EXHIBIT 1
EXECUTION COPY
FINANCIAL ASSET SECURITIES CORP.
Depositor
and
CONSUMER PORTFOLIO SERVICES, INC.
Originator and Servicer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Trustee and Standby Servicer
POOLING AND SERVICING AGREEMENT
Dated as of March 1, 1998
$186,954,818.61
CPS Grantor Trust 1998-1
$177,607,077.70 6.00% Class A Certificates
$9,347,740.93 10.25% Class B Certificates
POOLING AND SERVICING AGREEMENT dated as of March 1, 1998 (the
"Agreement") among Financial Asset Securities Corp., a Delaware corporation, as
depositor (the "Depositor"), Consumer Portfolio Services, Inc., a California
corporation, as originator of the receivables ("CPS"), and as servicer (in such
capacity, the "Servicer"), and Norwest Bank Minnesota, National Association, a
national banking association, as trustee and standby servicer (the "Trustee" and
"Standby Servicer", respectively).
WHEREAS the Depositor has purchased a portfolio of receivables arising
in connection with motor vehicle retail installment sale contracts acquired by
Consumer Portfolio Services, Inc., Samco Acceptance Corp. or Linc Acceptance
Company LLC through motor vehicle dealers, independent finance companies and
deposit institutions;
WHEREAS the Servicer is willing to service all such
receivables;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, and other good and valuable consideration, the
receipt of which is acknowledged, the parties hereto, intending to be legally
bound, agree as follows:
ARTICLE I
Definitions
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SECTION I.1. Definitions. Whenever used in this Agreement,
the following words and phrases, unless the context otherwise
requires, whenever capitalized shall have the following meanings:
"Adjusted Compensating Interest" has the meaning assigned to
such term in Section 3.8(b).
"Affiliate" of any Person means any Person who directly or indirectly
controls, is controlled by, or is under direct or indirect common control with
such Person. For purposes of this definition of "Affiliate", the term "control"
(including the terms "controlling", "controlled by" and "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause a direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
"Agreement" means this Pooling and Servicing Agreement, as the same may
be amended and supplemented from time to time.
"Amount Financed" means with respect to a Receivable the aggregate
amount originally advanced under such Receivable toward the purchase price of
the Financed Vehicle and any related costs, including amounts advanced in
respect of accessories, insurance premiums, service and warranty contracts,
other items customarily financed as part of retail automobile installment sale
contracts or promissory notes, and related costs.
"Annual Percentage Rate" or "APR" of a Receivable means the annual
percentage rate of finance charges or service charges as stated in the related
Contract.
"Authenticating Agent" has the meaning assigned to such term
in Section 6.2B.
"Bank of America" means Bank of America National Trust and Savings
Association and its successors.
"Basic Documents" means this Pooling and Servicing Agreement, the CPS
Purchase Agreement, the Samco Purchase Agreement, the Linc Purchase Agreement,
the Insurance Agreement, the Indemnification Agreement, the Indemnification and
Contribution Agreement dated March 13, 1998, among the Depositor, Greenwich
Capital Markets, Inc. and CPS, the Premium Side Letter, the Spread Account
Agreement and the Series 1998-1 Supplement thereto, the Lock-Box Agreement, and
the Servicing Assumption Agreement.
"Book-Entry Certificates" means beneficial interests in the Class A
Certificates, ownership and transfers of which shall be evidenced or made
through book entries by a Clearing Agency; provided that after the occurrence of
a condition whereupon book-entry registration and transfer are no longer
permitted and Definitive Certificates are issued to the Certificate Owners, such
Definitive Certificates shall replace Book-Entry Certificates.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in the City of New York, the State in which the
Corporate Trust Office is located, the State in which the executive offices of
the Servicer are located or the State in which the principal place of business
of the Certificate Insurer is located shall be authorized or obligated by law,
executive order, or governmental decree to be closed.
"Casualty" means, with respect to a Financed Vehicle, the total loss or
destruction of such Financed Vehicle.
"Certificate" means any one of the certificates executed by the
Trustee on behalf of the Trust and authenticated by the Trustee in substantially
the form set forth in Exhibit A or Exhibit B hereto.
"Certificate Account" means the account designated as such, established
and maintained pursuant to Section 4.1.
"Certificate Balance" as of any day, means the sum of the Class A
Certificate Balance on such day and the Class B Certificate Balance on such day.
"Certificate Insurer" means Financial Security Assurance Inc., a stock
insurance company organized and created under the laws of the State of New York,
or its successors in interest.
"Certificate Insurer Optional Deposit" means, with respect to any
Determination Date and the related Distribution Date, any amount delivered by
the Certificate Insurer to the Trustee in accordance with Section 4.11.
"Certificate Owner" means, with respect to a Book-Entry Certificate,
the Person who is the beneficial owner thereof as reflected on the books of the
Clearing Agency, or on the books of a Person maintaining an account with such
Clearing Agency (directly or as an indirect participant), in accordance with the
rules of such Clearing Agency.
"Certificate Register" and "Certificate Registrar" mean, respectively,
the register maintained and the Certificate Registrar appointed pursuant to
Section 6.3.
"Certificateholder" or "Holder" means the Person in whose name a
Certificate shall be registered in the Certificate Register, except that so long
as any Certificates are outstanding, solely for the purposes of giving any
consent, waiver, request or demand pursuant to this Agreement, the interest
evidenced by any Certificate registered in the name of the Depositor, CPS, the
Servicer or any of their Affiliates, shall not be taken into account in
determining whether the requisite percentage necessary to effect any such
consent, waiver, request or demand shall have been obtained.
"Certificates" means the Class A Certificates and the
Class B Certificates.
"Class A Certificate" means any one of the 6.00% Class A Certificates,
executed by the Trustee on behalf of the Trust and authenticated by the Trustee
in substantially the form set forth in Exhibit A hereto.
"Class A Certificate Balance" shall equal, initially, the Class A
Percentage of the Original Pool Balance and, thereafter, shall equal the initial
Class A Certificate Balance, reduced by all amounts previously distributed to
Class A Certificateholders and allocable to principal.
"Class A Certificateholder" means the Person in whose name a Class A
Certificate shall be registered in the Certificate Register.
"Class A Distributable Amount" means, for any Distribution Date, an
amount equal to the sum of the Class A Principal Distributable Amount with
respect to such Distribution Date and the Class A Interest Distributable Amount
with respect to such Distribution Date.
"Class A Guaranteed Distribution Amount" means, with respect to each
Distribution Date, the sum of the Class A Interest Distributable Amount for such
Distribution Date and the Class A Principal Distributable Amount for such
Distribution Date, in each case in accordance with the original terms of the
Class A Certificates when issued and without regard to any amendment or
modification of the Certificates or the Agreement which has not been consented
to by the Certificate Insurer; provided, however, the Class A Guaranteed
Distribution Amount shall not include, nor shall coverage be provided under the
Policy in respect of, any taxes, withholding or other charge imposed with
respect to any Class A Certificateholder by any governmental authority.
"Class A Interest Carryover Shortfall" means, as of the close of
business on any Distribution Date on which an Insurer Default is continuing, the
excess of the Class A Interest Distributable Amount for such Distribution Date
and any outstanding Class A Interest Carryover Shortfall from the preceding
Distribution Date, over the amount of interest that the Holders of the Class A
Certificates actually received on such current Distribution Date.
"Class A Interest Distributable Amount" means, for any Distribution
Date, an amount equal to thirty (30) days of interest at the Class A
Pass-Through Rate on the Class A Certificate Balance as of the close of business
on the last day of the related Collection Period (calculated on the basis of a
360-day year consisting of twelve 30-day months); provided, however, that on the
first Distribution Date, the Class A Interest Distributable Amount will equal
interest at the Class A Pass-Through Rate on the Class A Certificate Balance
from and including the Closing Date through and including April 14, 1998.
"Class A Pass-Through Rate" means 6.00% per annum.
"Class A Percentage" shall be ninety-five percent (95%).
"Class A Pool Factor" means, as of a Distribution Date, a seven-digit
decimal figure equal to the Class A Certificate Balance as of the close of
business on such Distribution Date divided by the initial Class A Certificate
Balance. The Class A Pool Factor will be 1.0000000 as of the Closing Date;
thereafter, the Class A Pool Factor will decline to reflect reductions in the
Class A Certificate Balance.
"Class A Principal Carryover Shortfall" means, as of the close of
business on any Distribution Date on which an Insurer Default is continuing, the
excess of the Class A Principal Distributable Amount and any outstanding Class A
Principal Carryover Shortfall from the preceding Distribution Date, over the
amount of principal that the Holders of the Class A Certificates actually
received on such current Distribution Date.
"Class A Principal Distributable Amount" means, with respect to any
Distribution Date other than the Final Scheduled Distribution Date, the sum of
(a) the Class A Percentage of the Principal Distributable Amount plus (b) the
portion of the Certificate Insurer Optional Deposit pursuant to Section
4.11(ii), if any, allocable to principal for such Distribution Date. In
addition, on the Final Scheduled Distribution Date, the Class A Principal
Distributable Amount will equal the Class A Certificate Balance as of the Final
Scheduled Distribution Date.
"Class B Certificate" means any one of the 10.25% Class B Certificates,
executed by the Trustee on behalf of the Trust and authenticated by the Trustee
in substantially the form set forth in Exhibit B hereto.
"Class B Certificate Balance" shall equal, initially, the Class B
Percentage of the Original Pool Balance and, thereafter, shall equal the initial
Class B Certificate Balance, reduced by all amounts previously distributed to
Class B Certificateholders and allocable to principal.
"Class B Certificateholder" means the Person in whose name a Class B
Certificate shall be registered in the Certificate Register.
"Class B Deficiency" shall have the meaning specified in
Section 4.7(c).
"Class B Distributable Amount" means, for any Distribution Date, an
amount equal to the sum of the Class B Principal Distributable Amount with
respect to such Distribution Date and the Class B Interest Distributable Amount
with respect to such Distribution Date.
"Class B Interest Carryover Shortfall" means, as of the close of
business on any Distribution Date, the excess of the Class B Interest
Distributable Amount for such Distribution Date and any outstanding Class B
Interest Carryover Shortfall from the preceding Distribution Date, over the
amount of interest that the Holders of the Class B Certificates actually
received pursuant to Section 4.6(c)(vi) on such current Distribution Date.
"Class B Interest Distributable Amount" means, for any Distribution
Date, an amount equal to thirty (30) days of interest at the Class B
Pass-Through Rate on the Class B Certificate Balance as of the close of business
on the last day of the related Collection Period (calculated on the basis of a
360-day year consisting of twelve 30-day months); provided, however, that on the
first Distribution Date, the Class B Interest Distributable Amount will equal
interest at the Class B Pass-Through Rate on the Class B Certificate Balance
from and including the Closing Date through and including April 14, 1998.
"Class B Pass-Through Rate" means 10.25% per annum.
"Class B Percentage" shall be five percent (5%).
"Class B Pool Factor" means, as of a Distribution Date, a seven-digit
decimal figure equal to the Class B Certificate Balance as of the close of
business on such Distribution Date divided by the initial Class B Certificate
Balance. The Class B Pool Factor will be 1.0000000 as of the Closing Date;
thereafter, the Class B Pool Factor will decline to reflect reductions in the
Class B Certificate Balance.
"Class B Principal Carryover Shortfall" means, as of the close of
business on any Distribution Date, the excess of the Class B Principal
Distributable Amount and any outstanding Class B Principal Carryover Shortfall
from the preceding Distribution Date, over the amount of principal that the
Holders of the Class B Certificates actually received on such current
Distribution Date.
"Class B Principal Distributable Amount" means, with respect to any
Distribution Date other than the Final Scheduled Distribution Date, the Class B
Percentage of the Principal Distributable Amount. In addition, on the Final
Scheduled Distribution Date, the Class B Principal Distributable Amount will
equal the Class B Certificate Balance as of the Final Scheduled Distribution
Date.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended, or any successor provision thereto. The initial Clearing Agency shall
be The Depository Trust Company ("DTC").
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means March 16, 1998.
"Code" shall have the meaning specified in Section 2.6.
"Collateral Agent" means, the Collateral Agent named in the Spread
Account Agreement, and any successor thereto pursuant to the terms of the Spread
Account Agreement.
"Collateral Agent Fee" means the fee payable to the Collateral Agent on
each Distribution Date in an amount equal to one-twelfth of 0.01% of the
Certificate Balance on the last day of the second preceding Collection Period;
provided, however, that on the first Distribution Date the Collateral Agent will
be entitled to receive an amount equal to the product of (i) the percentage
equivalent of a fraction the numerator of which is the number of days from the
Closing Date to but excluding the first Distribution Date and the denominator of
which is 360, (ii) 0.01% and (iii) the Certificate Balance as of the Closing
Date.
"Collection Account" means the account designated as such, established
and maintained pursuant to Section 4.1.
"Collection Period" means each calendar month during the term of this
Agreement or, in the case of the initial Collection Period, the period from and
excluding the Cutoff Date to and including the last day of the month in which
the Cutoff Date occurred. Any amount stated "as of the close of business on the
last day of a Collection Period" shall give effect to the following calculations
as determined as of the end of the day on such last day: (1) all applications of
collections, (2) all current and previous Payaheads, (3) all applications of
Payahead Balances and (4) all distributions.
"Compensating Interest" means, with respect to all Simple Interest
Receivables for which the Scheduled Payment for any Collection Period is
received prior to the date on which such Scheduled Payment is due or for which
any prepayment is otherwise received, an amount equal to the aggregate of the
positive differences, if any, with respect to each such Simple Interest
Receivable between (x) the sum of (a) 30 days' interest at an interest rate
equal to the weighted average of the Class A Pass- Through Rate and the Class B
Pass-Through Rate (weighted by relative Class A Certificate Balance and Class B
Certificate Balance) on the Principal Balance of each such Simple Interest
Receivable as of the first day of the related Collection Period and (b) the
product of (i) one twelfth of the sum of (A) the Servicing Rate and (B) the per
annum rate at which the Premium is calculated pursuant to the Premium Side
Letter and (ii) the Principal Balance of such Simple Interest Receivable as of
the first day of the related Collection Period and (y) the product of (i) the
interest actually paid by the related Obligor with respect to such Simple
Interest Receivable with respect to such Collection Period and (ii) a fraction,
the numerator of which is the sum of (a) such weighted average of the Class A
Pass-Through Rate and the Class B Pass-Through Rate referred to in (x)(a) above,
(b) the Servicing Rate and (c) the per annum rate at which the Premium is
calculated pursuant to the Premium Side Letter, and the denominator of which is
the APR of such Simple Interest Receivable.
"Confidential Information" means, in relation to any Person, any
written information delivered or made available by or on behalf of CPS or the
Depositor to such Person in connection with or pursuant to this Agreement or the
transactions contemplated hereby which is proprietary in nature and clearly
marked or identified as being confidential information, other than information
(i) which was publicly known, or otherwise known to such Person, at the time of
disclosure (except pursuant to disclosure in connection with this Agreement),
(ii) which subsequently becomes publicly known through no act or omission by
such Person, or (iii) which otherwise becomes known to such Person other than
through disclosure by CPS or the Depositor.
"Contract" means a motor vehicle retail installment sale
contract.
"Corporate Trust Office" means the office of the Trustee at which its
corporate trust business shall be administered, which office at the date of this
Agreement is located at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
"CPS" means Consumer Portfolio Services, Inc., a California
corporation and its successors.
"CPS Purchase Agreement" means the Purchase Agreement dated as of March
1, 1998 by and between the Depositor and CPS, as such agreement may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof, relating to the purchase of the CPS Receivables by the Depositor
from CPS.
"CPS Receivables" shall have the meaning specified in the
CPS Purchase Agreement.
"Cram Down Loss" means, with respect to a Receivable, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the amount owed on a Receivable or otherwise modifying or restructuring
Scheduled Payments to be made on a Receivable, an amount equal to such reduction
in Principal Balance of such Receivable or the reduction in the net present
value (using as the discount rate the lower of the contract rate or the rate of
interest specified by the court in such order) of the Scheduled Payments as so
modified or restructured. A "Cram Down Loss" shall be deemed to have occurred on
the date such order is entered.
"Cutoff Date" means March 2, 1998.
"Dealer" means, with respect to a Receivable, the seller of the related
Financed Vehicle, who originated and assigned such Receivable to CPS, Samco or
Linc, who in turn sold such Receivable to the Depositor.
"Deficiency Claim Amount" shall have the meaning specified
in Section 4.7(a).
"Deficiency Claim Date" means, with respect to any Distribution Date,
the fourth Business Day preceding such Distribution Date.
"Deficiency Notice" shall have the meaning specified in
Section 4.7(a).
"Definitive Certificate" shall have the meaning specified in
Section 6.3(d).
"Delivery" means, when used with respect to Transaction
Account Property:
(i) the perfection and priority of a security interest in such
Transaction Account Property which is governed by the law of a
jurisdiction which has adopted the 1978 Revision to Article 8 of the
UCC:
(a) with respect to bankers' acceptances, commercial
paper, negotiable certificates of deposit and other
obligations that constitute "instruments" within the meaning
of Section 9-105 (1) (i) of the UCC and are susceptible of
physical delivery, transfer thereof to the Trustee or its
nominee or custodian by physical delivery to the Trustee or
its nominee or custodian endorsed to, or registered in the
name of, the Trustee or its nominee or custodian or endorsed
in blank, and, with respect to a certificated security (as
defined in Section 8-102 of the UCC), transfer thereof (1) by
delivery of such certificated security endorsed to, or
registered in the name of, the Trustee or its nominee or
custodian or endorsed in blank to a financial intermediary (as
defined in Section 8-313 of the UCC) and the making by such
financial intermediary of entries on its books and records
identifying such certificated securities as belonging to the
Trustee or its nominee or custodian and the sending by such
financial intermediary of a confirmation of the purchase of
such certificated security by the Trustee or its nominee or
custodian, or (2) by delivery thereof to a "clearing
corporation" (as defined in Section 8-102 (3) of the UCC) and
the making by such clearing corporation of appropriate entries
on its books reducing the appropriate securities account of
the transferor and increasing the appropriate securities
account of a financial intermediary by the amount of such
certificated security, the identification by the clearing
corporation of the certificated securities for the sole and
exclusive account of the financial intermediary, the
maintenance of such certificated securities by such clearing
corporation or a "custodian bank" (as defined in Section
8-102(4) of the UCC) or the nominee of either subject to the
clearing corporation's exclusive control, the sending of a
confirmation by the financial intermediary of the purchase by
the Trustee or its nominee or custodian of such securities and
the making by such financial intermediary of entries on its
books and records identifying such certificated securities as
belonging to the Trustee or its nominee or custodian (all of
the foregoing, "Physical Property"), and, in any event, any
such Physical Property in registered form shall be in the name
of the Trustee or its nominee or custodian; and such
additional or alternative procedures as may hereafter become
appropriate to effect the complete transfer of ownership of
any such Transaction Account Property to the Trustee or its
nominee or custodian, consistent with changes in applicable
law or regulations or the interpretation thereof;
(b) with respect to any security issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or by the
Federal National Mortgage Association that is a book-entry
security held through the Federal Reserve System pursuant to
Federal book-entry regulations, the following procedures, all
in accordance with applicable law, including applicable
Federal regulations and Articles 8 and 9 of the UCC:
book-entry registration of such Transaction Account Property
to an appropriate book-entry account maintained with a Federal
Reserve Bank by a financial intermediary which is also a
"depository" pursuant to applicable Federal regulations and
issuance by such financial intermediary of a deposit advice or
other written confirmation of such book-entry registration to
the Trustee or its nominee or custodian of the purchase by the
Trustee or its nominee or custodian of such book-entry
securities; the making by such financial intermediary of
entries in its books and records identifying such book-entry
security held through the Federal Reserve System pursuant to
Federal book-entry regulations as belonging to the Trustee or
its nominee or custodian and indicating that such custodian
holds such Transaction Account Property solely as agent for
the Trustee or its nominee or custodian; and such additional
or alternative procedures as may hereafter become appropriate
to effect complete transfer of ownership of any such
Transaction Account Property to the Trustee or its nominee or
custodian, consistent with changes in applicable law or
regulations or the interpretation thereof; and
(c) with respect to any item of Transaction Account
Property that is an uncertificated security under Article 8 of
the UCC and that is not governed by clause (b) above,
registration on the books and records of the issuer thereof in
the name of the financial intermediary, the sending of a
confirmation by the financial intermediary of the purchase by
the Trustee or its nominee or custodian of such uncertificated
security, the making by such financial intermediary of entries
on its books and records identifying such uncertificated
certificates as belonging to the Trustee or its nominee or
custodian; or
(ii) the perfection and priority of a security interest in
such Transaction Account Property which is governed by the law of a
jurisdiction which has adopted the 1994 Revision to Article 8 of the
UCC:
(a) with respect to bankers' acceptances, commercial
paper, negotiable certificates of deposit and other
obligations that constitute "instruments" within the meaning
of Section 9-105(1)(i) of the UCC (other than certificated
securities) and are susceptible of physical delivery, transfer
thereof to the Trustee by physical delivery to the Trustee,
indorsed to, or registered in the name of, the Trustee or its
nominee or indorsed in blank and such additional or
alternative procedures as may hereafter become appropriate to
effect the complete transfer of ownership of any such
Transaction Account Property to the Trustee free and clear of
any adverse claims, consistent with changes in applicable law
or regulations or the interpretation thereof;
(b) with respect to a "certificated security" (as
defined in Section 8-102(a)(4) of the UCC), transfer thereof:
(1) by physical delivery of such
certificated security to the Trustee, provided that
if the certificated security is in registered form,
it shall be indorsed to, or registered in the name
of, the Trustee or indorsed in blank;
(2) by physical delivery of such
certificated security in registered form to a
"securities intermediary" (as defined in Section
8-102(a)(14) of the UCC) acting on behalf of the
Trustee if the certificated security has been
specially endorsed to the Trustee by an effective
endorsement;
(c) with respect to any security issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or by the
Federal National Mortgage Association that is a book-entry
security held through the Federal Reserve System pursuant to
Federal book entry regulations, the following procedures, all
in accordance with applicable law, including applicable
federal regulations and Articles 8 and 9 of the UCC:
book-entry registration of such property to an appropriate
book-entry account maintained with a Federal Reserve Bank by a
securities intermediary which is also a "depositary" pursuant
to applicable federal regulations and issuance by such
securities intermediary of a deposit advice or other written
confirmation of such book-entry registration to the Trustee of
the purchase by the securities intermediary on behalf of the
Trustee of such book-entry security; the making by such
securities intermediary of entries in its books and records
identifying such book-entry security held through the Federal
Reserve System pursuant to Federal book-entry regulations as
belonging to the Trustee and indicating that such securities
intermediary holds such book-entry security solely as agent
for the Trustee; and such additional or alternative procedures
as may hereafter become appropriate to effect complete
transfer of ownership of any such Transaction Account Property
to the Trustee free of any adverse claims, consistent with
changes in applicable law or regulations or the interpretation
thereof;
(d) with respect to any item of Transaction Account
Property that is an "uncertificated security" (as defined in
Section 8-102(a)(18) of the UCC) and that is not governed by
clause (c) above, transfer thereof:
(1)(A) by registration to the Trustee as the
registered owner thereof, on the books and records of
the issuer thereof.
(B) by another Person (not a securities
intermediary) either becomes the registered owner of
the uncertificated security on behalf of the Trustee,
or having become the registered owner acknowledges
that it holds for the Trustee.
(2) the issuer thereof has agreed that it
will comply with instructions originated by the
Trustee without further consent of the registered
owner thereof.
(e) with respect to a "security entitlement" (as
defined in Section 8-102(a)(17) of the UCC):
(1) if a securities intermediary (A) indicates by
book entry that a "financial asset" (as defined in Section
8-102(a)(9) of the UCC) has been credited to the Trustee's
"securities account" (as defined in Section 8-501(a) of the
UCC), (B) receives a financial asset (as so defined) from the
Trustee or acquires a financial asset for the Trustee, and in
either case, accepts it for credit to the Trustee's securities
account (as so defined), (C) becomes obligated under other
law, regulation or rule to credit a financial asset to the
Trustee's securities account, or (D) has agreed that it will
comply with "entitlement orders" (as defined in Section
8-102(a)(8) of the UCC) originated by the Trustee, without
further consent by the "entitlement holder" (as defined in
Section 8-102(a)(7) of the UCC), of a confirmation of the
purchase and the making by such securities intermediary of
entries on its books and records identifying as belonging to
the Trustee of (I) a specific certificated security in the
securities intermediary's possession, (II) a quantity of
securities that constitute or are part of a fungible bulk of
certificated securities in the securities intermediary's
possession, or (III) a quantity of securities that constitute
or are part of a fungible bulk of securities shown on the
account of the securities intermediary on the books of another
securities intermediary; and
(f) in each case of delivery contemplated pursuant to
clause(a) through (e) of subsection (ii) hereof, the Trustee
shall make appropriate notations on its records, and shall
cause the same to be made on the records of its nominees,
indicating that such Transaction Account Property which
constitutes a security is held in trust pursuant to and as
provided in this Agreement.
"Depositor" means Financial Asset Securities Corp. as the seller of the
Receivables under this Agreement, and each of its successors pursuant to Section
7.3.
"Depository" means the initial Depository, The Depository Trust
Company, the nominee of which is Cede & Co., as the registered Holder of the
denomination specified herein, and any permitted successor depository. The
Depository shall at all times be a "clearing corporation" as defined in Section
8-102(5) of the Uniform Commercial Code of the State of New York.
"Depository Agreement" means the DTC Letter of Representations dated
the Closing Date by and between the Depositor, the Trustee and the Depository
Trust Company.
"Depository Participant" means a broker, dealer, bank or other
financial institution or other Person for whom from time to time a Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
"Determination Date" means the earlier of (i) the seventh Business Day
of each calendar month and (ii) the fifth Business Day preceding the related
Distribution Date.
"Distribution Date" means, for each Collection Period, the 15th day of
the following month, or if the 15th day is not a Business Day, the next
following Business Day, commencing April 15, 1998.
"Eligible Account" means (i) a segregated trust account that is
maintained with a depository institution acceptable to the Certificate Insurer
(so long as no Insurer Default shall have occurred and be continuing), or (ii) a
segregated direct deposit account maintained with a depository institution or
trust company organized under the laws of the United States of America, or any
of the States thereof, or the District of Columbia, having a certificate of
deposit, short-term deposit or commercial paper rating of at least "A-1" by
Standard & Poor's and "P-1" by Moody's and (so long as no Insurer Default shall
have occurred and be continuing) acceptable to the Certificate Insurer.
