RXHIBIT 10.10
AMENDED AND RESTATED SALE AND SERVICING AGREEMENT
AMONG
PAGE THREE FUNDING LLC, AS
PURCHASER AND ISSUER,
CONSUMER PORTFOLIO SERVICES, INC. AS
SELLER AND SERVICER,
AND
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
AS
BACKUP SERVICER AND TRUSTEE,
DATED AS OF
JANUARY 12, 2007
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS.............................................................................................1
SECTION 1.1. DEFINITIONS.......................................................................................1
SECTION 1.2. OTHER DEFINITIONAL PROVISIONS.....................................................................1
ARTICLE II CONVEYANCE OF RECEIVABLES..............................................................................2
SECTION 2.1. CONVEYANCE OF RECEIVABLES.........................................................................2
SECTION 2.2. TRANSFERS INTENDED AS SALES.......................................................................5
SECTION 2.3. FURTHER ENCUMBRANCE OF RECEIVABLES AND OTHER CONVEYED PROPERTY....................................5
ARTICLE III THE RECEIVABLES.......................................................................................6
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF SELLER..........................................................6
SECTION 3.2. REPURCHASE UPON BREACH; SECTION 341 MEETING.....................................................13
SECTION 3.3. CUSTODY OF RECEIVABLE FILES AND PLEDGED SUBORDINATE SECURITIES...................................13
SECTION 3.4. ACCEPTANCE OF RECEIVABLE FILES BY TRUSTEE; MISSING CERTIFICATES OF TITLE.........................14
SECTION 3.5. ACCESS TO RECEIVABLE FILES.......................................................................14
SECTION 3.6. TRUSTEE TO OBTAIN FIDELITY INSURANCE.............................................................15
SECTION 3.7. TRUSTEE TO MAINTAIN SECURE FACILITIES............................................................15
ARTICLE IV ADMINISTRATION AND SERVICING OF RECEIVABLES...........................................................15
SECTION 4.1. DUTIES OF THE SERVICER...........................................................................15
SECTION 4.2. COLLECTION OF RECEIVABLE PAYMENTS; MODIFICATIONS OF RECEIVABLES; LOCKBOX AGREEMENTS..............16
SECTION 4.3. REALIZATION UPON RECEIVABLES.....................................................................17
SECTION 4.4. INSURANCE........................................................................................17
SECTION 4.5. MAINTENANCE OF SECURITY INTERESTS IN VEHICLES....................................................18
SECTION 4.6. ADDITIONAL COVENANTS OF SERVICER.................................................................18
SECTION 4.7. PURCHASE OF RECEIVABLES UPON BREACH OF COVENANT..................................................19
SECTION 4.8. SERVICING FEE....................................................................................19
SECTION 4.9. SERVICER'S CERTIFICATE...........................................................................20
SECTION 4.10. ANNUAL STATEMENT AS TO COMPLIANCE, NOTICE OF SERVICER TERMINATION EVENT.........................20
SECTION 4.11. INDEPENDENT ACCOUNTANTS' REPORTS................................................................20
SECTION 4.12. INDEPENDENT ACCOUNTANTS' REVIEW OF RECEIVABLE FILES.............................................21
SECTION 4.13. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING RECEIVABLES...........................21
SECTION 4.14. VERIFICATION OF SERVICER'S CERTIFICATE..........................................................21
SECTION 4.15. RETENTION AND TERMINATION OF SERVICER...........................................................22
SECTION 4.16. ERRORS AND OMISSIONS POLICY AND FIDELITY BOND...................................................23
ARTICLE V ACCOUNTS; DISTRIBUTIONS; STATEMENTS TO THE NOTEHOLDER..................................................23
SECTION 5.1. ESTABLISHMENT OF PLEDGED ACCOUNTS................................................................23
SECTION 5.2. ESTABLISHMENT OF DEPOSIT ACCOUNT.................................................................24
SECTION 5.3. CERTAIN REIMBURSEMENTS TO THE SERVICER...........................................................24
SECTION 5.4. APPLICATION OF COLLECTIONS.......................................................................25
SECTION 5.5. [RESERVED].......................................................................................25
SECTION 5.6. DEPOSITS INTO THE COLLECTION ACCOUNT.............................................................25
SECTION 5.7. DISTRIBUTIONS....................................................................................25
SECTION 5.8. NOTE DISTRIBUTION ACCOUNT........................................................................27
SECTION 5.9. STATEMENTS TO NOTEHOLDERS........................................................................28
SECTION 5.10. DIVIDEND OF INELIGIBLE RECEIVABLES..............................................................30
ARTICLE VI [RESERVED]............................................................................................30
ARTICLE VII THE PURCHASER........................................................................................30
SECTION 7.1. REPRESENTATIONS OF PURCHASER.....................................................................30
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TABLE OF CONTENTS
(CONTINUED)
ARTICLE VIII THE SELLER..........................................................................................32
SECTION 8.1. REPRESENTATIONS OF SELLER........................................................................32
SECTION 8.2. ADDITIONAL COVENANTS OF THE SELLER...............................................................35
SECTION 8.3. LIABILITY OF SELLER; INDEMNITIES.................................................................36
SECTION 8.4. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF, SELLER..........................37
SECTION 8.5. [RESERVED].......................................................................................37
SECTION 8.6. REPORTING REQUIREMENTS...........................................................................37
ARTICLE IX THE SERVICER..........................................................................................38
SECTION 9.1. REPRESENTATIONS AND COVENANTS OF SERVICER........................................................38
SECTION 9.2. LIABILITY OF SERVICER; INDEMNITIES...............................................................39
SECTION 9.3. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF THE SERVICER OR BACKUP SERVICER..41
SECTION 9.4. [RESERVED].......................................................................................42
SECTION 9.5. DELEGATION OF DUTIES.............................................................................42
SECTION 9.6. SERVICER AND BACKUP SERVICER NOT TO RESIGN.......................................................42
ARTICLE X DEFAULT................................................................................................42
SECTION 10.1. SERVICER TERMINATION EVENTS.....................................................................42
SECTION 10.2. CONSEQUENCES OF A SERVICER TERMINATION EVENT OR NON-EXTENSION OF TERM OF SERVICER...............43
SECTION 10.3. APPOINTMENT OF SUCCESSOR........................................................................44
SECTION 10.4. NOTIFICATION TO THE NOTEHOLDERS AND NOTE PURCHASERS.............................................45
SECTION 10.5. WAIVER OF PAST DEFAULTS.........................................................................45
SECTION 10.6. ACTION UPON CERTAIN FAILURES OF THE SERVICER....................................................45
SECTION 10.7. CONTINUED ERRORS................................................................................45
ARTICLE XI MISCELLANEOUS PROVISIONS..............................................................................46
SECTION 11.1. AMENDMENT.......................................................................................46
SECTION 11.2. PROTECTION OF TITLE TO PROPERTY.................................................................47
SECTION 11.3. NOTICES.........................................................................................49
SECTION 11.4. ASSIGNMENT......................................................................................49
SECTION 11.5. LIMITATIONS ON RIGHTS OF OTHERS.................................................................49
SECTION 11.6. SEVERABILITY....................................................................................49
SECTION 11.7. SEPARATE COUNTERPARTS...........................................................................49
SECTION 11.8. HEADINGS........................................................................................50
SECTION 11.9. GOVERNING LAW...................................................................................50
SECTION 11.10. ASSIGNMENT TO TRUSTEE..........................................................................50
SECTION 11.11. NONPETITION COVENANTS..........................................................................50
SECTION 11.12. LIMITATION OF LIABILITY OF TRUSTEE.............................................................50
SECTION 11.13. INDEPENDENCE OF THE SERVICER...................................................................50
SECTION 11.14. NO JOINT VENTURE...............................................................................50
SECTION 11.15. SPECIAL SUPPLEMENTAL AGREEMENT.................................................................50
SECTION 11.16. FULL RECOURSE TO THE ISSUER AND THE PURCHASER.................................................50
SECTION 11.17. ACKNOWLEDGEMENT OF ROLES.......................................................................51
SECTION 11.18. TERMINATION....................................................................................51
SECTION 11.19. SUBMISSION TO JURISDICTION.....................................................................51
SECTION 11.20. WAIVER OF TRIAL BY JURY........................................................................51
SECTION 11.21. PROCESS AGENT..................................................................................52
SECTION 11.22. SET-OFF........................................................................................52
SECTION 11.23. NO WAIVER; CUMULATIVE REMEDIES.................................................................52
SECTION 11.24. MERGER AND INTEGRATION.........................................................................52
SECTION 11.25. INTERCREDITOR AGREEMENT TO CONTROL.............................................................52
SECTION 11.26. CONTROLLING NOTE PURCHASER; MAJORITY NOTEHOLDERS OF HIGHEST PRIORITY CLASS.....................53
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ANNEXES
Annex A Defined Terms
Annex B List of Non-Certificated Title States
SCHEDULES
Schedule A - Schedule of Receivables
Schedule B - Location for Delivery of Receivable Files
EXHIBITS
Exhibit A - Form of Servicer's Certificate
Exhibit B - Form of Trust Receipt
Exhibit C - Form of Release Request
Exhibit D - [Reserved]
Exhibit E - [Reserved]
Exhibit F - Form of Assignment
Exhibit G - Form of Addition Notice
Exhibit H - Data Tape Fields
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AMENDED AND RESTATED SALE AND SERVICING AGREEMENT (this "AGREEMENT")
dated as of January 12, 2007, among PAGE THREE FUNDING LLC, a Delaware limited
liability company (the "PURCHASER"), CONSUMER PORTFOLIO SERVICES, INC., a
California corporation (in its capacities as Seller, the "SELLER" and as
Servicer, the "SERVICER," respectively), ▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
a national banking association (in its capacities as Backup Servicer, the
"BACKUP SERVICER" and as Trustee, the "TRUSTEE," respectively).
WHEREAS, the Purchaser desires to purchase, from time to time,
portfolios of receivables arising in connection with motor vehicle retail
installment sale contracts acquired by Consumer Portfolio Services, Inc., from
motor vehicle dealers and independent finance companies;
WHEREAS, the Purchaser intends to finance such purchases by issuing
Class A Notes and Class B Notes, each of which shall be secured by, among other
assets, the Receivables and the Other Conveyed Property, pursuant to the
Indenture (as defined below);
WHEREAS, the Seller is willing to sell such Receivables and the Other
Conveyed Property to the Purchaser from time to time; and
WHEREAS the Servicer is willing to service all such Receivables.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
---------
DEFINITIONS
-----------
SECTION 1.1. DEFINITIONS. Capitalized terms used in this Agreement and
not otherwise defined in this Agreement, shall have the meanings set forth in
Annex A attached hereto.
