opinion of Counsel, in form and
substance satisfactory to the Noteholder, with respect to (a) the "true sale"
nature of the transfers of Receivables and, to the extent applicable, related
Other Conveyed Property hereunder and under each related Assignment, (b) the
"backup security interest" with respect to the transfers of Receivables and, to
the extent applicable, related Other Conveyed Property hereunder and under each
related Assignment, (c) the validity of the security interest in connection with
the pledge of Collateral to the Trustee under the Indenture on each Funding Date
and (d) the perfection and first priority of the transfers and pledges referred
to in CLAUSES (a)-(c) above. To the extent each such Opinion of Counsel is in
any manner reliant on UCC lien searches, each such UCC lien search shall be
dated no earlier than ten Business Days prior to the date of each such related
Opinion of Counsel, and shall be accompanied by officer's certificates from the
appropriate parties certifying that no filings subsequent to the date of such
lien searches have been made. Such Opinion of Counsel shall state, among other
things, that, in the opinion of such counsel, either (A) all financing
statements and continuation statements have been authorized and filed that are
necessary to perfect the interest of the Purchaser 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. The Opinion of Counsel
referred to in this SECTION 4.17 shall specify any action necessary (as of the
date of such opinion) to be taken to preserve and protect such interest.
ARTICLE V
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ACCOUNTS; DISTRIBUTIONS; STATEMENTS TO THE NOTEHOLDER
-----------------------------------------------------
SECTION 5.1. ESTABLISHMENT OF PLEDGED ACCOUNTS.
(a) The Trustee, on behalf of the Noteholder, 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 Noteholder. The Collection Account shall initially be established
with the Trustee.
(b) The Trustee, on behalf of the Noteholder, 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 Noteholder. The Note Distribution Account shall initially
be established with the Trustee.
(c) The Trustee, on behalf of the Noteholder shall establish
and maintain in its own name an Eligible Account (the "PRINCIPAL
FUNDING ACCOUNT"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Trustee on
behalf of the Noteholder. The Principal Funding Account shall initially
be established with the Trustee.
(d) The Trustee, on behalf of the Noteholder shall establish
and maintain in its own name an Eligible Account (the "RESERVE
ACCOUNT"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Trustee on behalf of
the Noteholder. The Reserve Account shall initially be established with
the Trustee.
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(e) Funds on deposit in the Collection Account, the Principal
Funding Account, the Reserve Account and the Note Distribution Account
(collectively, the "PLEDGED 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 resignation or termination of CPS as Servicer, by the Noteholder
(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 Noteholder. Other than as permitted by the Rating
Agencies and the Noteholder, funds on deposit in any Pledged 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 Draw Date, Funds deposited in a
Pledged Account on the day immediately preceding a Settlement Date upon
the maturity of any Eligible Investments are not required to be
invested overnight. All Eligible Investments will be held to maturity.
(f) All investment earnings of moneys deposited in the Pledged
Accounts shall be deposited (or caused to be deposited) by the Trustee
in the Collection Account for distribution pursuant to SECTION 5.7(A),
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 Pledged 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.
(g) The Trustee shall not in any way be held liable by reason
of any insufficiency in any of the Pledged 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.
(h) If (i) the Servicer or the Noteholder, as applicable,
shall have failed to give investment directions for any funds on
deposit in the Pledged Accounts to the Trustee by 1:00 p.m. Eastern
Time (or such other time as may be agreed by the Purchaser and Trustee)
on any Business Day; or (ii) an Event of Default shall have occurred
and be continuing with respect to the Note but the Note shall not have
been declared due and payable, or, if the Note shall have been declared
due and payable following an Event of Default, amounts collected or
receivable from the Receivables and the Other Conveyed 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 Pledged Accounts in an Eligible Investment described in
PARAGRAPH (f) the definition thereof.
(i) The Trustee shall possess all right, title and interest in
all funds on deposit from time to time in the Pledged Accounts and in
all proceeds thereof (including all Investment Earnings on the Pledged
Accounts) and all such funds, investments, proceeds and income shall be
part of the Other Conveyed Property. Except as otherwise provided
herein, the Pledged Accounts shall be under the sole dominion and
control of the Trustee for the benefit of the Noteholder. If at any
time any of the Pledged Accounts ceases to be an Eligible Account, the
Servicer with the consent of the Noteholder shall within five Business
Days establish a new Pledged Account as an Eligible Account and shall
transfer any cash and/or any investments to such new Pledged Account.
The Servicer shall promptly notify the Rating Agencies, the Trustee and
the Noteholder 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 Pledged Accounts are not
accounts with the Trustee, the Servicer shall notify the Trustee and
the Noteholder in writing promptly upon any of such Pledged Accounts
ceasing to be an Eligible Account.
(j) Notwithstanding anything to the contrary herein or in any
other document relating to a Trust Account, the "securities
intermediary's jurisdiction" (within the meaning of Section 8-110 of
the UCC) or the "bank's jurisdiction" (with the meaning of 9-304 of the
UCC) as applicable, with respect to each Pledged Account shall be the
State of New York.
(k) With respect to the Pledged Account Property, the Trustee
agrees that:
20
(i) any Pledged Account Property that is held in deposit
accounts shall be held solely in an Eligible Account; 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;
(ii) any Pledged Account Property shall be delivered to the
Trustee in accordance with the definition of "DELIVERY"; and
(iii) the Servicer shall have the power, revocable by the
Noteholder to instruct the Trustee to make withdrawals and payments
from the Pledged Accounts for the purpose of permitting the Servicer
and the Trustee to carry out their respective duties hereunder.
SECTION 5.2 [RESERVED].
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 an Accrual 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
Settlement Date pursuant to SECTION 5.7(A)(IV) upon certification by the
Servicer of such amounts and the provision of such information to the Trustee
and the Noteholder as may be necessary in the opinion of the Noteholder to
verify the accuracy of such certification; provided, however, that the Servicer
must provide such certification within three months of it becoming aware of such
mistaken deposit, posting or returned check. In the event that the Noteholder
has not received evidence satisfactory to it of the Servicer's entitlement to
reimbursement pursuant to this Section, the Noteholder shall 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 Settlement Date.
SECTION 5.4. APPLICATION OF COLLECTIONS. All collections for each
Accrual 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. RESERVE ACCOUNT.
(a) The Reserve Account will be held for the benefit of the
Noteholder. On or prior to the Closing Date, the Purchaser shall
deposit or cause to be deposited into the Reserve Account an amount
equal to the Required Reserve Account Amount. On each Funding Date, the
Purchaser shall deposit a portion of the related Advance into the
Reserve Account until the amount on deposit in the Reserve Account
equals the Required Reserve Account Amount.
(b) In the event that the Servicer's Certificate with respect
to any Determination Date shall state that the Available Funds with
respect to the related Settlement Date are insufficient to make the
payments required to be made on the related Settlement Date pursuant to
SECTIONS 5.7(a)(i) through (vi) (such deficiency being a "DEFICIENCY
CLAIM AMOUNT"), then on the Deficiency Claim Date, the Trustee shall
deliver to the Noteholder and the Servicer, by hand delivery, telex or
facsimile transmission, a written notice (a "DEFICIENCY NOTICE")
specifying the Deficiency Claim Amount for such Settlement Date. The
Trustee shall withdraw an amount equal to such Deficiency Claim Amount
from the Reserve Account (to the extent of the funds available on
deposit therein) for deposit in the Collection Account on the related
Settlement Date and distribution pursuant to SECTIONS 5.7(a)(i) through
(vi), as applicable.
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(c) Any Deficiency Notice shall be delivered by 10:00 a.m.,
New York City time, on the Deficiency Claim Date. The amounts
distributed to the Trustee pursuant to a Deficiency Notice shall be
deposited by the Trustee into the Collection Account pursuant to
SECTION 5.6.
(d) Following the Facility Termination Date, all amounts, or
any portion thereof, on deposit in the Reserve Account will be
deposited into the Collection Account for distribution pursuant to
SECTION 5.7.