"Eligible Investments" mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully
guaranteed as to the full and timely payment by, the United
States of America;
(b) demand deposits, time deposits or certificates of deposit
of any depository institution or trust company incorporated under the laws of
the United States of America or any State thereof (or any domestic branch of a
foreign bank) and subject to supervision and examination by Federal or State
banking or depository institution authorities; provided, however, that at the
time of the investment or contractual commitment to invest therein, the
commercial paper or other short-term unsecured debt obligations (other than such
obligations the rating of which is based on the credit of a Person other than
such depository institution or trust company) thereof shall be rated "A-1+" by
Standard & Poor's and "P-1" by Moody's;
(c) commercial paper that, at the time of the investment or
contractual commitment to invest therein, is rated "A-1+" by Standard & Poor's
and "P-1" by Moody's;
(d) bankers' acceptances issued by any depository institution
or trust company referred to in clause (b) above;
(e) repurchase obligations with respect to any security that
is a direct obligation of, or fully guaranteed as to the full and timely payment
by, the United States of America or any agency or instrumentality thereof the
obligations of which are backed by the full faith and credit of the United
States of America, in either case entered into with (i) a depository institution
or trust company (acting as principal) described in clause (b) or (ii) a
depository institution or trust company whose commercial paper or other short
term unsecured debt obligations are rated "A-1+" by Standard & Poor's and "P-1"
by Moody's and long term unsecured debt obligations are rated "AAA" by Standard
& Poor's and "Aaa" by Moody's;
(f) with the prior written consent of the Certificate Insurer,
money market mutual funds registered under the Investment Company Act of 1940,
as amended, having a rating, at the time of such investment, from each of the
Rating Agencies in the highest investment category granted thereby; and
(g) any other investment as may be acceptable to the
Certificate Insurer, as evidenced by a writing to that effect, as may from time
to time be confirmed in writing to the Trustee by the Certificate Insurer.
Any Eligible Investments may be purchased by or through the Trustee or
any of its Affiliates.
"Employee Plan" has the meaning assigned to such term in
Section 6.3(b).
"ERISA" shall have the meaning specified in Section 2.6.
"Event of Default" means an event specified in Section 9.1.
"Final Scheduled Distribution Date" shall be the August 15, 2003
Distribution Date.
"Financed Vehicle" means a new or used automobile, light truck, van or
minivan, together with all accessions thereto, securing an Obligor's
indebtedness under a Receivable.
"Insolvency Proceeding" shall have the meaning specified in
Section 9.5(b).
"Insurance Agreement" means the Insurance and Indemnity Agreement among
CPS, CPS Receivables Corp., the Depositor and the Certificate Insurer, dated as
of March 1, 1998 as the same may be amended, supplemented or otherwise modified
from time to time in accordance with the terms thereof.
"Insurance Agreement Event of Default" means an Event of Default as
defined in the Insurance Agreement.
"Insurer Default" shall mean any one of the following events shall have
occurred and be continuing:
(i) the Certificate Insurer fails to make a payment
required under the Policy in accordance with its terms;
(ii) the Certificate Insurer (A) files any petition
or commences any case or proceeding under any provision or
chapter of the United States Bankruptcy Code, the New York
Department of Insurance Code or similar Federal or State law
relating to insolvency, bankruptcy, rehabilitation,
liquidation or reorganization, (B) makes a general assignment
for the benefit of its creditors or (C) has an order for
relief entered against it under the United States Bankruptcy
Code or any other similar Federal or State law relating to
insolvency, bankruptcy, rehabilitation, liquidation or
reorganization which is final and nonappealable; or
(iii) a court of competent jurisdiction, the New York
Department of Insurance or other competent regulatory
authority enters a final and nonappealable order, judgment or
decree (A) appointing a custodian, trustee, agent or receiver
for the Certificate Insurer or for all or any material portion
of its property or (B) authorizing the taking of possession by
a custodian, trustee, agent or receiver of the Certificate
Insurer (or the taking of possession of all or any material
portion of the property of the Certificate Insurer).
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens, mechanics' liens, and any liens
that may attach to a Financed Vehicle by operation of law.
"Linc" means Linc Acceptance Company LLC and its successors.
"Linc Purchase Agreement" means the Purchase Agreement, dated as of
March 1, 1998 by and between Linc and the Depositor, as such agreement may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof, relating to the purchase of the Linc Receivables by the
Depositor from Linc.
"Linc Receivables" shall have the meaning specified in the
Linc Purchase Agreement.
"Liquidated Receivable" means any Receivable (i) which has been
liquidated by the Servicer through the sale of the Financed Vehicle or (ii) for
which the related Financed Vehicle has been repossessed and 90 days have elapsed
since the date of such repossession or (iii) as to which an Obligor has failed
to make more than 90% of a Scheduled Payment of more than ten dollars for 120 or
more days as of the end of a Collection Period or (iv) with respect to which
proceeds have been received which, in the Servicer's judgment, constitute the
final amounts recoverable in respect of such Receivable.
"Liquidation Proceeds" means all amounts realized with respect to a
Liquidated Receivable (other than amounts withdrawn from the Spread Account and
drawings under the Policy) net of (i) reasonable expenses incurred by the
Servicer in connection with the collection of such Receivable and the
repossession and disposition of the Financed Vehicle and (ii) amounts that are
required to be refunded to the Obligor on such Receivable; provided, however,
that the Liquidation Proceeds with respect to any Receivable shall in no event
be less than zero.
"Lock-Box Account" means the segregated account designated as such,
established and maintained pursuant to Section 4.1.
"Lock-Box Agreement" means the Tri-Party Remittance Processing
Agreement, dated the Closing Date, among the Servicer, the Lock-Box Processor,
CPS Receivables Corp. and the Trustee, as amended, modified or supplemented from
time to time, unless such Agreement shall be terminated in accordance with its
terms or the terms hereof, in which event "Lock-Box Agreement" shall mean such
other agreement, in form and substance acceptable to the Certificate Insurer,
among the Servicer, the Lock-Box Processor and the Trustee.
"Lock-Box Bank" means, as of any date, a depository institution named
by the Servicer and acceptable to the Certificate Insurer at which the Lock-Box
Account is established and maintained as of such date.
"Lock-Box Processor" means, initially, Bank of America, and thereafter,
its successors or any replacement Lock-Box Processor acceptable to the
Certificate Insurer under the Lock-Box Agreement.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., and any
successors thereof.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
related Financed Vehicle or any other Person who owes or may be liable for
payments under such Receivable.
"Officer's Certificate" means a certificate signed by the chairman of
the board, the president, any vice chairman of the board, any vice president,
the treasurer, the controller or any assistant treasurer, any assistant
controller, secretary or assistant secretary of CPS, the Depositor, or the
Servicer, as appropriate.
"Opinion of Counsel" means a written opinion of counsel who may but
need not be counsel to the Depositor or the Servicer, which counsel shall be
reasonably acceptable to the Trustee and (if such opinion or a copy thereof is
required by the provisions of this Agreement to be delivered to the Certificate
Insurer) the Certificate Insurer and which opinion shall be acceptable to the
Trustee and (if such opinion or a copy thereof is required by the provisions of
this Agreement to be delivered to the Certificate Insurer) the Certificate
Insurer in form and substance.
"Optional Purchase Percentage" means 10%.
"Original Pool Balance" means $186,954,818.61.
"Originator" means CPS, as originator of the Receivables.
"Payahead" on a Rule of 78's Receivable means the amount, as of the
close of business on the last day of a Collection Period, determined in
accordance with Section 4.3 with respect to such Rule of 78's Receivable.
"Payahead Account" means the account designated as such, established
and maintained pursuant to Section 4.1. The Payahead Account shall be held by
the Trustee but shall be primarily for the benefit of the Obligors of Rule of
78's Receivables and shall not be part of the Trust.
"Payahead Balance" on a Rule of 78's Receivable means the sum, as of
the close of business on the last day of a Collection Period, of all Payaheads
made by or on behalf of the Obligor with respect to such Rule of 78's
Receivable, as reduced by applications of previous Payaheads with respect to
such Rule of 78's Receivable, pursuant to Sections 4.3 and 4.4.
"Paying Agent" has the meaning assigned to such term in
Section 6.2A.
"Person" means any individual, corporation, estate, partnership,
limited liability company, estate, partnership, joint venture, association,
joint stock company, trust (including any beneficiary thereof), unincorporated
organization, or government or any agency or political subdivision thereof.
"Policy" means the Financial Guaranty Insurance Policy No.
50673-N issued by the Certificate Insurer for the benefit of the
Holders of the Class A Certificates issued hereunder, including
any endorsements thereto.
"Policy Claim Amount" with respect to a Distribution Date, means the
sum of: (I) the lesser of (i) the amount required to be distributed pursuant to
Section 4.6(c)(v), and (ii) the excess of the sum of the amounts required to be
distributed pursuant to Section 4.6(c)(i) through (v) over the sum of the Total
Distribution Amount and the amount distributed (or available to be distributed
pursuant to the Spread Account Agreement) in respect of the Deficiency Claim
Amount and any amounts available to be distributed pursuant to Section
4.11(iii), plus (II) the lesser of (i) the amount required to be distributed
pursuant to Section 4.6(c)(vii), and (ii) the excess of the sum of the amounts
required to be distributed pursuant to Section 4.6(c)(i) through (vii) over the
sum of the Total Distribution Amount and the amount distributed (or available to
be distributed pursuant to the Spread Account Agreement) in respect of the
Deficiency Claim Amount and any amounts available to be distributed pursuant to
Section 4.11(iii). For purposes of this definition, amounts required to be
distributed on a given Distribution Date shall be calculated without regard to
the availability of funds on such Distribution Date to satisfy such amounts.
"Policy Payments Account" means the segregated trust account created by
the Servicer under Section 4.1.
"Pool Balance" as of the close of business on the last day of a
Collection Period means the aggregate Principal Balance of the Receivables
(excluding Liquidated Receivables and Purchased Receivables).
"Post-Office Box" means the separate post-office box in the name of the
Trustee for the benefit of the Certificateholders and the Certificate Insurer,
established and maintained pursuant to Section 4.1.
"Preference Claim" shall have the meaning specified in
Section 9.5(b).
"Premium" has the meaning specified in the Premium Side
Letter.
"Premium Side Letter" means the letter agreement among CPS, the Trustee
and the Certificate Insurer referring to payment of the Premium.
"Principal Balance" of a Receivable, as of the close of business on the
last day of a Collection Period means the Amount Financed minus the sum of the
following amounts without duplication: (i) in the case of a Rule of 78's
Receivable, that portion of all Scheduled Payments actually received on or prior
to such day allocable to principal using the actuarial or constant yield method;
(ii) in the case of a Simple Interest Receivable, that portion of all Scheduled
Payments actually received on or prior to such day allocable to principal using
the Simple Interest Method; (iii) any payment of the Purchase Amount with
respect to the Receivable allocable to principal; (iv) any Cram Down Loss in
respect of such Receivable; and (v) any prepayment in full or any partial
prepayment applied to reduce the Principal Balance of the Receivable.
"Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of the following amounts: (i) the sum of (x) the
principal portion as calculated in accordance with Section 4.3 of all Scheduled
Payments received during the preceding Collection Period on Rule of 78's
Receivables (excluding Recoveries and any other amounts deposited into the
Payahead Account but including amounts transferred from the Payahead Account to
the Certificate Account to be applied to the principal portion of Scheduled
Payments) and (y) all payments of principal received on Simple Interest
Receivables during the preceding Collection Period; (ii) the principal portion
of all prepayments in full received during the preceding Collection Period
(including prepayments in full resulting from collections with respect to a
Receivable received during the preceding Collection Period plus the transfer of
the Payahead Balance with respect to such Receivable to the Certificate Account
pursuant to Section 4.6(a)(ii)) (without duplication of amounts included in
clause (i) above and clause (iv) below); (iii) the portion of the Purchase
Amount allocable to principal of each Receivable that became a Purchased
Receivable as of the last day of the preceding Collection Period and, at the
option of the Certificate Insurer, the Principal Balance of each Receivable that
was required to be but was not so purchased or repurchased (without duplication
of amounts referred to in clauses (i) and (ii) above); (iv) the Principal
Balance of each Receivable that first became a Liquidated Receivable during the
preceding Collection Period (without duplication of the amounts included in
clauses (i) and (ii) above); and (v) the aggregate amount of Cram Down Losses
with respect to the Receivables that have occurred during the preceding
Collection Period.
"Purchase Agreements" means the CPS Purchase Agreement, the Samco
Purchase Agreement and the Linc Purchase Agreement.
"Purchase Amount" means, with respect to a Receivable, the amount, as
of the close of business on the last day of a Collection Period, required to
prepay in full such Receivable under the terms thereof including interest
thereon to the end of the month of purchase.
"Purchased Receivable" means a Receivable purchased as of the close of
business on the last day of a Collection Period by the Servicer pursuant to
Section 3.7 or by CPS pursuant to Section 2.8.
"Rating Agency" means each of Standard & Poor's and Moody's and any
successors thereof. If either of such organizations or their respective
successors is no longer in existence, "Rating Agency" shall be such nationally
recognized statistical rating organization or other comparable Person designated
by the Certificate Insurer (so long as no Insurer Default shall have occurred
and be continuing), notice of which designation shall be given to the Trustee
and the Servicer.
"Receivable" means each retail installment sale contract for a Financed
Vehicle which shall appear on Schedule A to this Agreement (which Schedule A may
be in the form of microfiche) and all rights and obligations thereunder except
for Receivables that shall have become Purchased Receivables.
"Receivable Files" means the documents specified in
Section 2.7.
"Record Date" means, with respect to any Distribution Date, the tenth
day of the calendar month in which such Distribution Date occurs.
"Recoveries" means, with respect to a Liquidated Receivable, the monies
collected from whatever source, during any Collection Period following the
Collection Period in which such Receivable became a Liquidated Receivable, net
of the reasonable costs of liquidation plus any amounts required by law to be
remitted to the Obligor.
"Reimbursement Obligations" means, with respect to each Distribution
Date, any amounts due to the Certificate Insurer under the terms hereof or under
the Insurance Agreement and with respect to which the Certificate Insurer has
not been previously paid.
"Requisite Amount" has the meaning specified in the Series
1998-1 Supplement.
"Rule of 78's Receivable" means any Receivable under which the portion
of a payment allocable to earned interest (which may be referred to in the
related retail installment sale contract as an add-on finance charge) and the
portion allocable to the Amount Financed is determined according to the method
commonly referred to as the "Rule of 78's" method or the "sum of the months'
digits" method or any equivalent method.
"Samco" means Samco Acceptance Corp. and its successors.
"Samco Purchase Agreement" means the Purchase Agreement, dated as of
March 1, 1998 by and between Samco and the Depositor, as such agreement may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof, relating to the purchase of the Samco Receivables by the
Depositor from Samco.
"Samco Receivables" shall have the meaning specified in the
Samco Purchase Agreement.
"Scheduled Payment" means, for any Collection Period for any
Receivable, the amount indicated in such Receivable as required to be paid by
the Obligor in such Collection Period (without giving effect to deferments of
payments pursuant to Section 3.2 or any rescheduling of payments in any
insolvency or similar proceedings).
"Securities Act" shall have the meaning specified in Section
6.3(f).
"Series 1998-1 Supplement" means the Series 1998-1 Supplement to the
Master Spread Account Agreement dated as of March 1, 1998 among the Certificate
Insurer, CPS Receivables Corp. and the Collateral Agent, as the same may be
modified, supplemented or otherwise amended in accordance with the terms
thereof.
"Servicer" means CPS as the servicer of the Receivables which were
purchased by the Depositor, and each successor to CPS (in the same capacity)
pursuant to Section 8.3(a) or 9.2.
"Servicer's Certificate" means a certificate completed and executed by
a Servicing Officer pursuant to Section 3.9, substantially in the form of
Exhibit E-2.
"Servicing Assumption Agreement" means the Servicing Assumption
Agreement, dated as of March 1, 1998, among CPS, the Standby Servicer and the
Trustee, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.
"Servicing Fee" means the fee payable to the Servicer for services
rendered during the respective Collection Period, determined pursuant to Section
3.8.
"Servicing Officer" means any person whose name appears on a list of
Servicing Officers delivered to the Trustee and the Certificate Insurer, as the
same may be amended from time to time.
"Servicing Rate" shall be 2.08% per annum, payable monthly, provided,
however, that if the Standby Servicer becomes the successor Servicer, the
"Servicing Rate" shall be equal to a percentage per annum determined pursuant to
the Servicing Assumption Agreement not to exceed 3.00% per annum.
"Simple Interest Method" means the method of allocating a fixed level
payment between principal and interest, pursuant to which the portion of such
payment that is allocated to interest is equal to the product of the APR
multiplied by the unpaid balance multiplied by the period of time (expressed as
a fraction of a year, based on the actual number of days in the calendar month
and the actual number of days in the calendar year) elapsed since the preceding
payment of interest was made and the remainder of such payment is allocable to
principal.
"Simple Interest Receivable" means any Receivable under which the
portion of a payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
"Spread Account" means, with respect to the Trust and similar trusts to
be established by CPS, the Spread Account established and maintained pursuant to
the Spread Account Agreement. The Spread Account shall be held by the Collateral
Agent and shall in no event be deemed part of the Trust.
"Spread Account Agreement" means the Master Spread Account Agreement
among CPS Receivables Corp., the Certificate Insurer, the Collateral Agent and
the Trustee, as amended and restated as of March 1, 1998, as the same may be
further amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof.
"Standard & Poor's" means Standard & Poor's, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, and any successors thereof.
"Standby Fee" means the fee payable to the Standby Servicer so long as
CPS is the Servicer, on each Distribution Date in an amount equal to one-twelfth
of 0.025% of the Certificate Balance on the last day of the second preceding
Collection Period; provided, however, that on the first Distribution Date the
Trustee will be entitled to receive an amount equal to the product of (i) the
percentage equivalent of a fraction the numerator of which is the number days
from the Closing Date to but excluding the first Distribution Date and the
denominator of which is 360, (ii) 0.025% and (iii) the Certificate Balance as of
the Closing Date.
"Standby Servicer" means Norwest Bank Minnesota, National Association,
in its capacity as Standby Servicer pursuant to the terms of the Servicing
Assumption Agreement or such other Person as may have been appointed Standby
Servicer pursuant to Section 9.2(c).
"State" means any State of the United States of America, or the
District of Columbia.
"Total Distribution Amount" shall mean, for each Distribution Date, the
sum of the following amounts with respect to the preceding Collection Period:
(i) all collections on Receivables (including amounts transferred from the
Payahead Account to the Certificate Account pursuant to Section 4.6(a)(ii) but
excluding amounts deposited into the Payahead Account); (ii) Liquidation
Proceeds received during the Collection Period with respect to Receivables that
became Liquidated Receivables during the Collection Period in accordance with
the Servicer's customary servicing procedures; (iii) proceeds from Recoveries
with respect to Liquidated Receivables; (iv) the Purchase Amount of each
Receivable that became a Purchased Receivable as of the last day of the
Collection Period, and (v) the amount of any Certificate Insurer Optional
Deposit into the Collection Account pursuant to Section 4.11(iii) with respect
to such Distribution Date, and any earnings on investments of funds in the
Collection Account and the Payahead Account pursuant to Section 4.1(a).
"Transaction Account Property" means the Transaction Accounts, all
amounts and investments held from time to time in any Transaction Account
(whether in the form of deposit accounts, Physical Property, book-entry
securities, uncertificated securities or otherwise), and all proceeds of the
foregoing.
"Transaction Accounts" means the property set forth in item
(vii) of Section 2.2.
"Trigger Event" has the meaning specified in the Series
1998-1 Supplement.
"Trust" means the trust created by this Agreement, the estate of which
shall consist of the Trust Assets.
"Trust Assets" means that property set forth in items (i) through
(viii) in Section 2.2 and the Policy for the benefit of the Class A
Certificateholders.
"Trustee" means the Person acting as Trustee under this Agreement, its
successor in interest, and any successor trustee pursuant to Section 10.11.
"Trustee Fee" means the fee payable to the Trustee on each Distribution
Date in an amount equal to one-twelfth of 0.01% of the Certificate Balance on
the last day of the second preceding Collection Period; provided, however, that
on the first Distribution Date the Trustee will be entitled to receive an amount
equal to the product of (i) the percentage equivalent of a fraction the
numerator of which is the number days from the Closing Date to but excluding the
first Distribution Date and the denominator of which is 360, (ii) 0.01% and
(iii) the Certificate Balance as of the Closing Date.
"Trustee Officer" means any vice president, any assistant vice
president, any assistant secretary, any assistant treasurer, any trust officer,
or any other officer of the Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge of and familiarity with the
particular subject.
"Trustee's Certificate" means a certificate completed and executed for
the Trustee by a Trustee Officer pursuant to Section 10.2, substantially in the
form of, in the case of an assignment to CPS, Exhibit C-1 and in the case of an
assignment to the Servicer, Exhibit C-2.
"UCC" means the Uniform Commercial Code as in effect in the
relevant jurisdiction.
SECTION I.2. Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the term "including"
means "including without limitation."
SECTION I.3. Section References. All section references shall be to
Sections in this Agreement.
SECTION I.4. Limitation on Trust Fund Activities. Notwithstanding any
other provision in this Agreement to the contrary, the Trustee shall have no
power to vary the investment of the Certificateholders within the meaning of
Treasury Department Regulation ss. 301.7701-4(c) or to engage in business unless
the Trustee and the Certificate Insurer shall have received an Opinion of
Counsel that such activity shall not cause the Trust to be an association
taxable as a corporation for federal income tax purposes.
SECTION I.5. Calculations. All calculations of the amount of interest
accrued on the Certificates and all calculations of the amount of the Servicing
Fee, the Collateral Agent Fee, the Standby Fee and the Trustee Fee shall be made
on the basis of a 360-day year consisting of twelve 30-day months. All
references to the Principal Balance of a Receivable as of the last day of a
Collection Period shall refer to the close of business on such day.
SECTION I.6. Action by or Consent of Certificateholders. Whenever any
provision of this Agreement refers to action to be taken, or consented to, by
Certificateholders, such provision shall be deemed to refer to
Certificateholders of record as of the Record Date immediately preceding the
date on which such action is to be taken, or consent given, by
Certificateholders. Solely for the purposes of any action to be taken, or
consented to, by Certificateholders, any Certificate registered in the name of
the Depositor, CPS, the Servicer or any Affiliate thereof shall be deemed not to
be outstanding and shall not be taken into account in determining whether the
requisite interest necessary to effect any such action or consent has been
obtained; provided, however, that, solely for the purpose of determining whether
the Trustee is entitled to rely upon any such action or consent, only
Certificates which the Trustee knows to be so owned shall be so disregarded.
SECTION I.7. Material Adverse Effect. Whenever a determination is to be
made under this Agreement as to whether a given event, action, course of conduct
or set of facts or circumstances could or would have a material adverse effect
on the Trust or the Certificateholders (or any similar or analogous
determination), such determination shall be made without taking into account the
insurance provided by the Policy.
ARTICLE II
The Trust and Trust Property
----------------------------
SECTION II.1. Creation of Trust. Upon the execution of this Agreement
by the parties hereto, there is hereby created the CPS Grantor Trust 1998-1.
SECTION II.2. Conveyance of Receivables. In consideration of the
Trustee's delivery of Certificates in an aggregate principal amount equal to the
Original Pool Balance to or upon the written order of the Depositor, the
Depositor does hereby sell, transfer, assign, set over and otherwise convey to
the Trustee, in trust for the benefit of the Certificateholders, without
recourse:
(i) all right, title and interest of the Depositor in and to
the Receivables listed in Schedule A hereto and, with respect to Rule
of 78's Receivables, all monies due or to become due thereon after the
Cutoff Date (including Scheduled Payments due after the Cutoff Date
(including principal prepayments relating to such Scheduled Payments)
but received by the Depositor or CPS on or before the Cutoff Date) and,
with respect to Simple Interest Receivables, all monies received
thereunder after the Cutoff Date and all Liquidation Proceeds and
Recoveries received with respect to such Receivables after the Cutoff
Date;
(ii) all right, title and interest of the Depositor in and to
the security interests in the Financed Vehicles granted by Obligors
pursuant to the Receivables and any other interest of the Depositor in
such Financed Vehicles, including, without limitation, the certificates
of title or, with respect to such Financed Vehicles in the State of
Michigan, all other evidence of ownership with respect to such Financed
Vehicles;
(iii) all right, title and interest of the Depositor in and to
any proceeds from claims on any physical damage, credit life and credit
accident and health insurance policies or certificates relating to the
Financed Vehicles or the Obligors;
(iv) all right, title and interest of the Depositor in and to
the Purchase Agreements, including a direct right to cause CPS to
purchase Receivables from the Trust under certain circumstances;
(v) all right, title and interest of the Depositor in and to
refunds for the costs of extended service contracts with respect to
Financed Vehicles securing Receivables, refunds of unearned premiums
with respect to credit life and credit accident and health insurance
policies or certificates covering an Obligor or Financed Vehicle or his
or her obligations with respect to a Financed Vehicle and any recourse
to Dealers for any of the foregoing;
(vi) the Receivable File related to each Receivable;
(vii) all amounts and property from time to time held in or
credited to the Collection Account, the Lock-Box Account, the Policy
Payments Account or the Certificate Account;
(viii) all right, title, and interest of the Depositor in any
recourse against the Dealers with respect to the sale of the
Receivables; and
(ix) the proceeds of any and all of the foregoing.
In addition, the Depositor shall cause the Policy to be issued to and
delivered to the Trust for the benefit of the Class A Certificateholders.
SECTION II.3. Transfer Intended as Sale; Precautionary Security
Interest. The conveyance to the Trust of the property set forth in Section 2.2
above is intended as a sale free and clear of all Liens, and it is intended that
the property of the Trust shall not be part of the Depositor's estate in the
event of the filing of a bankruptcy petition by or against the Depositor under
any bankruptcy law. In the event, however, that notwithstanding the intent of
CPS, the Depositor and the Trustee, the transfer under this Agreement is held
not to be a sale, this Agreement shall constitute a grant of a security interest
in the property described in Section 2.2 above, for the benefit of the
Certificateholders and the Certificate Insurer as their interests may appear
herein.
SECTION II.4. Acceptance by Trustee. The Trustee does hereby accept all
consideration conveyed by the Depositor pursuant to Section 2.2, and declares
that the Trustee shall hold such consideration upon the trusts herein set forth
for the benefit of all present and future Certificateholders, subject to the
terms and provisions of this Agreement.