SECTION 1.2. OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any instrument governed hereby and in any
certificate or other document made or delivered pursuant hereto unless
otherwise defined therein.
(b) Accounting terms used but not defined or partly defined in
this Agreement, in any instrument governed hereby or in any certificate
or other document made or delivered pursuant hereto, to the extent not
defined, shall have the respective meanings given to them under GAAP as
in effect on the date of determination or any such instrument,
certificate or other document, as applicable. To the extent that the
definitions of accounting terms in this Agreement or in any such
instrument, certificate or other document are inconsistent with the
meanings of such terms under GAAP, the definitions contained in this
Agreement or in any such instrument, certificate or other document
shall control.
(c) The words "HEREOF," "HEREIN," "HEREUNDER" and words of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement.
(d) Section, Schedule and Exhibit references contained in this
Agreement are references to Sections, Schedules and Exhibits in or to
this Agreement unless otherwise specified; and the term "INCLUDING"
shall mean "INCLUDING WITHOUT LIMITATION."
(e) The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms.
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Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as the same may from time to time be
amended, modified or supplemented in accordance with the terms thereof and
includes (in the case of agreements or instruments) references to all
attachments and instruments associated therewith; all references to a Person
include its permitted successors and assigns.
ARTICLE II
----------
CONVEYANCE OF RECEIVABLES
-------------------------
SECTION 2.1. CONVEYANCE OF RECEIVABLES.
(a) In consideration of the Purchaser's delivery to or upon
the order of the Seller on any Funding Date of the Purchase Price
therefor, the Seller does hereby sell, transfer, assign, set over and
otherwise convey to the Purchaser, without recourse (subject to the
obligations set forth herein) all right, title and interest of the
Seller, whether now existing or hereafter arising, in, to and under:
(i) the Receivables listed in Schedule A to each
Assignment executed and delivered by the Seller on such
Funding Date;
(ii) all monies received under the Receivables on and
after the related Cutoff Date and all Net Liquidation Proceeds
received with respect to the Receivables on and after the
related Cutoff Date;
(iii) the security interests in the Financed Vehicles
and any accessions thereto granted by Obligors pursuant to the
related Contracts and any other interest of the Seller in such
Financed Vehicles, including, without limitation, the
certificates of title or, with respect to such Receivables
that finance a vehicle in the States listed in ANNEX B, other
evidence of title issued by the applicable Department of Motor
Vehicles or similar authority in such States, with respect to
such Financed Vehicles;
(iv) any proceeds from claims on any Receivables
Insurance Policies or certificates relating to the Financed
Vehicles securing the Receivables or the Obligors thereunder;
(v) all proceeds from recourse against Dealers or
Consumer Lenders with respect to the Receivables and all other
rights (but none of the obligations) of the Seller under any
agreements with Dealers or Consumer Lenders;
(vi) refunds for the costs of extended service
contracts with respect to Financed Vehicles securing the
Receivables, refunds of unearned premiums with respect to
credit life and credit accident and health insurance policies
or certificates covering an Obligor or Financed Vehicle under
a Receivable or his or her obligations with respect to a
Financed Vehicle and any recourse to Dealers or Consumer
Lenders for any of the foregoing;
(vii) the Receivable File related to each Receivable
and all other documents that the Seller keeps on file in
accordance with its customary procedures relating to the
Receivables for Obligors of the Financed Vehicles;
(viii) all amounts and property from time to time
held in or credited to the Collection Account or the Lockbox
Account;
(ix) all property (including the right to receive
future Net Liquidation Proceeds) that secures a Receivable
that has been acquired by or on behalf of the Seller or the
Purchaser pursuant to a liquidation of such Receivable;
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(x) the proceeds from any Servicer's errors and
omissions policy or fidelity bond, to the extent such proceeds
relate to any Receivable, Financed Vehicle or other
Collateral; and
(xi) all present and future claims, demands, causes
and choses in action in respect of any or all of the foregoing
and all payments on or under and all proceeds of every kind
and nature whatsoever in respect of any or all of the
foregoing, including all proceeds of the conversion, voluntary
or involuntary, into cash or other liquid property, all cash
proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts,
insurance proceeds, condemnation awards, rights to payment of
any and every kind and other forms of obligations and
receivables, instruments and other property which at any time
constitute all or part of or are included in the proceeds of
any of the foregoing.
(b) The Seller shall transfer to the Purchaser the Receivables
and the Other Conveyed Property described in PARAGRAPH (a) above only
upon the satisfaction of each of the conditions set forth below on or
prior to the related Funding Date. In addition to constituting
conditions precedent to any purchase hereunder and under each
Assignment, the following shall also be conditions precedent to any
Advance on any Funding Date under the terms of the applicable Note
Purchase Agreement:
(i) the Seller shall have provided the Purchaser,
Trustee, the applicable Note Purchaser and the applicable
Noteholders with (A) an Addition Notice substantially in the
form of EXHIBIT G hereto (which shall include a supplement to
the Schedule of Receivables) and (B) a data tape or other
electronic file containing information regarding the Related
Receivables in the form of EXHIBIT H hereto to be transferred
on such Funding Date (the "DATA TAPE FIELDS") no later than
2:00 p.m. (New York City time) four (4) Business Days prior to
such Funding Date and shall have provided any information
reasonably requested by any of the foregoing with respect to
the Issuer, the Servicer and the Related Receivables;
(ii) the Seller shall, to the extent required by
SECTION 4.2 of this Agreement, have deposited in the
Collection Account all collections received on and after the
Cutoff Date in respect of the Related Receivables to be
purchased on such Funding Date;
(iii) as of each Funding Date, (A) the Seller shall
not be insolvent and shall not become insolvent as a result of
the transfer of Related Receivables on such Funding Date, (B)
the Seller shall not intend to incur or believe that it shall
incur debts that would be beyond its ability to pay as such
debts mature, (C) such transfer shall not have been made with
actual intent to hinder, delay or defraud any Person and (D)
the assets of the Seller shall not constitute unreasonably
small capital to carry out its business as then conducted;
(iv) if such Funding Date is a Class A Funding Date,
the Class A Facility Termination Date shall not have occurred;
(v) if such Funding Date is a Class B Funding Date,
the Class B Facility Termination Date shall not have occurred;
(vi) the Servicer shall have established a Lockbox
Account acceptable to the Controlling Note Purchaser;
(vii) each of the representations and warranties made
by the Seller pursuant to SECTION 3.1 and the other Basic
Documents with respect to the Related Receivables to be
purchased on such Funding Date shall be true and correct as of
the related Funding Date and the Seller shall have performed
all obligations to be performed by it hereunder or in any
Assignment on or prior to such Funding Date;
(viii) the Seller shall, at its own expense, on or
prior to the Funding Date, indicate in its computer files that
the Related Receivables to be purchased on such Funding Date
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have been sold to the Purchaser pursuant to this Agreement or
an Assignment, as applicable, and have been pledged by the
Purchaser to the Trustee for the benefit of the Note
Purchasers and the Noteholders under the Indenture;
(ix) the Seller shall have taken all action required
to maintain (A) the first priority perfected ownership
interest of the Purchaser in the Related Receivables and Other
Conveyed Property, (B) subject to the terms and provisions of
the Intercreditor Agreement, the first priority perfected
security interest of the Trustee in the Collateral for the
benefit of the Note Purchasers and the Noteholders, (C) the
first priority perfected security interest of the Trustee in
the Pledged Subordinate Securities for the benefit of the
Class B Note Purchasers and the Class B Noteholders, and (D)
subject to the terms and provisions of the Intercreditor
Agreement, the second priority perfected security interest of
the UBS Indenture Trustee in the Bear Cross Collateral
(subject only to the Lien granted pursuant to Granting Clause
I of the Indenture) for the benefit of the Class B note
purchasers and the Class B noteholders under the UBS Basic
Documents;
(x) no selection procedures adverse to the interests
of any Note Purchaser or any Noteholder shall have been
utilized in selecting the Related Receivables to be sold on
such Funding Date;
(xi) the addition of any such Related Receivables to
be purchased on such Funding Date shall not result in a
material adverse tax consequence to any Noteholder, any Note
Purchaser or the Purchaser;
(xii) the Seller shall have delivered to each
Noteholder, the applicable Note Purchaser and the Trustee an
Officers' Certificate confirming the satisfaction of each
condition precedent specified in this paragraph (b);
(xiii) if such Funding Date is a Class A Funding
Date, no Class A Funding Termination Event, Servicer
Termination Event, or any event that, with the giving of
notice or the passage of time, or both, would constitute a
Class A Funding Termination Event or Servicer Termination
Event, shall have occurred and be continuing;
(xiv) if such Funding Date is a Class B Funding Date,
no Class B Funding Termination Event, Servicer Termination
Event, or any event that, with the giving of notice or the
passage of time, or both, would constitute a Class B Funding
Termination Event or Servicer Termination Event, shall have
occurred and be continuing;
(xv) the Trustee shall have confirmed receipt of the
related Receivable File for each Related Receivable included
in the applicable Borrowing Base calculation and shall have
delivered an original Trust Receipt to the Controlling Note
Purchaser and a copy thereof to the applicable Noteholders and
the other Note Purchasers with respect to the Receivable Files
related to the Related Receivables to be purchased on such
Funding Date;
(xvi) the Seller shall have filed or caused to be
filed all necessary UCC-l financing statements (or amendments
thereto) necessary to maintain (in each case assuming for
purposes of this clause (xvi) that such perfection may be
achieved by making the appropriate filings), and taken any
other steps necessary to maintain, (A) the first priority
perfected ownership interest of Purchaser and (B) subject to
the terms and provisions of the Intercreditor Agreement, the
first priority, perfected security interest of the Trustee for
the benefit of the Note Purchasers and the Noteholders, with
respect to the Related Receivables and Other Conveyed Property
and the Collateral, respectively, to be transferred on such
Funding Date;
(xvii) the Seller shall have filed or caused to be
filed all necessary UCC-l financing statements (or amendments
thereto) necessary to maintain (in each case assuming for
purposes of this clause (xvii) that such perfection may be
achieved by making the appropriate filings), and taken any
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other steps necessary to maintain, (A) the first priority
perfected security interest of the Trustee for the benefit of
the Class B Note Purchasers and the Class B Noteholders, with
respect to the Pledged Subordinate Securities and (B) subject
to the terms and provisions of the Intercreditor Agreement,
the second priority perfected security interest of the UBS
Indenture Trustee for the benefit of the Class B note
purchasers and the Class B noteholders under the UBS Basic
Documents, with respect to the Bear Cross Collateral (subject
only to the Lien created pursuant to Granting Clause I of the
Indenture);
(xviii) the Seller shall have executed and delivered
an Assignment in the form of EXHIBIT F with respect to such
Related Receivables and the Other Conveyed Property related
thereto;
(xix) each of the conditions precedent to such
Advance set forth in this Agreement, the Indenture and the
applicable Note Purchase Agreement shall have been satisfied;
(xx) if such Funding Date is a Class A Funding Date,
such Class A Funding Date shall not occur in the same calendar
week as any prior Class A Funding Date;
(xxi) if such Funding Date is a Class B Funding Date,
such Class B Funding Date shall also be a Class A Funding Date
and no more than two Class B Funding Dates shall occur during
any one calendar month; and
(xxii) if such Funding Date is a Class B Funding
Date, such Class B Funding Date shall not be a funding date
for the Class B notes issued under the UBS Warehouse Facility.