(e) On any Settlement Date prior to the Facility Termination
Date on which, after all distributions required to be made on such
Settlement Date pursuant to SECTION 5.7(a) have been made, the amount
on deposit in the Reserve Account exceeds the Required Reserve Account
Amount, the Trustee shall withdraw such excess and distribute the same
to the Purchaser or its designee in accordance with SECTION
5.7(a)(xiii).
SECTION 5.6. ADDITIONAL DEPOSITS. The Servicer or the Seller, 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. All such
deposits shall be made, in immediately available funds, on the Business Day
preceding the related Determination Date. On the Deficiency Claim Date, the
Trustee shall remit to the Collection Account any amounts withdrawn from the
Reserve Account pursuant to SECTION 5.5.
SECTION 5.7. DISTRIBUTIONS.
(a) On each Settlement Date prior to the occurrence and
continuance of an Event of Default, 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 from amounts on deposit in the
Collection Account:
(i) to the Noteholder, any payments from the Hedge
Counterparty to the extent they are due and payable in an amount equal
to the excess, if any, of the Noteholder's Monthly Interest
Distributable Amount over Capped Monthly Interest, in respect of the
Noteholder's Interest Distributable Amount;
(ii) to the Hedge Counterparty, from Available Funds and any
amounts deposited in the Collection Account pursuant to SECTION 5.5(B)
in respect of Hedge Counterparty Scheduled Fees;
(iii) to the Backup Servicer and the Trustee, as applicable,
pro rata, from Available Funds and any amounts deposited in the
Collection Account pursuant to SECTION 5.5(b), in respect of the Backup
Servicing Fee (so long as the Backup Servicer is not acting as
successor Servicer), the Trustee Fee, reasonable expenses incurred in
connection with transitioning the servicing to the Backup Servicer and
all other reasonable out-of-pocket expenses thereof (including counsel
fees and expenses) and all unpaid Backup Servicing Fees (so long as the
Backup Servicer is not acting as successor Servicer), Trustee Fees,
reasonable expenses incurred in connection with transitioning the
servicing to the Backup Servicer and all other reasonable out-of-pocket
expenses (including counsel fees and expenses) from prior Accrual
Periods; PROVIDED, HOWEVER, that expenses payable to each of the Backup
Servicer and Trustee pursuant to this CLAUSE (iii), excluding amounts
paid to the Backup Servicer in respect of transition expenses, shall be
limited to a total of $25,000 per annum; PROVIDED, FURTHER, that the
amount of transition expenses distributed to the Backup Servicer during
the term of this Agreement pursuant to this CLAUSE (iii) shall in no
case exceed $50,000 in the aggregate.
(iv) to the Servicer, from Available Funds and any amounts
deposited in the Collection Account pursuant to SECTION 5.5(b), in
respect of the Servicing Fee and all unpaid Servicing Fees from prior
Accrual Periods and all reimbursements to which the Servicer is
entitled pursuant to SECTION 5.3;
(v) to the Note Distribution Account, from Available Funds and
any amounts deposited in the Collection Account pursuant to SECTION
5.5(b), the remaining Noteholder's Interest Distributable Amount after
giving effect to Section 5.7(a)(i) hereof;
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(vi) to the Note Distribution Account, from Available Funds
and any amounts deposited in the Collection Account pursuant to SECTION
5.5(B), the Noteholder's Principal Distributable Amount for such
Accrual Period;
(vii) to the Trustee, for deposit in the Reserve Account, from
Available Funds, an amount equal to the excess of (A) the Required
Reserve Account Amount for such Settlement Date over (B) the amount on
deposit in the Reserve Account;
(viii) to the Note Distribution Account, from Available Funds,
to the Noteholder in respect of any amounts owed to the Noteholder
pursuant to Sections 3.03 and 3.04 of the Note Purchase Agreement;
(ix) to the Noteholder, from Available Funds, the Unused
Facility Fee for such Settlement Date;
(x) to the Hedge Counterparty, from Available Funds, in
respect of Hedge Counterparty Termination Fees;
(xi) to any successor Servicer from Available Funds, its
servicing fees in excess of the Servicing Fee and, to the extent not
previously paid by the predecessor Servicer pursuant to this Agreement,
reasonable transition expenses (up to a maximum of $50,000 in the
aggregate over the term of this Agreement) incurred in becoming the
successor Servicer;
(xii) to the Backup Servicer and the Trustee, as applicable,
pro rata, from Available Funds, in respect of reasonable out-of-pocket
expenses thereof (including counsel fees and expenses) and reasonable
out-of-pocket expenses (including counsel fees and expenses) from prior
Accrual Periods to the extent not paid thereto pursuant to SECTION
5.7(a)(iii) above; and
(xiii) to the Purchaser, the remaining Available Funds, if
any, and any amounts released from the Reserve Account pursuant to
SECTION 5.5(e).
(b) 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(a) on the related Settlement Date.
SECTION 5.8. NOTE DISTRIBUTION ACCOUNT.
(a) On each Settlement Date (based solely on the information
contained in the Servicer's Certificate), the Trustee shall distribute
all amounts on deposit in the Note Distribution Account to the
Noteholder in respect of the Note to the extent of amounts due and
unpaid on the Note for principal and interest in the following amounts
and in the following order of priority:
(i) to the Noteholder, the Noteholder's Interest Distributable
Amount; PROVIDED that if there are not sufficient funds in the Note
Distribution Account to pay the entire amount then due on the Note, the
amount in the Note Distribution Account shall be applied to the payment
of such interest pro rata among the Holders of the Note;
(ii) to the Noteholder, in reduction of the Invested Amount,
the Noteholder's Principal Distributable Amount to pay principal on the
Note until the outstanding principal amount of the Note has been
reduced to zero; provided that if there are not sufficient funds in the
Note Distribution Account to pay the entire amount then due on the
Note, the amount in the Note Distribution Account shall be applied to
the payment of such principal pro rata among the Holders of the Note;
(iii) to the Noteholder, any other amounts due the Noteholder
pursuant to the Basic Documents.
23
(b) On each Settlement Date, the Trustee shall provide or make
available electronically (or, upon written request, by first class mail
or facsimile) send to the Noteholder the statement or statements
provided to the Trustee by the Servicer pursuant to SECTION 5.9 hereof
on such Settlement Date; PROVIDED HOWEVER, the Trustee shall have no
obligation to provide such information described in this SECTION 5.8(b)
until it has received the requisite information from the Servicer.
SECTION 5.9. STATEMENTS TO THE NOTEHOLDER. (a) On the Determination
Date (in accordance with SECTION 4.9), the Servicer shall provide to the
Trustee, the Rating Agencies and the Noteholder on the related Record Date a
copy of the Servicer's Certificate setting forth at least the following
information as to the Note to the extent applicable:
(i) the amount of such distribution allocable to principal of
the Note;
(ii) the amount of such distribution allocable to interest on
or with respect to the Note;
(iii) the amount, if any, of such distribution payable out of
amounts withdrawn from the Reserve Account;
(iv) the Aggregate Principal Balance as of the close of
business on the last day of the preceding Accrual Period;
(v) the aggregate outstanding principal amount of the Note;
(vi) the amount of the Servicing Fee paid to the Servicer with
respect to the related Accrual Period, and the amount of any unpaid
Servicing Fees and the change in such amount from the prior Settlement
Date;
(vii) the amount of each of the Backup Servicing Fee and the
Trustee Fee paid to the Backup Servicer and the Trustee as applicable,
with respect to the related Accrual Period, and the amount of any
unpaid Backup Servicing Fees and Trustee Fees and the change in such
amounts from the prior Settlement Date;
(viii) the Noteholder's Interest Carryover Shortfall and the
Noteholder's Principal Carryover Shortfall, if any;
(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 31 to 60 days as of the last day of
the related Accrual Period;
(x) 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 31 to 45 days as of the last day of
the related Accrual Period; and
(xi) the amount of aggregate Realized Losses, if any, for the
related Accrual Period;
(xii) the number of, and the aggregate Purchase Amounts for,
Receivables, if any, that were repurchased during the related Interest
Period and summary information as to losses and delinquencies with
respect to the Receivables as of the end of the related Accrual Period;
and
(xiii) the cumulative amount of Realized Losses from the
initial Cutoff Date to the last day of the related Accrual Period.