SECTION II.5. Assignment by Depositor. The Depositor does hereby
transfer, assign and otherwise convey unto the Trustee, for the benefit of the
Certificateholders, its right to any recourse to CPS resulting from the
occurrence of a breach of any of CPS' representations and warranties contained
in Section 3.2 of the Purchase Agreement. The provisions of this Section 2.5 are
intended to grant the Trustee a direct right against CPS to demand performance
under the terms of the Purchase Agreement.
SECTION II.6. [Reserved].
SECTION II.7. Delivery of Receivable Files. On or prior to the Closing
Date, the Depositor shall transfer and deliver to the Trustee at the offices
specified in Schedule B to this Agreement with respect to each Receivable the
following:
(i) The fully executed original of the Receivable (together
with any agreements modifying the Receivable, including without
limitation, any extension agreements).
(ii) The original certificate of title in the name of CPS (or,
with respect to the Samco Receivables, Samco, or, with respect to the
Linc Receivables, Linc) or such documents that CPS shall keep on file,
in accordance with its customary procedures, evidencing the security
interest of CPS (or, with respect to the Samco Receivables, Samco, or,
with respect to the Linc Receivables, Linc) in the Financed Vehicle or,
if not yet received, a copy of the application therefor showing CPS
(or, with respect to the Samco Receivables, Samco, or, with respect to
the Linc Receivables, Linc) as secured party.
The Servicer shall hold all other documents with respect to the Receivables as
custodian for the Trust.
SECTION II.8. Acceptance of Receivable Files by Trustee. The Trustee
acknowledges receipt of files which the Depositor has represented are the
Receivable Files. The Trustee has reviewed the Receivable Files and has
determined that it has received a file for each Receivable identified in
Schedule A to this Agreement. The Trustee declares that it holds and will
continue to hold such files and any amendments, replacements or supplements
thereto and all other Trust Assets as Trustee in trust for the use and benefit
of all present and future Certificateholders. The Trustee agrees to review each
file delivered to it no later than 45 days after the Closing Date to determine
whether such Receivable Files contain the documents referred to in Section
2.7(i) and (ii). If the Trustee has found or finds that a file for a Receivable
has not been received, or that a file is unrelated to the Receivables identified
in Schedule A to this Agreement or that any of the documents referred to in
Section 2.7(i) or (ii) are not contained in a Receivable File, the Trustee shall
inform CPS, the Depositor, the Standby Servicer and the Certificate Insurer
promptly, in writing, of the failure to receive a file with respect to such
Receivable (or of the failure of any of the aforementioned documents to be
included in the Receivable File) or shall return to CPS as the Depositor's
designee any file unrelated to a Receivable identified in Schedule A to this
Agreement (it being understood that the Trustee's obligation to review the
contents of any Receivable File shall be limited as set forth in the preceding
sentence). Unless such defect with respect to such Receivable File shall have
been cured by the last day of the second Collection Period following discovery
thereof by the Trustee, CPS shall repurchase any such Receivable as of such last
day. In consideration of the purchase of the Receivable, CPS shall remit the
Purchase Amount, in the manner specified in Section 4.5. The sole remedy of the
Trustee, the Trust, or the Certificateholders with respect to a breach pursuant
to this Section 2.8 shall be to require CPS to purchase the applicable
Receivables pursuant to this Section 2.8. Upon receipt of the Purchase Amount
and written instructions from the Servicer, the Trustee shall release to CPS or
its designee the related Receivable File and shall execute and deliver all
reasonable instruments of transfer or assignment, without recourse, as are
prepared by CPS and delivered to the Trustee and are necessary to vest in CPS or
such designee title to the Receivable. The Trustee shall make a list of
Receivables for which an application for a certificate of title but not an
original certificate of title or, with respect to Receivables originated in the
State of Michigan, a "Form RD108" stamped by the Department of Motor Vehicles,
is included in the Receivable File as of the date of its review of the
Receivable Files and deliver a copy of such list to the Servicer and the
Certificate Insurer. On the date which is 180 days following the Closing Date or
the next succeeding Business Day, the Trustee shall inform CPS and the other
parties to this Agreement and the Certificate Insurer of any Receivable for
which the related Receivable File on such date does not include an original
certificate of title or, with respect to Financed Vehicles in the State of
Michigan, for which the related Receivable File on such date does not include a
"Form RD108" stamped by the Department of Motor Vehicles, and CPS shall
repurchase any such Receivable as of the last day of the current Collection
Period. The Depositor shall have no obligation to repurchase any Receivable upon
a breach pursuant to this Section 2.8. The Depositor shall have no liability for
any action taken or omitted to be taken by CPS pursuant to this Section 2.8.
SECTION II.9. Access to Receivable Files. The Trustee shall permit the
Servicer, the Depositor, any Certificateholder and the Certificate Insurer
access to the Receivable Files at all reasonable times during the Trustee's
normal business hours; provided, however, that the Trustee shall provide such
access to any Certificateholder only (i) in such cases where the Trustee is
required by applicable statutes or regulations (whether applicable to the
Trustee, the Servicer or to such Certificateholder) to permit such
Certificateholder to review the Receivable Files or (ii) if an Insurer Default
shall have occurred and be continuing. In addition, the Trustee shall provide
such access to any Certificateholder at all reasonable times during the
Trustee's normal business hours if an Event of Default shall have occurred and
be continuing. In each case, such access shall be afforded without charge but
only upon reasonable request. Each Certificateholder shall be deemed to have
agreed by its acceptance of a Certificate to use its best efforts to hold in
confidence all Confidential Information in accordance with its then customary
procedures; provided that nothing herein shall prevent any Certificateholder
from delivering copies of any financial statements and other documents whether
or not constituting Confidential Information, and disclosing other information,
whether or not Confidential Information, to (i) its directors, officers,
employees, agents and professional consultants, (ii) any other institutional
investor that holds Certificates, (iii) any prospective institutional investor
transferee in connection with the contemplated transfer of a Certificate or any
part thereof or participation therein who is subject to confidentiality
arrangements at least substantially similar hereto, (iv) any governmental
authority, (v) the National Association of Insurance Commissioners or any
similar organization, (vi) any nationally recognized rating agency in connection
with the rating of the Class A Certificates by such agency or (vii) any other
Person to which such delivery or disclosure may be necessary or appropriate (a)
in compliance with any applicable law, rule, regulation or order, (b) in
response to any subpoena or other legal process, (c) in connection with any
litigation to which such Certificateholder is a party, or (d) in order to
protect or enforce such Person's investment in any Certificate. The Trustee
shall, within two Business Days of the request of the Servicer or the
Certificate Insurer, execute such documents and instruments as are prepared by
the Servicer or the Certificate Insurer and delivered to the Trustee, as the
Servicer or the Certificate Insurer deems necessary to permit the Servicer, in
accordance with its customary servicing procedures, to enforce the Receivable on
behalf of the Trust and any related insurance policies covering the Obligor, the
Receivable or Financed Vehicle so long as such execution in the Trustee's sole
discretion does not conflict with this Agreement and will not cause it undue
risk or liability. The Trustee shall not be obligated to release any document
from any Receivable File unless it receives a trust receipt signed by a
Servicing Officer in the form of Exhibit E-1 hereto (the "Trust Receipt"). Such
Trust Receipt shall obligate the Servicer to return such document(s) to the
Trustee when the need therefor no longer exists unless the Receivable shall be
liquidated, in which case, upon receipt of a certificate of a Servicing Officer
substantially in the form of Exhibit E-2 hereto to the effect that all amounts
required to be deposited in the Collection Account with respect to such
Receivable have been so deposited, the Trust Receipt shall be released by the
Trustee to the Servicer.
ARTICLE III
Administration and Servicing of Receivables
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SECTION III.1. Duties of Servicer. The Servicer, as agent for the
Trust, the Certificateholders and the Certificate Insurer (to the extent
provided herein) shall manage, service, administer and make collections on the
Receivables with reasonable care, using that degree of skill and attention
customary and usual for institutions which service motor vehicle retail
installment contracts similar to the Receivables and, to the extent more
exacting, that the Servicer exercises with respect to all comparable automotive
receivables that it services for itself or others. 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
Certificate Insurer with respect to distributions. Without limiting the
generality of the foregoing, and subject to the servicing standards set forth in
this Agreement, the Servicer is authorized and empowered by the Trustee to
execute and deliver, on behalf of itself, the Trust, the Certificateholders or
any of them, any and all instruments of satisfaction or cancellation, or partial
or full release or discharge, and all other comparable instruments, with respect
to such Receivables or to the Financed Vehicles securing such Receivables and/or
the certificates of title or, with respect to Financed Vehicles in the State of
Michigan, other evidence of ownership with respect to such Financed Vehicles. If
the Servicer shall commence a legal proceeding to enforce a Receivable, the
Trustee 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 Trustee shall, at the Servicer's
expense and direction, take steps to enforce such Receivable, including bringing
suit in its name or the name of the Certificateholders. The Servicer shall
prepare and furnish to the Trustee, 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.
SECTION III.2. Collection and Allocation of Receivable Payments.
Consistent with the standards, policies and procedures required by this
Agreement, the Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Receivables as and when the
same shall become due and shall follow such collection procedures as it follows
with respect to all comparable automotive receivables that it services for
itself or others; provided, however, that the Servicer shall notify each Obligor
to make all payments with respect to the Receivables to the Post-Office Box. The
Servicer will provide each Obligor with a monthly statement in order to notify
such Obligors to make payments directly to the Post-Office Box. The Servicer
shall allocate collections between principal and interest in accordance with the
customary servicing procedures it follows with respect to all comparable
automotive receivables that it services for itself or others and in accordance
with the terms of this Agreement. Except as provided below, the Servicer, for so
long as CPS is the Servicer, may grant extensions on a Receivable; provided,
however, that the Servicer may not grant more than one extension per calendar
year with respect to a Receivable or grant an extension with respect to a
Receivable for more than one calendar month or grant more than three extensions
in the aggregate with respect to a Receivable without the prior written consent
of the Certificate Insurer and provided, further, that if the Servicer extends
the date for final payment by the Obligor of any Receivable beyond the last day
of the penultimate Collection Period preceding the Final Scheduled Distribution
Date, it shall promptly purchase the Receivable from the Trust in accordance
with the terms of Section 3.7 hereof (and for purposes thereof, the Receivable
shall be deemed to be materially and adversely affected by such breach). If the
Servicer is not CPS, the Servicer may not make any extension on a Receivable
without the prior written consent of the Certificate Insurer. The Servicer may
in its discretion waive any late payment charge or any other fees that may be
collected in the ordinary course of servicing a Receivable. Notwithstanding
anything to the contrary contained herein, the Servicer shall not agree (i) to
any alteration of the interest rate on any Receivable or of the amount of any
Scheduled Payment on Receivables, and (ii) shall not agree to any modification
that would result in a "deemed exchange" of a receivable under Section 1001 of
the Internal Revenue Code of 1986, as amended, or would constitute reinvestment
adversely affecting the status of the Trust as not an association taxable as a
corporation for Federal income tax purposes.
SECTION III.3. Realization Upon Receivables. On behalf of the Trust,
the Certificateholders and the Certificate Insurer, the Servicer shall use its
best efforts, consistent with the servicing procedures set forth herein, to
repossess or otherwise convert the ownership of the Financed Vehicle securing
any Receivable as to which the Servicer shall have determined eventual payment
in full is unlikely. The Servicer shall commence efforts to repossess or
otherwise convert the ownership of a Financed Vehicle on or prior to the date
that an Obligor has failed to make more than 90% of a Scheduled 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 3.2, 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 sole 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 III.4. Physical Damage Insurance; Other Insurance. (a) The
Servicer, in accordance with the servicing procedures and standards set forth
herein, shall require that (i) each Obligor shall have obtained insurance
covering the Financed Vehicle, as of the date of the execution of the
Receivable, insuring against loss and damage due to fire, theft, transportation,
collision and other risks generally covered by comprehensive and collision
coverage and each Receivable requires the Obligor to maintain such physical loss
and damage insurance naming CPS (or, with respect to the Samco Receivables,
Samco, or, with respect to the Linc Receivables, Linc) and its successors and
assigns as an additional insured, (ii) each Receivable that finances the cost of
premiums for credit life and credit accident and health insurance is covered by
an insurance policy or certificate naming CPS (or, with respect to the Samco
Receivables, Samco, or, with respect to the Linc Receivables, Linc) as
policyholder (creditor) and (iii) as to each Receivable that finances the cost
of an extended service contract, the respective Financed Vehicle which secures
the Receivable is covered by an extended service contract.
(b) To the extent applicable, the Servicer shall not take any action
which would result in noncoverage under any of the insurance policies referred
to in Section 3.4(a) which, but for the actions of the Servicer, would have been
covered thereunder. The Servicer, on behalf of the Trustee, shall take such
reasonable action as shall be necessary to permit recovery under any of the
foregoing insurance policies. Any amounts collected by the Servicer under any of
the foregoing insurance policies shall be deposited in the Collection Account
pursuant to Section 4.2.
SECTION III.5. Maintenance of Security Interests in Financed Vehicles.
(a) Consistent with the policies and procedures required by this Agreement, the
Servicer shall take such steps as are necessary to maintain perfection of the
security interest created by each Receivable in the related Financed Vehicle
including but not limited to obtaining the execution by the Obligors and the
recording, registering, filing, re-recording, re-registering and refiling of all
security agreements, financing statements and continuation statements or
instruments as are necessary to maintain the security interest granted by
Obligors under the respective Receivables. The Trustee hereby authorizes the
Servicer, and the Servicer agrees, to take any and all steps as are necessary to
re-perfect or continue the perfection of such security interest on behalf of the
Trust in the event of the relocation of a Financed Vehicle or for any other
reason. In the event that the assignment of a Receivable 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, the
Servicer hereby agrees that CPS's designation as the secured party on such
certificate of title is in its capacity as Servicer as agent of the Trustee.
(b) Upon the occurrence of an Insurance Agreement Event of Default, the
Certificate Insurer may (so long as no Insurer Default shall have occurred and
be continuing) instruct the Trustee and the Servicer to take or cause to be
taken, or, if an Insurer Default shall have occurred, upon the occurrence of an
Event of Default, 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 Trust by amending the title documents of
such Financed Vehicles or by such other reasonable means as may, in the opinion
of counsel to the Certificate Insurer or the Trustee (as applicable), which
opinion shall not be an expense of the Trustee, be necessary or prudent. The
Servicer hereby agrees to pay all expenses related to such perfection or
re-perfection and to take all action necessary therefor. In addition, prior to
the occurrence of an Insurance Agreement Event of Default, the Certificate
Insurer may (unless an Insurer Default shall have occurred and be continuing)
instruct the Trustee and the Servicer to take or cause to be taken such action
as may, in the opinion of counsel to the Certificate Insurer, be necessary to
perfect or re-perfect the security interest in the Financed Vehicles securing
the Receivables in the name of the Trustee on behalf of the Trust, including by
amending the title documents of such Financed Vehicles or by such other
reasonable means as may, in the opinion of counsel to the Certificate Insurer,
be necessary or prudent; provided, however, that if the Certificate Insurer
requests (unless an Insurer Default shall have occurred and be continuing) that
the title documents be amended prior to the occurrence of an Insurance Agreement
Event of Default, the out-of-pocket expenses of the Servicer or the Trustee in
connection with such action shall be reimbursed to the Servicer or the Trustee,
as applicable, by the Certificate Insurer.
SECTION III.6. Additional Covenants of Servicer. The Servicer shall not
release the Financed Vehicle securing each Receivable from the security interest
granted by such Receivable in whole or in part except in the event of payment in
full by the Obligor thereunder or repossession, nor shall the Servicer impair
the rights of the Certificateholders in such Receivables, nor shall the Servicer
amend a Receivable, except that extensions may be granted in accordance with
Section 3.2.
SECTION III.7. Purchase of Receivables Upon Breach. The Servicer or the
Trustee shall inform the other party and the Certificate Insurer promptly, in
writing, upon the discovery of any breach of Section 3.2, 3.4, 3.5 or 3.6;
provided, however, that the failure to give such notice shall not affect any
obligation of the Servicer hereunder. Unless the breach shall have been cured by
the last day of the second Collection Period following such discovery (or, at
the Servicer's election, the last day of the first following Collection Period),
the Servicer shall purchase any Receivable materially and adversely affected by
such breach. In consideration of the purchase of such Receivable, the Servicer
shall remit the Purchase Amount in the manner specified in Section 4.5. The sole
remedy of the Trustee, the Trust, the Certificate Insurer or the
Certificateholders with respect to a breach of Section 3.2, 3.4, 3.5 or 3.6
shall be to require the Servicer to repurchase Receivables pursuant to this
Section 3.7; provided, however, that the Servicer so long as the Servicer is
CPS, shall indemnify the Trustee, the Standby Servicer, the Collateral Agent,
the Certificate Insurer, the Trust and the Certificateholders against all costs,
expenses, losses, damages, claims and liabilities, including reasonable fees and
expenses of counsel, which may be asserted against or incurred by any of them as
a result of third party claims arising out of the events or facts giving rise to
such breach. If it is determined that the management, administration and
servicing of the Receivables and operation of the Trust pursuant to this
Agreement constitutes a violation of the prohibited transaction rules of ERISA
or the Code to which no statutory exception or administrative exemption applies,
such violation shall not be treated as a breach of Sections 3.2, 3.4, 3.5 or 3.6
if not otherwise such a breach. The Depositor shall have no obligation to
repurchase the Receivables upon a breach of Section 3.2, 3.4, 3.5 or 3.6. The
Depositor shall have no liability for actions taken or omitted to be taken by
the Servicer pursuant to this Section 3.7.
SECTION III.8. Servicing Fee. (a) The Servicing Fee for each
Distribution Date shall be equal to the sum of (i) the result of one-twelfth
times 2.00% of the Pool Balance as of the close of business on the last day of
the second preceding Collection Period plus (ii) the result of one-twelfth times
0.08% of the Certificate Balance as of the close of business on the last day of
the second preceding Collection Period; provided, however, that with respect to
the first Distribution Date the Servicer will be entitled to receive a Servicing
Fee equal to the sum of (i) the result of one-twelfth times 2.0% of the Original
Pool Balance plus (ii) the result of one-twelfth times 0.08% of the Certificate
Balance as of the Closing Date. 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.
On or prior to each Distribution Date, CPS shall deposit into the
Collection Account, out of its own funds without any right of reimbursement
therefor, an amount (the "Adjusted Compensating Interest") equal to the positive
difference, if any, between (i) Compensating Interest for the prior Collection
Period and (ii) the amount on deposit in the Spread Account.
SECTION III.9. Servicer's Certificate. By 10:00 a.m., Minneapolis time,
on each Determination Date, the Servicer shall deliver to the Trustee, the
Depositor, the Certificate Insurer and the Rating Agencies, a Servicer's
Certificate containing all information necessary to make the distributions
pursuant to Section 4.6 (including, if required, withdrawals from or deposits to
the Payahead Account and withdrawals from the Spread Account) for the Collection
Period preceding the date of such Servicer's Certificate and all information
necessary for the Trustee to send statements to Certificateholders and the
Certificate Insurer pursuant to Section 4.8. Receivables to be purchased by the
Servicer or to be purchased by CPS shall be identified by the Servicer by
account number with respect to such Receivable (as specified in Schedule A).
SECTION III.10. Annual Statement as to Compliance: Notice of Default.
(a) The Servicer shall deliver to the Trustee, the Depositor, the Standby
Servicer and the Certificate Insurer, on or before July 31 of each year
beginning July 31, 1999, an Officer's Certificate, dated as of March 31 of such
year, stating that (i) a review of the activities of the Servicer during the
preceding 12-month period (or, in the case of the first such certificate, the
period from the Cutoff Date to June 30, 1999) and of its performance under this
Agreement has been made under such officer's supervision and (ii) to the best of
such officer's knowledge, based on such review, the Servicer has fulfilled all
its obligations under this Agreement throughout such year (or, in the case of
the first such certificate, such shorter period), or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officer and the nature and status thereof. The Trustee shall send
a copy of such certificate and the report referred to in Section 3.11 to the
Rating Agencies. The Trustee shall forward a copy of such certificate as well as
the report referred to in Section 3.11 to each Certificateholder.
(b) The Servicer shall deliver to the Trustee, the Depositor, the
Certificate Insurer, the Standby Servicer and the Rating Agencies, promptly
after having obtained knowledge thereof, but in no event later than 5 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 an Event of
Default under Section 9.1.
The Trustee shall deliver to each Certificateholder a copy of each
notice delivered to it by the Servicer or the Depositor pursuant to this Section
3.10(b).
SECTION III.11. Annual Independent Certified Public Accountant's
Report. The Servicer shall cause a firm of nationally recognized independent
certified public accountants, who may also render other services to the Servicer
or to the Depositor, to deliver to the Trustee, the Certificateholders and the
Certificate Insurer on or before July 31 of each year beginning July 31, 1999, a
report dated as of June 30 of such year and reviewing the Servicer's activities
during the preceding 12-month period (or, in the case of the first such report,
the period from the Cutoff Date to June 30, 1999), addressed to the Board of
Directors of the Servicer, and to the Trustee, the Depositor, and the
Certificate Insurer, to the effect that such firm has examined the financial
statements of the Servicer and issued its report therefor and that such
examination (1) was made in accordance with generally accepted auditing
standards, and accordingly included such tests of the accounting records and
such other auditing procedures as such firm considered necessary in the
circumstances; (2) included tests relating to auto loans serviced for others in
accordance with the requirements of the Uniform Single Audit Program for
Mortgage Bankers (the "Program"), to the extent the procedures in the Program
are applicable to the servicing obligations set forth in this Agreement; (3)
included an examination of the delinquency and loss statistics relating to the
Servicer's portfolio of automobile and light truck installment sales contracts;
and (4) except as described in the report, disclosed no exceptions or errors in
the records relating to automobile and light truck loans serviced for others
that, in the firm's opinion, paragraph four of the Program requires such firm to
report. The accountant's report shall further state that (1) a review in
accordance with agreed upon procedures was made of three randomly selected
Servicer Certificates; (2) except as disclosed in the report, no exceptions or
errors in the Servicer Certificates were found; and (3) the delinquency and loss
information, relating to the Receivables contained in the Servicer Certificates
were found to be accurate. In the event such firm requires the Trustee and/or
the Standby Servicer to agree to the procedures performed by such firm, the
Servicer shall direct the Trustee and/or the Standby Servicer, as applicable, in
writing to so agree; it being understood and agreed that the Trustee and/or the
Standby Servicer will deliver such letter of agreement in conclusive reliance
upon the direction of the Servicer, and neither the Trustee nor the Standby
Servicer shall make, or have any obligations to make, 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 III.12. Reserved.
SECTION III.13. Servicer Expenses. The Servicer shall be required to
pay all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of independent accountants, taxes imposed on
the Servicer, and expenses incurred in connection with distributions and reports
to Certificateholders.
SECTION III.14. Retention and Termination of Servicer. The Servicer
hereby covenants and agrees to act as such under this Agreement for an initial
term commencing on the Closing Date and ending on March 31, 1998, which term
shall be extendible by the Certificate Insurer for successive quarterly terms
ending on each successive March 31, June 30, September 30 and December 31 (or,
at the discretion of the Certificate Insurer exercised pursuant to revocable
written standing instructions from time to time to the Servicer, the Depositor
and the Trustee, for any specified number of terms greater than one), until such
time as all amounts due to the Certificateholders have been paid and until the
termination of the Trust. Each such notice (including each notice pursuant to
standing instructions, which shall be deemed delivered at the end of successive
terms for so long as such instructions are in effect) (a "Servicer Extension
Notice") shall be delivered by the Certificate Insurer to the Trustee, the
Depositor and the Servicer. The Servicer hereby agrees that, upon its receipt of
any such Servicer Extension Notice, the Servicer shall become bound, for the
duration of the term covered by such Servicer Extension Notice, to continue as
the Servicer subject to and in accordance with the other provisions of this
Agreement. At such time as the Class A Certificates have been paid in full and
all outstanding Reimbursement Obligations and other amounts owed to the
Certificate Insurer have been paid in full or an Insurer Default has occurred
and is continuing, the term of the Servicer's appointment hereunder shall be
deemed to have been extended until the termination of the Trust or, in the case
of an Insurer Default, until such time, if any, as such Insurer Default has been
cured unless such appointment is terminated sooner in accordance with the terms
of this Agreement. Until such time as an Insurer Default shall have occurred and
be continuing, the Trustee agrees that if as of the fifteenth day prior to the
last day of any term of the Servicer, the Trustee shall not have received any
Servicer Extension Notice from the Certificate Insurer, the Trustee shall,
within five days thereafter, give written notice of such non-receipt to the
Certificate Insurer.
SECTION III.15. Access to Certain Documentation and Information
Regarding Receivables. The Servicer shall provide to representatives of the
Trustee, the Depositor, the Certificateholders and the Certificate Insurer
reasonable access to documentation and computer systems and information
regarding the Receivables. The Servicer shall provide such access to any
Certificateholder only (i) in such cases where the Servicer is required by
applicable statutes or regulations (whether applicable to the Servicer or to
such Certificateholder) to permit such Certificateholder to review such
materials and (ii) if an Insurer Default shall have occurred and be continuing.
In each case, such access shall be afforded without charge but only upon
reasonable request and during normal business hours. Nothing in this Section
3.15 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 3.15
as a result of such obligation shall not constitute a breach of this Section
3.15.
SECTION III.16. Verification of Servicer's Certificate. (a) On or
before the fifth calendar day of each month, the Servicer will deliver to the
Trustee and the Standby Servicer a computer diskette (or other electronic
transmission) in a format acceptable to the Trustee and the Standby Servicer
containing information with respect to the Receivables as of the close of
business on the last day of the preceding Collection Period which information is
necessary for preparation of the Servicer's Certificate. The Standby Servicer
shall use such computer diskette (or other electronic transmission) to verify
certain information specified in Section 3.16(b) contained in the Servicer's
Certificate delivered by the Servicer, and the Standby Servicer shall notify the
Servicer and the Certificate Insurer of any discrepancies on or before the
second Business Day following the Determination Date. In the event that the
Standby Servicer reports any discrepancies, the Servicer and the Standby
Servicer shall attempt to reconcile such discrepancies prior to the second
Business Day prior to the related Distribution 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 Distribution Date. In
the event that the Standby Servicer and the Servicer are unable to reconcile
discrepancies with respect to a Servicer's Certificate by the related
Distribution Date, the Servicer shall cause a firm of independent certified
public accountants, at the Servicer's expense, to audit the Servicer's
Certificate and, prior to the fifth calendar day of the following month,
reconcile the discrepancies. The effect, if any, of such reconciliation shall be
reflected in the Servicer's Certificate for such next succeeding Determination
Date. Other than the duties specifically set forth in this Agreement, the
Standby Servicer shall have no obligations hereunder, including, without
limitation, to supervise, verify, monitor or administer the performance of the
Servicer. The Standby Servicer shall have no liability for any actions taken or
omitted by the Servicer. The duties and obligations of the Standby Servicer
shall be determined solely by the express provisions of this Agreement and no
implied covenants or obligations shall be read into this Agreement against the
Standby Servicer.