Unless waived by the Controlling Note Purchaser (or the Class
B Note Purchasers, in the case of ITEM (v), ITEM (ix)(c) AND (d), ITEM
(xiv), ITEM (xvii)(a) AND (b), ITEM (xxi) and ITEM (xxii) above) in
writing, the Seller covenants that in the event any of the foregoing
conditions precedent are not satisfied with respect to any Related
Receivable on the date required as specified above, the Seller will
immediately repurchase such Related Receivable from the Purchaser, at a
price equal to the Purchase Amount thereof, in the manner specified in
SECTION 3.2 and SECTION 4.7. Except with respect to ITEM (xvi) above,
the Trustee may rely on the accuracy of the Officers' Certificate
delivered pursuant to ITEM (xii) above without independent inquiry or
verification.
(c) PAYMENT OF PURCHASE PRICE. In consideration for the sale
of the Related Receivables and Other Conveyed Property described in
SECTION 2.1(A) or the related Assignment, the Purchaser shall, on each
Funding Date on which Related Receivables are transferred hereunder,
pay to or upon the order of the Seller the applicable Purchase Price in
the following manner: (i) cash in an amount equal to the amount of each
Advance received by the Purchaser under the Notes on such Funding Date
and (ii) to the extent the Purchase Price for the related Receivables
and Other Conveyed Property exceeds the aggregate amount of cash
described in (i), such excess shall be treated as a capital
contribution by the Seller to the Purchaser.
SECTION 2.2. TRANSFERS INTENDED AS SALES. It is the intention of the
Seller and the Purchaser that each transfer and assignment contemplated by this
Agreement and each Assignment shall constitute a sale of the Related Receivables
and Other Conveyed Property from the Seller to the Purchaser free and clear of
all liens and rights of others and it is intended that the beneficial interest
in and title to the Related Receivables and Other Conveyed Property shall not be
part of the Seller's estate in the event of the filing of a bankruptcy petition
by or against the Seller under any bankruptcy law. In the event that,
notwithstanding the intent of the Seller and the Purchaser, the transfer and
assignment contemplated hereby or by any Assignment is held not to be a sale,
this Agreement and each Assignment shall constitute a security agreement under
applicable law and the Seller hereby grants to the Purchaser a security interest
in the Receivables and Other Conveyed Property, which security interest has been
assigned to the Trustee, acting on behalf of the Noteholders and Note
Purchasers.
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SECTION 2.3. FURTHER ENCUMBRANCE OF RECEIVABLES AND OTHER CONVEYED
PROPERTY.
(a) Immediately upon the conveyance to the Purchaser by the
Seller of the Related Receivables and any item of the related Other
Conveyed Property pursuant to SECTION 2.1 and the related Assignment,
all right, title and interest of the Seller in and to such Related
Receivables and Other Conveyed Property shall terminate, and all such
right, title and interest shall vest in the Purchaser.
(b) Immediately upon the vesting of any Related Receivables
and the related Other Conveyed Property in the Purchaser, the Purchaser
shall have the sole right to pledge or otherwise encumber such Related
Receivables and the related Other Conveyed Property. Pursuant to the
Indenture, (i) subject to the terms and provisions of the Intercreditor
Agreement, the Purchaser shall grant a security interest in the
Collateral to secure the repayment of the Notes, the other Secured
Obligations and any and all other amounts due and owing to the Note
Purchasers and the Noteholders pursuant to the Basic Documents, (ii)
the Purchaser shall grant a security interest in the Pledged
Subordinate Securities to secure the repayment of the Class B Notes,
the other Secured Obligations and any and all other amounts due and
owing, in each case, to the Class B Note Purchasers and the Class B
Noteholders pursuant to the Basic Documents, and (iii) subject to the
terms and provisions of the Intercreditor Agreement, the Purchaser
shall grant a second priority security interest in the Bear Cross
Collateral to secure the repayment of the Class B notes and any and all
other amounts due and owing, in each case, to the Class B note
purchasers and the Class B noteholders under the UBS Basic Documents
pursuant to the UBS Basic Documents, subject only to the Lien Granted
pursuant to Granting Clause I of the Indenture.
(c) The Trustee shall, at such time as (i) each Facility
Termination Date has occurred, (ii) the payment in full of the Secured
Obligations has occurred, (iii) each Note Purchase Agreement shall have
been terminated pursuant to its terms, (iv) there are no Notes
Outstanding, (v) all sums due to the Trustee, the Note Purchasers and
the Noteholders pursuant to the Basic Documents and all sums due to the
UBS Indenture Trustee, the Class B note purchasers and the Class B
noteholders under the UBS Basic Documents have been paid in full, and
(vi) all other conditions precedent under the Indenture shall have been
satisfied, release any remaining portion of the Collateral, the Pledged
Subordinate Securities and the Bear Cross Collateral to the Purchaser.
ARTICLE III.
------------
THE RECEIVABLES
---------------
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF SELLER. (a) The Seller
makes the following representations and warranties as to the Receivables to the
Purchaser, to the Trustee for the benefit of the Note Purchasers and the
Noteholders, to each Note Purchaser and to each Noteholder, on which the
Purchaser relies in acquiring the Receivables, on which the Trustee relies in
accepting a pledge of the Receivables under the Indenture, on which the
Noteholders have relied in purchasing the Notes and on which each Note Purchaser
will rely in paying the Advance Amounts to the Purchaser. Such representations
and warranties speak as of the Class A Closing Date (with respect to the Class A
Note Purchaser and the Class A Noteholders) and the Class B Closing Date (with
respect to the Class B Note Purchasers and the Class B Noteholders) and as of
each Funding Date; PROVIDED that to the extent such representations and
warranties relate to the Receivables conveyed on any Funding Date, such
representations and warranties shall speak as of the related Funding Date, but
shall survive the sale, transfer and assignment of the Receivables to the
Purchaser and the pledge thereof by the Purchaser hereunder to the Trustee
pursuant to the Indenture.
(i) CHARACTERISTICS OF RECEIVABLES. Each Receivable
(1) is evidenced either by (i) a retail installment sale
contract or (ii) an installment promissory note and security
agreement; (2) if such Receivable is evidenced by a retail
installment sale contract, has been originated in the United
States of America by a Dealer for the retail sale of a
Financed Vehicle in the ordinary course of such Dealer's
business and without any fraud or misrepresentation on the
part of the Dealer, such Dealer had all necessary licenses and
permits to originate such Receivables in the state where such
Dealer was located, has been fully and properly executed by
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the parties thereto, has been purchased by the Seller directly
from the Dealer in connection with the sale of Financed
Vehicles by the Dealer and has been validly assigned without
any intervening assignments by such Dealer to the Seller in
accordance with its terms; (3) if such Receivable is evidenced
by an installment promissory note and security agreement, has
been originated in the United States of America by a Consumer
Lender in the ordinary course of such Consumer Lender's
business and without any fraud or misrepresentation on the
part of such Consumer Lender or the Dealer, and such Consumer
Lender had all necessary licenses and permits to originate
such Receivable in the State where such Receivable was
originated and where such Consumer Lender was located, and
such Receivable has been fully and properly executed by the
parties thereto, has been purchased by the Seller directly
from the Consumer Lender (if the Consumer Lender is not the
Seller) in connection with the sale of Financed Vehicles by
the Dealer and has been validly assigned by such Consumer
Lender without any intervening assignments by such Consumer
Lender to the Seller (if the Consumer Lender is not the
Seller); (4) has created a valid, subsisting, and enforceable
first priority perfected security interest in favor of the
Seller or the Consumer Lender, as applicable, in the Financed
Vehicle, which security interest has been validly assigned by
the Seller to the Purchaser or by the Consumer Lender to the
Seller (if the Consumer Lender is not the Seller) and by the
Seller to the Purchaser, as applicable, and by the Purchaser
to the Trustee; (5) contains customary and enforceable
provisions such that the rights and remedies of the holder or
assignee thereof shall be adequate for realization against the
collateral of the benefits of the security including without
limitation a right of repossession following a default; (6)
provides for level weekly, bi-weekly, semi-monthly or monthly
payments that fully amortize the Amount Financed over the
original term (except for the last payment, which may be
different from the level payment but in no event shall exceed
three times such level payment) and yields interest at the
Annual Percentage Rate; (7) if such Receivable is evidenced by
a retail installment sale contract, was originated by a Dealer
to an Obligor and was sold by the Dealer to the Seller, or if
such Receivable is evidenced by an installment promissory note
and security agreement, was originated by a Consumer Lender to
an Obligor and, if not originated by the Seller, has been sold
by such Consumer Lender to the Seller, in each case without
any fraud or misrepresentation on the part of the Seller, such
Consumer Lender, such Dealer or the related Obligor; (8) is
denominated in U.S. dollars; (9) provides, in the case of
prepayment, for the full payment of the Principal Balance
thereof plus accrued interest through the date of prepayment
based on the APR of the Receivable; and (10) contains no
obligation to lend more money to the related Obligor in the
future.