(b) Within 60 days after the end of each calendar year,
commencing February 28, 2005, the Servicer shall deliver to the
Trustee, and the Trustee shall, provided it has received the necessary
information from the Servicer, promptly thereafter furnish to the
Noteholder (a) a report (prepared by the Servicer) as to the aggregate
24
of the amounts reported pursuant to subclauses (i), (ii), (vi) and
(vii) of SECTION 5.9(a) for such preceding calendar year, and (b) such
information as may be reasonably requested by the Noteholder or
required by the Code and regulations thereunder, to enable the
Noteholder to prepare its Federal and State income tax returns. The
obligation of the Trustee set forth in this paragraph shall be deemed
to have been satisfied to the extent that substantially comparable
information shall be provided by the Servicer to the Noteholder
pursuant to any requirements of the Code.
(c) The Trustee may make available to the Noteholder and the
Rating Agencies via the Trustee's Internet Website, all statements
described herein and, with the consent or at the direction of the
Seller, such other information regarding the Note and/or the
Receivables as the Trustee may have in its possession, but only with
the use of a password provided by the Trustee. The Trustee will make no
representation or warranties as to the accuracy or completeness of such
documents and will assume no responsibility therefore. The Trustee's
Internet Website shall be initially located at ▇▇▇.▇▇▇▇▇▇▇.▇▇▇ or at
such other address as shall be specified by the Trustee from time to
time in writing to the Noteholder. In connection with providing access
to the Trustee's Internet Website, the Trustee may require registration
and the acceptance of a disclaimer. The Trustee shall not be liable for
the dissemination of information in accordance with this Agreement.
SECTION 5.10. DIVIDEND OF INELIGIBLE RECEIVABLES. The Issuer may, on
the last day of the month in which any Receivables are sold into a
securitization transaction, distribute any Ineligible Receivables to the Seller
as a dividend; PROVIDED THAT there is no Borrowing Base Deficiency on such date.
ARTICLE VI
----------
[RESERVED]
----------
ARTICLE VI
----------
THE PURCHASER
-------------
SECTION 7.1. REPRESENTATIONS OF PURCHASER. The Purchaser makes the
following representations on which the Noteholder shall be deemed to have relied
in purchasing the Note. The representations speak as of the execution and
delivery of this Agreement and as of each Funding Date, and shall survive the
sale of the Receivables to the Purchaser and the pledge thereof to the Trustee
pursuant to the Indenture.
(a) ORGANIZATION AND GOOD STANDING. The Purchaser has been
duly formed and is validly existing as a limited liability company
solely under the laws of the state of Delaware and is in good standing
under the laws of the State of Delaware, 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 pledge the Receivables and the Other Conveyed Property
pledged to the Trustee.
(b) DUE QUALIFICATION. The Purchaser is duly qualified to do
business as a foreign limited liability company 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 Purchaser has the power
(corporate and other) and authority to execute and deliver this
Agreement and the other Basic Documents to which it is a party and to
carry out its terms and their terms, respectively; the Purchaser has
full power and authority to pledge the Collateral to be pledged to the
Trustee by it pursuant to the Indenture and has duly authorized such
pledge to the Trustee by all necessary corporate action; and the
execution, delivery and performance of this Agreement and the Basic
Documents to which the Purchaser is a party have been duly authorized
by the Purchaser by all necessary action.
25
(d) VALID SALE. BINDING OBLIGATIONS. This Agreement effects a
valid sale 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 other Basic Documents to which the
Purchaser is a party, when duly executed and delivered, shall
constitute legal, valid and binding obligations of the Purchaser
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 other Basic Documents and the
fulfillment of the terms of this Agreement and the other 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 Limited Liability Company Agreement
of the Purchaser, or any indenture, agreement, mortgage, deed of trust
or other instrument to which the Purchaser 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 Purchaser of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Purchaser or any of its properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the Purchaser's knowledge, threatened against the
Purchaser, before any court, regulatory body, administrative agency or
other tribunal or governmental instrumentality having jurisdiction over
the Purchaser or its properties (A) asserting the invalidity of this
Agreement, the Note or any of the Basic Documents, (B) seeking to
prevent the issuance of the Note 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 Purchaser of its
obligations under, or the validity or enforceability of, this Agreement
or any of the Basic Documents, or (D) relating to the Purchaser and
which might adversely affect the federal or state income, excise,
franchise or similar tax attributes of the Note.
(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 Note or the consummation of the other
transactions contemplated by this Agreement, except such as have been
duly made or obtained or as may be required by the Basic Documents.
(h) TAX RETURNS. The Purchaser has filed all federal and state
tax returns which are required to be filed and paid all taxes,
including any assessments received by it, to the extent that such taxes
have become due. Any taxes, fees and other governmental charges payable
by the Purchaser in connection with consummation of the transactions
contemplated by this Agreement and the other Basic Documents to which
the Purchaser is a party and the fulfillment of the terms of this
Agreement and the other Basic Documents to which the Purchaser is a
party have been paid or shall have been paid at or prior to the Closing
Date and as of each Funding Date.
(i) CHIEF EXECUTIVE OFFICE. The chief executive office of the
Purchaser is at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
ARTICLE VIII
------------
THE SELLER
----------
SECTION 8.1. REPRESENTATIONS OF SELLER. The Seller makes the following
representations on which the Purchaser is deemed to have relied in acquiring the
Receivables and a which the Noteholder are deemed to have relied in purchasing
the Note. The representations speak as of the execution and delivery of this
Agreement, as of the Closing Date and as of each Funding Date, and shall survive
the sale of the Receivables to the Purchaser and the pledge thereof by the
Purchaser to the Trustee pursuant to the Indenture.
26
(a) ORGANIZATION AND GOOD STANDING. The Seller has been duly
organized and is validly existing as a corporation solely under the
laws of the State of California and is in good standing under the laws
of the State of California, with power and authority to own its
properties and to conduct its business as such properties are currently
owned and such business is currently conducted, and had at all relevant
times, and now has, power, authority and legal right to acquire, own
and sell the Receivables and the Other Conveyed Property transferred to
the Purchaser and to perform its other obligations under this Agreement
or any other Basic Documents to which it is a party.
(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
(including the origination, sale and servicing of the Receivables as
required by this Agreement) shall require such qualifications.
(c) POWER AND AUTHORITY. The Seller has the power (corporate
and other) and authority to execute and deliver this Agreement and the
other 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 Purchaser by it and has
duly authorized such sale and assignment to the Purchaser 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 to the Purchaser, 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 does
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
Agreement, the Note or any of the Basic Documents, (B) seeking to
prevent the issuance of the Note 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 Note.
(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 Note or the consummation of the other
transactions contemplated by this Agreement and the Basic Documents,
except such as have been duly made or obtained.
27
(h) FINANCIAL CONDITION. The Seller has a positive net worth
and is able to and does pay its liabilities as they mature. The Seller
is not in default under any obligation to pay money to any Person
except for matters being disputed in good faith which do not involve an
obligation of the Seller on a promissory note. The Seller will not use
the proceeds from the transactions contemplated by the Basic Documents
to give any preference to any creditor or class of creditors, and this
transaction will not leave the Seller with remaining assets which are
unreasonably small compared to its ongoing operations.
(i) FRAUDULENT CONVEYANCE. The Seller is not selling the
Receivables to the Purchaser with any intent to hinder, delay or
defraud any of its creditors; the Seller will not be rendered insolvent
as a result of the sale of the Receivables to the Purchaser.