(b) The Standby Servicer shall review each Servicer's Certificate
delivered pursuant to Section 3.16(a) and shall:
(i) confirm that such Servicer's Certificate is complete on
its face;
(ii) load the computer diskette (which shall be in a format
acceptable to the Standby Servicer) received from the Servicer pursuant
to Section 3.16(a) hereof, confirm that such computer diskette is in a
readable form and calculate and confirm the Principal Balance of each
Receivable for the most recent Distribution Date;
(iii) confirm that the Total Distribution Amount, the Class A
Distributable Amount, the Class A Principal Distributable Amount, the
Class A Interest Distributable Amount, the Class B Distributable
Amount, the Class B Interest Distributable Amount, the Class B
Principal Distributable Amount, the Standby Fee, the Servicing Fee, the
Trustee Fee, the amount on deposit in the Spread Account, and the
Premium in the Servicer's Certificate are accurate based solely on the
recalculation of the Servicer's Certificate; and
(iv) confirm the calculation of the performance tests set
forth in the Spread Account Agreement.
SECTION III.17. 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 III.18. Delegation of Duties. The Servicer may at any time
delegate duties under this Agreement to sub-contractors who are in the business
of servicing automotive receivables with the prior written consent of the
Controlling Party as determined pursuant to Section 12.11 and (unless an
Insurance Agreement Event of Default shall have occurred and be continuing or
Norwest Bank Minnesota, National Association shall then be the Servicer) the
Holders of Class B Certificates evidencing more than 50% of the Class B
Certificate Balance; provided, however, that no such delegation or
sub-contracting of duties by the Servicer shall relieve the Servicer of its
responsibility with respect to such duties; and provided further, that the
consent of the Holders of the requisite percentage of the Class B Certificate
Balance shall not be unreasonably withheld or delayed and shall be deemed to
have been given unless, on or before the Objection Date (as defined below), the
Trustee shall have received Objection Notices (as defined below) from Holders of
Class B Certificates representing a majority of the Class B Certificate Balance.
Upon written request of the Servicer, the Trustee shall deliver to each Class B
Certificateholder of record as of the most recent Record Date a notice (a
"Delegation Notice") prepared by the Servicer (i) specifying the duties the
Servicer proposes to delegate, (ii) identifying the sub-contractor to whom it
proposes to delegate such duties and (iii) informing such Class B
Certificateholder that if it wishes to object to the proposed delegation of
duties, it must deliver a written notice of objection (specifying in reasonable
detail the reasons for its objection; such notice of objection an "Objection
Notice") on or before the date specified in such Delegation Notice (the
"Objection Date"), which Objection Date shall be a date which is not more than
10 Business Days after the date the Servicer delivers such Delegation Notice to
the Trustee.
ARTICLE IV
Distributions, Spread Account;
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Statements to Certificateholders
--------------------------------
SECTION IV.1. Accounts; Post-Office Box. (a) The Trustee shall
establish the Lock-Box Account in the name of CPS Receivables Corp. for the
benefit of the Certificateholders and the Certificate Insurer, provided that
pursuant to the Lock-Box Agreement, the Lock-Box Processor and no other person,
save the Trustee and pursuant to the standing instructions of the Trustee, which
instructions may only be modified in a writing signed by the Trustee, the
Servicer has authority to direct disposition of funds on deposit in the Lock-Box
Account consistent with the provisions of this Agreement and the Lock-Box
Agreement. The Trustee shall have no liability or responsibility with respect to
the Lock-Box Processor's directions or activities as set forth in the preceding
sentence. The Lock-Box Account shall be established pursuant to and maintained
in accordance with the Lock-Box Agreement and shall be a demand deposit account
initially established and maintained with Bank of America, or at the request of
the Certificate Insurer (unless an Insurer Default shall have occurred and be
continuing) an Eligible Account satisfying clause (i) of the definition thereof;
provided, however, that the Trustee shall give the Servicer prior written notice
of any change made at the request of the Certificate Insurer in the location of
the Lock-Box Account. The Trustee shall establish and maintain the Post-Office
Box at a United States Post Office Branch in the name of the Trustee for the
benefit of the Certificateholders and the Certificate Insurer.
In the event the Servicer shall for any reason no longer be acting as
such, the Standby Servicer or a successor Servicer shall thereupon assume all of
the rights and obligations of the outgoing Servicer under the Lock-Box
Agreement. In such event, the successor Servicer shall be deemed to have assumed
all of the outgoing Servicer's interest therein and to have replaced the
outgoing Servicer as a party to the Lock-Box Agreement to the same extent as if
such Lock-Box Agreement had been assigned to the successor Servicer, except that
the outgoing Servicer shall not thereby be relieved of any liability or
obligations on the part of the outgoing Servicer under such Lock-Box Agreement
and the successor Servicer shall not be liable for any obligations of the
outgoing Servicer arising out of a default by such outgoing Servicer. The
outgoing Servicer shall, upon request of the Trustee, but at the expense of the
outgoing Servicer, deliver to the successor Servicer all documents and records
relating to the Lock-Box Agreement and an accounting of amounts collected and
held by the Lock-Box Bank and otherwise use its best efforts to effect the
orderly and efficient transfer of any Lock-Box Agreement to the successor
Servicer. In the event that the Certificate Insurer (so long as no Insurer
Default shall have occurred and be continuing) or Holders of Certificates
evidencing more than 50% of the Class A Certificate Balance (if an Insurer
Default shall have occurred and be continuing) shall elect to change the
identity of the Lock-Box Bank, the Servicer, at its expense, shall cause the
Lock-Box Bank to deliver, at the direction of the Certificate Insurer (so long
as no Insurer Default shall have occurred and be continuing) or Holders of
Certificates evidencing more than 50% of the Class A Certificate Balance (if an
Insurer Default shall have occurred and be continuing) to the Trustee or a
successor Lock-Box Bank, all documents and records relating to the Receivables
and all amounts held (or thereafter received) by the Lock-Box Bank (together
with an accounting of such amounts) and shall otherwise use its best efforts to
effect the orderly and efficient transfer of the lock-box arrangements.
In addition, the Trustee shall establish, with itself, the Collection
Account, the Policy Payments Account, and the Certificate Account in the name of
the Trustee for the benefit of the Certificateholders and the Certificate
Insurer. In addition, the Trustee shall establish with itself the Payahead
Account in the name of the Trustee for the benefit of Obligors of Rule of 78's
Receivables who make payments thereon in excess of Scheduled Payments and
applicable late fees and for the benefit, to the extent of earnings on
investments of funds in the Payahead Account, of the Certificateholders. The
Payahead Account shall not be included in the Trust. Any amounts held on deposit
in the Payahead Account and any investment earnings thereon are owned by, and
will be taxable to, CPS Receivables for federal income tax purposes. The
Collection Account, the Policy Payments Account, the Certificate Account and the
Payahead Account shall be Eligible Accounts initially established with the
Trustee; provided, however, if any of such accounts shall cease to be an
Eligible Account, the Servicer, with the consent of the Certificate Insurer,
within 5 Business Days shall, cause such accounts to be moved to an institution
so that such account meets the definition of Eligible Account. The Servicer
shall promptly notify the Rating Agencies and the Depositor of any change in the
location of any of the aforementioned accounts.
All amounts held in the Collection Account and the Payahead Account
shall be invested by the Trustee at the written direction of the Servicer in
Eligible Investments in the name of the Trustee as trustee of the Trust and
shall mature no later than one Business Day immediately preceding the
Distribution Date next succeeding the date of such investment. Such written
direction shall certify that any such investment is authorized by this Section.
No investment may be sold prior to its maturity. Amounts in the Policy Payments
Account and the Certificate Account shall not be invested. The amount of
earnings on investments of funds in the Collection and Payahead Accounts during
the Collection Period related to each Distribution Date shall be deposited into
the Certificate Account, on each Distribution Date, and shall be available for
distribution pursuant to Section 4.6(c). The Servicer shall not direct the
Trustee to make any investment of any funds held in any of the Transaction
Accounts unless the security interest granted and perfected in such Transaction
Account will continue to be perfected in such investment, in any 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. For purposes of this paragraph, the Trustee will take delivery
of the Eligible Investments in accordance with Schedule C.
(b) The Trustee shall not in any way be held liable by reason of any
insufficiency in any of the Transaction 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 in its commercial capacity as
principal obligor and not as Trustee to make payments on Eligible Investments
issued by the Trustee in such commercial capacity as principal obligor and not
as Trustee, in accordance with their terms.
(c) If the Servicer shall have failed to give investment directions for
any funds on deposit in any of the Transaction Accounts to the Trustee by 2:00
p.m. Eastern Time (or such other time as may be determined by the Trustee) on
any Business Day, then the Trustee shall, to the fullest extent practicable,
invest and reinvest funds in such Transaction Accounts in one or more Eligible
Investments.
(d) The Trustee shall on or prior to each Distribution Date (and prior
to the transfer from the Collection Account to the Certificate Account described
in Section 4.6(a)) transfer from the Collection Account to the Payahead Account
all Payaheads as described in Section 4.3 received by the Servicer during the
related Collection Period.
SECTION IV.2. Collections. On each Business Day, pursuant to the
Lock-Box Agreement, the Lock-Box Processor will transfer any payments from
Obligors received in the Post-Office Box to the Lock-Box Account. Within two
Business Days of receipt of funds into the Lock-Box Account, the Servicer shall
cause the Lock-Box Bank to transfer funds from the Lock-Box Account to the
Collection Account. In addition, the Servicer shall remit all payments by or on
behalf of the Obligors received by the Servicer with respect to the Receivables
(other than Purchased Receivables), and all Liquidation Proceeds no later than
the Business Day following receipt directly (without deposit into any
intervening account) into the Lock-Box Account or the Collection Account.
SECTION IV.3. Application of Collections. All collections for each
Collection Period shall be applied by the Servicer as follows:
With respect to each Receivable (other than a Purchased Receivable),
payments by or on behalf of the Obligor shall be applied hereunder, in the case
of a Rule of 78's Receivable, first, to the Scheduled Payment of such Rule of
78's Receivable, with the principal portion of the Scheduled Payment being
allocated on an actuarial basis, 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. With respect to any Rule of 78's Receivable, any remaining excess shall
be added to the Payahead Balance, and shall be applied to prepay the Rule of
78's Receivable, but only if the sum of such excess and the previous Payahead
Balance shall be sufficient to prepay the Rule of 78's Receivable in full.
Otherwise, any such remaining excess payments with respect to a Rule of 78's
Receivable shall constitute a Payahead, and shall increase the Payahead Balance.
SECTION IV.4. Payaheads. As of the close of business on the last day of
each Collection Period, if the payments by or on behalf of the Obligor on a Rule
of 78's Receivable (other than a Purchased Receivable) shall be less than the
Scheduled Payment and accrued late fees with respect to such Receivable, the
Payahead Balance of an Obligor shall be applied by the Servicer to the extent of
the shortfall and such Payahead Balance shall be reduced accordingly.
SECTION IV.5. Additional Deposits. The Servicer or CPS, as the case may
be, shall deposit or cause to be deposited in the Collection Account the
aggregate Purchase Amount with respect to Purchased Receivables and the Servicer
shall deposit therein all amounts to be paid under Sections 3.8 or 11.2. All
such deposits shall be made, in immediately available funds, on the Business Day
preceding the Determination Date. On or before the third Business Day preceding
each Distribution Date, the Trustee shall remit to the Collection Account any
amounts delivered to the Trustee by the Collateral Agent pursuant to Section
4.7.
SECTION IV.6. Distributions; Policy Claims. (a) On each Distribution
Date, the Trustee shall cause to be made the following transfers and
distributions based solely on the amounts set forth in the Servicer's
Certificate for the related Distribution Date:
(i) From the Collection Account to the Certificate Account, in
immediately available funds, those funds that were deposited in the
Collection Account, plus earnings on investments of funds in the
Collection Account pursuant to Section 4.1(a), for the Collection
Period related to such Distribution Date.
(ii) From the Payahead Account, to the Certificate Account, in
immediately available funds, the aggregate previous Payaheads to be
applied to Scheduled Payments on Rule of 78's Receivables or
prepayments for the related Collection Period pursuant to Sections 4.3
and 4.4, plus earnings on investments of funds in the Payahead Account,
for the related Collection Period, pursuant to Section 4.1 (a).
(b) Prior to each Distribution Date, the Servicer shall on the related
Determination Date calculate the Total Distribution Amount, the Class A
Distributable Amount, the Class A Interest Distributable Amount, the Class A
Principal Distributable Amount, the Class B Interest Distributable Amount and
the Class B Principal Distributable Amount, and, based on the Total Distribution
Amount, and the other distributions to be made on such Distribution Date,
determine the amount distributable to the Certificateholders of each class.
(c) On each Distribution Date, the Trustee (based on the information
contained in the Servicer's Certificate delivered on the related Determination
Date pursuant to Section 3.9) shall, subject to subsection (d) hereof, make the
following distributions in the following order of priority:
(i) to the Servicer, from the Total Distribution Amount, any
amount deposited into the Collection Account pursuant to Section
4.7(a), and any amount deposited into the Collection Account pursuant
to Section 4.11(i) in respect of Servicing Fees, the Servicing Fee and
all unpaid Servicing Fees from prior Collection Periods; provided,
however, that as long as CPS is the Servicer and Norwest Bank
Minnesota, National Association, is the Standby Servicer, the Trustee
shall first pay to the Standby Servicer out of the Servicing Fee
otherwise payable to CPS an amount equal to the Standby Fee;
(ii) n the event the Standby Servicer becomes the successor
Servicer, to the Standby Servicer, from the Total Distribution Amount
(as such Total Distribution Amount has been reduced by payments
pursuant to clause (i) above) and any amount deposited into the
Collection Account pursuant to Section 4.7(a), to the extent not
previously paid by the predecessor Servicer pursuant to Section 9.2,
reasonable transition expenses (up to a maximum of $50,000) incurred in
making the transition from Standby Servicer to successor Servicer;
(iii) to the Trustee, from the Total Distribution Amount (as
such Total Distribution Amount has been reduced by payments pursuant to
clauses (i) and (ii) above), any amount deposited into the Collection
Account pursuant to Section 4.7(a), and any amount deposited into the
Collection Account pursuant to Section 4.11(i) in respect of Trustee
Fees and reasonable out-of-pocket expenses of the Trustee, the Trustee
Fee and all reasonable out-of-pocket expenses (including counsel fees
and expenses) and all unpaid Trustee Fees and all unpaid reasonable
out-of-pocket expenses (including counsel fees and expenses) from prior
Collection Periods; provided, however, that unless an Event of Default
shall have occurred and be continuing, expenses payable to the Trustee
pursuant to this clause (iii) and expenses payable to the Collateral
Agent pursuant to clause (iv) below, shall be limited to $50,000 per
annum;
(iv) to the Collateral Agent, from the Total Distribution
Amount (as such Total Distribution Amount has been reduced by payments
pursuant to clauses (i) through (iii) above), any amount deposited into
the Collection Account pursuant to Section 4.7(a), and any amount
deposited into the Collection Account pursuant to Section 4.11(i) in
respect of fees and expenses of the Collateral Agent, all fees and
expenses payable to the Collateral Agent with respect to such
Distribution Date pursuant to the Spread Account Agreement;
(v) to the Class A Certificateholders, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) through (iv) above) and any amount
deposited into the Collection Account pursuant to Sections 4.7(a) and
4.11(iii), an amount equal to the sum of (x) the Class A Interest
Distributable Amount, (y) any Class A Interest Carryover Shortfall and
(z) interest on such outstanding Class A Interest Carryover Shortfall,
to the extent permitted by law, at the Class A Pass-Through Rate from
such preceding Distribution Date through the current Distribution Date
(calculated on the basis of a 360-day year consisting of twelve 30-day
months) in each case as of the close of business on the preceding
Distribution Date;
(vi) to the Class B Certificateholders, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) through (v) above) and any amount
deposited into the Collection Account pursuant to Section 4.7(c), an
amount equal to the sum of (x) the Class B Interest Distributable
Amount (y) any Class B Interest Carryover Shortfall and (z) interest on
such outstanding Class B Interest Carryover Shortfall, to the extent
permitted by law, at the Class B Pass-Through Rate from such preceding
Distribution Date through the current Distribution Date (calculated on
the basis of a 360- day year consisting of twelve 30-day months), in
each case as of the close of the preceding Distribution Date;
(vii) to the Class A Certificateholders, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) through (vi) above), any amount
deposited into the Collection Account pursuant to Section 4.7(a), and
any amount deposited into the Collection Account pursuant to Section
4.11(ii) or (iii), an amount equal to the sum of the Class A Principal
Distributable Amount and any Class A Principal Carryover Shortfall as
of the close of business on the preceding Distribution Date with
respect to each Distribution Date;
(viii) to the Certificate Insurer, from the Total Distribution
Amount (as such Total Distribution Amount has been reduced by payments
made pursuant to clauses (i) through (vii) above), and any amount
deposited into the Collection Account pursuant to Section 4.7(a), an
amount equal to the Reimbursement Obligations;
(ix) in the event any Person other than the Standby Servicer
becomes the successor Servicer, to such successor Servicer, from the
Total Distribution Amount (as such Total Distribution Amount has been
reduced by payments pursuant to clauses (i) through (viii) above) and
any amount deposited into the Collection Account pursuant to Section
4.7(a), to the extent not previously paid by the predecessor Servicer
pursuant to Section 9.2, reasonable transition expenses (up to a
maximum of $50,000) incurred in making the transition from the Standby
Servicer to successor Servicer;
(x) to the Class B Certificateholders, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) through (ix) above) and any amount
deposited into the Collection Account pursuant to Sections 4.7(c), an
amount equal to the sum of the Class B Principal Distributable Amount
and any Class B Principal Carryover Shortfall as of the close of the
preceding Distribution Date; and
(xi) to the Collateral Agent, for deposit into the Spread
Account, the remaining Total Distribution Amount, if any.
(d) The rights of the Class B Certificateholders to receive
distributions in respect of the Class B Certificates pursuant to Section
4.6(c)(vi) on a Distribution Date shall be and hereby are subordinated to the
payment of the amounts distributable pursuant to Sections 4.6(c)(i) through (v).
The rights of the Class B Certificateholders to receive distributions in respect
of the Class B Certificates pursuant to Section 4.6(c)(x) on a Distribution Date
shall be and hereby are subordinated to the payment of the amounts distributable
pursuant to Sections 4.6(c)(i) through (ix). At such time as the Class A
Certificates are paid in full and the Certificate Insurer has received payment
in full for all outstanding Reimbursement Obligations and any other amounts owed
to the Certificate Insurer, the Class B Certificateholders shall be entitled to
exercise all rights granted to the Class A Certificateholders under this
Agreement to the extent that the exercise of such rights does not conflict with
the provisions of the Spread Account Agreement.
(e) (i) In the event that the Trustee has delivered a
Deficiency Notice with respect to any Determination Date pursuant to
Section 4.7(a), the Trustee shall determine on the third Business Day
(the "Draw Date") preceding the related Distribution Date the Policy
Claim Amount, if any, for such Distribution Date. Amounts paid by the
Certificate Insurer pursuant to a claim submitted under this Section
4.6(e)(i) shall be deposited by the Trustee into the Policy Payments
Account and thereafter into the Certificate Account for payment to
Class A Certificateholders in respect of the Class A Guaranteed
Distribution Amount on the related Distribution Date.
(ii) Any notice delivered by the Trustee to the Certificate
Insurer pursuant to Section 4.6(e)(i) shall specify the Policy Claim
Amount claimed under the Policy and shall constitute a "Notice of
Claim" under the Policy. In accordance with the provisions of the
Policy, the Certificate Insurer is required to pay to the Trustee the
Policy Claim Amount properly claimed thereunder by 12:00 noon, New York
City time, on the later of (1) the third Business Day following receipt
on a Business Day of the Notice of Claim, and (2) the applicable
Distribution Date. Notwithstanding the provisions of Section 4.6(c),
any payment made by the Certificate Insurer under the Policy shall be
applied solely to the payment of the Class A Certificates and for no
other purpose.
(iii) The Trustee shall (i) receive as attorney-in-fact of
each Class A Certificateholder any Policy Claim Amount from the
Certificate Insurer and (ii) deposit the same in the Certificate
Account for disbursement to the Class A Certificateholders as set forth
in clauses (v) and (vii) of Section 4.6(c). Any and all Policy Claim
Amounts disbursed by the Trustee from claims made under the Policy
shall not be considered payment by the Trustee or from the Spread
Account with respect to such Class A Certificates, and shall not
discharge the obligations of the Trust with respect thereto.
(iv) The Trustee shall be entitled to enforce on behalf of the
Class A Certificateholders the obligations of the Certificate Insurer
under the Policy. Notwithstanding any other provision of this
Agreement, the Class A Certificateholders are not entitled to institute
proceedings directly against the Certificate Insurer.
(f) Subject to Section 11.1 respecting the final payment upon
retirement of each Certificate, the Servicer shall on each Distribution Date
instruct the Trustee to distribute to each Certificateholder of record on the
preceding Record Date either by wire transfer, in immediately available funds to
the account of such Holder at a bank or other entity having appropriate
facilities therefor, if such Certificateholder is the Depository or such
Holder's Certificates in the aggregate evidence an original principal balance of
at least $1,000,000, and if such Certificateholder shall have provided to the
Trustee appropriate instructions prior to the Record Date for such Distribution
Date, or if not, by check mailed to such Certificateholder at the address of
such Holder appearing in the Certificate Register, the amounts to be distributed
to such Certificateholder pursuant to such Holder's Certificates.
SECTION IV.7. Withdrawals from Spread Account. (a) In the event that
the Servicer's Certificate with respect to any Determination Date shall state
that the Total Distribution Amount with respect to such Determination Date is
insufficient (taking into account the application of the Total Distribution
Amount to the payment required to be made on the related Distribution Date
pursuant to Section 4.6(c)(vi)) to make the payments required to be made on the
related Distribution Date pursuant to Section 4.6(c)(i), (ii), (iii), (iv), (v),
(vii) or (viii) (such deficiency being a "Deficiency Claim Amount"), then on the
fourth Business Day immediately preceding the related Distribution Date, the
Trustee shall deliver to the Collateral Agent, the Certificate Insurer, the
Depositor and the Servicer, by hand delivery, telex or facsimile transmission, a
written notice (a "Deficiency Notice") specifying the Deficiency Claim Amount
for such Distribution Date. Such Deficiency Notice shall direct the Collateral
Agent to remit such Deficiency Claim Amount (to the extent of the funds
available to be distributed pursuant to the Spread Account Agreement) to the
Trustee for deposit in the Collection Account and distribution pursuant to
Sections 4.6(c)(i), (ii), (iii), (iv), (v), (vii) and/or (viii), as applicable.
(b) Any Deficiency Notice shall be delivered by 10:00 a.m., New York
City time, on the fourth Business Day preceding such Distribution Date. The
amounts distributed by the Collateral Agent to the Trustee pursuant to a
Deficiency Notice shall be deposited by the Trustee into the Collection Account
pursuant to Section 4.5.
(c) In the event that the Servicer's Certificate with respect to any
Determination Date shall state that the Total Distribution Amount with respect
to such Determination Date is insufficient to make the payments required to be
made on the related Distribution Date pursuant to Section 4.6(c)(vi) or (x)
(such deficiency being a "Class B Deficiency"), then on the fourth Business Day
immediately preceding the related Distribution Date, the Trustee shall deliver
to the Collateral Agent, the Servicer and the Depositor, by hand delivery, telex
or facsimile transmission, a written notice specifying the amount of the Class B
Deficiency for such Distribution Date. Such notice shall direct the Collateral
Agent to remit to the Trustee an amount equal to such Class B Deficiency (but
only to the extent that, pursuant to the Spread Account Agreement, funds are
required to be released from the Spread Account to CPS Receivables Corp on the
related Distribution Date) for deposit into the Collection Account and
distribution pursuant to Section 4.6(c)(vi) and/or Section 4.6(c)(x), as
applicable, and any funds so remitted to the Trustee shall be deemed to have
been released to CPS Receivables Corp and paid to the Trustee at the direction
of CPS Receivables Corp.
SECTION IV.8. Statements to Certificateholders; Tax Returns. (a) With
each distribution from the Certificate Account to the Certificateholders made on
a Distribution Date, the Servicer shall provide to the Certificate Insurer, the
Depositor, and to the Trustee for the Trustee to forward to each
Certificateholder of record a statement (prepared by the Servicer) substantially
in the form of Exhibit D hereto setting forth at least the following information
as to the Certificates to the extent applicable:
(i) the amount of such distribution allocable to principal of
the Class A Certificates and the Class B Certificates, respectively;
(ii) the amount of such distribution allocable to interest on
the Class A Certificates and the Class B Certificates, respectively;
(iii) the Pool Balance, the Class A Pool Factor and the Class
B Pool Factor as of the close of business on the last day of the
preceding Collection Period;
(iv) the Class A Certificate Balance and the Class B
Certificate Balance as of the close of business on the last day of the
preceding Collection Period, after giving effect to payments allocated
to principal reported under (i) above;
(v) the amount of the Servicing Fee (inclusive of the Standby
Fee paid to the Standby Servicer) paid to the Servicer with respect to
the related Collection Period, the Class A Percentage of the Servicing
Fee (inclusive of the Standby Fee), the Class B Percentage of the
Servicing Fee (inclusive of the Standby Fee) and the amount of any
unpaid Servicing Fees (inclusive of the Standby Fee) and the change in
such amount from that of the prior Distribution Date;
(vi) the amount of the Class A Interest Carryover Shortfall,
if applicable, on such Distribution Date and the Class A Principal
Carryover Shortfall, if applicable, on such Distribution Date, and the
change in such amounts from the prior Distribution Date;
(vii) the amount of the Class B Interest Carryover Shortfall,
if applicable, on such Distribution Date and the amount of the Class B
Principal Carryover Shortfall, if applicable, on such Distribution
Date, and the change in such amounts from the prior Distribution Date;
(viii) the amount paid, if any, to Class A Certificateholders
from funds received under the Policy for such Distribution Date;
(ix) the amount distributable to the Certificate Insurer on
such Distribution Date;
(x) the aggregate amount in each of the Payahead Account and
the Spread Account and the change in each such amount from the
preceding Distribution Date;
(xi) the number of Receivables and the aggregate gross amount
scheduled to be paid thereon, including unearned finance and other
charges, for which the related Obligors are delinquent in making
scheduled payments between 31 and 59 days and 60 days or more;
(xii) the number and the aggregate Purchase Amount of
Receivables that became Purchased Receivables during the related
Collection Period and summary information as to losses and
delinquencies with respect to the Receivables; and
(xiii) the cumulative amount of Liquidated Receivables, net of
Recoveries, since the Cutoff Date to the last day of the related
Collection Period.