(ii) ADDITIONAL RECEIVABLES CHARACTERISTICS. As of
the related Funding Date, as applicable:
(A) each Related Receivable has (1) an original term
of 24 to 72 months; (2) an original Amount Financed of at
least $3,000 and not more than $35,000; and (3) had an APR of
at least 8% and not more than 30% (subject to applicable
laws);
(B) each Related Receivable is not more than 30 days
past due with respect to more than 10% of any Scheduled
Receivable Payment as of the related Cutoff Date and no funds
have been advanced by the Seller, any Dealer, any Consumer
Lender or anyone acting on their behalf in order to cause any
Related Receivable to satisfy such requirement;
(C) no Related Receivable has been extended beyond
its original term, except in accordance with the Seller's
Contract Purchase Guidelines regarding deferments or
extensions;
(D) each Related Receivable satisfies in all material
respects the Seller's Contract Purchase Guidelines as in
effect on the Closing Date or as otherwise amended from time
to time in accordance with Section 8.2(c); and
(E) each Related Receivable that is a Seasoned
Receivable shall (i) not have an Obligor that has failed to
make the first Scheduled Receivable Payment due on such
Seasoned Receivable, (ii) not have been sold to the Purchaser
and pledged to the Trustee for the benefit of the Noteholders
and the Note Purchasers more than 120 days after the Seller
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paid the related Dealer or Consumer Lender (if such Consumer
Lender is not the Seller) for such Seasoned Receivable, (iii)
not have an Obligor that has ever been delinquent in payment
with respect to such Seasoned Receivable for more than sixty
(60) days.
(iii) SCHEDULE OF RECEIVABLES. The information with
respect to the Related Receivables set forth in Schedule A to
the related Assignment is true and correct in all material
respects as of the close of business on the related Cutoff
Date, and no selection procedures adverse to any Noteholder or
any Note Purchaser have been utilized in selecting the Related
Receivables to be sold hereunder and thereunder.
(iv) COMPLIANCE WITH LAW. Each Related Receivable,
the sale of the Financed Vehicle and the sale of any physical
damage, credit life and credit accident and health insurance
and any extended warranties or service contracts complied at
the time the Related Receivable was originated or made and at
the execution of the applicable Assignment complies in all
material respects with all requirements of applicable Federal,
State, and local laws, including, without limitation, Consumer
Laws. Each Receivable has been serviced in compliance with all
applicable requirements of law.
(v) NO GOVERNMENT OBLIGOR. None of the Related
Receivables are due from the United States of America or any
State or from any agency, department, or instrumentality of
the United States of America or any State.
(vi) NO FLEET SALES. None of the Receivables have
been included in a "fleet" sale (i.e., a sale to any single
Obligor of more than five Financed Vehicles).
(vii) SECURITY INTEREST IN FINANCED VEHICLE.
Immediately subsequent to the sale, assignment and transfer
thereof to the Purchaser, each Related Receivable shall be
secured by a validly perfected first priority security
interest in the Financed Vehicle in favor of the Seller as
secured party which security interest has been validly
assigned to the Purchaser and subsequently validly pledged to
the Trustee for the benefit of the Noteholders and Note
Purchasers, and such assigned security interest is prior to
all other liens upon and security interests in such Financed
Vehicle which now exist or may hereafter arise or be created
(except, as to priority, for any tax liens or mechanics' liens
which may arise after the related Funding Date as a result of
an Obligor's failure to pay its obligations, as applicable).
(viii) RECEIVABLES IN FORCE. No Related Receivable
has been satisfied, subordinated or rescinded, nor has any
related Financed Vehicle been released from the lien granted
by the related Receivable in whole or in part.
(ix) NO WAIVER. Except as permitted under SECTION 4.2
and CLAUSE (X) below, no provision of a Related Receivable has
been waived, altered or modified in any respect since its
origination. No Related Receivable has been modified as a
result of application of the Servicemembers Civil Relief Act,
as amended.
(x) NO AMENDMENTS. No Related Receivable has been
amended, modified, waived or refinanced except as such Related
Receivable may have been amended in accordance with Servicer's
Servicing Guidelines.
(xi) NO DEFENSES. No right of rescission, setoff,
counterclaim or defense exists or has been asserted or
threatened with respect to any Related Receivable. The
operation of the terms of any Related Receivable or the
exercise of any right thereunder will not render such Related
Receivable unenforceable in whole or in part and such
Receivable is not subject to any such right of rescission,
setoff, counterclaim, or defense.
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(xii) NO LIENS. As of the related Cutoff Date, (a)
there are no liens or claims existing or which have been filed
for work, labor, storage or materials relating to a Financed
Vehicle financed under a Related Receivable that shall be
liens prior to, or equal or coordinate with, the security
interest in the Financed Vehicle granted by the Related
Receivable and (b) there is no lien against the Financed
Vehicle financed under a Related Receivable for delinquent
taxes.
(xiii) NO DEFAULT; REPOSSESSION. Except for payment
delinquencies continuing for a period of not more than 45 days
as of the related Cutoff Date, no default, breach, violation
or event permitting acceleration under the terms of any
Related Receivable has occurred; and no continuing condition
that with notice or the lapse of time, or both, would
constitute a default, breach, violation or event permitting
acceleration under the terms of any Related Receivable has
arisen; and the Seller shall not waive and has not waived any
of the foregoing (except in a manner consistent with SECTION
4.2) and no Financed Vehicle financed under a Related
Receivable shall have been repossessed.
(xiv) INSURANCE; OTHER. (A) Each Obligor under the
Related Receivables has obtained an insurance policy covering
the Financed Vehicle as of the execution of such Receivable
insuring against loss and damage due to fire, theft,
transportation, collision and other risks generally covered by
comprehensive and collision coverage, the Seller and its
successors and assigns are named the loss payee or an
additional insured of such insurance policy, such insurance
policy is in an amount at least equal to the lesser of (i) the
Financed Vehicle's actual cash value or (ii) the remaining
Principal Balance of the Related Receivable, and each Related
Receivable requires the Obligor to obtain and maintain such
insurance naming the Seller and its successors and assigns as
loss payee or an additional insured, (B) each Related
Receivable that finances the cost of premiums for credit life
and credit accident and health insurance is covered by an
insurance policy or certificate of insurance naming the Seller
as policyholder (creditor) under each such insurance policy
and certificate of insurance and (C) as to each Related
Receivable that finances the cost of an extended service
contract, the respective Financed Vehicle which secures the
Related Receivable is covered by an extended service contract.
As of the related Cutoff Date, no Financed Vehicle is or had
previously been insured under a policy of forced-placed
insurance.
(xv) TITLE. It is the intention of the Seller that
each transfer and assignment herein contemplated constitutes a
sale of the Related Receivables and the related Other Conveyed
Property from the Seller to the Purchaser and that the
beneficial interest in and title to such Related Receivables
and related Other Conveyed Property not be part of the
Seller's estate in the event of the filing of a bankruptcy
petition by or against the Seller under any bankruptcy law. No
Related Receivable or related Other Conveyed Property has been
sold, transferred, assigned, or pledged by the Seller to any
Person other than the Purchaser and by the Purchaser to any
Person other than the Trustee. Immediately prior to each
transfer and assignment herein contemplated, the Seller had
good and marketable title to each Related Receivable and
related Other Conveyed Property and was the sole owner
thereof, free and clear of all liens, claims, encumbrances,
security interests, and rights of others, and, immediately
upon the transfer thereof to the Purchaser and the Purchaser
shall have good and marketable title to the Receivables and
the other Conveyed Property and shall be the sole owner
thereof, free and clear of all Liens and, immediately upon the
pledge thereof to the Trustee under the Indenture, the Trustee
for the benefit of the Noteholders and the Note Purchasers,
subject to the terms and provisions of the Intercreditor
Agreement, shall have a valid and enforceable security
interest in the Collateral, free and clear of all liens,
encumbrances, security interests, and rights of others, and
each such transfer and pledge has been perfected under the
UCC. No Dealer or Consumer Lender (unless such Consumer Lender
is the Seller) has a participation in, or other right to
receive, proceeds of any Receivable.
(xvi) LAWFUL ASSIGNMENT; NO CONSENT REQUIRED. No
Related Receivable has been originated in, or is subject to
the laws of, any jurisdiction under which the sale, transfer,
and assignment of such Related Receivable under this Agreement
or the pledge of such Related Receivable under the Indenture
or pursuant to transfers of the Notes shall be unlawful, void,
or voidable. The Seller has not entered into any agreement
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with any account debtor that prohibits, restricts or
conditions the assignment of any portion of the Related
Receivables. For the validity of such sales, transfers,
assignments and pledges, no consent by any Dealer, Consumer
Lender, Obligor or any other Person is required under any
agreement or applicable law.
(xvii) ALL FILINGS MADE. All filings (including,
without limitation, UCC filings or other actions) necessary in
any jurisdiction to give: (a) the Purchaser a first priority
perfected ownership interest in the Receivables and the Other
Conveyed Property, including, without limitation, the proceeds
of the Receivables (to the extent that the Purchaser can
obtain such first priority perfected security interest
pursuant to one or more filings), (b) subject to the terms and
provisions of the Intercreditor Agreement, the Trustee, for
the benefit of the Noteholders and the Note Purchasers, a
first priority perfected security interest in the Collateral,
(c) the Trustee, for the benefit of the Class B Note
Purchasers and the Class B Noteholders, a first priority
perfected security interest in the Pledged Subordinate
Securities, and (d) subject to the terms and provisions of the
Intercreditor Agreement, the UBS Indenture Trustee, for the
benefit of the Class B note purchasers and the Class B
noteholders under the UBS Basic Documents, a second priority
perfected security interest in the Bear Cross Collateral
(subject only to the Lien granted pursuant to Granting Clause
I of the Indenture), have been made, taken or performed.
(xviii) RECEIVABLE FILE; ONE ORIGINAL. The Seller has
delivered to the Trustee, at the location specified in
SCHEDULE B hereto, a complete Receivable File with respect to
each Related Receivable, and the Trustee has delivered an
original Trust Receipt therefor to the Controlling Note
Purchaser and a copy thereof to the Purchaser, the other Note
Purchasers and the Noteholders. There is only one original
executed copy of each Receivable. The Servicer has in its
possession all other relevant documents with respect to the
Receivables, including without limitation the related credit
application and verification of insurance.
(xix) CHATTEL PAPER. Each Related Receivable
constitutes "TANGIBLE CHATTEL PAPER" under the UCC.