(j) TAX RETURNS. The Seller has filed all material federal and
state tax returns which are required to be filed and paid all material
taxes, including any assessments received by it, to the extent that
such taxes have become due (other than taxes, the amount or validity of
which are currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP
have been provided on the books of the Seller). Any taxes, fees and
other governmental charges payable by the Seller in connection with
consummation of the transactions contemplated by this Agreement and the
other Basic Documents to which the Seller is a party and the
fulfillment of the terms of this Agreement and the other Basic
Documents to which the Seller is a party have been paid or shall have
been paid as of each Funding Date.
(k) CHIEF EXECUTIVE OFFICE. The Seller has more than one place
of business, and the chief executive office of the Seller is at ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and its organizational number is
1682500.
(l) CERTIFICATE, STATEMENTS AND REPORTS. The officer's
certificates, statements, reports and other documents prepared by
Seller and furnished by Seller to the Purchaser, the Trustee or the
Noteholder pursuant to this Agreement or any other Basic Document to
which it is a party, and in connection with the transactions
contemplated hereby or thereby, when taken as a whole, do not contain
any untrue statement of a material fact or omit to state a material
fact necessary to make the statements contained herein or therein not
misleading.
(m) LEGAL COUNSEL, ETC. Seller consulted with its own legal
counsel and independent accountants to the extent it deems necessary
regarding the tax, accounting and regulatory consequences of the
transactions contemplated hereby, Seller is not participating in such
transactions in reliance on any representations of any other party,
their affiliates, or their counsel with respect to tax, accounting and
regulatory matters.
(n) NO MATERIAL ADVERSE CHANGE AS OF MARCH 31, 2004. No
Material Adverse Change has occurred with respect to the Seller since
the end of the quarter reported on in the Seller's Form 10-Q filed with
the Commission on May 14, 2004.
(o) NO DEFAULT. The Seller is not in default in the
performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in, and is not otherwise in default
under (i) any law or statute applicable to it, including, without
limitation, any Consumer Law, (ii) any judgment, decree, writ,
injunction, order, award or other action of any court or governmental
authority or arbitrator or any order, rule or regulation of any
federal, state, county, municipal or other governmental or public
authority or agency having or asserting jurisdiction over it or any of
its properties or (iii) (x) any indebtedness or any instrument or
agreement under or pursuant to which any such indebtedness has been, or
could be, issued or incurred or (y) any other instrument or agreement
to which it is a party or by which it is bound or any of its properties
is affected, including, without limitation, the Basic Documents, which
either individually or in the aggregate, (A) could reasonably be
expected to result in a Material Adverse Change with respect to the
Seller, or in any impairment of the right or ability of the Seller to
carry on its business substantially as now conducted or (B) could
reasonably be expected to materially and adversely affect the Seller's
performance of its obligations hereunder, or the validity or
enforceability of this Agreement or the Basic Documents.
28
SECTION 8.2. ADDITIONAL COVENANTS OF THE SELLER.
(a) SALE. The Seller agrees to treat the conveyances hereunder
for all purposes (including without limitation tax and financial
accounting purposes) as sales on all relevant books, records, tax
returns, financial statements and other applicable documents.
(b) NON-PETITION. In the event of any breach of a
representation and warranty made by the Purchaser hereunder, the Seller
covenants and agrees that it will not take any action to pursue any
remedy that it may have hereunder, in law, in equity or otherwise,
until a year and a day have passed since the date on which the Note
issued by the Purchaser has been paid in full. The Purchaser and the
Seller agree that damages will not be an adequate remedy for breach of
this covenant and that this covenant may be specifically enforced by
the Purchaser, by the Trustee on behalf of the Noteholder or the
Noteholder.
(c) CHANGES TO SELLER'S CONTRACT PURCHASE GUIDELINES. The
Seller covenants that it will not make any material changes to the
Seller's Contract Purchase Guidelines, or its classification of
Obligors within such programs unless (i) the Noteholder expressly
consents in writing prior to such changes (such consent not to be
unreasonably withheld) and (ii) after giving effect to any such
changes, the Rating Agency Condition is satisfied.
SECTION 8.3. LIABILITY OF SELLER; INDEMNITIES. Subject to the
limitation of remedies set forth in Section 3.2 hereof with respect to a breach
of any representations and warranties contained in SECTION 3.1 hereof, the
Seller shall indemnify the Purchaser, the Backup Servicer, the Trustee, the
Noteholder and their respective officers, directors, agents and employees for
any liability as a result of the failure of a Receivable to be originated in
compliance with all requirements of law and for any breach of any of its
representations, warranties or other agreements contained herein.
(a) The Seller shall defend, indemnify, and hold harmless the
Purchaser, the Backup Servicer, the Trustee, the Noteholder and their
respective officers, directors, agents and employees from and against
any and all costs, expenses, losses, damages, claims, and liabilities,
arising out of or resulting from the use, ownership, or operation by
the Seller, any Affiliate thereof or any of their respective agents or
subcontractors, of a Financed Vehicle.
(b) The Seller shall indemnify, defend and hold harmless the
Purchaser, the Backup Servicer, the Trustee, the Noteholder and their
respective officers, directors, agents and employees 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 Trustee and the Backup Servicer and except any taxes to which
the Trustee may otherwise be subject), including without limitation any
sales, gross receipts, general corporation, tangible personal property,
privilege or license taxes (but, in the case of the Purchaser, not
including any taxes asserted with respect to federal or other income
taxes arising out of distributions on the Note) and costs and expenses
in defending against the same.
(c) The Seller shall indemnify, defend and hold harmless the
Purchaser, the Backup Servicer, the Trustee, the Noteholder and their
respective officers, directors, agents and employees 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/or (ii) the Seller's or
the Purchaser's violation of Federal or state securities laws in
connection with the offering and sale of the Note.
(d) The Seller shall indemnify, defend and hold harmless the
Trustee and the Backup 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 Trustee or the Backup Servicer.
29
Indemnification under this Section shall survive the resignation or
removal of the Servicer or the Trustee and the termination of this Agreement or
the Indenture, 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.
Notwithstanding any provision of this Section 8.3 or any other
provision of this Agreement, nothing herein shall be construed as to require the
Seller to provide any indemnification hereunder or under any other Basic
Document for any costs, expenses, losses, claims, damages or liabilities arising
out of, or incurred in connection with, credit losses with respect to the
Receivables.
SECTION 8.4. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SELLER. Seller 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 Seller's
business unless, after the merger, consolidation, conveyance, transfer, lease or
succession, the successor or surviving entity shall be capable of fulfilling the
duties of Seller contained in this Agreement. Any corporation (i) into which
Seller may be merged or consolidated, (ii) resulting from any merger or
consolidation to which Seller shall be a party, (iii) which acquires by
conveyance, transfer, or lease substantially all of the assets of Seller, or
(iv) succeeding to the business of Seller, in any of the foregoing cases shall
execute an agreement of assumption to perform every obligation of Seller under
this Agreement and, whether or not such assumption agreement is executed, shall
be the successor to Seller 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 Seller from
any obligation. Seller shall provide notice of any merger, consolidation or
succession pursuant to this Section to the Trustee, the Noteholder and each
Rating Agency. Notwithstanding the foregoing, Seller shall not merge or
consolidate with any other Person or permit any other Person to become a
successor to Seller's business, unless (x) immediately after giving effect to
such transaction, no representation or warranty made pursuant to SECTION 8.1
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 Event of Default shall have occurred and be continuing, (y) Seller
shall have delivered to the Trustee, the Rating Agencies and the Noteholder 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) Seller
shall have delivered to the Trustee, the Rating Agencies and the Noteholder an
Opinion of Counsel, stating in the opinion of such counsel, either (A) all
financing statements and continuation statements and amendments thereto have
been authorized and filed that are necessary to preserve and protect the
interest of the Purchaser 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.
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.