Each amount set forth pursuant to subclauses (i), (ii), (v), (viii) and (ix)
above shall be expressed as a dollar amount per $1,000 of original principal
balance of a Certificate.
(b) Within thirty days after the end of each calendar year, the Trustee
shall, provided it has received the necessary information from the Servicer,
furnish to each Person who at any time during such calendar year was a
Certificateholder of record and received any payment thereon (a) a report
(prepared by the Servicer) as to the aggregate of amounts reported pursuant to
(i), (ii), and (v) of this Section 4.8 for such calendar year or applicable
portion thereof during which such person was a Certificateholder, and (b) such
information as may be reasonably requested by the Certificateholders or required
by the Internal Revenue Code and regulations thereunder, to enable such Holders
to prepare their 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 pursuant to any requirements of the Code.
(c) The Servicer, at its own expense, shall cause a firm of nationally
recognized accountants to prepare any tax returns required to be filed by the
Trust, and the Trustee shall execute and file such returns if requested to do so
by the Servicer. The Trustee, upon request, will furnish the Servicer with all
such information known to the Trustee as may be reasonably required in
connection with the preparation of all tax returns of the Trust.
SECTION IV.9. Policy Payments; Subrogation. (a) The Trustee shall keep
a complete and accurate record of the amount of insurance payments made in
reduction of the Class A Certificate Balance and in payment of the Class A
Interest Distributable Amount and Class A Principal Distributable Amount
pursuant to the Policy. The Certificate Insurer shall have the right to inspect
such records at reasonable times upon one Business Day's prior notice to the
Trustee.
(b) Subject to and conditioned upon payment of any interest or
principal with respect to the Class A Certificates by or on behalf of the
Certificate Insurer, the Trustee on behalf of the Class A Certificateholders
shall assign, and the Class A Certificateholders, by reason of their acquisition
and holding of the Class A Certificates, are hereby deemed to have assigned to
the Certificate Insurer all rights to the payment of the Class A Interest
Distributable Amount and Class A Principal Distributable Amount which are then
due for payment to the extent of all payments made by the Certificate Insurer.
The Certificate Insurer (for so long as no Insurer Default shall have occurred
and be continuing) may exercise any option, vote, right, power or the like with
respect to the Class A Certificates to the extent it has made a principal
payment pursuant to the Policy. The Trustee and the Class A Certificateholders,
by reason of their acquisition and holding of the Class A Certificates, agree
that the Certificate Insurer shall be subrogated to all of the rights to payment
of the Class A Certificateholders or in relation thereto to the extent that any
payment of principal or interest was made to such Class A Certificateholders
with payments made under the Policy by the Certificate Insurer in accordance
with the provisions hereof.
SECTION IV.10. Reliance on Information from the Servicer.
Notwithstanding anything to the contrary contained in this Agreement, all
distributions from any of the accounts described in this Article IV and any
transfer of amounts between such accounts shall be made by the Trustee in
reliance on information provided to the Trustee by the Servicer in writing,
whether by way of a Servicer's Certificate or otherwise and the Trustee shall be
fully protected in relying on such information from the Servicer.
SECTION IV.11. Optional Deposits by the Certificate Insurer. The
Certificate Insurer shall at any time, and from time to time, with respect to a
Distribution Date, have the option (but shall not be required, except as
provided in Section 4.6(e)) to deliver amounts to the Trustee for deposit into
the Collection Account for any of the following purposes: (i) to provide funds
in respect of the payment of fees or expenses of any provider of services to the
Trust with respect to such Distribution Date, (ii) to distribute as a component
of the Class A Principal Distributable Amount to the extent that the Class A
Certificate Balance as of the Determination Date preceding such Distribution
Date exceeds the Class A Percentage of the Pool Balance as of such Determination
Date, or (iii) to include such amount as part of the Total Distribution Amount
for such Distribution Date to the extent that without such amount a draw would
be required to be made on the Policy.
If the Certificate Insurer waives the satisfaction of any of
the events that might trigger an event of default under the Insurance Agreement
and so notifies the Trustee in writing pursuant to Section 5.02(d) of the
Insurance Agreement, the Trustee shall notify ▇▇▇▇▇'▇ of such waiver.
ARTICLE V
Reserved.
---------
ARTICLE VI
The Certificates
----------------
SECTION VI.1. The Certificates. The Trustee shall, upon written order
or request signed in the name of the Depositor by one of its officers authorized
to do so and delivered to a Trustee Officer, execute on behalf of the Trust,
authenticate and deliver the Certificates to or upon the order of the Depositor
in the aggregate principal amount and denominations as set forth in such written
order or request. The Class A Certificates shall be issuable in minimum
denominations of ($1,000) and integral multiples thereof. The Class B
Certificates shall be issuable in minimum denominations of $250,000 and integral
multiples of $1,000 in excess thereof. The Class A Certificates shall be issued
in fully registered book-entry form. The Class B Certificates shall be issued in
fully registered definitive form. The Certificates shall be executed on behalf
of the Trust by manual or facsimile signature of a Trustee Officer of the
Trustee. Certificates bearing the manual or facsimile signatures of individuals
who were, at the time when such signatures shall have been affixed, authorized
to sign on behalf of the Trustee, shall be valid and binding obligations of the
Trust, notwithstanding that such individuals or any of them shall have ceased to
be so authorized prior to the authentication and delivery of such Certificates
or did not hold such offices at the date of such Certificates.
SECTION VI.2A. Appointment of Paying Agent. The Trustee may act as or
appoint one or more paying agents (each, a "Paying Agent"). The Paying Agent
shall make distributions to Certificateholders from amounts delivered by the
Trustee to the Paying Agent from amounts on deposit in the Certificate Account
pursuant to Article IV. Either the Trustee or the Certificate Insurer may remove
the Paying Agent if such Person determines in its sole discretion that the
Paying Agent shall have failed to perform its obligations under this Agreement
in any material respect. The Paying Agent shall initially be the Trustee. A
co-paying agent may be chosen by the Trustee. Any co-paying agent or any
successor Paying Agent shall be permitted to resign as Paying Agent, co-paying
agent or successor Paying Agent, as the case may be, upon 30 days' written
notice to the Trustee, the Depositor and the Certificate Insurer. In the event
that the Trustee, any co-paying agent or any successor Paying Agent shall no
longer be the Paying Agent, co-paying agent or successor Paying Agent, as the
case may be, the Trustee, with the Certificate Insurer's reasonable consent,
shall appoint a successor to act as Paying Agent or co-paying agent. The Trustee
shall cause each Paying Agent and each successor Paying Agent or any additional
Paying Agent appointed by the Trustee (other than the Trustee, which hereby
agrees) to execute and deliver to the Trustee an instrument in which such Paying
Agent, successor Paying Agent or additional Paying Agent shall agree with the
Trustee that, as Paying Agent, such Paying Agent, successor Paying Agent or
additional Paying Agent will hold all sums, if any, held by it for payment to
the Certificateholders in trust for the benefit of the Certificateholders
entitled thereto in an Eligible Account (which may be maintained with such
Paying Agent) until such sums shall be paid to such Certificateholders and shall
promptly notify the Trustee of any default in making such payment. The Paying
Agent shall return all unclaimed funds to the Trustee and upon removal of a
Paying Agent shall also return all funds in its possession to the Trustee. The
provisions of Sections 10.4 and 10.5 shall apply to each Paying Agent in its
role as Paying Agent. The fees of any Paying Agent or co-paying agent shall be
paid by the Trustee. Each Paying Agent and co-paying agent must be acceptable to
the Depositor.
SECTION VI.2B. Authenticating Agent. (a) The Trustee may appoint one or
more authenticating agents with respect to the Certificates which shall be
authorized to act on behalf of the Trustee in authenticating the Certificates in
connection with the issuance, delivery, registration of transfer, exchange or
repayment of the Certificates (the "Authenticating Agent"). Whenever reference
is made in this Agreement to the authentication of Certificates by the Trustee
or the Trustee's certificate of authentication, such reference shall be deemed
to include authentication by an Authenticating Agent and a certificate of
authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent must be acceptable to the Depositor and the
Certificate Insurer. The Trustee is hereby appointed as the initial
Authenticating Agent.
(b) Any institution succeeding to the corporate agency business of an
Authenticating Agent shall continue to be an Authenticating Agent without the
execution or filing of any paper or any further act on the part of the Trustee
or such Authenticating Agent.
(c) Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the Depositor. The Trustee may at
any time terminate the agency of an Authenticating Agent by giving notice of
termination to such Authenticating Agent and to the Depositor. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
an Authenticating Agent shall cease to be acceptable to the Trustee or the
Depositor or the Certificate Insurer, the Trustee may appoint a successor
Authenticating Agent. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless acceptable to the Trustee, the Depositor and the Certificate Insurer.
(d) The Trustee agrees to pay to each Authenticating Agent from its own
funds from time to time reasonable compensation for its services under this
Section 6.2B.
(e) The provisions of Sections 10.4 and 10.5 shall be applicable to any
Authenticating Agent.
(f) Pursuant to an appointment made under this Section 6.2B, the
Certificates may have endorsed thereon, in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication in substantially the
following form:
This is one of the Certificates described in the Pooling and Servicing
Agreement.
[ ]
as Authenticating Agent for the Trustee,
By
Authorized Signatory
SECTION VI.2. Authentication of Certificates. The Trustee shall cause
the Certificates to be executed on behalf of the Trust, authenticated, and
delivered to or upon the written order of the Depositor, such written order to
be signed by its chairman of the board, its president, or any vice president,
without further corporate action by the Depositor, in authorized denominations,
pursuant to this Agreement. No Certificate shall entitle its Holder to any
benefit under this Agreement, or shall be valid for any purpose, unless there
shall appear on such Certificate a certificate of authentication substantially
in the form set forth in Exhibit A or Exhibit B hereto or in Section 6.2B, as
the case may be, executed by a Trustee Officer of the Trustee by manual
signature; such authentication shall constitute conclusive evidence that such
Certificate shall have been duly authenticated and delivered hereunder. All
Certificates issued on the Closing Date shall be dated the Closing Date. All
Certificates issued upon transfer or exchange thereafter shall be dated the date
of their authentication.
SECTION VI.3. Registration of Transfer and Exchange of Certificates.
(a) The Certificate Registrar shall keep or cause to be kept, at the office or
agency maintained pursuant to Section 6.7, a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, the Trustee shall
provide for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Trustee shall be the initial Certificate
Registrar.
(b) No transfer of a Class B Certificate shall be made unless (i) the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and any applicable State securities laws are complied with,
(ii) such transfer is exempt from the registration requirements under said
Securities Act and laws or (iii) such transfer is made to a Person who the
transferor reasonably believes is a "qualified institutional buyer" (as defined
in Rule 144A of the Securities Act) that is purchasing such Class B Certificate
for its own account or the account of a qualified institutional buyer to whom
notice is given that the transfer is being made in reliance on said Rule 144A.
In the event that a transfer is to be made in reliance upon clause (ii) above,
the Class B Certificateholder desiring to effect such transfer and such Class B
Certificateholder's prospective transferee must each (x) certify in writing to
the Trustee the facts surrounding such transfer and (y) provide the Trustee with
a written opinion of counsel in form and substance satisfactory to the Depositor
and the Trustee that such transfer may be made pursuant to an exemption from the
Securities Act or laws, which Opinion of Counsel shall not be an expense of the
Depositor or the Trustee. In the event that a transfer is to be made in reliance
upon clause (iii) above, the prospective transferee shall have furnished to the
Trustee and the Depositor a Transferee Certificate, signed by such transferee,
in the form of Exhibit F. Neither the Depositor nor the Trustee is under any
obligation to register the Class B Certificates under said Securities Act or any
other securities law. The Certificate Registrar may request and shall receive in
connection with any transfer signature guarantees satisfactory to it in its sole
discretion.
In no event shall a Class B Certificate be transferred to an employee
benefit plan, trust annuity or account subject to ERISA or a plan described in
Section 4975(e)(1) of the Code (any such plan, trust or account including any
▇▇▇▇▇ (HR-10) plans, individual retirement accounts or annuities and other
employee benefit plans subject to Section 406 of ERISA or Section 4975 of the
Code being referred to in this Section 6.3 as an "Employee Plan"), a trustee of
any Employee Plan, or an entity, account or other pooled investment fund the
underlying assets of which include or are deemed to include Employee Plan assets
by reason of an Employee Plan's investment in the entity, account or other
pooled investment fund. The foregoing restriction on sale or transfer to an
employee benefit plan shall not apply to prevent the initial issuance or sale or
subsequent transfer of the Class B Certificates to an insurance company,
insurance service, or insurance organization qualified to do business in a State
that purchases Class B Certificates with funds held in one or more of its
general accounts which is eligible for the exemptive relief afforded under
Section III of Prohibited Transaction Class Exemption 95-60. The Depositor, CPS,
the Servicer, the Trustee, the Certificate Insurer and the Standby Servicer
shall not be responsible for confirming or otherwise investigating whether a
proposed purchaser is an employee benefit plan, trust or account subject to
ERISA, or described in Section 4975(e)(1) of the Code.
(c) Each Holder of Class B Certificates, by virtue of the acquisition
and holding thereof, will be deemed to have represented and agreed as follows:
(i) It is a qualified institutional buyer as defined in Rule
144A or an institutional accredited investor as defined in Regulation D
promulgated under the Securities Act and is acquiring the Class B
Certificates for its own institutional account or for the account of a
qualified institutional buyer or an institutional accredited investor
for the purpose of investment and not with a view to or for sale in
connection with any distribution thereof, subject nevertheless to any
requirement of law that the disposition of the Purchaser's property
shall at all times be and remain within its control.
(ii) It understands that the Class B Certificates have been
offered in a transaction not involving any public offering within the
meaning of the Securities Act, and that, if in the future it decides to
resell, pledge or otherwise transfer any Class B Certificates, such
Class B Certificates may be resold, pledged or transferred only (a) to
a person whom the transferor reasonably believes is a qualified
institutional buyer (as defined in Rule 144A under the Securities Act)
that purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A, (b) pursuant to an
effective registration statement under the Securities Act or (c) in
reliance on another exemption under the Securities Act.
(iii) It understands that the Class B Certificates
will bear a legend substantially to the following effect:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES THAT THIS SECURITY MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON WHOM THE
TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT, PURCHASING
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER
IS BEING MADE IN RELIANCE ON RULE 144A, AND SUBJECT TO THE RECEIPT BY
THE TRUSTEE AND THE DEPOSITOR OF A CERTIFICATION OF THE TRANSFEREE, (2)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR (3) IN RELIANCE ON ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND SUBJECT TO THE RECEIPT BY THE
TRUSTEE OF A CERTIFICATION OF THE TRANSFEREE (SATISFACTORY TO THE
TRUSTEE) AND AN OPINION OF COUNSEL (SATISFACTORY TO THE TRUSTEE AND THE
DEPOSITOR) TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND IN COMPLIANCE
WITH THE TRANSFER REQUIREMENTS SET FORTH IN SECTION 6.3 OF THE
AGREEMENT.
IN NO EVENT SHALL THIS CLASS B CERTIFICATE BE TRANSFERRED TO
AN EMPLOYEE BENEFIT PLAN, TRUST ANNUITY OR ACCOUNT SUBJECT TO ERISA OR
A PLAN DESCRIBED IN SECTION 4975(E)(1) OF THE CODE, (ANY SUCH PLAN,
TRUST OR ACCOUNT BEING REFERRED TO AS AN "EMPLOYEE PLAN"), A TRUSTEE OF
ANY EMPLOYEE PLAN, OR AN ENTITY, ACCOUNT OR OTHER POOLED INVESTMENT
FUND THE UNDERLYING ASSETS OF WHICH INCLUDE OR ARE DEEMED TO INCLUDE
EMPLOYEE PLAN ASSETS BY REASON OF AN EMPLOYEE PLAN'S INVESTMENT IN THE
ENTITY, ACCOUNT OR OTHER POOLED INVESTMENT FUND. INCLUDED WITHIN THE
DEFINITION OF "EMPLOYEE PLANS" ARE, WITHOUT LIMITATION, ▇▇▇▇▇ (HR-10)
PLANS, IRA'S (INDIVIDUAL RETIREMENT ACCOUNTS OR ANNUITIES) AND OTHER
EMPLOYEE BENEFIT PLANS, SUBJECT TO SECTION 406 OF ERISA OR SECTION 4975
OF THE CODE. THE FOREGOING RESTRICTION ON SALE OR TRANSFER TO AN
EMPLOYEE BENEFIT PLAN SHALL NOT APPLY TO PREVENT THE INITIAL ISSUANCE
OR SALE OR SUBSEQUENT TRANSFER OF THIS CLASS B CERTIFICATE TO AN
INSURANCE COMPANY, INSURANCE SERVICE, OR INSURANCE ORGANIZATION THAT IS
QUALIFIED TO DO BUSINESS IN A STATE IF SUCH INSURANCE COMPANY PURCHASES
THIS CLASS B CERTIFICATE WITH FUNDS HELD IN ONE OR MORE OF ITS GENERAL
ACCOUNTS WHICH IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AFFORDED UNDER
SECTION III OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60.
(iv) It has not acquired the Class B Certificates
with the assets of an Employee Plan, other than an insurance company,
insurance service or insurance organization qualified to do business in
a State, which represents that the source of funds from which its
investment is to be made is an "insurance company general account" of
such buyer (as such term is defined) under Section V of The United
States Department of Labor's Prohibited Transaction Class Exemption
95-60 ("PTCE 95-60")), and as of the date of the purchase of the
Certificates, such buyer satisfies all of the requirements for relief
under Section I and IV of PTCE 95- 60.
(d) Upon surrender for registration of transfer of any Certificate at
the Corporate Trust Office, the Trustee shall execute, authenticate and the
Trustee shall deliver, in the name of the designated transferee or transferees,
one or more new Certificates in authorized denominations of a like aggregate
amount dated the date of authentication. At the option of a Holder, Certificates
may be exchanged for other Certificates in authorized denominations of a like
aggregate amount upon surrender of the Certificates to be exchanged at the
Corporate Trust Office.
(e) Every Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Trustee and the Certificate Registrar duly executed by
the Holder or his attorney duly authorized in writing. Each Certificate
surrendered for registration of transfer and exchange shall be canceled and
subsequently disposed of by the Trustee in accordance with its customary
procedures.
(f) No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
SECTION VI.4. Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate shall be surrendered to the Certificate Registrar, or
if the Certificate Registrar shall receive evidence to its satisfaction of the
destruction, loss, or theft of any Certificate and (b) there shall be delivered
to the Certificate Registrar, the Trustee and the Certificate Insurer such
security or indemnity as may be required by them to save each of them harmless,
then in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, the Trustee on behalf of the Trust shall execute,
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor and
denomination. If after the delivery of such new Certificate, a bona fide
purchaser of the original Certificate in lieu of which such new Certificate was
issued presents for payment such original Certificate, the Certificate Insurer
and the Trustee shall be entitled to recover such new Certificate from the
Person to whom it was delivered or any Person taking therefrom, except a bona
fide purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expenses incurred
by the Certificate Insurer or the Trustee or any agent of either of them in
connection therewith. In connection with the issuance of any new Certificate
under this Section 6.4, the Trustee and the Certificate Registrar may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection therewith. Any duplicate Certificate issued
pursuant to this Section 6.4 shall constitute conclusive evidence of ownership
in the Trust, as if originally issued, whether or not the lost, stolen, or
destroyed Certificate shall be found at any time.
SECTION VI.5. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Trustee or the Certificate
Registrar may treat the Person in whose name any Certificate shall be registered
as the owner of such Certificate for the purpose of receiving distributions
pursuant to Section 4.6 and for all other purposes whatsoever, and neither the
Trustee nor the Certificate Registrar shall be bound by any notice to the
contrary.
SECTION VI.6. Access to List of Certificateholders' Names and
Addresses. The Trustee shall furnish or cause to be furnished to the Servicer or
the Certificate Insurer, at the expense of the Trust, within 15 days after
receipt by the Trustee of a request therefor from the Servicer or the
Certificate Insurer, as the case may be, in writing, a list of the names and
addresses of the Certificateholders as of the most recent Record Date. If three
or more Class A Certificateholders, or one or more Holders of Class A
Certificates evidencing not less than 25% of the Class A Certificate Balance
apply in writing to the Trustee, and such application states that the applicants
desire to communicate with other Certificateholders with respect to their rights
under this Agreement or under the Certificates and such application shall be
accompanied by a copy of the communication that such applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt
for such application, afford such applicants access during normal business hours
to the current list of Certificateholders. Each Holder, by receiving and holding
a Certificate, shall be deemed to have agreed to hold none of the Servicer, the
Certificate Insurer or the Trustee accountable by reason of the disclosure of
its name and address, regardless of the source from which such information was
derived.
SECTION VI.7. Maintenance of Office or Agency. The Trustee shall
maintain in Minneapolis, Minnesota, an office or offices or agency or agencies
where Certificates may be surrendered for registration of transfer or exchange
and where notices and demands to or upon the Trustee in respect of the
Certificates and this Agreement may be served. The Trustee initially designates
its office located at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, as its office for such purposes. The Trustee shall give prompt
written notice to the Servicer and to Certificateholders of any change in the
location of the Certificate Register or any such office or agency.
SECTION VI.8. Book-Entry Certificates. The Class A Certificates, upon
original issuance, will be issued in the form of typewritten Certificates
representing the Book-Entry Certificates, to be delivered to The Depository
Trust Company, the initial Clearing Agency, by, or on behalf of, the Depositor.
The Class A Certificates delivered to The Depository Trust Company shall
initially be registered on the Certificate Register in the name of Cede & Co.,
the nominee of the initial Clearing Agency, and no Certificate Owner will
receive a definitive certificate representing such Certificate Owner's interest
in the Class A Certificates, except as provided in Section 6.10. Unless and
until definitive, fully registered Class A Certificates (the "Definitive
Certificates") have been issued to Certificate Owners pursuant to Section 6.10:
(i) the provisions of this Section 6.8 shall be
in full force and effect;
(ii) the Depositor, the Servicer, the Certificate
Registrar, and the Trustee may deal with the Clearing Agency for all
purposes (including the making of distributions on the Class A
Certificates) as the authorized representative of the Certificate
Owners;
(iii) to the extent that the provisions of this
Section 6.8 conflict with any other provisions of this Agreement, the
provisions of this Section 6.8 shall control;
(iv) the rights of Certificate Owners shall be
exercised only through the Clearing Agency and shall be limited to
those established by law and agreements between such Certificate Owners
and the Clearing Agency and/or the Clearing Agency Participants.
Pursuant to the Depository Agreement, unless and until Definitive
Certificates are issued pursuant to Section 6.10, the initial Clearing
Agency will make book-entry transfers among the Clearing Agency
Participants and receive and transmit distributions of principal and
interest on the Class A Certificates to such Clearing Agency
Participants; and
(v) whenever this Agreement requires or permits
actions to be taken based upon instructions or directions of Holders of
Certificates evidencing a specified percentage of the Class A
Certificate Balance, the Clearing Agency shall be deemed to represent
such percentage only to the extent that it has received instructions to
such effect from Certificate Owners and/or Clearing Agency Participants
owning or representing, respectively, such required percentage of the
beneficial interest in Class A Certificates and has delivered such
instructions to the Trustee.
(vi) each such Certificate registered in the name of
the Depository's nominee and shall bear the following legend:
"Unless this Certificate is presented by an
authorized representative of The Depository Trust Company, a
New York corporation ("DTC"), to the Trustee or its agent for
registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or
in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co.
or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has an
interest herein."
SECTION VI.9. Notices to Clearing Agency. Whenever notice or other
communication to the Class A Certificateholders is required under this
Agreement, unless and until Definitive Certificates shall have been issued to
Certificate Owners pursuant to Section 6.10, the Trustee and the Servicer shall
give all such notices and communications specified herein to be given to Holders
of the Class A Certificates to the Clearing Agency.
SECTION VI.10. Definitive Certificates. If (i) (A) the Depositor
advises the Trustee in writing that the Clearing Agency is no longer willing or
able to properly discharge its responsibilities under the Depository Agreement
and (B) the Trustee or the Depositor is unable to locate a qualified successor,
(ii) the Depositor at its option, advises the Trustee in writing that it elects
to terminate the book-entry system through the Clearing Agency, or (iii) after
the occurrence of an Event of Default, the Clearing Agency at the direction of
Certificate Owners representing beneficial interests aggregating not less than a
majority of the Class A Certificate Balance, advises the Trustee in writing that
the continuation of a book-entry system through the Clearing Agency is no longer
in the best interests of the Certificate Owners, than the Trustee shall notify
the Clearing Agency and request that the Clearing Agency notify all Certificate
Owners of the occurrence of any such event and of the availability of Definitive
Certificates to Certificate Owners requesting the same. Upon surrender to the
Trustee of the Class A Certificates by the Clearing Agency, accompanied by
registration instructions from the Clearing Agency for registration, the Trustee
shall issue the Definitive Certificates and deliver such Definitive Certificates
in accordance with the instructions of the Clearing Agency. None of the
Depositor, the Certificate Registrar nor the Trustee shall be liable for any
delay in delivery of such instructions and may conclusively rely on, and shall
be protected in relying on, such instructions. Upon the issuance of Definitive
Certificates, the Trustee shall recognize the Holders of the Definitive
Certificates as Certificateholders hereunder. The Trustee shall not be liable if
the Trustee or the Depositor is unable to locate a qualified successor Clearing
Agency.
ARTICLE VII
The Depositor
-------------
SECTION VII.1. Representations of Depositor. The Depositor makes the
following representations to the Certificate Insurer and the Trustee, on which
the Certificate Insurer relied in executing and delivering the Policy and on
which the Trustee on behalf of itself and the Certificateholders relied in
accepting the Receivables in trust and executing and authenticating the
Certificates. The representations speak as of the execution and delivery of this
Agreement and shall survive the sale of the Receivables to the Trustee.
(i) Organization and Good Standing. The Depositor has been
duly organized and is validly existing as a corporation in good
standing under the laws of the State of Delaware, with power and
authority to execute, deliver and perform its obligations under this
Agreement
(ii) Due Qualification. The Depositor is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals in all jurisdictions material to
the performance of its obligations under this Agreement.