(xx) TITLE DOCUMENTS. (A) If the Related Receivable
was originated in a State in which notation of a security
interest on the title document of the related Financed Vehicle
is required or permitted to perfect such security interest,
the title document of the related Financed Vehicle for such
Related Receivable shows, or if a new or replacement title
document is being applied for with respect to such Financed
Vehicle the title document (or, with respect to Related
Receivables that finance a vehicle in the States listed in
ANNEX B, other evidence of title issued by the applicable
Department of Motor Vehicles or similar authority in such
States) will be received within 180 days of the origination
date and will show, the Seller named as the original secured
party under the Related Receivable as the holder of a first
priority security interest in such Financed Vehicle, and (B)
if the Related Receivable was originated in a State in which
the filing of a financing statement under the UCC is required
to perfect a security interest in motor vehicles, such filings
or recordings have been duly made and show the Seller named as
the original secured party under the Related Receivable, and
in either case, the Trustee has the same rights as such
secured party has or would have (if such secured party were
still the owner of the Receivable) against all parties
claiming an interest in such Financed Vehicle, and such rights
have been validly pledged, subject to the terms and provisions
of the Intercreditor Agreement, to the Trustee for the benefit
of the Noteholders and the Note Purchasers pursuant to the
Indenture. With respect to each Related Receivable for which
the title document has not yet been returned from the
Registrar of Titles, the Seller has received written evidence
from the related Dealer that such title document showing the
Seller as first lienholder has been applied for.
(xxi) VALID AND BINDING OBLIGATION OF OBLIGOR. Each
Related Receivable is the legal, valid and binding obligation
in writing of the Obligor thereunder and is enforceable in
accordance with its terms, except only as such enforcement may
be limited by bankruptcy, insolvency or similar laws affecting
the enforcement of creditors' rights generally, and all
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parties to such contract had full legal capacity to execute
and deliver such contract and all other documents related
thereto and to grant the security interest purported to be
granted thereby. Each Related Receivable is not subject to any
right of set-off by the Obligor.
(xxii) CHARACTERISTICS OF OBLIGORS. As of the date of
each Obligor's application for credit from which the Related
Receivable arises, such Obligor (a) did not have any material
past due credit obligations or any personal or real property
repossessed or wages garnished within one year prior to the
date of such application, unless such amounts have been repaid
or discharged through bankruptcy, (b) was not the subject of
any Federal, State or other bankruptcy, insolvency or similar
proceeding pending on the date of application that has not
been discharged, (c) had not been the subject of more than one
Federal, State or other bankruptcy, insolvency or similar
proceeding that has not completed a ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, (▇)
was domiciled in the United States and (e) was not
self-employed. During the period from the date of each
Obligor's application for financing of the Financed Vehicle
from which the related Receivable arises to the applicable
Funding Date, no Obligor is or has been the subject of any
Federal, State or other bankruptcy, insolvency or similar
proceeding that has not completed a Section 341 Meeting.
(xxiii) POST-OFFICE BOX. On or prior to the next
billing period after the related Cutoff Date, the Servicer
will notify each Obligor to make payments with respect to its
respective Related Receivables after the related Cutoff Date
directly to the Post-Office Box, and will provide each Obligor
with a monthly statement in order to enable such Obligor to
make payments directly to the Post-Office Box.
(xxiv) CASUALTY AND IMPOUNDING. No Financed Vehicle
financed under a Related Receivable has suffered a Casualty
and the Seller has not received any notice that any Financed
Vehicle has been impounded.
(xxv) NO AGREEMENT TO LEND. The Obligor with respect
to each Related Receivable does not have any option under the
Receivable to borrow from any person any funds secured by the
Financed Vehicle.
(xxvi) OBLIGATION TO DEALERS OR OTHERS. The Purchaser
and its assignees will assume no obligation to Dealers,
Consumer Lenders or other originators or holders of the
Related Receivables (including, but not limited to under
dealer reserves) as a result of its purchase of the Related
Receivables.
(xxvii) NO IMPAIRMENT. Neither Seller nor the
Purchaser has done anything to convey any right to any Person
that would result in such Person having a right to payments
due under any Related Receivables or otherwise to impair the
rights of the Purchaser, the Trustee, any Noteholder or any
Note Purchaser in any Related Receivable or the proceeds
thereof.
(xxviii) RECEIVABLES NOT ASSUMABLE. No Related
Receivable is assumable by another Person in a manner which
would release the Obligor thereof from such Obligor's
obligations to the Purchaser or Seller with respect to such
Related Receivable.
(xxix) SERVICING. The servicing of each Related
Receivable and the collection practices relating thereto have
been lawful and in accordance with the standards set forth in
this Agreement; and other than Seller and the Back-up Servicer
pursuant to the Basic Documents, no other person has the right
to service the Receivable.
(xxx) CREATION OF SECURITY INTEREST. This Agreement
creates a valid and continuing security interest (as defined
in the UCC) in the Receivables and the Other Conveyed Property
in favor of the Purchaser, which security interest is prior to
all other Liens (other than the Liens of the Trustee and the
UBS Indenture Trustee under the Indenture) and is enforceable
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as such as against creditors of and purchasers from the
Seller. The Indenture creates a valid and continuing security
interest (as defined in the UCC) in (x) subject to the terms
and provisions of the Intercreditor Agreement, the Collateral
in favor of the Trustee for the benefit of the Noteholders and
the Note Purchasers, which security interest is prior to all
other Liens, (y) the Pledged Subordinate Securities in favor
of the Trustee for the benefit of the Class B Note Purchasers
and the Class B Noteholders, which security interest is prior
to all other Liens, and (z) subject to the terms and
provisions of the Intercreditor Agreement, the Bear Cross
Collateral in favor of the UBS Indenture Trustee for the
benefit of the Class B note purchasers and the Class B
noteholders under the UBS Basic Documents, which security
interest is prior to all Liens, other than the Lien created
pursuant to Granting Clause I of the Indenture, and such
security interests are, in each case, enforceable as such as
against creditors of and purchasers from the Issuer.
(xxxi) PERFECTION OF SECURITY INTEREST IN RECEIVABLES
AND OTHER CONVEYED PROPERTY. The Seller has caused the filing
of all appropriate financing statements in the proper filing
office in the appropriate jurisdictions under applicable law
in order to perfect the security interest in the Receivables
and the Other Conveyed Property granted to the Purchaser
hereunder pursuant to SECTION 2.1 and the related Assignment.
(xxxii) PERFECTION OF SECURITY INTEREST IN TRUST
ESTATE. The Purchaser has caused the filing of all appropriate
financing statements in the proper filing office in the
appropriate jurisdictions under applicable law in order to
perfect (i) the security interest in the Receivables and the
other Collateral granted to the Trustee for the benefit of the
Noteholders and the Note Purchasers pursuant to Granting
Clause I of the Indenture; (i) the security interest in the
Pledged Subordinate Securities granted to the Trustee for the
benefit of the Class B Noteholders and the Class B Note
Purchasers pursuant to Granting Clause II of the Indenture,
and (i) the security interest in the Bear Cross Collateral
granted to the UBS Indenture Trustee for the benefit of the
Class B noteholders and the Class B note purchasers under the
UBS Basic Documents pursuant to Granting Clause III of the
Indenture.
(xxxiii) PERFECTION OF SECURITY INTERESTS IN FINANCED
VEHICLES. The Seller has taken all steps necessary to perfect
its security interest against the Obligors in the Financed
Vehicles securing the Receivables and such security interest
has been validly assigned by the Seller to the Purchaser and
pledged by the Purchaser to the Trustee for the benefit of the
Noteholders and the Note Purchasers.
(xxxiv) NO OTHER SECURITY INTERESTS - SELLER. Other
than the security interest granted to the Purchaser pursuant
to SECTION 2.1 and the related Assignment, the Seller has not
pledged, assigned, sold, granted a security interest in, or
otherwise conveyed any of the Receivables or the Other
Conveyed Property, other than such security interests as are
released at or before the conveyance thereof. The Seller has
not authorized the filing of and is not aware of any financing
statements filed against the Seller that include a description
of collateral covering any portion of the Receivables and the
Other Conveyed Property other than any financing statement
relating to the security interest granted to the Purchaser
hereunder or that has been terminated or released as to the
Receivables and the Other Conveyed Property. The Seller is not
aware of any judgment or tax lien filings against the Seller.
(xxxv) NO OTHER SECURITY INTERESTS - PURCHASER. Other
than (A) the security interest in the Collateral granted to
the Trustee for the benefit of the Noteholders and Note
Purchasers pursuant to Granting Clause I of the Indenture, (B)
the security interest in the Pledged Subordinate Securities
granted to the Trustee for the benefit of the Class B Note
Purchasers and the Class B Noteholders pursuant to Granting
Clause II of the Indenture, and (C) the security interest in
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the Bear Cross Collateral granted to the UBS Indenture Trustee
for the benefit of the Class B note purchasers and the Class B
noteholders under the UBS Basic Documents pursuant to Granting
Clause III of the Indenture, the Purchaser has not pledged,
assigned, sold, granted a security interest in, or otherwise
conveyed any of the Collateral, the Pledged Subordinate
Securities or the Bear Cross Collateral. The Purchaser has not
authorized the filing of and is not aware of any financing
statements filed against the Purchaser that include a
description of collateral covering any portion of the
Collateral, the Pledged Subordinate Securities or the Bear
Cross Collateral other than any financing statement relating
to the security interests described in the preceding clauses
(A), (B) and (C), or a security interest that has been
terminated or released with respect to the Collateral, the
Pledged Subordinate Securities or the Bear Cross Collateral.
The Purchaser is not aware of any judgment or tax lien filings
against the Purchaser.
(xxxvi) NOTATIONS ON CONTRACTS; FINANCING STATEMENT
DISCLOSURE. The Servicer has in its possession copies of all
Contracts that constitute or evidence the Receivables. The
Contracts that constitute or evidence the Receivables do not
have any marks or notations indicating that they have been
pledged, assigned or otherwise conveyed to any Person other
than the Purchaser and/or the Trustee for the benefit of the
Noteholders and the Note Purchasers. All financing statements
filed or to be filed against the Seller in favor of the
Purchaser in connection herewith describing the Trust Estate
contain a statement to the following effect: "A purchase of or
security interest in any collateral described in this
financing statement will violate the rights of the secured
party."
(xxxvii) RECORDS. On or prior to each Funding Date,
the Seller will have caused its records (including electronic
ledgers) relating to each Related Receivable to be conveyed by
it on such Funding Date to be clearly and unambiguously marked
to reflect that such Related Receivable was conveyed by it to
the Purchaser and pledged by the Purchaser to the Trustee for
the benefit of the Noteholders and the Note Purchasers.
(xxxviii) COMPUTER INFORMATION. The computer
diskette, computer tape or other electronic transmission made
available by the Seller to the Purchaser on each Funding Date
is, as of the related Cutoff Date, complete and accurate and
includes a description of the same Receivables described in
Schedule A to the related Assignment.
(xxxix) TFC, MFN, SEAWEST RECEIVABLES. None of the
Related Receivables was originated by TFC, MFN, SeaWest or any
of their respective Subsidiaries.