ARTICLE IX
----------
THE SERVICER
------------
SECTION 9.1. REPRESENTATIONS OF SERVICER. The Servicer makes the
following representations on which the Purchaser is deemed to have relied in
acquiring the Receivables and on which the Noteholder is deemed to have relied
in purchasing the Note. The representations speak as of the execution and
delivery of this Agreement and as of the Closing Date, in the case of
Receivables conveyed by the Closing Date, and as of the applicable Funding Date,
in the case of Receivables conveyed by such Funding Date, and shall survive the
sale of the Receivables to the Purchaser and the pledge thereof to the Trustee
pursuant to the Indenture.
30
(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 the servicing of the Receivables as required by this
Agreement) requires or shall require such qualification except where
the failure to so qualify or obtain such licenses or consents could not
reasonably be expected to result in a material adverse effect with
respect to it or to the Receivables.
(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 Note 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 validity or enforceability of this Agreement, the Note 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 Note.
(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 Note or the consummation of the other
transactions contemplated by this Agreement, except such as have been
duly made or obtained.
(h) TAXES. The Servicer has filed all federal and state tax
returns which are required to be filed and paid all taxes, including
any assessments received by it, to the extent that such taxes have
become due (other than taxes, the amount or validity of which are
currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been
provided on the books of the Seller). Any taxes, fees and other
governmental charges payable by the Servicer in connection with
31
consummation of the transactions contemplated by this Agreement and the
other Basic Documents to which the Seller is a party and the
fulfillment of the terms of this Agreement and the other Basic
Documents to which the Seller is a party have been paid or shall have
been paid as of each Funding Date.
(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 Consumer Portfolio Services, ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
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 in the Basic Documents to which it is a party.
(i) The Servicer shall defend, indemnify and hold harmless the
Purchaser, the Trustee, the Backup Servicer, the Noteholder and their
respective officers, directors, agents and employees 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 or agent or sub-contractor
thereof of any Financed Vehicle;
(ii) The Servicer, so long as CPS is the Servicer, shall
indemnify, defend and hold harmless the Purchaser, the Trustee, the
Backup Servicer, the Noteholder and their respective officers,
directors, agents and employees 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 Purchaser, the pledge thereof to the
Trustee or the issuance and original sale of the Note) and costs and
expenses in defending against the same;
(iii) The Servicer shall indemnify, defend and hold harmless
the Purchaser, the Trustee, the Backup Servicer, the Noteholder and
their respective officers, directors, agents and employees from and
against any and all costs, expenses, losses, claims, damages, and
liabilities to the extent that such cost, expense, loss, claim, damage,
or liability arose out of, or was imposed upon the Purchaser, the
Trustee, the Backup Servicer or the Noteholder 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 or as a result of a
breach of any representation, warranty or other agreement made by the
Servicer in this Agreement; and
(iv) The Servicer shall indemnify, defend, and hold harmless
the Trustee and the Backup Servicer 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, 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 or the Backup Servicer, 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 or the Backup
Servicer.
(b) Notwithstanding the foregoing, the Servicer shall not be
obligated to defend, indemnify, and hold harmless the Noteholder for
any losses, claims, damages or liabilities incurred by the Noteholder
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 Note by the Noteholder with the assets of a plan
subject to such provisions of ERISA or the Code.
32
(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 the
Seller or any successor Servicer 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 BACKUP SERVICER.
(a) The Servicer shall not merge or consolidate with any other
Person, convey, transfer or lease all or substantially all of its
assets as an entirety to another Person, or permit any other Person to
become the successor to the Servicer's business unless, after the
merger, consolidation, conveyance, transfer, lease or succession, the
successor or surviving entity shall be capable of fulfilling the duties
of the Servicer contained in this Agreement. Any corporation (i) into
which the Servicer may be merged or consolidated, (ii) resulting from
any merger or consolidation to which the Servicer shall be a party,
(iii) which acquires by conveyance, transfer, or lease substantially
all of the assets of the Servicer, or (iv) succeeding to the business
of the Servicer, in any of the foregoing cases shall execute an
agreement of assumption to perform every obligation of the Servicer
under this Agreement and, whether or not such assumption agreement is
executed, shall be the successor to the 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 Servicer from
any obligation. The Servicer shall provide notice of any merger,
consolidation or succession pursuant to this Section to the Trustee,
the Noteholder and each Rating Agency. Notwithstanding the foregoing,
the Servicer shall not merge or consolidate with any other Person or
permit any other Person to become a successor to the Servicer'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 Event of Default shall have occurred and be
continuing, (y) the Servicer shall have delivered to the Trustee, the
Rating Agencies and the Noteholder 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)
the Servicer shall have delivered to the Trustee, the Rating Agencies
and the Noteholder 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 Purchaser 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 Person (i) into which the Backup Servicer (in its
capacity as Backup Servicer or successor Servicer) may be merged or
consolidated, (ii) resulting from any merger or consolidation to which
the Backup Servicer shall be a party, (iii) which acquires by
conveyance, transfer or lease substantially all of the assets of the
Backup Servicer, or (iv) succeeding to the business of the Backup
Servicer, in any of the foregoing cases shall execute an agreement of
assumption to perform every obligation of the Backup Servicer under
this Agreement and, whether or not such assumption agreement is
executed, shall be the successor to the Backup 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 Backup Servicer
from any obligation.
33
SECTION 9.4. [RESERVED]
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 receivables with the prior written consent of the
Noteholder; PROVIDED, HOWEVER, that no such delegation or subcontracting of
duties by the Servicer shall relieve the Servicer of its responsibility with
respect to such duties.
SECTION 9.6. SERVICER AND BACKUP SERVICER NOT TO RESIGN. Subject to the
provisions of SECTION 9.3, neither the Servicer nor the Backup Servicer shall
resign from the obligations and duties imposed on it by this Agreement as
Servicer or Backup Servicer except (i) 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 Backup Servicer, as
the case may be, and the Noteholder does not elect to waive the obligations of
the Servicer or the Backup 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 or, (ii) in the case of the Backup Servicer, upon the prior written
consent of the Noteholder. Any such determination permitting the resignation of
the Servicer or Backup Servicer shall be evidenced by an Opinion of Counsel to
such effect delivered and acceptable to the Trustee and the Noteholder. No
resignation of the Servicer shall become effective until the Backup Servicer or
an entity acceptable to the Noteholder shall have assumed the responsibilities
and obligations of the Servicer. No resignation of the Backup Servicer shall
become effective until an entity acceptable to the Noteholder shall have assumed
the responsibilities and obligations of the Backup Servicer; provided, however,
that in the event a successor Backup Servicer is not appointed within 60 days
after the Backup Servicer has given notice of its resignation and has provided
the Opinion of Counsel required by this SECTION 9.6, the Backup Servicer may
petition a court for its removal.
SECTION 9.7. REPORTING REQUIREMENTS. (a) The Servicer shall furnish, or
cause to be furnished to the Noteholder:
(i) AUDIT REPORT. As soon as available and in any event within
90 days after the end of each fiscal year of the Servicer, a copy of
the consolidated balance sheet of the Servicer and its Affiliates as at
the end of such fiscal year, together with the related statements of
earnings, stockholders' equity and cash flows for such fiscal year,
prepared in reasonable detail and in accordance with GAAP certified by
independent certified public accountants of recognized national
standing as shall be selected by the Servicer.
(ii) QUARTERLY STATEMENTS. As soon as available, but in any
event within 45 days after the end of each fiscal quarter (except the
fourth fiscal quarter) of the Servicer, copies of the unaudited
consolidated balance sheet of the Servicer and its Affiliates as at the
end of such fiscal quarter and the related unaudited statements of
earnings, stockholders' equity and cash flows for the portion of the
fiscal year through such fiscal quarter (and as to the statements of
earnings for such fiscal quarter) in each case setting forth in
comparative form the figures for the corresponding periods of the
previous fiscal year, prepared in reasonable detail and in accordance
with GAAP applied consistently throughout the periods reflected therein
and certified by the chief financial or accounting officer of the
Servicer as presenting fairly the financial condition and results of
operations of the Servicer and its Affiliates (subject to normal
year-end adjustments).