(iii) Power and Authority. The Depositor has the power and
authority to execute and deliver this Agreement and to carry out its
terms; the Depositor has full power and authority to sell and assign
the property sold and assigned to and deposited with the Trustee as
part of the Trust and has duly authorized such sale and assignment to
the Trustee by all necessary corporate action; and the execution,
delivery, and performance of this Agreement has been duly authorized by
the Depositor by all necessary corporate action.
(iv) Valid Sale; Binding Obligation. This Agreement effects a
valid sale, transfer and assignment of the Receivables and the other
property conveyed to the Trust pursuant to Section 2.2, enforceable
against creditors of and purchasers from the Depositor; and this
Agreement shall constitute a legal, valid and binding obligation of the
Depositor enforceable in accordance with its terms except as
enforceability may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting the enforcement of creditors' rights
generally and by equitable limitations on the availability of specific
remedies, regardless of whether such enforceability is considered a
proceeding in equity or at law.
(v) No Violation. The execution, delivery and performance by
the Depositor of this Agreement and the consummation of the
transactions contemplated by this Agreement and the fulfillment of the
terms of this Agreement do not conflict with, result in any breach of
any of the terms and provisions of, nor constitute (with or without
notice or lapse of time or both) a default under, the certificate of
incorporation or by-laws of the Depositor, or any material indenture,
agreement, mortgage, deed of trust, or other instrument to which the
Depositor is a party or by which it is bound or any of its properties
are subject; nor result in the creation or imposition of any material
lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust, or other instrument
(other than this Agreement); nor violate any law, order, rule, or
regulation applicable to the Depositor of any court or of any Federal
or State regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Depositor or its
properties.
(vi) No Proceedings. There are no proceedings or
investigations pending, or to the Depositor's best knowledge,
threatened, before any court, regulatory body, administrative agency,
or other tribunal or governmental instrumentality having jurisdiction
over the Depositor or its properties: (A) asserting the invalidity of
this Agreement or the Certificates, (B) seeking to prevent the issuance
of the Certificates or the consummation of any of the transactions
contemplated by this Agreement, (C) seeking any determination or ruling
that might materially and adversely affect the performance by the
Depositor of its obligations under, or the validity or enforceability
of, this Agreement or the Certificates, or (D) relating to the
Depositor and which might adversely affect the Federal or State income,
excise, franchise or similar tax attributes of the Certificates.
(vii) 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 Certificates or the
consummation of the other transactions contemplated by this Agreement,
except such as have been duly made or obtained.
(viii) Principal Place of Business. The Depositor hereby
represents and warrants to the Trustee that the Depositor's principal
place of business and chief executive office is, and for the four
months preceding the date of this Agreement has been, located at: ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
SECTION VII.2. Liability of Depositor; Indemnities. The Depositor shall
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Depositor under this Agreement and the
representations made by the Depositor in this Agreement. The Depositor shall
indemnify, defend, and hold harmless the Trustee and the Standby Servicer from
and against any loss, liability or expense incurred by reason of (a) the
Depositor'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 or (b) the Depositor's violation of
Federal or State securities laws in connection with the sale of the
Certificates.
Indemnification under this Section 7.2 shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation.
If the Depositor shall have made any indemnity payments to the Trustee or the
Standby Servicer pursuant to this Section and the Trustee or the Standby
Servicer thereafter shall collect any of such amounts from others, the Trustee
or the Standby Servicer shall repay such amounts to the Depositor, without
interest.
SECTION VII.3. Merger or Consolidation of, or Assumption of the
Obligations of, Depositor. Any Person (a) into which the Depositor may be merged
or consolidated, (b) which may result from any merger or consolidation to which
the Depositor shall be a party, or (c) which may succeed to the properties and
assets of the Depositor substantially as a whole, which person in any of the
foregoing cases executes an agreement of assumption to perform every obligation
of the Depositor under this Agreement, shall be the successor to the Depositor
hereunder without the execution or filing of any document or any further act by
any of the parties to this Agreement; provided, however, that (i) immediately
after giving effect to such transaction, no event that, after notice or lapse of
time, or both, would become an Event of Default shall have happened and be
continuing, (ii) the Depositor shall have delivered to the Certificate Insurer
and the Trustee an Officer's Certificate and an Opinion of Counsel each stating
that such consolidation, merger, or succession and such agreement or assumption
comply with this Section 7.3 and that all conditions precedent, if any, provided
for in this Agreement relating to such transaction have been complied with,
(iii) the Depositor shall have delivered to the Certificate Insurer and the
Trustee an Opinion of Counsel either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary fully to preserve and
protect the interest of the Trustee in the Receivables, and reciting the details
of such filings, or (B) stating that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interest and (iv)
immediately after giving effect to such transaction, no Insurance Agreement
Event of Default and no event that, after notice or lapse of time, or both,
would become an Insurance Agreement Event of Default shall have happened and be
continuing. The Depositor shall provide notice of any merger, consolidation or
succession pursuant to this Section 7.3 to each Rating Agency and shall have
received confirmation from each Rating Agency that the then current rating of
the Class A Certificates or the Class B Certificates will not be downgraded as a
result of such merger, consolidation or succession. Notwithstanding anything
herein to the contrary, the execution of the foregoing agreement of assumption
and compliance with clause (i), (ii), (iii) or (iv) above shall be conditions to
the consummation of the transactions referred to in clause (a), (b) or (c)
above.
SECTION VII.4. Limitation on Liability of Depositor and Others. The
Depositor and any director or officer or employee or agent of the Depositor 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 hereunder. The Depositor shall not be under any obligation to appear in,
prosecute, or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
SECTION VII.5. Depositor May Own Certificates. The Depositor and any
Person controlling, controlled by, or under common control with the Depositor
may in its individual or any other capacity become the owner or pledgee of
Certificates with the same rights as it would have if it were not the Depositor
or an affiliate thereof, except as otherwise provided in the definition of
"Certificateholder" specified in Section 1.1 and in Section 1.6. Certificates so
owned by or pledged to the Depositor or such controlling or commonly controlled
Person shall have an equal and proportionate benefit under the provisions of
this Agreement, without preference, priority, or distinction as among all of the
Certificates except as otherwise provided herein or by the definition of
Certificateholder.
ARTICLE VIII
The Servicer
------------
SECTION VIII.1. Representations of Servicer. The Servicer makes the
following representations to the Depositor, the Certificate Insurer and the
Trustee, on which the Depositor relies in executing and delivering this
Agreement, on which the Certificate Insurer relies in executing and delivering
the Policy, and on which the Trustee on behalf of itself and the
Certificateholders relies in accepting the Receivables in trust and executing
and authenticating the Certificates. The representations speak as of the
execution and delivery of this Agreement and shall survive the sale of the
Receivables to the Trustee.
(i) Organization and Good Standing. The initial Servicer has
been duly organized and is validly existing as a corporation in good
standing under the laws of the State of California, with power and
authority to own its properties and to conduct its business as such
properties shall be 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.
(ii) Due Qualification. The initial 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) shall require such qualifications.
(iii) 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 has been duly
authorized by the Servicer by all necessary corporate action.
(iv) 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.
(v) No Violation. The execution, delivery and performance by
the Servicer of this Agreement and the consummation of the transactions
contemplated by this Agreement and the Basic Documents to which 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 do not
conflict with, result in any breach of any of the terms and provisions
of, nor constitute (with or without notice or lapse of time) a default
under, the articles of incorporation or by-laws 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; nor result in the creation or imposition of any
lien upon any of its properties pursuant to the terms of any indenture,
agreement, mortgage, deed of trust, or other instrument (other than the
Basic Documents); nor 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.
(vi) No Proceedings. There are no proceedings or
investigations pending, or to the initial Servicer's best knowledge,
threatened against the initial 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, the
Certificates or any of the Basic Documents to which it is a party, (B)
seeking to prevent the issuance of the Certificates or the consummation
of any of the transactions contemplated by this Agreement or any of the
Basic Documents to which it is a party, (C) seeking any determination
or ruling that might materially and adversely affect the performance by
the initial Servicer of its obligations under, or the validity or
enforceability of, this Agreement, the Certificates or any of the Basic
Documents to which it is a party, or (D) relating to the initial
Servicer and which might adversely affect the Federal or State income,
excise, franchise or similar tax attributes of the Certificates.
(vii) 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 Certificates or the
consummation of the other transactions contemplated by this Agreement,
except such as have been duly made or obtained.
(viii) Taxes. The Servicer has filed on a timely basis all tax
returns required to be filed by it and paid all taxes, to the extent
that such taxes have become due.
(ix) Chief Executive Office. The initial Servicer hereby
represents and warrants to the Trustee that the Servicer's principal
place of business and chief executive office is, and for the four
months preceding the date of this Agreement has been, located at: 2
▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
SECTION VIII.2. Indemnities of Servicer. (a) The Servicer shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement and the representations made by
the Servicer herein.
(i) The initial Servicer shall defend, indemnify, and hold
harmless the Trustee, the Standby Servicer, the Collateral Agent, the
Trust, the Certificate Insurer, the Certificateholders and the
Depositor, 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 Servicer or any Affiliate thereof
of a Financed Vehicle.
(ii) The initial Servicer shall indemnify, defend and hold
harmless the Trustee, the Standby Servicer, the Collateral Agent, the
Trust, the Certificate Insurer and the Depositor from and against any
taxes that may at any time be asserted against the Trustee, the Standby
Servicer, the Collateral Agent, the Trust, the Certificate Insurer or
the Depositor, with respect to the transactions contemplated herein
including, without limitation, any sales, gross receipts, general
corporation, tangible personal property, privilege, or license taxes
and costs and expenses in defending against the same.
(iii) The initial Servicer shall indemnify, defend, and hold
harmless the Trustee, the Standby Servicer, the Collateral Agent, the
Depositor, the Certificate Insurer, the Trust and the
Certificateholders 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 Trustee, the Standby Servicer, the Collateral Agent, the
Depositor, the Trust or the Certificateholders through, the negligence,
willful misfeasance, or bad faith of the Servicer in the performance of
its duties under this Agreement or by reason of reckless disregard of
its obligations and duties under this Agreement.
(iv) The initial Servicer shall indemnify, defend, and hold
harmless the Trustee, the Standby Servicer, the Depositor, and the
Collateral Agent from and against all costs, expenses, losses, claims,
damages, and liabilities arising out of or incurred in connection with
the acceptance or performance of the trusts and duties herein
contained, if any, except to the extent that such cost, expense, loss,
claim, damage or liability: (a) shall be due to the willful
misfeasance, bad faith, or negligence (except for errors in judgment)
of the Trustee, the Standby Servicer, the Depositor or Collateral
Agent, as applicable; (b) relates to any tax other than the taxes with
respect to which the Servicer shall be required to indemnify the
Trustee, the Standby Servicer, the Depositor or the Collateral Agent;
or (c) shall arise from the Trustee's breach of any of its
representations or warranties set forth in Section 10.13.
(v) Notwithstanding the foregoing, the Servicer shall not be
obligated to defend, indemnify, and hold harmless any Certificateholder
for any losses, claims, damages or liabilities incurred by any
Certificateholders arising out of claims, complaints, actions and
allegations relating to Section 406 of ERISA or Section 4975 of the
Code as a result of the purchase or holding of a Certificate by such
Certificateholder with the assets of a plan subject to such provisions
of ERISA or the Code or the servicing, management and operation of the
Trust.
(b) For purposes of this Section, in the event of the termination of
the rights and obligations of the Servicer (or any successor thereto pursuant to
Section 8.3) as Servicer pursuant to Section 9.1, or a resignation by the
Servicer pursuant to this Agreement, such Servicer shall be deemed to continue
to be the Servicer pending appointment of a successor Servicer pursuant to
Section 9.2. The provisions of this Section 8.2(b) shall in no way affect the
survival pursuant to Section 8.2(c) of the indemnification by the outgoing
Servicer provided by Section 8.2(a).
(c) Indemnification by the initial Servicer under this Section 8.2
shall survive the termination of this Agreement and any resignation or removal
of CPS as Servicer and shall include reasonable fees and expenses of counsel and
expenses of litigation. If the Servicer shall have made any indemnity payments
pursuant to this Section and the recipient thereafter collects any of such
amounts from others, the recipient shall promptly repay such amounts to the
Servicer, without interest.
SECTION VIII.3. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer or Standby Servicer. (a) Any Person (a) into which the
Servicer may be merged or consolidated, (b) which may result from any merger or
consolidation to which the Servicer shall be a party, or (c) which may succeed
to the properties and assets of the Servicer substantially as a whole, shall
execute an agreement of assumption to perform every obligation of the Servicer
hereunder, and whether or not such assumption agreement is executed, shall be
the successor to the Servicer under this Agreement without further act on the
part of any of the parties to this Agreement; provided, however, that (i)
immediately after giving effect to such transaction, no Event of Default, and no
event which, after notice or lapse of time, or both, would become an Event of
Default shall have happened and be continuing, (ii) the Servicer shall have
delivered to the Trustee and the Certificate Insurer an Officer's Certificate
and an Opinion of Counsel each stating that such consolidation, merger or
succession and such agreement of assumption comply with this Section 8.3 and
that all conditions precedent provided for in this Agreement relating to such
transaction have been complied with, (iii) the Servicer shall have delivered to
the Trustee and the Certificate Insurer an Opinion of Counsel either (A) stating
that, in the opinion of such counsel, all financing statements and continuation
statements and amendments thereto have been executed and filed that are
necessary fully to preserve and protect the interest of the Trustee in the
Receivables and reciting the details of such filings, or (B) stating that, in
the opinion of such counsel, no such action shall be necessary to preserve and
protect such interest and (iv) nothing herein shall be deemed to release the
Servicer from any obligation. Notwithstanding anything herein to the contrary,
the execution of the foregoing agreement of assumption and compliance with
clauses (i), (ii) or (iii) above shall be conditions to the consummation of the
transactions referred to in clause (a), (b) or (c) above.
(b) Any Person (a) into which the Standby Servicer may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Standby Servicer shall be a party, or (c) which may succeed to the properties
and assets of the Standby Servicer substantially as a whole, shall execute an
agreement of assumption to perform every obligation of the Standby Servicer
hereunder, and whether or not such assumption agreement is executed, shall be
the successor to the Standby Servicer under this Agreement without further act
on the part of any of the parties to this Agreement; provided, however, that
nothing herein shall be deemed to release the Standby Servicer from any
obligation.
SECTION VIII.4. Limitation on Liability of Servicer and Others. Neither
the Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be under any liability to the Trust or the Certificateholders,
except as provided under this Agreement, for any action taken or for refraining
from the taking of any action pursuant to this Agreement; provided, however,
that this provision shall not protect the Servicer or any such person against
any liability that would otherwise be imposed by reason of a breach of this
Agreement or willful misfeasance, bad faith, or negligence in the performance of
duties or by reason of reckless disregard of obligations and duties under this
Agreement. The Servicer and any director or officer or employee or agent of the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising under this
Agreement.
Except as provided in this Agreement, the Servicer shall not be under
any obligation to appear in, prosecute, or defend any legal action that shall
not be incidental to its duties to service the Receivables in accordance with
this Agreement, and that in its opinion may involve it in any expense or
liability.
SECTION VIII.5. Servicer and Standby Servicer Not to Resign. Subject to
the provisions of Section 8.3, neither the Servicer nor the Standby Servicer may
resign from the obligations and duties hereby imposed on it as Servicer or
Standby Servicer, as applicable, as the case may be, under this Agreement except
upon 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 result in a material adverse
effect on the Servicer or the Standby Servicer, as the case may be, and the
Certificate Insurer does not elect to waive the obligations of the Servicer or
the Standby Servicer, as the case may be, to perform the duties which render it
legally unable to act or does not elect to delegate those duties to another
Person. Notice of any such determination permitting the resignation of the
Servicer or the Standby Servicer, as the case may be, shall be communicated to
the Depositor, the Trustee and the Certificate Insurer at the earliest
practicable time (and, if such communication is not in writing, shall be
confirmed in writing at the earliest practicable time) and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered to and satisfactory to the Depositor, the Trustee and the Certificate
Insurer concurrently with or promptly after such notice. No such resignation of
the Servicer shall become effective until a successor servicer shall have
assumed the responsibilities and obligations of CPS in accordance with Section
9.2 and the Servicing Assumption Agreement, if applicable. No such resignation
of the Standby Servicer shall become effective until an entity acceptable to the
Certificate Insurer shall have assumed the responsibilities and obligations of
the Standby Servicer; provided, however, that if no such entity shall have
assumed such responsibilities and obligations of the Standby Servicer within 60
days of the resignation of the Standby Servicer, the Standby Servicer may
petition a court of competent jurisdiction for the appointment of a successor to
the Standby Servicer.
ARTICLE IX
Default
-------
SECTION IX.1. Events of Default. If any one of the following events
("Events of Default") shall occur and be continuing:
(i) Any failure by the Servicer to deliver to the Trustee for
distribution to Certificateholders any proceeds or payment required to
be so delivered under the terms of the Certificates and this Agreement
that shall continue unremedied for a period of two Business Days (or,
in the case of a payment or deposit to be made no later than a
Distribution Date, the failure to make such payment or deposit by such
Distribution Date); or the certificate required by Section 3.9, the
statement required by Section 3.10, or the report required by Section
3.11 shall not have been delivered within five (5) days after the date
such certificates or statements or reports, as the case may be, are
required to be delivered; or
(ii) Failure on the part of CPS, the Servicer, or the
Depositor, as the case may be, duly to observe or to perform in any
material respect any other covenants or agreements of CPS, the Servicer
or the Depositor (as the case may be) set forth in the Certificates,
the Purchase Agreement or in this Agreement, which failure shall
continue unremedied for a period of 30 days after the date on which
written notice of such failure requiring the same to be remedied, shall
have been given (1) to CPS, the Servicer or the Depositor (as the case
may be), by the Certificate Insurer or the Trustee, or (2) to CPS, the
Servicer or the Depositor, (as the case may be), and to the Trustee and
the Certificate Insurer by the Holders of Class A Certificates
evidencing not less than 25% of the Class A Certificate Balance or,
after the Class A Certificates have been paid in full and all
outstanding Reimbursement Obligations and other amounts due to the
Certificate Insurer have been paid in full, by the Holders of Class B
Certificates evidencing not less than 25% of the Class B Certificate
Balance; or
(iii) The entry of a decree or order by a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a conservator, receiver, or liquidator for CPS or the
Servicer (or, so long as CPS is Servicer, any of the Servicer's
Affiliates) in any bankruptcy, insolvency, readjustment of debt,
marshaling of assets and liabilities, or similar proceedings, or for
the winding up or liquidation of its affairs, and the continuance of
any such decree or order unstayed and in effect for a period of 60
consecutive days; or
(iv) The consent by CPS or the Servicer (or, so long as CPS is
Servicer, any of the Servicer's Affiliates) to the appointment of a
conservator, trustee, receiver or liquidator in any bankruptcy,
insolvency, readjustment of debt, marshaling of assets and liabilities,
or similar proceedings of or relating to CPS or the Servicer (or, so
long as CPS is Servicer, any of the Servicer's Affiliates) of or
relating to substantially all of its property; or CPS or the Servicer
(or, so long as CPS is Servicer, any of the Servicer's Affiliates)
shall admit in writing its inability to pay its debts generally as they
become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its
obligations; or
(v) The occurrence of an Insurance Agreement Event of Default;
then, and in each and every case, so long as an Event of Default shall not have
been remedied, provided (i) no Insurer Default shall have occurred and be
continuing, the Certificate Insurer in its sole and absolute discretion, or (ii)
if an Insurer Default shall have occurred and be continuing, then either the
Trustee or the Holders of Class A Certificates evidencing not less than 25% of
the Class A Certificate Balance or (iii) if the Class A Certificates have been
paid in full and either (A) all outstanding Reimbursement Obligations and other
amounts due to the Certificate Insurer have been paid in full or (B) an Insurer
Default shall have occurred and be continuing, then either the Trustee or the
Holders of Class B Certificates evidencing not less than 25% of the Class B
Certificate Balance, by notice then given in writing to the Servicer (and to the
Trustee if given by the Certificate Insurer or by the Certificateholders) may
terminate all of the rights and obligations of the Servicer under this
Agreement. The Servicer shall be entitled to its pro rata share of the Servicing
Fee for the number of days in the Collection Period prior to the effective date
of its termination. On or after the receipt by the Servicer of such written
notice, all authority and power of the Servicer under this Agreement, whether
with respect to the Certificates or the Receivables or otherwise, shall, without
further action, pass to and be vested in (i) the Standby Servicer or (ii) such
successor Servicer as may be appointed under Section 9.2; provided, however,
that the successor Servicer shall have no liability with respect to any
obligation which was required to be performed by the predecessor Servicer prior
to the date the successor Servicer becomes the Servicer or any claim of a third
party (including a Certificateholder) based on any alleged action or inaction of
the predecessor Servicer as Servicer; and, without limitation, the Trustee is
hereby authorized and empowered to execute and deliver, on behalf of the
predecessor 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 related
documents, or otherwise. The predecessor Servicer shall cooperate with the
successor Servicer and the Trustee in effecting the termination of the
responsibilities and rights of the predecessor Servicer under this Agreement,
including the transfer to the successor Servicer for administration by it of all
cash amounts that shall at the time be held or should have been held by the
predecessor Servicer for deposit, or shall thereafter be received with respect
to a Receivable and the delivery to the successor Servicer of all files and
records concerning the Receivables and a computer tape in readable form
containing all information necessary to enable the successor Servicer to service
the Receivables and the other property of the Trust. All reasonable costs and
expenses (including attorneys' fees) incurred in connection with transferring
the Receivable Files to the successor Servicer and amending this Agreement to
reflect such succession as Servicer pursuant to this Section 9.1 shall be paid
by the predecessor Servicer upon presentation of reasonable documentation of
such costs and expenses. In addition, any successor Servicer shall be entitled
to payment from the immediate predecessor Servicer for reasonable transition
expenses incurred in connection with acting as successor Servicer, and to the
extent not so paid, such payment shall be made pursuant to Section 4.6(c)
hereof. Upon receipt of notice of the occurrence of an Event of Default, the
Trustee shall give notice thereof to the Rating Agencies and the Depositor. The
predecessor Servicer shall grant the Depositor, the Trustee, the Standby
Servicer and the Certificate Insurer reasonable access to the predecessor
Servicer's premises at the predecessor Servicer's expense. If requested by the
Certificate Insurer, the Standby Servicer or successor Servicer shall terminate
any arrangements relating to (i) the Lock-Box Account with the Lock-Box Bank,
(ii) the Post-Office Box or (iii) the Lock-Box Agreement, and direct the
Obligors to make all payments under the Receivables directly to the Servicer at
the predecessor Servicer's expense (in which event the successor Servicer shall
process such payments directly, or, through a Lock-Box Account with a Lock-Box
Bank at the direction of the Certificate Insurer).
SECTION IX.2. Appointment of Successor. (a) Upon the Servicer's receipt
of notice of termination pursuant to Section 9.1, the Servicer's resignation in
accordance with the terms of this Agreement or expiration or non-renewal of the
term of the Servicer hereunder in accordance with Section 3.14, the predecessor
Servicer shall continue to perform its functions as Servicer under this
Agreement, in the case of termination, only until the date specified in such
termination notice or, if no such date is specified in a notice of termination,
until receipt of such notice and, in the case of expiration and non-renewal of
the term of the Servicer upon the expiration of such term, and, in the case of
resignation, until the later of (x) the date 45 days from the delivery to the
Trustee of written notice of such resignation (or written confirmation of such
notice) in accordance with the terms of this Agreement and (y) the date upon
which the predecessor Servicer shall become unable to act as Servicer, as
specified in the notice of resignation and accompanying Opinion of Counsel. In
the event of termination of the Servicer, Norwest Bank Minnesota, National
Association, as Standby Servicer, shall assume the obligations of Servicer
hereunder on the date specified in such written notice (the Assumption Date")
pursuant to the Servicing Assumption Agreement or, in the event that the
Certificate Insurer shall have determined that a Person other than the Standby
Servicer shall be the successor Servicer in accordance with Section 9.2(c), such
Person shall assume the obligations of Servicer hereunder on the date of the
execution of a written assumption agreement by such Person to serve as successor
Servicer. Notwithstanding the Standby Servicer's assumption of, and its
agreement to perform and observe, all duties, responsibilities and obligations
of CPS as Servicer under this Agreement arising on and after the Assumption
Date, the Standby Servicer shall not be deemed to have assumed or to become
liable for, or otherwise have any liability for, any duties, responsibilities,
obligations or liabilities of CPS or any other predecessor Servicer arising on
or before the Assumption Date, whether provided for by the terms of this
Agreement, arising by operation of law or otherwise, including, without
limitation, any liability for, any duties, responsibilities, obligations or
liabilities of CPS or any other predecessor Servicer arising on or before the
Assumption Date under Sections 3.7, 4.4 or 8.2 of this Agreement, regardless of
when the liability, duty, responsibility or obligation of CPS or any other
predecessor Servicer theretofore arose, whether provided by the terms of this
Agreement, arising by operation of law or otherwise. In addition, if the Standby
Servicer shall be legally unable to act as Servicer and an Insurer Default shall
have occurred and be continuing, the Standby Servicer, the Trustee or Class A
Certificateholders holding Class A Certificates evidencing not less than a
majority of the Class A Certificate Balance (or, if the Class A Certificates
have been paid in full, Class B Certificateholders holding Class B Certificates
evidencing not less than a majority of the Class B Certificate Balance) may
petition a court of competent jurisdiction to appoint any successor to the
Servicer. Pending appointment pursuant to the preceding sentence, the Standby
Servicer shall act as successor Servicer unless it is legally unable to do so,
in which event the predecessor Servicer shall continue to act as Servicer until
a successor has been appointed and accepted such appointment. In the event that
a successor Servicer has not been appointed at the time when the predecessor
Servicer has ceased to act as Servicer in accordance with this Section 9.2, then
the Certificate Insurer, in accordance with Section 9.2(c) shall appoint, or
petition a court of competent jurisdiction to appoint a successor to the
Servicer under this Agreement.
(b) Upon appointment, the successor Servicer shall be the successor in
all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties, and liabilities arising thereafter relating thereto
placed on the predecessor Servicer, and shall be entitled to the Servicing Fee
and all of the rights granted to the predecessor Servicer, by the terms and
provisions of this Agreement.
(c) Subject to Section 12.11, the Certificate Insurer may exercise at
any time its right to appoint as Standby Servicer or as successor Servicer a
Person other than the Person serving as Standby Servicer at the time, and shall
have no liability to the Trustee, CPS, the Depositor, the Person then serving as
Standby Servicer, any Certificateholder or any other person if it does so.