(xl) REMAINING PRINCIPAL BALANCE. As of the related
Cutoff Date, each Related Receivable has a remaining Principal
Balance of at least $3,000 and the Principal Balance of each
Receivable set forth in Schedule A to the related Assignment
is true and accurate in all respects.
(xli) NET ACQUISITION FEE. The average Net
Acquisition Fee is less than 3.0%.
(xlii) DELIVERY OF RECEIVABLE FILES. A complete
Receivable File (other than, if applicable, a certificate of
title missing from the related Receivable File as described in
SECTION 3.4(B)) with respect to each Receivable has been,
prior to the Funding Date, delivered to the Trustee at the
location listed in SCHEDULE B hereof.
(xliii) FULL AMOUNT ADVANCED. The full amount of each
Receivable has been advanced to each Obligor, and there are no
requirements for future advances thereunder.
(xliv) ILLINOIS RECEIVABLES. (a) The Seller does not
own a substantial interest in the business of a Dealer within
the meaning of Illinois Sales Finance Agency Act Rules and
Regulations, Section 160.230(1) and (b) with respect to each
Receivable originated in the State of Illinois, (i) the
printed or typed portion of the related Form of Receivable
complies with the requirements of 815 ILCS 375/3(b) and (ii)
the Seller has not, and for so long as such Receivable is
outstanding shall not, place or cause to be placed on the
related Financed Vehicle any collateral protection insurance
in violation of 815 ILCS 180/10.
(xlv) CALIFORNIA RECEIVABLES. Each Receivable
originated in the State of California has been, and at all
times during the term of the Sale and Servicing Agreement will
be, serviced by the Servicer in compliance with Cal. Civil
Code ss. 2981, et seq.
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(xlvi) CONSUMER LENDERS. Each Consumer Lender has obtained all
necessary licenses and approvals in all jurisdictions in which
the origination and purchase of installment promissory notes
and security agreements and the sale thereof to the Seller (if
the Seller is not the Consumer Lender) requires or shall
require such licenses or approvals, except where the failure
to obtain such licenses or approvals would not result in a
Material Adverse Effect.
SECTION 3.2. REPURCHASE UPON BREACH; SECTION 341 MEETING
(a) The Seller, the Servicer, any Noteholder, any Note
Purchaser or the Trustee, as the case may be, shall inform the other
parties to this Agreement promptly, in writing, upon the discovery of
any breach of the Seller's representations and warranties made pursuant
to SECTION 3.1 with respect to a Receivable (without regard to any
limitations therein as to the Seller's knowledge). Unless the breach
shall have been cured within thirty (30) days of the discovery thereof
by the Trustee or receipt by the Trustee of notice from the Seller, the
Servicer, any Noteholder or any Note Purchaser of such breach, the
Seller shall repurchase such Receivable. In consideration of the
purchase of any Receivable, the Seller shall remit the Purchase Amount,
in the manner specified in SECTION 5.6. The sole remedies of the
Purchaser, the Trustee, the Note Purchasers or the Noteholders with
respect to any Receivables as to which a breach of representations and
warranties pursuant to SECTION 3.1 has occurred shall be to enforce the
Seller's obligation to purchase such Receivables and the indemnity
provided by SECTION 8.3(e) . Upon receipt of the Purchase Amount in
respect of any Defective Receivables and written instructions from the
Servicer, the Trustee shall release to the Seller or its designee the
related Receivable File and shall execute and deliver all reasonable
instruments of transfer or assignment, without recourse, as are
prepared by the Seller and delivered to the Trustee and necessary to
vest in the Seller or such designee title to such Defective
Receivables. The parties hereto hereby acknowledge that the Controlling
Note Purchaser and the Majority Noteholders of the Highest Priority
Class shall each have the right to enforce directly against the Seller
the Seller's repurchase and indemnity obligations pursuant to this
SECTION 3.2.
(b) If (i) the Insolvency Event related to a Section 341
Meeting has not been discharged by the bankruptcy court or other
similar court presiding over such Insolvency Event within 90 days of
the conveyance of the related Receivable by the Seller to the Purchaser
pursuant to SECTION 2.1(a), or (ii) the Obligor on any Receivable that
was the subject of a Section 341 Meeting shall not have made the first
two payments due on such Receivable, in each case, the Seller shall
repurchase such Receivable as of the last day of such next Accrual
Period.
SECTION 3.3. CUSTODY OF RECEIVABLE FILES AND PLEDGED SUBORDINATE
SECURITIES.
(a) In connection with each sale, transfer and assignment of
Receivables and related Other Conveyed Property to the Purchaser
pursuant to this Agreement and each Assignment, and each pledge thereof
by the Purchaser to the Trustee for the benefit of the Noteholders and
the Note Purchasers pursuant to the Indenture, the Trustee shall act as
custodian of the following documents or instruments in its possession
which shall be delivered to the Trustee on or before the Closing Date
or the related Funding Date in accordance with SECTION 3.4 (with
respect to each Receivable):
(i) The fully executed original of the Receivable
(together with any agreements modifying or assigning the
Receivable, including without limitation any extension
agreements); and
(ii) The original certificate of title in the name of
the Obligor with a notation on such certificate of title
evidencing Seller's security interest therein or such
documents that the Seller shall keep on file, in accordance
with its customary procedures, evidencing the security
interest of the Seller in the Financed Vehicle or, if not yet
received, a copy of the application therefor showing the
Seller as secured party, or a dealer guarantee of title.
(b) Upon payment in full of any Receivable, the Servicer will
notify the Trustee pursuant to a certificate of a Servicing Officer in
the form of EXHIBIT C and shall request delivery of the Receivable and
Receivable File to the Servicer.
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(c) If a Class B Borrowing Base Deficiency would exist upon
the release of Receivables under Article X of the Indenture in
connection with a Securitization Transaction, the Issuer shall pledge
the related Pledged Subordinate Securities to the Trustee, for the
benefit of the Class B Noteholders and the Class B Note Purchasers
pursuant to Granting Clause II of the Indenture, the Issuer shall
deliver such Pledged Subordinate Securities to the Trustee on the
related Securitization Closing Date and the Trustee shall act as
custodian of such Pledged Subordinate Securities. Each Pledged
Subordinate Security delivered to the Trustee pursuant to this
subparagraph (c) shall be endorsed in blank by the record holder
thereof with a medallion-guaranteed signature. By virtue of its
delivery of any Pledged Subordinate Securities to the Trustee on a
Securitization Closing Date pursuant to this Section 3.3(c), the Issuer
shall be deemed to have confirmed, for the benefit of the Class B Note
Purchasers and the Class B Noteholders, that, as of such Securitization
Closing Date, the representations and warranties with respect to each
such Pledged Subordinate Security set forth in the Basic Documents are
true and correct in all material respects. In addition, the Issuer
shall deliver or shall cause to be delivered to the Class B Note
Purchasers and the Class B Noteholders all true sale opinions issued by
counsel to CPS in connection with any Securitization Transaction for
which Pledged Subordinate Securities are delivered to the Trustee
pursuant to this Section 3.3(c) (which true sale opinions shall either
be addressed to the Class B Note Purchasers and the Class B Noteholders
or shall specifically authorize their reliance thereon). Upon delivery
of any such Pledged Subordinate Securities to the Trustee in the manner
provided herein and upon the Trustee's acknowledgment of receipt
thereof, such Pledged Subordinate Securities shall become subject to
the Lien created by Granting Clause II of the Indenture. The Trustee
shall release any such Pledged Subordinate Securities upon the
prepayment of the related Class B Invested Amount in accordance with
Section 10.1 of the Indenture.
SECTION 3.4. ACCEPTANCE OF RECEIVABLE FILES BY TRUSTEE; MISSING
CERTIFICATES OF TITLE
(a) In connection with any Funding Date, the Seller shall
cause to be delivered to the Trustee the Receivable Files for the
Related Receivables to be purchased on such Funding Date not less than
four Business Days prior to the related Funding Date. The Trustee
declares that it will hold and will continue to hold such files and any
amendments, replacements or supplements thereto and all Other Conveyed
Property as Trustee, custodian, agent and bailee in trust for the use
and benefit of the Noteholders and the Note Purchasers. The Trustee
shall within three Business Days after receipt of such files, execute
and deliver to the Controlling Noteholder a receipt substantially in
the form of EXHIBIT B hereto (a "TRUST RECEIPT") for the Receivable
Files received by the Trustee and a copy thereof to the other Note
Purchasers and the Noteholders. By its delivery of a Trust Receipt, the
Trustee shall be deemed to have (a) acknowledged receipt of the files
(or the Receivables) which the Seller has represented are and contain
the Receivable Files for the Related Receivables to be purchased by the
Purchaser on the related Funding Date as indicated on Schedule A to the
Addition Notice, (b) reviewed such files or Receivables and (c)
determined that it has received the items referred to in SECTION
3.3(A)(I) and (II) for each Related Receivable identified on Schedule A
to the Addition Notice, except, in each case, as may otherwise be noted
in Schedule I to the Trust Receipt. Unless such defect noted on
Schedule I of the related Trust Receipt with respect to such Receivable
to be transferred on the related Funding Date shall have been cured by
the Seller or waived by the Controlling Note Purchaser, in its sole and
absolute discretion, and the Trustee shall have executed a Trust
Receipt reflecting that such Receivable is no longer on Schedule I
thereto prior to 11 a.m. New York time on the related Funding Date, the
Purchaser shall not purchase such Receivable from the Seller on such
Funding Date. The Trustee shall return to or otherwise handle the files
at the direction of the Seller and any file unrelated to a Receivable
identified in Schedule A to the related Addition Notice (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).
(b) The Trustee shall make a list of Receivables for which an
application for a certificate of title but not an original certificate
of title or, with respect to Receivables that finance a vehicle in the
States listed in ANNEX B, other evidence of title issued by the
applicable Department of Motor Vehicles or similar authority in such
States, is included in the Receivable File as of the date of its review
of the Receivable Files and deliver a copy of such list to the
Servicer, each Noteholder and each Note Purchaser. On the date which is
180 days following the related Funding Date, and monthly thereafter,
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the Trustee shall inform the Seller, the Purchaser, each Noteholder and
each Note Purchaser of any Receivable for which the related Receivable
File on such date does not include an original certificate of title or,
with respect to Financed Vehicles in the States listed in ANNEX B,
other evidence of title issued by the applicable Department of Motor
Vehicles or similar authority in such States, and the Seller shall
repurchase any such Receivable as of the last Business Day of the
Accrual Period in which the expiration of such 180 days occurs. In
consideration of the purchase of the Receivable, the Seller shall remit
the Purchase Amount for such Receivable, in the manner specified in
SECTION 5.6. Upon receipt of the Purchase Amount for a Receivable and
written instructions from the Servicer, the Trustee shall release to
the Seller or its designee the related Receivable File and shall
execute and deliver all reasonable instruments of transfer or
assignment, without recourse, as are prepared by the Seller and
delivered to the Trustee and are necessary to vest in the Seller or
such designee title to the Receivable.