ARTICLE X
---------
DEFAULT
-------
SECTION 10.1. SERVICER TERMINATION EVENTS. For purposes of this
Agreement, each of the following shall constitute a "SERVICER TERMINATION
EVENT":
(a) Any failure by the Servicer or, for so long as the Seller
or an Affiliate of the Purchaser is the Servicer, the Purchaser, to
deliver any proceeds or payment required to be so delivered under this
Agreement or any other Basic Document that continues unremedied for a
period of two Business Days (or one Business Day with respect to
payment of Purchase Amounts) after written notice is received by the
Servicer from the Trustee or the Noteholder or after discovery of such
failure by a Responsible Officer of the Servicer;
34
(b) Failure by the Servicer to deliver to the Trustee and the
Noteholder the Servicer's Certificate 12:00 noon New York City time on
the second Business Day after the date such Servicer's Certificate is
required to be delivered;
(c) Failure on the part of the Servicer or, for so long as the
Seller or an Affiliate of the Purchaser is the Servicer, the Purchaser
to duly observe or perform any other covenants or agreements of the
Servicer or the Purchaser, as applicable, set forth in this Agreement,
which failure (i) materially and adversely affects the rights of the
Noteholder and (ii) except for covenants relating to merger and
consolidation or preservation of ownership or security interests in the
Financed Vehicles, continues unremedied for a period of 30 days after
the earlier of knowledge thereof by the Servicer or after the date on
which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Noteholder;
(d) The occurrence of an Insolvency Event with respect to the
Servicer (or, for so long as the Seller or an Affiliate of the
Purchaser is the Servicer, the Purchaser);
(e) Any representation, warranty or statement of the Servicer
made in this Agreement or any other Basic Document to which it is a
party or any certificate, report or other writing delivered pursuant
hereto or thereto shall prove to be incorrect in any material respect
as of the time when the same shall have been made (excluding, however,
any representation or warranty set forth in this Agreement relating to
the characteristics of the Receivables), and the incorrectness of such
representation, warranty or statement has a material adverse effect on
the Purchaser or the Noteholder and, within 30 days after the earlier
of knowledge thereof by the Servicer or after written notice thereof
shall have been given to the Servicer by the Trustee or the Noteholder
the circumstances or condition in respect of which such representation,
warranty or statement was incorrect shall not have been eliminated or
otherwise cured;
(f) If (i) during any period hereafter commencing April 1and
ending the following September 30, the average of the Servicer
Delinquency Ratios for the last day of each of the preceding three
Accrual Periods exceeds 6.00%, or (ii) during any period hereafter
commencing October 1 and ending the following March 31, the average of
the Servicer Delinquency Ratios for the last day of each of the
preceding three Accrual Periods exceeds 6.50%;
(g) The Loss Ratio exceeds 8.00%;
(h) The Noteholder shall not have delivered a Servicer
Extension Notice pursuant to SECTION 4.15; or
(i) An Event of Default shall have occurred.
In the event that the Servicer, Purchaser or Trustee gains knowledge of
the occurrence of a Servicer Termination Event, the Servicer, Purchaser or
Trustee, as applicable, shall promptly notify the Noteholder in writing of such
occurrence; PROVIDED, THAT, the Servicer shall be deemed to satisfy such
obligation upon its delivery of an Officer's Certificate in accordance with
SECTION 4.10 hereof.
SECTION 10.2. CONSEQUENCES OF A SERVICER TERMINATION EVENT. If a
Servicer Termination Event shall occur and be continuing, the Noteholder by
notice given in writing to the Servicer 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 Accrual 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 Note or the
Receivables and Other Conveyed Property or otherwise, automatically shall pass
35
to, be vested in and become obligations and responsibilities of the Backup
Servicer (or such other successor Servicer appointed by the Noteholder under
SECTION 10.3); PROVIDED, HOWEVER, that the successor Servicer shall have no
liability with respect to any obligation which was required to be performed by
the terminated Servicer prior to the date that the successor Servicer becomes
the Servicer or any claim of a third party based on any alleged action or
inaction of the terminated Servicer. The successor Servicer is authorized and
empowered by this Agreement to execute and deliver, on behalf of the terminated
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of the Receivables and the Other Conveyed
Property and related documents to show the Purchaser 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 reasonable
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 hereof. Upon receipt of
notice of the occurrence of a Servicer Termination Event, the Trustee shall give
notice thereof to the Rating Agencies and the Noteholder. If requested by the
Noteholder, 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 Noteholder, at the successor
Servicer's expense. The terminated Servicer shall grant the Trustee, the
successor Servicer and the Noteholder 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 4.15, or upon the resignation
of the Servicer pursuant to SECTION 9.6, the predecessor Servicer shall
continue to perform its functions as Servicer under this Agreement, in
the case of termination, only until the date specified in such
termination notice or, if no such date is specified in a notice of
termination, until receipt of such notice and, in the case of
expiration and non-renewal of the term of the Servicer upon the
expiration of such term, and, in the case of resignation, until the
later of (x) the date 45 days from the delivery to the Trustee of
written notice of such resignation (or written confirmation of such
notice) in accordance with the terms of this Agreement and (y) the date
upon which the predecessor Servicer shall become unable to act as
Servicer, as specified in the notice of resignation and accompanying
Opinion of Counsel; 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 the Backup
Servicer or any other successor Servicer shall not have assumed the
duties, obligations and liabilities or 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, Backup Servicer (or such other
Person as shall have been appointed by the Noteholder) 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, ▇▇▇▇▇ Fargo Bank, National
Association, as the Backup 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 Noteholder shall have
determined that a Person other than the Backup 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
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successor Servicer. Notwithstanding the Backup Servicer's assumption
of, and its agreement to perform and observe, all duties,
responsibilities and obligations of the Seller as Servicer, or any
successor Servicer, under this Agreement arising on and after the
Assumption Date, the Backup 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 (i) the
Seller or any other 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 the Seller or any other 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 the Seller or any
other Servicer therefor arose, whether provided by the terms of this
Agreement, arising by operation of law or otherwise, or (ii) under
SECTION 9.2(a)(ii), (iv) or (v). Notwithstanding the above, if the
Backup Servicer shall be legally unable or unwilling to act as
Servicer, the Backup Servicer, the Trustee or the Noteholder 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 Backup 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
Backup Servicer of its obligation to succeed as successor Servicer upon
the termination of the Servicer pursuant to SECTION 10.2 or the
resignation of the Servicer pursuant to SECTION 9.6. If upon the
termination of the Servicer pursuant to SECTION 10.2 or the resignation
of the Servicer pursuant to SECTION 9.6, the Noteholder appoints a
successor Servicer other than the Backup Servicer, the Backup Servicer
shall not be relieved of its duties as Backup Servicer hereunder.
(b) Any successor Servicer shall be entitled to such
compensation (whether payable out of the Collection Account or
otherwise) as the Servicer would have been entitled to under this
Agreement if the Servicer had not resigned or been terminated
hereunder.
SECTION 10.4. NOTIFICATION TO THE NOTEHOLDER. Upon any termination of,
or appointment of a successor to, the Servicer, the Trustee shall give prompt
written notice thereof to the Noteholder and to the Rating Agencies.
SECTION 10.5. WAIVER OF PAST DEFAUlTS. The Noteholder may, waive in
writing any default by the Servicer in the performance of its obligations under
this Agreement and the consequences thereof. 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 Noteholder. 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) through (h) unless
notified thereof in writing by the Servicer or the Noteholder. 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.