Subject to Section 8.5, no provision of this Agreement shall be construed as
relieving the Standby Servicer of its obligation to succeed as successor
Servicer upon the termination of the Servicer pursuant to Section 9.1 or
resignation of the Servicer pursuant to Section 8.5. If upon any such
resignation or termination, the Certificate Insurer appoints a successor
Servicer other than the Standby Servicer, the Standby Servicer shall not be
relieved of its duties as Standby Servicer hereunder.
SECTION IX.3. Reserved.
SECTION IX.4. Notification to Certificateholders. Upon any termination
of, or appointment of a successor to, the Servicer pursuant to this Article IX,
the Trustee shall give prompt written notice thereof to Certificateholders at
their respective addresses appearing in the Certificate Register and to each of
the Rating Agencies.
SECTION IX.5. Direction of Insolvency Proceedings by Certificate
Insurer. (a) In the event that the Trustee has received a certified copy of an
order of the appropriate court that any Class A Guaranteed Distribution Amount
paid on a Class A Certificate has been avoided in whole or in part as a
preference payment under applicable bankruptcy law, the Trustee shall so notify
the Certificate Insurer, shall comply with the provisions of the Policy to
obtain payment by the Certificate Insurer of such avoided Class A Guaranteed
Distribution Amount payment, and shall, at the time it provides notice to the
Certificate Insurer, notify Holders of the Class A Certificates by mail that, in
the event that any Class A Certificateholder's payment is so recoverable, such
Class A Certificateholder will be entitled to payment pursuant to the terms of
the Policy. Pursuant to the terms of the Policy, the Certificate Insurer will
make such payment on behalf of the Class A Certificateholder to the receiver,
conservator, debtor-in-possession or trustee in bankruptcy named in the Order
(as defined in the Policy) and not to the Trustee or any Class A
Certificateholder directly (unless a Class A Certificateholder has previously
paid such payment to the receiver, conservator, debtor-in-possession or trustee
in bankruptcy, in which case the Certificate Insurer will make such payment to
the Trustee for distribution to such Class A Certificateholder upon proof of
such payment reasonably satisfactory to the Certificate Insurer).
(b) Upon knowledge of any of the following events, the Trustee shall
promptly notify the Depositor and the Certificate Insurer of (i) the
commencement of any of the events or proceedings described in Section 9.1 (iii)
or (iv) in respect of CPS or the Servicer or any such event or proceedings
applicable to an Obligor under a Receivable (any such event or proceedings, an
"Insolvency Proceeding") and (ii) the making of any claim in connection with any
Insolvency Proceeding seeking the avoidance as a preferential transfer (a
"Preference Claim") with regard to any payment of principal of, or interest on a
Class A Certificate. Each Class A Certificateholder, by its purchase of Class A
Certificates, and the Trustee hereby agree that, the Certificate Insurer may,
provided an Insurer Default has not occurred, at any time during the
continuation of an Insolvency Proceeding direct all matters relating to such
Insolvency Proceeding, including, without limitation, (i) all matters relating
to any Preference Claim, (ii) the direction of any appeal of any order relating
to any Preference Claim and (iii) the posting of any surety, supersedeas or
performance bond pending any such appeal at the expense of the Certificate
Insurer, but subject to reimbursement as provided in the Insurance Agreement. In
addition, and without limitation of the foregoing, as set forth in Section 4.9,
the Certificate Insurer shall be subrogated to, and each Class A
Certificateholder and the Trustee hereby delegate and assign, to the fullest
extent permitted by law, the rights of the Trustee and each Class A
Certificateholder in the conduct of any proceeding with respect to a Preference
Claim, including, without limitation, all rights of any party to an adversary
proceeding action with respect to any court order issued in connection with any
such Preference Claim.
SECTION IX.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 9.1 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 Depositor, the Servicer and the
Certificate Insurer. For all purposes of this Agreement (including, without
limitation, Section 9.5(b) and this Section 9.6), the Trustee shall not be
deemed to have knowledge of any failure of the Servicer as specified in Section
9.1 unless notified thereof in writing by the Depositor, the Servicer, the
Certificate Insurer or by a Certificateholder. The Trustee shall be under no
duty or obligation to investigate or inquire as to any potential failure of the
Servicer specified in Section 9.1.
ARTICLE X
The Trustee
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SECTION X.1. Duties of Trustee. The Trustee, both prior to the
occurrence of an Event of Default and after an Event of Default shall have been
cured or waived, shall undertake to perform such duties and only such duties as
are specifically set forth in this Agreement. If an Event of Default shall have
occurred and shall not have been cured or waived, the Trustee shall exercise
such of the rights and powers vested in it by this Agreement and shall use the
same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that shall be specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.
The Trustee shall take and maintain custody of the Receivable Files
(except as otherwise provided herein) and the Schedule of Receivables included
as Schedule A to this Agreement and shall retain copies of all Servicer's
Certificates prepared hereunder.
No provision of this Agreement shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act, or its own bad faith; provided, however, that:
(i) Prior to the occurrence of an Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred, the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Agreement, the Trustee shall
not be liable except for the performance of such duties and obligations
as shall be specifically set forth in this Agreement, no implied
covenants or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the Trustee,
the Trustee may conclusively rely on the truth of the statements and
the correctness of the opinions expressed in any certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Agreement;
(ii) The Trustee shall not be liable for an error of judgment
made in good faith by a Trustee Officer, unless it shall be proved that
the Trustee shall have been negligent in ascertaining the pertinent
facts;
(iii) The Trustee shall not be liable with respect to any
action taken, suffered, or omitted to be taken in good faith in
accordance with this Agreement or at the direction of the Certificate
Insurer or, after an Insurer Default, the Holders of Class A
Certificates evidencing not less than 25% of the Class A Certificate
Balance or, after the Class A Certificates have been paid in full and
either (A) all outstanding Reimbursement Obligations and other amounts
due to the Certificate Insurer have been paid in full or (B) an Insurer
Default shall have occurred and be continuing, the Holders of Class B
Certificates evidencing not less than 25% of the Class B Certificate
Balance, relating to the time, method, and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Agreement;
(iv) The Trustee shall not be charged with knowledge of any
Event of Default, unless a Trustee Officer assigned to the Trustee's
Corporate Trust Office receives written notice of such Event of Default
from the Servicer or the Depositor, as the case may be, the Certificate
Insurer or, after an Insurer Default, the Holders of Class A
Certificates evidencing not less than 25% of the Class A Certificate
Balance or, after the Class A Certificates have been paid in full and
either (A) all outstanding Reimbursement Obligations and other amounts
due to the Certificate Insurer have been paid in full or (B) an Insurer
Default shall have occurred and be continuing, the Holders of Class B
Certificates evidencing not less than 25% of the Class B Certificate
Balance (such notice shall constitute actual knowledge of an Event of
Default by the Trustee); and
(v) The Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and reasonably believed by it
to be authorized or within the discretion or rights or powers conferred
upon it by this Agreement.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there shall be
reasonable grounds for believing that the repayment of such funds or adequate
indemnity against such risk or liability shall not be reasonably assured to it,
and none of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Servicer under this Agreement except during
such time, if any, as the Trustee, in its capacity as Standby Servicer, shall be
the successor to, and be vested with the rights, duties, powers, and privileges
of, the Servicer in accordance with the terms of this Agreement.
Except for actions expressly authorized by this Agreement, the Trustee
shall take no action reasonably likely to impair the security interests created
or existing under any Receivable or Financed Vehicle or to impair the value of
any Receivable or Financed Vehicle.
All information obtained by the Trustee regarding the Obligors and the
Receivables, whether upon the exercise of its rights under this Agreement or
otherwise, shall be maintained by the Trustee in confidence and shall not be
disclosed to any other Person, unless such disclosure is required by this
Agreement or any applicable law or regulation.
SECTION X.2. Trustee's Certificate. On or as soon as practicable after
each Distribution Date on which Receivables shall be assigned to CPS or the
Servicer, as applicable, pursuant to this Agreement, based on amounts deposited
to the Collection Account, notices received pursuant to this Agreement and the
information contained in the Servicer's Certificate for the related Collection
Period, identifying the Receivables purchased by CPS pursuant to Section 2.8 or
purchased by the Servicer pursuant to Section 3.7 or 11.2, the Trustee shall
execute a Trustee's Certificate (in the form of Exhibit C-1 or C-2, as
applicable), and shall deliver such Trustee's Certificate, accompanied by a copy
of the Servicer's Certificate for such Collection Period to CPS or the Servicer,
as the case may be. The Trustee's Certificate submitted with respect to such
Distribution Date shall operate, as of such Distribution Date, as an assignment,
without recourse, representation, or warranty, to CPS or the Servicer, as the
case may be, of all the Trustee's right, title, and interest in and to such
repurchased Receivable, and all security and documents relating thereto, such
assignment being an assignment outright and not for security.
SECTION X.3. Reserved.
SECTION X.4. Certain Matters Affecting Trustee. Except as otherwise
provided in Section 10.1:
(i) The Trustee may rely and shall be fully protected in
acting or refraining from acting upon any resolution, Officer's
Certificate, Servicer's Certificate, certificate of auditors, or any
other certificate, statement, instrument, opinion, report, notice,
request, consent, order, appraisal, bond, or other paper or document
believed by it to be genuine and to have been signed or presented by
the proper party or parties.
(ii) The Trustee may consult with counsel, and any Opinion of
Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by the Trustee under
this Agreement in good faith and in accordance with such Opinion of
Counsel.
(iii) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement, or to
institute, conduct, or defend any litigation under this Agreement or in
relation to this Agreement, at the request, order or direction of any
of the Certificateholders or the Certificate Insurer pursuant to the
provisions of this Agreement, unless such Certificateholders or the
Certificate Insurer shall have offered to the Trustee reasonable (in
the Trustee's judgement) security or indemnity against the costs,
expenses, and liabilities that may be incurred therein or thereby;
nothing contained in this Agreement, however, shall relieve the Trustee
of the obligations, upon the occurrence of an Event of Default (that
shall not have been cured or waived), to exercise such of the rights
and powers vested in it by this Agreement, with the same degree of care
and skill in their exercise as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.
(iv) Prior to the occurrence of an Event of Default and after
the curing or waiving of all Events of Default that may have occurred,
the Trustee shall not be bound to make any investigation into the facts
of matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond, or other paper or document (other than for its duties pursuant to
Section 2.8), unless requested in writing to do so by the Certificate
Insurer, the Depositor or Holders of Class A Certificates evidencing
not less than 25% of the Class A Certificate Balance or, after the
Class A Certificates have been paid in full and either (A) all
outstanding Reimbursement Obligations and other amounts due to the
Certificate Insurer have been paid in full or (B) an Insurer Default
shall have occurred and be continuing, the Holders of Class B
Certificates evidencing not less that 25% of the Class B Certificate
Balance; provided, however, that if the payment within a reasonable
time to the Trustee of the costs, expenses, or liabilities likely to be
incurred by it in the making of such investigation shall be, in the
opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Agreement, the Trustee may
require reasonable indemnity against such cost, expense, or liability
as a condition to so proceeding. The reasonable expense of every such
examination shall be paid by the Person making such request or, if paid
by the Trustee, shall be reimbursed by the Person making such request
upon demand. Nothing in this clause (iv) shall affect the obligation of
the Servicer to observe any applicable law prohibiting disclosure of
information regarding the Obligors.
(v) The Trustee may execute any of the trusts or powers
hereunder or perform any duties under this Agreement either directly or
by or through agents or attorneys or a custodian. The Trustee shall not
be responsible for any misconduct or negligence of any such agent or
custodian appointed with due care by it hereunder or of the Servicer in
its capacity as Servicer or custodian.
(vi) Except as may be required by Sections 2.8 and 10.1,
subsequent to the sale of the Receivables by the Depositor to the
Trust, the Trustee shall have no duty of independent inquiry, and the
Trustee may rely upon the representations and warranties and covenants
of the Depositor and the Servicer contained in this Agreement with
respect to the Receivables and the Receivable Files.
(vii) The Trustee may rely, and shall be fully protected in so
relying, as to factual matters relating to the Depositor or the
Servicer, on an Officer's Certificate of the Depositor or Servicer,
respectively.
(viii) The Trustee shall not be required to take any action or
refrain from taking any action under this Agreement, or any related
documents referred to herein, nor shall any provision of this
Agreement, or any such related document be deemed to impose a duty on
the Trustee to take action, if the Trustee shall have been advised by
counsel that such action is contrary to (i) the terms of this
Agreement, (ii) any such related document or (iii) law.
SECTION X.5. Trustee Not Liable for Certificates or Receivables. The
recitals contained herein and in the Certificates (other than the certificate of
authentication on the Certificates) shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Trustee assumes no
responsibility for the correctness thereof. The Trustee shall make no
representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the certificate of authentication on the Certificates),
or of any Receivable or related document. The Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity, and
enforceability of any security interest in any Financed Vehicle or any
Receivable, or the perfection and priority of such a security interest or the
maintenance of any such perfection and priority, or for or with respect to the
efficacy of the Trust or its ability to generate the payments to be distributed
to Certificateholders under this Agreement, including, without limitation: the
existence, condition, location, and ownership of any Financed Vehicle; the
existence and enforceability of any physical damage insurance thereon; except as
required by Section 2.8, the existence, contents and completeness of any
Receivable or any Receivable File or any computer or other record thereof; the
validity of the assignment of any Receivable to the Trust or of any intervening
assignment; except as required by Section 2.8, the performance or enforcement of
any Receivable; the compliance by the Depositor or the Servicer with any
warranty or representation made under this Agreement or in any related document
and the accuracy of any such warranty or representation prior to the Trustee's
receipt of notice or other discovery of any noncompliance therewith or any
breach thereof; any investment of monies by or at the direction of the Servicer
or the Certificate Insurer or any loss resulting therefrom (it being understood
that the Trustee shall remain responsible for any Trust Assets or Transaction
Account Property that it may hold); the acts or omissions of the Depositor, the
Servicer, or any Obligor; any action of the Servicer taken in the name of the
Trustee; or any action by the Trustee taken at the instruction of the Servicer;
provided, however, that the foregoing shall not relieve the Trustee of its
obligation to perform its duties under this Agreement. Except with respect to a
claim based on the failure of the Trustee to perform its duties under this
Agreement or based on the Trustee's negligence or willful misconduct, no
recourse shall be had for any claim based on any provision of this Agreement,
the Certificates, or any Receivable or assignment thereof against the Trustee in
its individual capacity, the Trustee shall not have any personal obligation,
liability, or duty whatsoever to any Certificateholder or any other Person with
respect to any such claim, and any such claim shall be asserted solely against
the Trust or any indemnitor who shall furnish indemnity as provided in this
Agreement. The Trustee shall not be accountable for the use or application by
the Depositor of any of the Certificates or of the proceeds of such
Certificates, or for the use or application of any funds paid to the Servicer in
respect of the Receivables. The Depositor hereby certifies to the Trustee that
the Rating Agencies rating the Class A Certificates are Standard & Poor's and
Moody's and the rating agency rating the Class B Certificates is Standard &
Poor's and that their addresses are as set forth in Section 12.5. The Trustee
may rely on the accuracy of such certification until it receives from the
Depositor an Officer's Certificate superseding such certification.
SECTION X.6. Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
and may deal with the Depositor and the Servicer in banking transactions with
the same rights as it would have if it were not Trustee.
SECTION X.7. Indemnity of Trustee. CPS as Servicer shall indemnify the
Trustee for, and hold it harmless against any loss, liability, or expense
incurred without willful misfeasance, negligence, or bad faith on the Trustee's
part, arising out of or in connection with the acceptance or administration of
the Trust, or the Trustee's performance of its duties hereunder including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties under
this Agreement. Additionally the Depositor, pursuant to Section 7.2, shall
indemnify the Trustee with respect to certain matters, the Servicer, pursuant to
Section 8.2, shall indemnify the Trustee with respect to certain matters, and
Certificateholders, pursuant to Section 10.4 shall, upon the circumstances
therein set forth, indemnify the Trustee under certain circumstances. The
provisions of this Section 10.7 shall survive the termination of this Agreement
or any resignation or removal of CPS as Servicer.
SECTION X.8. Eligibility Requirements for Trustee. The Trustee under
this Agreement shall at all times be organized and doing business under the laws
of the United States of America; authorized under such laws to exercise
corporate trust powers; having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by Federal or State
authorities; and having a rating, both with respect to long-term and short-term
unsecured obligations, of not less than investment grade by the Rating Agencies.
If such corporation shall publish reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section 10.8, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 10.8, the Trustee shall resign immediately in the
manner and with the effect specified in Section 10.9.
SECTION X.9. Resignation or Removal of Trustee. The Trustee may at any
time resign and be discharged from the trusts hereby created by giving 30 days'
prior written notice thereof to the Servicer. Upon receiving such notice of
resignation, with the prior written consent of (a) the Certificate Insurer
(provided no Insurer Default has occurred which is continuing) and the Holders
of Class A Certificates evidencing not less than a majority of the Class A
Certificate Balance or (b) if the Class A Certificates have been paid in full
and all outstanding Reimbursement Obligations and other amounts owing to the
Certificate Insurer have been paid in full, with the prior written consent of
the Holders of Class B Certificates evidencing not less than a majority of the
Class B Certificate Balance, the Servicer shall promptly appoint a successor
Trustee by written instrument, in duplicate, one copy of which instrument shall
be delivered to the resigning Trustee and one copy to the successor Trustee. If
no successor Trustee shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor Trustee. The Trustee may be removed at any time by written demand of
the Certificate Insurer delivered to the Trustee and the Servicer; provided
that, if an Insurer Default has occurred which is continuing, such right of the
Certificate Insurer shall be inoperative during the period of such Insurer
Default and shall instead vest in the Trustee acting at the direction of the
Holders of Class A Certificates evidencing not less than a majority of the Class
A Certificate Balance or, from and after such time as the Class A Certificates
have been paid in full and all outstanding Reimbursement Obligations and other
amounts due to the Certificate Insurer have been paid in full, the Holders of
Class B Certificates evidencing not less than a majority of the Class B
Certificate Balance, in each case, in accordance with Section 12.11.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 10.8 and shall fail to resign after written
request therefor by the Servicer, or if at any time the Trustee shall be legally
unable to act, or shall be adjudged bankrupt or insolvent, or a receiver,
conservator or liquidator of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Servicer may remove the Trustee. If the Servicer shall
remove the Trustee under the authority of the immediately preceding sentence,
the Servicer shall promptly appoint a successor Trustee by written instrument,
in duplicate, one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor Trustee, and pay all fees and expenses
owed to the outgoing Trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 10.9 shall
not become effective until acceptance of appointment by the successor Trustee
pursuant to Section 10.10 and payment of all fees and expenses owed to the
outgoing Trustee. The Servicer shall provide notice of such resignation or
removal of the Trustee to each of the Rating Agencies and the Depositor.
SECTION X.10. Successor Trustee. Any successor Trustee appointed
pursuant to Section 10.9 shall execute, acknowledge, and deliver to the
Depositor, the Servicer, the Certificate Insurer and to its predecessor Trustee
an instrument accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Trustee shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties, and obligations of its
predecessor under this Agreement, with like effect as if originally named as
Trustee. The predecessor Trustee shall upon payment of its fees and expenses
deliver to the successor Trustee all documents and statements and monies held by
it under this Agreement; and the Servicer, the Certificate Insurer and the
predecessor Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for fully and certainly vesting and
confirming in the successor Trustee all such rights, powers, duties, and
obligations.
No successor Trustee shall accept appointment as provided in this
Section 10.10 unless at the time of such acceptance such successor Trustee shall
be eligible pursuant to Section 10.8.
Upon acceptance of appointment by a successor Trustee pursuant to this
Section 10.10, the Servicer shall mail notice of the successor of such Trustee
under this Agreement to all Holders of Certificates at their addresses as shown
in the Certificate Register, the Depositor, and to the Rating Agencies. If the
Servicer shall fail to mail such notice within 10 days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Servicer.
SECTION X.11. Merger or Consolidation of Trustee. Any corporation into
which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be eligible pursuant to Section 10.8, without the execution or
filing of any instrument or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding; provided further that
the Trustee shall mail notice of such merger or consolidation to the Rating
Agencies and the Depositor.
SECTION X.12. Co-Trustee; Separate Trustee. Notwithstanding any other
provisions of this Agreement, at any time, for the purpose of meeting any legal
requirements of any jurisdiction in which any part of the Trust or any Financed
Vehicle may at the time be located, the Servicer, the Certificate Insurer
(provided no Insurer Default shall have occurred and be continuing) and the
Trustee acting jointly shall have the power and shall execute and deliver all
instruments to appoint one or more persons approved by the Trustee to act as
co-trustee, jointly with the Trustee, or separate trustee or separate trustees,
of all or any part of the Trust, and to vest in such Person, in such capacity
and for the benefit of the Certificateholders, such title to the Trust, or any
part thereof, and, subject to the other provisions of this Section 10.12, such
powers, duties, obligations, rights, and trusts as the Servicer, the Certificate
Insurer and the Trustee may consider necessary or desirable. If the Servicer and
the Certificate Insurer shall not have joined in such appointment within 15 days
after the receipt by it of a request so to do, or in the case an Event of
Default shall have occurred and be continuing, the Trustee alone shall have the
power to make such appointment. No co-trustee or separate trustee under this
Agreement shall be required to meet the terms of eligibility as a successor
trustee pursuant to Section 10.8, except that the co-trustee or its parent shall
comply with the rating requirements set forth therein, and no notice of a
successor trustee pursuant to Section 10.10 and no notice to Certificateholders
of the appointment of any co-trustee or separate trustee shall be required
pursuant to Section 10.10.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties, and obligations conferred or
imposed upon the Trustee shall be conferred upon and exercised or
performed by the Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without the Trustee joining in such
act), except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed (whether as
Trustee under this Agreement or, in its capacity as Standby Servicer,
as successor to the Servicer under this Agreement), the Trustee shall
be incompetent or unqualified to perform such act or acts, in which
event such rights, powers, duties, and obligations (including the
holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the Trustee;
(ii) No trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under this
Agreement; and
(iii) Provided no Insurer Default shall have occurred and be
continuing, the Certificate Insurer may, and, in the event an Insurer
Default shall have occurred and be continuing, then, the Servicer and
the Trustee acting jointly may, at any time accept the resignation of
or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the other then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article X. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Trustee. Each such instrument shall be filed with the Trustee and a copy thereof
given to the Servicer.
Any separate trustee or co-trustee may at any time appoint the Trustee,
its agent or attorney-in-fact with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of this Agreement on
its behalf and in its name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION X.13. Representations and Warranties of Trustee. The Trustee
shall make the following representations and warranties on which the Depositor,
the Certificate Insurer and Certificateholders shall rely:
(i) The Trustee is a banking association duly organized,
validly existing, and in good standing under the laws of the United
States of America.
(ii) The Trustee has full corporate power authority and legal
right to execute, deliver, and perform this Agreement and shall have
taken all necessary action to authorize the execution, delivery and
performance by it of this Agreement.
(iii) This Agreement shall have been duly executed and
delivered by the Trustee and this Agreement constitutes a legal, valid
and binding obligation of the Trustee enforceable in accordance with
its terms, subject to (x) applicable bankruptcy, insolvency,
reorganization, moratorium, and other similar laws affecting creditor's
rights generally and (y) general principles of equity.
SECTION X.14. No Bankruptcy Petition. The Trustee covenants and agrees
that prior to the date which is one year and one day after the payment in full
of all securities issued by the Depositor or by a trust for which the Depositor
was the depositor it will not institute against, or join any other Person in
instituting against, the Depositor or the Trust any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any Federal or State bankruptcy or similar law.
SECTION X.15. Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as Trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Certificateholders in respect of which such judgment has
been obtained.
SECTION X.16. Rights of Certificate Insurer to Direct Trustee; Class B
Certificateholder's Right of First Refusal. (a) The Certificate Insurer, after
giving written notice to the Trustee, shall have the right to direct the time,
method and place at or by which the Trustee conducts any proceeding for any
remedy available to the Trustee, or exercises any such trust or power conferred
upon the Trustee.
(b) Notwithstanding anything to the contrary contained in subsection
(a) above, the Trustee shall not exercise any remedy involving a sale of the
Receivables unless it shall have received instruction to do so by Holders of at
least 662/3% of each of the Class A Certificate Balance and the Class B
Certificate Balance.
(c) Notwithstanding anything to the contrary contained in subsections
(a) or (b) above, the Trustee shall have the right to decline to follow any such
direction of the Certificate Insurer if the Trustee, being advised by counsel,
determines that the action so directed may not lawfully be taken, or if the
Trustee in good faith shall, by a responsible officer of the Trustee, determine
that the proceedings so directed would be illegal or involve it in personal
liability or be unduly prejudicial to the rights of Certificateholders;
provided, that nothing in this Agreement shall impair the right of the Trustee
to take any action deemed proper by the Trustee and which is not inconsistent
with such direction of the Certificate Insurer.
ARTICLE XI
Termination
-----------
SECTION XI.1. Termination of the Trust. The respective obligations and
responsibilities of CPS, the Depositor, the Servicer and the Trustee created
hereby and the Trust created by this Agreement shall terminate upon the payment
to Certificateholders of all amounts required to be paid to them pursuant to
this Agreement, the Spread Account Agreement or the Policy (including all
amounts required to reduce the Class A Certificate Balance to zero and to pay in
full any unpaid Class A Interest Distributable Amount), satisfaction of all
Reimbursement Obligations, and the expiration of any preference period related
thereto and the disposition of all property held as part of the Trust; provided,
however, that in no event shall the trust created by this Agreement continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late ambassador of the United States of
America to the Court of St. ▇▇▇▇▇, living on the date of this Agreement. The
Servicer shall promptly notify the Trustee, the Depositor and the Certificate
Insurer of any prospective termination pursuant to this Section 11.1.
Notice of any termination, specifying the Distribution Date upon which
the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be given promptly by
the Trustee by letter to Certificateholders mailed not earlier than the 15th day
and not later than the 25th day of the month next preceding the specified
Distribution Date stating (A) the Distribution Date upon which final payment of
the Certificates shall be made upon presentation and surrender of the
Certificates at the office of the Trustee therein designated, (B) the amount of
any such final payment, and (C) if applicable, that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made only
upon presentation and surrender of the Certificates at the office of the Trustee
therein specified. The Trustee shall give such notice to the Depositor and the
Certificate Registrar (if other than the Trustee) at the time such notice is
given to Certificateholders. Upon presentation and surrender of the
Certificates, the Trustee shall cause to be distributed to Certificateholders
amounts distributable on such Distribution Date pursuant to Section 4.6.