(c) For those Receivable Files that do not contain an original
certificate of title or, with respect to Receivables that finance a
vehicle in the States listed in ANNEX B, other evidence of title issued
by the applicable Department of Motor Vehicles or similar authority in
such States, upon receipt of such original title documents, the Seller
shall promptly deliver or cause to be delivered to the Trustee such
original title documents to the Trustee to place in the applicable
Receivable File.
SECTION 3.5. ACCESS TO RECEIVABLE FILES AND PLEDGED SUBORDINATE
SECURITIES. The Trustee shall permit the Servicer, the Note Purchasers and the
Noteholders access to the Receivable Files and the Pledged Subordinate
Securities at all reasonable times during the Trustee's normal business hours.
The Trustee shall, within two Business Days of the request of the Servicer, any
Note Purchaser or any Noteholder, execute such documents and instruments as are
prepared by the Servicer, such Note Purchaser or such Noteholder and delivered
to the Trustee, as the Servicer, such Note Purchaser or such Noteholder deems
necessary to permit the Servicer, in accordance with its customary servicing
procedures, to enforce the Receivable on behalf of the Purchaser and any related
insurance policies covering the Obligor, the Receivable or Financed Vehicle so
long as such execution in the Trustee's sole discretion does not conflict with
the Indenture or any other Basic Document and will not cause it undue risk or
liability. The Trustee shall not release any document from any Receivable File
unless it receives a release request signed by a Servicing Officer in the form
of EXHIBIT C hereto (the "RELEASE REQUEST"); PROVIDED, HOWEVER, if a Servicer
Termination Event or Event of Default shall have occurred and is continuing, the
Trustee shall not release any such Receivable File to the Servicer without the
prior written consent of the Controlling Note Purchaser. Such Release Request
shall obligate the Servicer to return such document(s) to the Trustee when the
need therefor no longer exists unless the Receivable shall be liquidated, in
which case, the Servicer shall certify in the Release Request that all amounts
required to be deposited in the Collection Account with respect to such
Receivable have been so deposited. Each Release Request delivered to the Trustee
pursuant to this SECTION 3.5 shall be forwarded by the Servicer to the
Controlling Note Purchaser electronically or by facsimile within one (1)
Business Day of delivery to the Trustee together with a list of all Receivables
to be released by the Trustee pursuant to such Release Request.
SECTION 3.6. TRUSTEE TO OBTAIN FIDELITY INSURANCE. The Trustee shall
maintain a fidelity bond in the form and amount as is customary for entities
acting as a trustee of funds and documents in respect of consumer contracts on
behalf of institutional investors.
SECTION 3.7. TRUSTEE TO MAINTAIN SECURE FACILITIES. The Trustee shall
maintain or cause to be maintained continuous custody of the Receivable Files
and the Pledged Subordinate Securities in secure and fire resistant facilities
segregated from any other receivables or securities of the Seller, the Purchaser
or any of their Affiliates in accordance with customary standards for such
custody.
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ARTICLE IV
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ADMINISTRATION AND SERVICING OF RECEIVABLES
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SECTION 4.1. DUTIES OF THE SERVICER. The Servicer, as agent for the
Purchaser, the Note Purchasers and the Noteholders, 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 that
service motor vehicle retail installment sale contracts or installment
promissory note and security agreements similar to the Receivables and, to the
extent more exacting, that the Servicer exercises with respect to all comparable
automotive receivables that it services for itself or others. In performing such
duties, the Servicer shall comply with its current servicing policies and
procedures, as such servicing policies and procedures may be amended from time
to time, so long as such amendments will not materially adversely affect the
interests of any Note Purchaser or any Noteholder, or otherwise with the prior
written consent of the Controlling Note Purchaser and the Majority Noteholders
of the Highest Priority Class (which consent shall not be unreasonably
withheld), and notice of such amendments is given to each Note Purchaser and
each Noteholder affected thereby prior to the effectiveness thereof. Without
limiting the generality of the foregoing, and subject to the servicing standards
set forth in this Agreement including, without limitation, the restrictions set
forth in SECTION 4.6, the Servicer is authorized and empowered by the Purchaser
to execute and deliver, on behalf of itself, the Purchaser, the Note Purchasers
and the Noteholders, any and all instruments of satisfaction or cancellation, or
partial or full release or discharge, and all other comparable instruments, with
respect to such Receivables or to the Financed Vehicles securing such
Receivables and/or the certificates of title or, with respect to Financed
Vehicles in the States listed in ANNEX B, other evidence of title issued by the
applicable Department of Motor Vehicles or similar authority in such States with
respect to such Financed Vehicles. If the Servicer shall commence a legal
proceeding to enforce a Receivable, the Purchaser shall thereupon be deemed to
have automatically assigned, solely for the purpose of collection, such
Receivable to the Servicer. If in any enforcement suit or legal proceeding it
shall be held that the Servicer may not enforce a Receivable on the ground that
it shall not be a real party in interest or a holder entitled to enforce such
Receivable, the Purchaser shall, at the Servicer's expense and direction, take
steps to enforce such Receivable, including bringing suit in its name or the
name of one or more Note Purchasers or Noteholders. The Servicer shall prepare
and furnish, and the Trustee shall execute, any powers of attorney and other
documents reasonably necessary or appropriate to enable the Servicer to carry
out its servicing and administrative duties hereunder.
SECTION 4.2. COLLECTION OF RECEIVABLE PAYMENTS; MODIFICATIONS OF
RECEIVABLES; LOCKBOX AGREEMENTS.
(a) Consistent with the standards, policies and procedures
required by this Agreement, the Servicer shall make reasonable efforts
to collect all payments called for under the terms and provisions of
the Receivables as and when the same shall become due and shall follow
such collection procedures as it follows with respect to all comparable
automotive receivables that it services for itself or others; PROVIDED,
HOWEVER, that promptly after the Closing Date (or the related Funding
Date, as applicable), but in no event more than 30 days thereafter, 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. The Servicer, for
so long as the Seller is the Servicer, may in accordance with the
Servicer's Servicing Guidelines grant extensions on a Receivable;
PROVIDED, HOWEVER, that the Servicer may not grant more than one (1)
extension per calendar year with respect to a Receivable or grant an
extension with respect to a Receivable for more than one (1) calendar
month or grant more than four (4) extensions in the aggregate with
respect to a Receivable without the prior written consent of the
Controlling Note Purchaser. If the Servicer is not the Seller or the
Backup Servicer, the Servicer may not make any extension on a
Receivable without the prior written consent of the Controlling Note
Purchaser (which consent shall not unreasonably be withheld). The
Servicer may in its discretion waive any prepayment charge, late
payment charge or any other similar fees that may be collected in the
ordinary course of servicing a Receivable. Notwithstanding anything to
the contrary contained herein, the Servicer shall not agree to any
alteration of the interest rate on any Receivable or of the amount of
any Scheduled Receivable Payment on Receivables, other than to the
extent that such alteration is required by applicable law.
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(b) The Servicer shall establish the Lockbox Account in the
name of the Purchaser for the benefit of the Trustee for the further
benefit of the Noteholders and the Note Purchasers. Pursuant to the
Lockbox Agreement, the Trustee has authorized the Servicer to direct
dispositions of funds on deposit in the Lockbox Account to the
Collection Account (but not to any other account), and no other Person,
except the Lockbox Processor and the Trustee, has authority to direct
disposition of funds on deposit in the Lockbox Account. However, the
Lockbox Agreement shall provide that Lockbox Bank will comply with
instructions originated by the Trustee relating to the disposition of
the funds in the Lockbox Account without further consent by the Seller,
the Servicer or the Purchaser. The Trustee shall have no liability or
responsibility with respect to the Lockbox Processor's directions or
activities as set forth in the preceding sentence. The Lockbox Account
shall be established pursuant to and maintained in accordance with the
Lockbox Agreement and shall be a demand deposit account initially
established and maintained with ▇▇▇▇▇ Fargo Bank, National Association,
or at the request of the Controlling Note Purchaser 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 Controlling Note Purchaser in the
location of the Lockbox Account. The Servicer shall establish and
maintain the Post-Office Box at a United States Post Office Branch in
the name of the Purchaser for the benefit of the Trustee for the
further benefit of the Noteholders and the Note Purchasers.
(c) Notwithstanding any Lockbox Agreement, or any of the
provisions of this Agreement relating to the Lockbox Agreement, the
Servicer shall remain obligated and liable to the Purchaser, the
Trustee, the Note Purchasers and the Noteholders for servicing and
administering the Receivables and the Other Conveyed Property in
accordance with the provisions of this Agreement without diminution of
such obligation or liability by virtue thereof.
(d) In the event the Seller shall for any reason no longer be
acting as the Servicer hereunder, the Backup Servicer or another
successor Servicer shall thereupon assume all of the rights and
obligations of the outgoing Servicer under the Lockbox Agreement. In
such event, the Backup Servicer or such other successor Servicer shall
be deemed to have assumed all of the outgoing Servicer's interest
therein and to have replaced the outgoing Servicer as a party to the
Lockbox Agreement to the same extent as if such Lockbox Agreement had
been assigned to the Backup Servicer or such other successor Servicer,
except that the outgoing Servicer shall not thereby be relieved of any
liability or obligations on the part of the outgoing Servicer to the
Lockbox Bank under such Lockbox Agreement. The outgoing Servicer shall,
upon request of the Controlling Note Purchaser or the Trustee, but at
the expense of the outgoing Servicer, deliver to the Backup Servicer or
such other successor Servicer all documents and records relating to the
Lockbox Agreement and an accounting of amounts collected and held by
the Lockbox Bank and otherwise use its best efforts to effect the
orderly and efficient assignment of any Lockbox Agreement to the Backup
Servicer or such other successor Servicer. In the event that the
Controlling Note Purchaser shall elect to change the identity of the
Lockbox Bank, the Servicer, at its expense, shall cause the Lockbox
Bank to deliver, at the direction of the Controlling Note Purchaser, to
the Trustee or a successor Lockbox Bank, all documents and records
relating to the Receivables and all amounts held (or thereafter
received) by the Lockbox Bank (together with an accounting of such
amounts) and shall otherwise use its best efforts to effect the orderly
and efficient transfer of the Lockbox arrangements.