SECTION 10.7. CONTINUED ERRORS. Notwithstanding anything contained
herein to the contrary, if the Backup Servicer becomes successor Servicer it is
authorized to accept and rely on all of the accounting, records (including
computer records) and work of the prior Servicer relating to the Receivables
(collectively, the "PREDECESSOR SERVICER WORK PRODUCT") without any audit or
other examination thereof, and the Backup Servicer as successor Servicer shall
have no duty, responsibility, obligation or liability for the acts and omissions
of the prior Servicer. If any error, inaccuracy, omission or incorrect or
non-standard practice or procedure (collectively, "ERRORS") exist in any
Predecessor Servicer Work Product and such Errors make it materially more
difficult to service or should cause or materially contribute to the Backup
Servicer as successor Servicer making or continuing any Errors (collectively,
"CONTINUED Errors"), the Backup Servicer as successor Servicer shall have no
duty or responsibility, for such Continued Errors; PROVIDED, HOWEVER, that the
Backup Servicer as successor Servicer agrees to use its best efforts to prevent
further Continued Errors. In the event that the Backup Servicer as successor
Servicer becomes aware of Errors or Continued Errors, the Backup Servicer as
successor Servicer shall, with the prior consent of the Noteholder use its best
efforts to reconstruct and reconcile such data as is commercially reasonable to
correct such Errors and Continued Errors and to prevent future Continued Errors.
The Backup Servicer as successor Servicer shall be entitled to recover its costs
thereby expended in accordance with SECTION 5.7(A)(XI) hereof.
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ARTICLE XI
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MISCELLANEOUS PROVISIONS
------------------------
SECTION 11.1. AMENDMENT.
(a) This Agreement may not be waived, amended or otherwise
modified except in a writing signed by the parties hereto and the
Noteholder.
(b) Promptly after the execution of any such amendment, waiver
or consent, the Trustee shall furnish written notification of the
substance of such amendment or consent to Rating Agencies.
(c) Prior to the execution of any amendment, waiver or consent
to this Agreement the Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such
amendment, waiver or consent is authorized or permitted by this
Agreement and the Opinion of Counsel referred to in SECTION 11.2(i)(i)
has been delivered.
(d) The Trustee may, but shall not be obligated to, enter into
any such amendment, waiver or consent which affects the Purchaser's or
the Trustee's, as applicable, own rights, duties or immunities under
this Agreement or otherwise.
(e) Upon the termination of the Seller as Servicer and the
appointment of the Backup Servicer as Servicer hereunder, all
amendments to the terms of this Agreement specified in the Servicing
and Lockbox Processing Assumption Agreement shall become a part of this
Agreement, as if this Agreement was amended to reflect such changes in
accordance with this SECTION 11.1.
SECTION 11.2. PROTECTION OF TITLE TO PROPERTY.
(a) The Seller, the Purchaser or Servicer or each of them
shall authorize, execute (if necessary) and file such financing
statements and cause to be authorized, executed (if necessary) 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 Purchaser 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 Noteholder 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) None of the Seller, the Purchaser or the Servicer shall
change its name, identity, jurisdiction of organization, form of
organization 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 9-506(a) of the UCC, unless it shall have given the
Noteholder and the Trustee at least thirty 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 Purchaser, the Seller or the Servicer,
as the case may be, shall deliver an Opinion of Counsel to the Trustee
and the Noteholder, in a form and substance reasonably satisfactory to
the Noteholder, stating either (A) all financing statements and
continuation statements have been authorized, executed and filed that
are necessary fully to preserve and protect the interest of the
Purchaser 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.
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(c) Each of the Seller, the Purchaser and the Servicer shall
have an obligation to give the Noteholder and the Trustee at least 60
days' prior written notice of any relocation of its chief executive
office or a change in its jurisdiction of organization if, as a result
of such relocation or change, 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 or new financing statement.
The Servicer shall at all times be organized under the laws of the
United States (or any State thereof), maintain each office from which
it shall service Receivables, and its chief executive office and
jurisdiction of organization, 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 Purchaser, the Servicer's master computer records (including any
backup archives) that refer to a Receivable shall indicate clearly the
interest of the Purchaser in such Receivable and that such Receivable
is owned by the Purchaser and pledged to the Trustee. Indication of the
Purchaser's and the Trustee'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 Purchaser and pledged
to the Trustee.
(g) The Servicer shall permit the Trustee, the Backup Servicer
and the Noteholder and their respective agents upon reasonable notice
and 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 Noteholder
or to the Trustee, within five Business Days, a list of all Receivables
(by contract number and name of Obligor) then pledged to the Trustee,
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 lien of the
Indenture.
(i) The Servicer shall deliver to the Noteholder and the
Trustee:
(i) promptly after the execution and delivery of this
Agreement and, if required pursuant to SECTION 11.1, of each amendment,
waiver, or consent, an Opinion of Counsel, in form and substance
satisfactory to the Noteholder, stating that in the opinion of such
counsel, either (A) all financing statements and continuation
statements have been authorized, executed and filed that are necessary
fully to preserve and protect the interest of the Purchaser and the
Trustee in the Receivables and the Opinion Collateral, and reciting the
details of such filings or referring to a prior Opinion 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 Closing Date, an Opinion of Counsel, dated as of a date
during such 90-day period, stating that, the opinion of such counsel,
either (a) all financing statements and continuation statement have
been authorized, executed and filed that are necessary fully to
preserve and protect the interest of the Purchaser and the Trustee in
the Receivables and the Opinion Collateral, 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.
39
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 11.3. NOTICES. All demands, notices and communications upon or
to the Seller, the Backup Servicer, the Servicer, the Trustee or the Rating
Agencies under this Agreement shall be in writing, via facsimile, 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
Consumer Portfolio Services, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: Chief Financial Officer, Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇; (b) in the case of
the Servicer, to Consumer Portfolio Services, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Chief Financial Officer, Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇;
(c) in the case of the Purchaser, to Page Funding LLC, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Chief Financial Officer, Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇;
(d) in the case of the Trustee or the Backup Servicer at the Corporate Trust
Office; (e) in the case of the Noteholder, to UBS Real Estate Securities Inc.,
1285 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Tamer El-Rayess, Telecopy: (▇▇▇)▇▇▇-▇▇▇▇; (f) in the case of Moody's, to ▇▇▇▇▇'▇
Investors Service, Inc., ABS Monitoring Department, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇; and (g) 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, Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇. Any notice so mailed within
the time prescribed in this Agreement shall be conclusively presumed to have
been duly given, whether or not the Noteholder shall receive such notice.
SECTION 11.4. 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 in SECTIONS 8.4, 9.3 and this SECTION 11.4 and as provided in
the provisions of this Agreement concerning the resignation of the Servicer,
this Agreement may not be assigned by the Purchaser, the Seller or the Servicer
without the prior written consent of the Trustee, the Backup Servicer and the
Noteholder; PROVIDED THAT the Purchaser will grant all of its right, title and
interest herein to the Trustee for the benefit of the Noteholder.
SECTION 11.5. 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 Noteholder or its assignee, as a third-party beneficiary. 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 Collateral or under
or in respect of this Agreement or any covenants, conditions or provisions
contained herein.
SECTION 11.6. 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 11.7. 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 11.8. 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 11.9. GOVERNING LAW. THIS AGREEMENT (OTHER THAN SECTIONS 2.1(A)
AND 2.2 HEREOF) SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS (OTHER THAN
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS. SECTIONS 2.1(A) AND 2.2 OF THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES UNDER SUCH SECTION SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
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SECTION 11.10. ASSIGNMENT TO TRUSTEE. The Seller hereby acknowledges
and consents to any mortgage, pledge, assignment and grant of a security
interest by the Purchaser to the Trustee pursuant to the Indenture for the
benefit of the Noteholder of all right, title and interest of the Purchaser in,
to and under the Receivables and Other Coverage of Property and/or the
assignment of any or all of the Purchaser's rights and obligations hereunder to
the Trustee.
SECTION 11.11.NONPETITION COVENANTS. 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 Final Scheduled Settlement
Date, acquiesce, petition or otherwise invoke or cause the Purchaser to invoke
the process of any court or government authority for the purpose of commencing
or sustaining a case against the Purchaser 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
Purchaser or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Purchaser.
SECTION 11.12. LIMITATION OF LIABILITY OF TRUSTEE. Notwithstanding
anything contained herein to the contrary, this Agreement has been executed and
delivered by ▇▇▇▇▇ Fargo Bank, National Association, not in its individual
capacity but solely as Trustee and Backup Servicer and in no event shall ▇▇▇▇▇
Fargo Bank, National Association, have any liability for the representations,
warranties, covenants, agreements or other obligations of the Purchaser
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 Purchaser.