In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date specified
in the above-mentioned written notice, the Trustee shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice all the Certificates shall not have been
surrendered for cancellation, the Trustee shall take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that shall remain
subject to this Agreement or, if none, from CPS. Any funds remaining in the
Trust after exhaustion of such remedies shall be distributed by the Trustee to
the American Red Cross.
SECTION XI.2. Optional Purchase of All Receivables. On the last day of
any Collection Period as of which the Pool Balance shall be less than or equal
to the Optional Purchase Percentage multiplied by the Original Pool Balance, the
Servicer shall have the option to purchase the corpus of the Trust (with the
consent of the Certificate Insurer, if such purchase would result in a claim on
the Policy or would result in any amount owing to the Certificate Insurer or to
the Holders of the Class A Certificates remaining unpaid); provided, however,
that the Servicer may not effect any such purchase unless the Trustee shall have
received an Opinion of Counsel to the effect that such purchase would not
constitute a fraudulent conveyance. To exercise such option the Servicer (or the
Certificate Insurer, if applicable) shall deposit pursuant to Section 4.5 in the
Collection Account an amount equal to the aggregate Purchase Amount for the
Receivables (including defaulted Receivables), plus the appraised value of any
other property held by the Trust, such value to be determined by an appraiser
mutually agreed upon by the Servicer, the Certificate Insurer and the Trustee,
and shall succeed to all interests in and to the Trust. For purposes of this
Section, the Purchase Amount shall not be less than the sum of the Class A
Certificate Balance and the Class B Certificate Balance.
ARTICLE XII
Miscellaneous Provisions
------------------------
SECTION XII.1. Amendment. (a) This Agreement may be amended from time
to time by the parties hereto, with the consent of the Trustee (which consent
may not be unreasonably withheld), with the prior written consent of the
Certificate Insurer (so long as no Insurer Default has occurred and is
continuing) but without the consent of any of the Certificateholders, to cure
any error, defect or ambiguity, to correct or supplement any provisions in this
Agreement, to comply with any changes in the Code, or to make any other
provisions with respect to matters or questions arising under this Agreement
which shall not be inconsistent with the provisions of this Agreement or the
Insurance Agreement; provided, however, that such action shall not, as evidenced
by an Opinion of Counsel delivered to the Trustee, adversely affect in any
material respect the interests of any Certificateholder; provided further that
if an Insurer Default has occurred and is continuing, such action shall not
materially adversely affect the interests of the Certificate Insurer.
(b) This Agreement may be amended from time to time by the Depositor,
the Servicer, and the Trustee with the consent of the Certificate Insurer and
with the consent (which consent of any Holder of a Certificate given pursuant to
this Section or pursuant to any other provision of this Agreement shall be
conclusive and binding on such Holder and on all future Holders of such
Certificate and of any Certificate issued upon the transfer thereof or in
exchange thereof or in lieu thereof whether or not notation of such consent is
made upon the Certificate) of the Holders of Class A Certificates evidencing not
less than a majority of the Class A Certificate Balance and the Holders of Class
B Certificates evidencing not less than a majority of the Class B Certificate
Balance for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement, or of modifying in any
manner the rights of the Holders of Certificates; provided, however, that no
such amendment shall (a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, or change the allocation or priority of,
collections of payments on Receivables or distributions that shall be required
to be made on any Certificate or change the Class A Pass-Through Rate or the
Class B Pass-Through Rate without the consent of each Certificateholder affected
thereby, (b) reduce the aforesaid percentage of the Class A Certificate Balance
or Class B Certificate Balance required to consent to any such amendment,
without the consent of the Holders of all Certificates of the applicable class
then outstanding, (c) result in a downgrade or withdrawal of the then current
rating of the Class A Certificates by either of the Rating Agencies without the
consent of all the Class A Certificateholders or (d) result in a downgrade or
withdrawal of the then current rating of the Class B Certificates by either of
the Rating Agencies without the consent of all the Class B Certificateholders.
Promptly after the execution of any such amendment or consent, the
Trustee shall furnish a copy of such amendment or consent to each
Certificateholder and each of the Rating Agencies.
It shall not be necessary for the consent of Certificateholders
pursuant to this Section to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents (and any other
consents of Certificateholders provided for in this Agreement) and of evidencing
the authorization of any action by Certificateholders shall be subject to such
reasonable requirements as the Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by this Agreement and
the Opinion of Counsel referred to in Section 12.2(i)(1). The Trustee may, but
shall not be obligated to, enter into any such amendment which affects the
Trustee's own rights, duties or immunities under this Agreement or otherwise.
(c) Notwithstanding anything to the contrary contained in Section
12.1(a) above, the provisions of the Agreement relating to (i) the Series 1998-1
Supplement, the Spread Account, the Requisite Amount, a Trigger Event or any
component definition of a Trigger Event and (ii) any additional sources of funds
which may be added to the Spread Account or uses of funds on deposit in the
Spread Account may be amended in any respect by the Depositor, CPS Receivables
Corp., the Servicer, the Certificate Insurer and the Collateral Agent (the
consent of which shall not be withheld or delayed with respect to any amendment
that does not adversely affect the Collateral Agent) without the consent of, or
notice to, the Certificateholders.
SECTION XII.2. Protection of Title to Trust. (a) Each of the Depositor,
as to itself, and the Servicer, as to itself, shall execute and file such
financing statements and cause to be executed and filed such continuation
statements, all in such manner and in such places as may be required by law
fully to preserve, maintain, and protect the interest of the Certificateholders
and the Trustee in its interest in the Receivables and the other Trust Assets
and in the proceeds thereof. Each of the Depositor, as to itself, and the
Servicer, as to itself, shall deliver (or cause to be delivered) to the Trustee
file-stamped copies of, or filing receipts for, any document filed as provided
above, as soon as available following such filing.
(b) Neither the Depositor nor the Servicer shall change its name,
identity, or corporate structure in any manner that would, could, or might make
any financing statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the meaning of ss. 9-402(7) of
the UCC, unless it shall have given the Trustee and the Certificate Insurer at
least five days' prior written notice thereof, shall have promptly filed
appropriate amendments to all previously filed financing statements or
continuation statements and shall have delivered an Opinion of Counsel (A)
stating that, in the opinion of such counsel, all amendments to all previously
filed financing statements and continuation statements have been executed and
filed that are necessary fully to preserve and protect the interest of the
Trustee in the Receivables and the other Trust Assets, and reciting the details
of such filings, or (B) stating that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interest.
(c) Each of the Depositor and the Servicer shall have an obligation to
give the Trustee and the Certificate Insurer at least 60 days' prior written
notice of any relocation of its principal executive office if, as a result of
such relocation, the applicable provisions of the UCC would require the filing
of any amendment of any previously filed financing or continuation statement or
of any new financing statement, shall promptly file any such amendment and shall
deliver an Opinion of Counsel (A) stating that, in the opinion of such counsel,
all amendments to all previously filed financing statements and continuation
statements have been executed and filed that are necessary fully to preserve and
protect the interest of the Trustee in the Receivables, and reciting the details
of such filings, or (B) stating that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interest. The Servicer
shall at all times maintain each office from which it shall service Receivables,
and its principal executive office, within the United States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Certificate
Account and Payahead 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 Trustee,
the Servicer's master computer records (including any back-up archives) that
refer to a Receivable shall indicate clearly the interest of CPS Grantor Trust
1998-1 in such Receivable and that such Receivable is owned by the Trust.
Indication of the Trust's ownership of a Receivable shall be deleted from or
modified on the Servicer's computer systems when, and only when, such Receivable
shall have been paid in full or repurchased.
(f) If at any time the Depositor 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 back-up
archives) that, if they shall refer in any manner whatsoever to any Receivable,
shall indicate clearly that such Receivable has been sold to and is owned by the
Trust.
(g) The Servicer shall permit the Depositor, the Trustee, the Standby
Servicer and the Certificate Insurer and its agents at any time during normal
business hours to inspect, audit, and make copies of and abstracts from the
Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Depositor, the
Trustee, the Standby Servicer or to the Certificate Insurer, within five
Business Days, a list of all Receivables (by contract number and name of
Obligor) then held as part of the Trust, together with a reconciliation of such
list to the Schedule of Receivables and to each of the Servicer's Certificates
furnished before such request indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Trustee and the Certificate
Insurer:
(1) promptly after the execution and delivery of this
Agreement and of each amendment hereto and after the execution and
delivery of each amendment to any financing statement, an Opinion of
Counsel either (A) stating that, in the opinion of such counsel, all
financing statements and continuation statements have been executed and
filed that are necessary fully to preserve and protect the interest of
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) stating that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interest; and
(2) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Cutoff Date, an Opinion of Counsel, dated as of a date during
such 90-day period either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the
interest of 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) stating that, in the opinion of such counsel,
no such action shall be necessary to preserve and protect such
interest.
Each Opinion of Counsel referred to in clause (i) (1) or (i) (2) 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.
(j) For the purpose of facilitating the execution of this Agreement and
for other purposes, this Agreement may be executed simultaneously in any number
of counterparts, each of which counterparts shall be deemed to be an original,
and all of which counterparts shall constitute but one and the same instrument.
(k) In the event any of the events described in Section 9.1 (iii) or
(iv) shall have occurred, or in the event CPS shall have been removed or
replaced as Servicer for any reason, then CPS and/or the Servicer shall
immediately cause each Certificate of Title for a Financed Vehicle to be marked
to reflect the security interest of the Trustee in the Financed Vehicle, and CPS
hereby appoints the Trustee its attorney-in-fact to effect such marking, and the
Trustee hereby accepts such appointment. The appointment of the Trustee
hereunder shall not operate to relieve CPS and/or the Servicer of its
obligations to ▇▇▇▇ each Certificate of Title under this provision. CPS shall be
liable for all costs, fees and expenses incurred under this Section 12.2(k).
SECTION XII.3. Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations and liabilities of the parties to
this Agreement or any of them.
No Certificateholder shall have any right to vote (except as
specifically provided herein including in Section 12.1) or in any manner
otherwise control the operation and management of the Trust, or the obligations
of the parties to this Agreement, nor shall anything in this Agreement set
forth, or contained in the terms of the Certificates, be construed so as to
constitute the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third
person by reason of any action taken pursuant to any provision of this
Agreement.
No Class A Certificateholder shall have any right by virtue or by
availing itself of any provisions of this Agreement to institute any suit,
action, or proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Holder previously shall have given to the Trustee a
written notice of default and of the continuance thereof, and unless also the
Holders of Class A Certificates evidencing not less than 25% of the Class A
Certificate Balance shall have made written request upon the Trustee to
institute such action, suit or proceeding in its own name as Trustee under this
Agreement and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses, and liabilities to be incurred therein
or thereby and the Trustee, for 30 days after its receipt of such notice,
request, and offer of indemnity, shall have neglected or refused to institute
any such action, suit or proceeding and during such 30-day period no request or
waiver inconsistent with such written request has been given to the Trustee
pursuant to this Section or Section 9.5; no one or more Holders of Class A
Certificates shall have any right in any manner whatever by virtue or by
availing itself or themselves of any provisions of this Agreement to affect,
disturb, or prejudice the rights of the Holders of any other of the Class A
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right, under this Agreement except in the
manner provided in this Agreement and for the equal, ratable, and common benefit
of all Class A Certificateholders. For the protection and enforcement of the
provisions of this Section 12.3, each Class A Certificateholder and the Trustee
shall be entitled to such relief as can be given either at law or in equity.
Nothing in this Agreement shall be construed as giving the Class A
Certificateholders any direct right to make a claim on the Policy.
No Class B Certificateholder shall have any right by virtue or by
availing itself of any provisions of the Agreement to institute any suit,
action, proceeding in equity or at law upon or under or with respect to this
Agreement, unless it has the prior written consent of the Certificate Insurer
and, if any Class A Certificate shall remain outstanding, the prior written
consent of the Holders of Class A Certificates evidencing not less than a
majority of the Class A Certificate Balance; provided that, this sentence shall
be inoperative from and after such time as the Class A Certificates have been
paid in full and all outstanding Reimbursement Obligations and other amounts due
to the Certificate Insurer have been paid in full.
SECTION XII.4. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS,
AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
SECTION XII.5. Notices. All demands, notices, and communications upon
or to the Depositor, the Servicer, the Trustee, the Certificate Insurer,
Standard & Poor's or Moody's under this Agreement shall be in writing, and
delivered (a) personally, (b) by certified mail, return receipt requested, (c)
by Federal Express or similar overnight courier service or (d) by telecopy, and
shall be deemed to have been duly given upon receipt (a) in the case of the
Depositor, to the agent for service as specified in this Agreement, at the
following address: ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (Telecopy:
▇▇▇- ▇▇▇-▇▇▇▇), or at such other address as shall be designated by the Depositor
in a written notice to the Trustee, (b) in the case of the Servicer, to the
Secretary, at the following address: 2 Ada, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (Telecopy:
714-753-3951), (c) in the case of the Trustee, at the Corporate Trust Office
(Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇), (d) in the case of Standard & Poor's, at the
following address: Standard & Poor's, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: Asset Backed Surveillance Department (Telecopy: (212)
208-0030), (e) in the case of ▇▇▇▇▇'▇ Investors Service, Inc., at the following
address: ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Structured
Surveillance Department (Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇) and (f) in the case of
Financial Security Assurance Inc., at the following address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Senior Vice President, Surveillance
(Telecopy (▇▇▇) ▇▇▇-▇▇▇▇). Any notice required or permitted to be mailed to a
Certificateholder shall be given by Federal Express or similar overnight courier
service, postage prepaid, at the address of such Holder as shown in the
Certificate Register. Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been duly given, whether or not
the Certificateholder shall receive such notice.
The Trustee shall give prompt written notice to each of the Depositor,
the Rating Agencies and each Class A Certificateholder of (i) any amendments to
the Insurance Agreement or the Policy (upon receipt of written notice of any
such amendments from CPS or the Servicer), (ii) any change in the identity of
the Paying Agent and (iii) any failure to make payment under the Policy.
SECTION XII.6. Severability of Provisions. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the
Certificates or the rights of the Holders thereof.
SECTION XII.7. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 7.3 and 8.3 and as provided in
the provisions of this Agreement concerning the resignation of the Servicer,
this Agreement may not be assigned by the Depositor or the Servicer without the
prior written consent of the Certificate Insurer, CPS, the Trustee and the
Holders of Certificates evidencing not less than a majority of the Pool Balance,
the Holders of Class A Certificates evidencing not less than a majority of the
Class A Certificate Balance and the Holders of Class B Certificates evidencing
not less than a majority of the Class B Certificate Balance.
SECTION XII.8. Certificates Nonassessable and Fully Paid.
Certificateholders shall not be personally liable for obligations of the Trust.
The interests represented by the Certificates shall be nonassessable for any
losses or expenses of the Trust or for any reason whatsoever, and upon
authentication thereof by the Trustee pursuant to Section 6.2 or 6.3,
Certificates shall be deemed fully paid.
SECTION XII.9. Nonpetition Covenant. (a) None of the Depositor, the
Servicer, the Trustee, the Standby Servicer or CPS shall petition or otherwise
invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the Trust or the Depositor 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 Trust or the Depositor or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Trust or the
Depositor.
(b) The Servicer shall not, nor cause the Depositor to, petition or
otherwise invoke the process of commencing or sustaining a case against the
Depositor 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 Depositor or any substantial part of its property,
or ordering the winding up or liquidation of the affairs of the Depositor.
SECTION XII.10. Third Party Beneficiaries. Except as otherwise
specifically provided herein with respect to Certificateholders, the parties to
this Agreement hereby manifest their intent that no third party other than the
Certificate Insurer and the Collateral Agent with respect to the indemnification
provisions set forth herein, shall be deemed a third party beneficiary of this
Agreement, and specifically that the Obligors are not third party beneficiaries
of this Agreement.
SECTION XII.11. Financial Security as Controlling Party. Each
Certificateholder by purchase of the Certificates held by it acknowledges that
the Trustee, as partial consideration of the issuance of the Policy, has agreed
that the Certificate Insurer shall have certain rights hereunder for so long as
no Insurer Default shall have occurred and be continuing. So long as an Insurer
Default has occurred and is continuing, any provision giving the Certificate
Insurer the right to direct, appoint or consent to, approve of, or take any
action under this Agreement shall be inoperative during the period of such
Insurer Default and such right shall instead vest in the Trustee acting at the
direction of the Holders of Class A Certificates evidencing, unless otherwise
specified, not less than a majority of the Class A Certificate Balance. From and
after such time as the Class A Certificates have been paid in full and all
outstanding Reimbursement Obligations and other amounts due to the Certificate
Insurer have been paid in full, any provision giving the Certificate Insurer or
the Class A Certificateholders the right to direct, appoint or consent to,
approve of, or take any action under this Agreement shall be inoperative and
such right shall instead vest in the Trustee acting at the direction of the
Holders of Class B Certificates evidencing, unless otherwise specified, not less
than 51% of the Class B Certificate Balance. The Certificate Insurer may
disclaim any of its rights and powers under this Agreement (but not its duties
and obligations under the Policy) upon delivery of a written notice to the
Trustee. The Certificate Insurer may give or withhold any consent hereunder in
its sole and absolute discretion.
SECTION XII.12. Rule 144A Information. For so long as any of the
Certificates are "restricted securities" within the meaning of Rule 144(a)(3)
under the Securities Act, each of CPS, the Depositor, the Trustee and the
Servicer agrees to cooperate with each other to provide to any Certificateholder
and to any prospective purchaser of Certificates designated by such a
Certificateholder, upon the request of such Certificateholder or prospective
purchaser, any information required to be provided to such holder or prospective
purchaser to satisfy the condition set forth in Rule 144A(d)(4) under the
Securities Act.
IN WITNESS WHEREOF, the Depositor, CPS, the Servicer, the Trustee and
the Standby Servicer have caused this Pooling and Servicing Agreement to be duly
executed by their respective officers as of the day and year first above
written.
FINANCIAL ASSET SECURITIES CORP.,
as Depositor
By:_______________________________
Name:
Title:
CONSUMER PORTFOLIO SERVICES, INC.,
as Originator and Servicer
By:_______________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: President
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee and Standby
Servicer
By:________________________________
Name:
Title:
TABLE OF CONTENTS
Section Page
ARTICLE I
Definitions
-----------
1.1. Definitions..............................................................1
1.2. Usage of Terms..........................................................26
1.3. Section References......................................................26
1.4. Limitation on Trust Fund Activities.....................................26
1.5. Calculations............................................................26
1.6. Action by or Consent of Certificateholders..............................26
1.7. Material Adverse Effect.................................................27
ARTICLE II
The Trust and Trust Property
----------------------------
2.1. Creation of Trust.......................................................27
2.2. Conveyance of Receivables...............................................27
2.3. Transfer Intended as Sale; Precautionary Security
Interest......................................................28
2.4. Acceptance by Trustee...................................................29
2.5. Assignment by Depositor.................................................29
2.6. [Reserved]..............................................................29
2.7. Delivery of Receivable Files............................................29
2.8. Acceptance of Receivable Files by Trustee...............................29
2.9. Access to Receivable Files..............................................31
ARTICLE III
Administration and Servicing of Receivables
-------------------------------------------
3.1. Duties of Servicer......................................................32
3.2. Collection and Allocation of Receivable Payments........................33
3.3. Realization Upon Receivables............................................34
3.4. Physical Damage Insurance; Other Insurance..............................34
3.5. Maintenance of Security Interests in Financed Vehicles..................35
3.6. Additional Covenants of Servicer........................................36
3.7. Purchase of Receivables Upon Breach.....................................36
3.8. Servicing Fee...........................................................37
3.9. Servicer's Certificate..................................................38
3.10. Annual Statement as to Compliance: Notice of Default....................38
3.11. Annual Independent Certified Public Accountant's
Report........................................................39
3.12. Reserved................................................................40
3.13. Servicer Expenses.......................................................40
3.14. Retention and Termination of Servicer...................................40
3.15. Access to Certain Documentation and Information
Regarding Receivables.........................................40
3.16. Verification of Servicer's Certificate..................................41
3.17. Fidelity Bond...........................................................42
3.18. Delegation of Duties....................................................42
ARTICLE IV
Distributions, Spread Account;
------------------------------
Statements to Certificateholders
--------------------------------
4.1. Accounts; Post-Office Box...............................................43
4.2. Collections.............................................................46
4.3. Application of Collections..............................................46
4.4. Payaheads...............................................................46
4.5. Additional Deposits.....................................................47
4.6. Distributions; Policy Claims............................................47
4.7. Withdrawals from Spread Account.........................................52
4.8. Statements to Certificateholders; Tax Returns...........................53
4.9. Policy Payments; Subrogation............................................55
4.10. Reliance on Information from the Servicer...............................55
4.11. Optional Deposits by the Certificate Insurer............................55
ARTICLE V
Reserved.
---------
ARTICLE VI
The Certificates
----------------
6.1. The Certificates........................................................56
6.2A. Appointment of Paying Agent.............................................56
6.2B. Authenticating Agent....................................................57
6.2. Authentication of Certificates..........................................58
6.3. Registration of Transfer and Exchange of Certificates...................59
6.4. Mutilated, Destroyed, Lost or Stolen Certificates.......................63
6.5. Persons Deemed Owners...................................................63
6.6. Access to List of Certificateholders' Names and
Addresses.....................................................63
6.7. Maintenance of Office or Agency.........................................64
6.8. Book-Entry Certificates.................................................64
6.9. Notices to Clearing Agency..............................................65
6.10. Definitive Certificates.................................................66
ARTICLE VII
The Depositor
-------------
7.1. Representations of Depositor............................................66
7.2. Liability of Depositor; Indemnities.....................................68
7.3. Merger or Consolidation of, or Assumption of the
Obligations of, Depositor.....................................69
7.4. Limitation on Liability of Depositor and Others.........................70
7.5. Depositor May Own Certificates..........................................70
ARTICLE VIII
The Servicer
------------
8.1. Representations of Servicer.............................................70
8.2. Indemnities of Servicer.................................................72
8.3. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer or Standby Servicer..................74
8.4. Limitation on Liability of Servicer and Others..........................75
8.5. Servicer and Standby Servicer Not to Resign.............................75
ARTICLE IX
Default
-------
9.1. Events of Default.......................................................76
9.2. Appointment of Successor................................................79
9.3. Reserved................................................................81
9.4. Notification to Certificateholders......................................81
9.5. Direction of Insolvency Proceedings by Certificate
Insurer.......................................................81
9.6. Action Upon Certain Failures of the Servicer............................82
ARTICLE X
The Trustee
-----------
10.1. Duties of Trustee......................................................83
10.2. Trustee's Certificate..................................................85
10.3. Reserved...............................................................85
10.4. Certain Matters Affecting Trustee......................................85
10.5. Trustee Not Liable for Certificates or Receivables.....................87
10.6. Trustee May Own Certificates...........................................89
10.7. Indemnity of Trustee...................................................89
10.8. Eligibility Requirements for Trustee...................................89
10.9. Resignation or Removal of Trustee......................................89
10.10. Successor Trustee......................................................91
10.11. Merger or Consolidation of Trustee.....................................91
10.12. Co-Trustee; Separate Trustee...........................................92
10.13. Representations and Warranties of Trustee..............................93
10.14. No Bankruptcy Petition.................................................94
10.15. Trustee May Enforce Claims Without Possession of
Certificates..................................................94
10.16. Rights of Certificate Insurer to Direct Trustee;
Class B Certificateholder's Right of First Refusal............94
ARTICLE XI
Termination
-----------
11.1. Termination of the Trust...............................................95
11.2. Optional Purchase of All Receivables...................................96
ARTICLE XII
Miscellaneous Provisions
------------------------
12.1. Amendment..............................................................96
12.2. Protection of Title to Trust...........................................98
12.3. Limitation on Rights of Certificateholders............................101
12.4. Governing Law.........................................................103
12.5. Notices...............................................................103
12.6. Severability of Provisions............................................103
12.7. Assignment............................................................104
12.8. Certificates Nonassessable and Fully Paid.............................104
12.9. Nonpetition Covenant..................................................104
12.10. Third Party Beneficiaries.............................................104
12.11. Financial Security as Controlling Party...............................105
12.12. Rule 144A Information.................................................105
EXHIBITS
Exhibit A Form of Class A Certificate
Exhibit B Form of Class B Certificate
Exhibit C-1 Form of Trustee's Certificate
Exhibit C-2 Form of Trustee's Certificate
Exhibit D Form of Monthly Certificateholder Statement
Exhibit E-1 Form of Trust Receipt
Exhibit E-2 Form of Servicing Officer's Certificate
Exhibit F Form of Transferee Certificate
SCHEDULES
Schedule A Schedule of Receivables
Schedule B Location of Receivables
Schedule C Delivery Requirements
Schedule A
----------
Schedule of Receivables
-----------------------
Schedule B
----------
Location of Receivables
-----------------------
Norwest Bank Minnesota, National Association
Sixth Street and Marquette Avenue
Norwest Center
Minneapolis, Minnesota 55479-0070
Schedule C
----------
(i) With respect to the Transaction Account Property, the Trustee
agrees that:
(a) any Transaction Account Property that is held in deposit
accounts shall be held solely in Eligible Accounts; and, except as
otherwise provided herein, each such Eligible Account shall be subject
to the exclusive custody and control of the Trustee and the Trustee
shall have sole signature authority with respect thereto;
(b) any Transaction Account Property that constitutes Physical
Property or "certificated securities" shall be delivered to the Trustee
in accordance with paragraph (i)(a) or (ii)(b), as applicable, of the
definition of "Delivery" and shall be held, pending maturity or
disposition, solely by the Trustee or a financial intermediary (as such
term is defined in Section 8-313(4) of the UCC) acting solely for the
Trustee;
(c) any Transaction Account Property that is a book-entry
security held through the Federal Reserve System pursuant to Federal
book-entry regulations shall be delivered in accordance with paragraph
(i)(b) or (ii)(c), as applicable, of the definition of "Delivery" and
shall be maintained by the Trustee, pending maturity or disposition,
through continued book-entry registration of such Transaction Account
Property as described in such paragraph; and
(d) any Transaction Account Property that is an
"uncertificated security" under Article 8 of the UCC and that is not
governed by clause (C) above shall be delivered to the Trustee in
accordance with paragraph (i)(c) or (ii)(d), as applicable, of the
definition of "Delivery" and shall be maintained by the Trustee,
pending maturity or disposition, through continued registration of the
Trustee's (or its nominee's) ownership of such security.
(e) The Servicer shall have the power, revocable by the
Certificate Insurer or, with the consent of the Certificate Insurer by
the Trustee, to instruct the Trustee to make withdrawals and payments
from the Transaction Accounts for the purpose of permitting the
Servicer and the Trustee to carry out its respective duties under the
Pooling and Servicing Agreement.