SECTION 11.13. 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 Purchaser, the Trustee and Backup Servicer
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 Purchaser in any
way and shall not otherwise be deemed an agent of the Purchaser.
SECTION 11.14. NO JOINT VENTURE. Nothing contained in this Agreement
(i) shall constitute the Servicer and the Purchaser 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 11.15. INTENTION OF PARTIES REGARDING DELAWARE SECURITIZATION
ACT. It is the intention of the Purchaser and the Seller that the transfer and
assignment of the property contemplated by SECTION 2.1(A) of this Agreement
shall constitute a sale of property from the Seller to the Purchaser, conveying
good title thereto free and clear of any liens, and the beneficial interest in
and title to such assets 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 or similar law. In addition, for purposes of complying with the
requirements of the Asset-Backed Securities Facilitation Act of the State of
Delaware, 6 Del. C. ss. 2701A, et seq. (the "SECURITIZATION ACT"), each of the
parties hereto hereby agrees that:
(a) any property, assets or rights purported to be
transferred, in whole or in part, by the Seller to the Purchaser
pursuant to this Agreement shall be deemed to no longer be the
property, assets or rights of the Seller;
(b) none of the Seller, its creditors or, in any insolvency
proceeding with respect to the Seller or the Seller's property, a
bankruptcy trustee, receiver, debtor, debtor in possession or similar
person, to the extent the issue is governed by Delaware law, shall have
any rights, legal or equitable, whatsoever to reacquire (except
pursuant to a provision of this Agreement), reclaim, recover,
repudiate, disaffirm, redeem or recharacterize as property of the
Seller any property, assets or rights purported to be transferred, in
whole or in part, by the Seller to the Purchaser pursuant to this
Agreement;
(c) in the event of a bankruptcy, receivership or other
insolvency proceeding with respect to the Seller or the Seller's
property, to the extent the issue is governed by Delaware law, such
property, assets and rights shall not be deemed to be part of the
Seller's property, assets, rights or estate; and
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(d) the transaction contemplated by this Agreement shall
constitute a "securitization transaction" as such term is used in the
Securitization Act..
SECTION 11.16. SPECIAL SUPPLEMENTAL AGREEMENT. If any party to this
Agreement is unable to sign any amendment or supplement due to its dissolution,
winding up or comparable circumstances, then the consent of the Noteholder shall
be sufficient to amend this Agreement without such party's signature.
SECTION 11.17. LIMITED RECOURSE. Notwithstanding anything to the
contrary contained in this Agreement, the obligations of the Purchaser hereunder
are solely the obligations of the Purchaser, and shall be payable by the
Purchaser, solely as provided herein. The Purchaser shall only be required to
pay (a) any fees, expenses, indemnities or other liabilities that it may incur
hereunder (i) from funds available pursuant to, and in accordance with, the
payment priorities set forth in SECTION 5.7(a) and (ii) only to the extent the
Purchaser receives additional funds for such purposes or to the extent it has
additional funds available (other than funds described in the preceding clause
(i)) that would be in excess of amounts that would be necessary to pay the debt
and other obligations of the Purchaser incurred in accordance with the
Purchaser's limited liability company agreement and all financing documents to
which the Purchaser is a party. In addition, no amount owing by the Purchaser
hereunder in excess of the liabilities that it is required to pay in accordance
with the preceding sentence shall constitute a "claim" (as defined in Section
101(5) of the Bankruptcy Code) against it. No recourse shall be had for the
payment of any amount owing hereunder or for the payment of any fee hereunder or
any other obligation of, or claim against, the Purchaser arising out of or based
upon any provision herein, against any member, employee, officer, agent,
director or authorized person of the Purchaser or any Affiliate thereof;
PROVIDED, HOWEVER, that the foregoing shall not relieve any such person or
entity of any liability they might otherwise have as a result of fraudulent
actions or omissions taken by them.
SECTION 11.18. ACKNOWLEDGEMENT OF ROLES. The parties expressly
acknowledge and consent to ▇▇▇▇▇ Fargo Bank, National Association acting in the
multiple capacities of Backup Servicer and Trustee. The parties agree that ▇▇▇▇▇
Fargo Bank, National Association in such multiple capacities shall not be
subject to any claim, defense or liability arising from its performance in any
such capacity based on conflict of interest principles, duty of loyalty
principles or other breach of fiduciary duties to the extent that any such
conflict or breach arises from the performance by ▇▇▇▇▇ Fargo Bank, National
Association of any other such capacity or capacities in accordance with this
Agreement or any other Basic Documents to which it is a party.
SECTION 11.19. TERMINATION. The respective obligations and
responsibilities of the Seller, the Purchaser, the Servicer, the Backup
Servicer, and the Trustee created hereby shall terminate on the Termination
Date; PROVIDED, HOWEVER, in any case there shall be delivered to the Trustee and
the Noteholder an Opinion of Counsel that all applicable preference periods
under federal, state and local bankruptcy, insolvency and similar laws have
expired with respect to the payments pursuant to this SECTION 11.19. The
Servicer shall promptly notify the Trustee, the Seller, the Issuer, each Rating
Agency and the Noteholder of any prospective termination pursuant to this
SECTION 11.19.
SECTION 11.20. SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, OR ANY LEGAL PROCESS WITH RESPECT TO ITSELF OR
ANY OF ITS PROPERTY, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY
DOCUMENT RELATED HERETO. EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE OF
ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY NEW YORK LAW.
SECTION 11.21. WAIVER OF TRIAL BY JURY. THE PARTIES HERETO EACH WAIVE
THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE
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BROUGHT BY ANY PARTY AGAINST THE OTHER PARTY, WHETHER WITH RESPECT TO CONTRACT
CLAIMS, TORT CLAIMS OR OTHERWISE. THE PARTIES HERETO EACH AGREE THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO
A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT.
SECTION 11.22. PROCESS AGENT. Each of Purchaser, Seller, Servicer and
Trustee agrees that the process by which any proceedings in the State of New
York are begun may be served on it by being delivered by certified mail at the
chief executive office or corporate trust office, as applicable, or at its
registered office for the time being. If such person is not or ceases to be
effectively appointed to accept service of process on the Purchaser's, Seller's,
Servicer's or Trustee's behalf, the Purchaser, Seller, Servicer or Trustee, as
applicable, shall, on the written demand of the process agent, appoint a further
person in the State of New York to accept service of process on its behalf and,
failing such appointment within 15 days, the process agent shall be entitled to
appoint such a person by written notice to the Purchaser, Seller, Servicer or
Trustee, as applicable. Nothing in this sub-clause shall affect the right of the
process agent to serve process in any other manner permitted by law.
SECTION 11.23. NO SET-OFF. Each of the Seller and Servicer agrees that
it shall have no right of set-off or banker's lien against, and no right to
otherwise deduct from, any funds held in any account described herein or in the
Basic Documents for any amount owed to it by the Seller, Servicer or Noteholder.
SECTION 11.24. NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise
and no delay in exercising any right, remedy, power or privilege hereunder,
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise hereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exhaustive of any rights, remedies, powers and privileges provided by law.
SECTION 11.25. MERGER AND INTEGRATION. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
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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.
PAGE FUNDING LLC, as Purchaser
By:________________________________
Title:
CONSUMER PORTFOLIO SERVICES, INC., as
Seller
By:________________________________
Title:
CONSUMER PORTFOLIO SERVICES, INC.,
as Servicer
By:________________________________
Title:
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
not in its individual capacity, but
solely as Backup Servicer and Trustee
By:________________________________
Title:
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SCHEDULE A
SCHEDULE OF RECEIVABLES
[Available upon request from Servicer]
SCHEDULE B
LOCATION FOR DELIVERY OF RECEIVABLE FILES
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION
MAC N9328-011
Suite ABS
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Services -
Asset-Backed Securities Vault