(e) On each Business Day, pursuant to the Lockbox Agreement,
the Lockbox Processor will transfer any payments from Obligors received
in the Post-Office Box to the Lockbox Account. Within two (2) Business
Days of receipt of funds into the Lockbox Account, the Servicer shall
cause the Lockbox Bank to transfer cleared funds from the Lockbox
Account to the Collection Account. In addition, the Servicer shall
remit all payments by or on behalf of the Obligors received by the
Servicer with respect to the Receivables (other than Purchased
Receivables) and all Net Liquidation Proceeds no later than two (2)
Business Days following receipt directly (without deposit into any
intervening account) into the Lockbox Account or the Collection
Account. The Servicer shall not commingle its assets and funds with
those on deposit in the Lockbox Account.
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SECTION 4.3. REALIZATION UPON RECEIVABLES. On behalf of the Purchaser,
the Trustee, the Note Purchasers and the Noteholders, the Servicer shall use its
best efforts, consistent with the servicing procedures set forth herein, to
repossess or otherwise convert the ownership of the Financed Vehicle securing
any Receivable as to which the Servicer shall have determined eventual payment
in full is unlikely. The Servicer shall commence efforts to repossess or
otherwise convert the ownership of a Financed Vehicle on or prior to the date
that an Obligor has failed to make more than 90% of a Scheduled Receivable
Payment thereon in excess of $10 for 120 days or more; PROVIDED, HOWEVER, that
the Servicer may elect not to commence such efforts within such time period if
in its good faith judgment it determines either that it would be impracticable
to do so or that the proceeds ultimately recoverable with respect to such
Receivable would be increased by forbearance. The Servicer shall follow such
customary and usual practices and procedures as it shall deem necessary or
advisable in its servicing of automotive receivables, consistent with the
standards of care set forth in Section 4.2, which may include reasonable efforts
to realize upon any recourse to Dealers or Consumer Lenders (if such Consumer
Lender is not the Seller) and selling the Financed Vehicle at public or private
sale. The foregoing shall be subject to the provision that, in any case in which
the Financed Vehicle shall have suffered damage, the Servicer shall not expend
funds in connection with the repair or the repossession of such Financed Vehicle
unless it shall determine in its discretion exercised in good faith that such
repair and/or repossession will increase the proceeds ultimately recoverable
with respect to such Receivable by an amount greater than the amount of such
expenses.
SECTION 4.4. INSURANCE.
(a) The Servicer, in accordance with the servicing procedures
and standards set forth herein, shall require that (i) each Obligor
shall have obtained insurance covering the Financed Vehicle, as of the
date of the execution of the Receivable, insuring against loss and
damage due to fire, theft, transportation, collision and other risks
generally covered by comprehensive and collision coverage and each
Receivable requires the Obligor to maintain such physical loss and
damage insurance naming the Seller and its successors and assigns as an
additional insured, (ii) each Receivable that finances the cost of
premiums for credit life and credit accident and health insurance is
covered by an insurance policy or certificate naming the Seller as
policyholder (creditor) and (iii) as to each Receivable that finances
the cost of an extended service contract, the respective Financed
Vehicle which secures the Receivable is covered by an extended service
contract (each, a "RECEIVABLES INSURANCE POLICY").
(b) To the extent applicable, the Servicer shall not take any
action which would result in noncoverage under any Receivables
Insurance Policy which, but for the actions of the Servicer, would have
been covered thereunder. The Servicer, on behalf of the Purchaser, the
Note Purchasers and the Noteholders, shall take such reasonable action
as shall be necessary to permit recovery under each Receivables
Insurance Policy. Any amounts collected by the Servicer under any
Receivables Insurance Policy, including, without limitation, proceeds
thereof, shall be deposited in the Collection Account within one (1)
Business Day of receipt.
SECTION 4.5. MAINTENANCE OF SECURITY INTERESTS IN VEHICLES.
(a) Consistent with the policies and procedures required by
this Agreement, the Servicer shall take such steps on behalf of the
Purchaser, the Note Purchasers and the Noteholders as are necessary to
maintain perfection of the security interest created by each Receivable
in the related Financed Vehicle, including but not limited to obtaining
the authorization or execution by the Obligors and the recording,
registering, filing, re-recording, re-registering and re-filing of all
security agreements, financing statements and continuation statements
or instruments as are necessary to maintain the security interest
granted by the Obligors under the respective Receivables. The Trustee
hereby authorizes the Servicer, and the Servicer agrees, to take any
and all steps necessary to re-perfect or continue the perfection of
such security interest on behalf of the Purchaser and Trustee for the
benefit of the Noteholders and Note Purchasers as necessary because of
the relocation of a Financed Vehicle or for any other reason. In the
event that the assignment of a Receivable to the Purchaser, and the
pledge thereof by the Purchaser to the Trustee for the benefit of the
Noteholders and Note Purchasers 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
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the state in which the Financed Vehicle is located, to perfect a
security interest in the related Financed Vehicle in favor of the
Trustee for the benefit of the Noteholders and the Note Purchasers,
each of the Trustee and the Seller hereby agrees that the Seller's
designation as the secured party on the certificate of title is in
respect of the Seller's capacity as Servicer as agent of the Trustee
for the benefit of the Noteholders and the Note Purchasers.
(b) Upon the occurrence and continuance of a Servicer
Termination Event, the Trustee and the Servicer shall take or cause to
be taken such action as may, in the opinion of counsel to the Trustee,
which opinion shall be an expense of the Servicer and 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 Noteholders and the Note
Purchasers by amending the title documents of such Financed Vehicles or
by such other reasonable means as may, in the opinion of counsel to the
Trustee, which opinion shall be an expense of the Servicer and shall
not be an expense of the Trustee, be necessary or prudent.
(c) The Seller hereby agrees to pay all expenses related to
such perfection or re-perfection in accordance with clauses (a) and (b)
above and to take all action necessary therefor. In addition, the
Controlling Note Purchaser or the Trustee may instruct the Servicer to
take or cause to be taken, and the Servicer shall take or cause to be
taken, such action as may, in the judgment of the Trustee or the Note
Purchaser, be necessary to perfect or re-perfect the security interest
in the Financed Vehicles underlying the Receivables in the name of the
Trustee on behalf of the Noteholders and the Note Purchasers, including
by amending the title documents of such Financed Vehicles or by such
other reasonable means as may, in the judgment of the Trustee or the
Controlling Note Purchaser, be necessary or prudent; PROVIDED, HOWEVER,
that if the Controlling Note Purchaser or the Trustee requests that the
title documents be amended prior to the occurrence of a Servicer
Termination Event, the Servicer shall carry out such action only to the
extent that the out-of-pocket expenses of the Servicer shall be
reimbursed by the Note Purchasers or the Noteholders, respectively, on
a PRO RATA basis (based upon the applicable outstanding Invested
Amounts).
SECTION 4.6. ADDITIONAL COVENANTS OF SERVICER.
(a) The Servicer shall not release the Financed Vehicle
securing any Receivable from the security interest granted by such
Receivable in whole or in part except in the event of payment in full
by the Obligor thereunder or repossession or other liquidation of the
Financed Vehicle, nor shall the Servicer impair the rights of any
Noteholder, any Note Purchaser or the Trustee in such Receivables, nor
shall the Servicer amend or otherwise modify a Receivable, except as
permitted in accordance with SECTION 4.2.
(b) The Servicer shall obtain and/or maintain all necessary
licenses, approvals, authorizations, orders or other actions of any
person, corporation or other organization, or of any court,
governmental agency or body or official, required in connection with
the execution, delivery and performance of this Agreement and the other
Basic Documents.
(c) The Servicer shall not make any material changes to its
collection policies unless the Controlling Note Purchaser expressly
consents in writing prior to such changes (which consent shall not be
unreasonably withheld).
(d) The Servicer shall provide written notice to the
Noteholders and the Note Purchasers of any default, event of default,
trigger event or servicer termination event under any other warehouse
financing facility or securitization that has occurred and which
default, event of default, trigger event or servicer termination shall
not have been waived or otherwise cured within the applicable cure
period.
(e) The Servicer shall reimburse each Note Purchaser and each
Noteholder for any and all fees or expenses that such Note Purchaser or
such Noteholder, as applicable, pay to a bank arising out of a return
of payments from the Purchaser or the Seller deposited for collection
by or for the benefit of such Note Purchaser or such Noteholder, as
applicable.
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(f) The Servicer will not (i) create, incur or suffer to
exist, or agree to create, incur or suffer to exist, or consent to
cause or permit in the future (upon the happening of a contingency or
otherwise) the creation, incurrence or existence of any lien, security
interest, charge, pledge, equity, encumbrance or restriction on
transferability of the Receivables and the Other Conveyed Property
except (x) for the lien in favor of the Trustee for the benefit of the
Noteholders and the Note Purchasers and the restrictions on
transferability imposed by this Agreement or any other Basic Document
or (y) with respect to any portion of the Receivables and the Other
Conveyed Property released in a manner permitted by the Basic Documents
from the lien in favor of the Trustee for the benefit of the
Noteholders and the Note Purchasers, or (ii) sign or file under the UCC
of any jurisdiction any financing statement which names the Seller, the
Servicer or the Purchaser as a debtor, or sign any security agreement
authorizing any secured party thereunder to file such financing
statement, with respect to the Receivables and Other Conveyed Property,
except in each case any such instrument solely securing the rights and
preserving the lien of the Trustee for the benefit of the Noteholders
and the Note Purchasers.
SECTION 4.7. PURCHASE OF RECEIVABLES UPON BREACH OF COVENANT. Upon
discovery by any of the Servicer, the Purchaser, the Trustee, any Note Purchaser
or any Noteholder of a breach of any of the covenants of the Servicer set forth
in SECTION 4.2(A), 4.4, 4.5 or 4.6, the party discovering such breach shall give
prompt written notice to the others; PROVIDED, HOWEVER, that the failure to give
any such notice shall not affect any obligation of the Servicer under this
SECTION 4.7. Unless the breach shall have been cured by the last day of the next
Accrual Period following such discovery, the Servicer shall purchase any
Receivable materially and adversely affected by such breach. In consideration of
the purchase of such Receivable, the Servicer shall remit the Purchase Amount
for such Receivable in the manner specified in SECTION 5.6. The sole remedy of
the Trustee, the Purchaser, the Note Purchasers or the Noteholders hereunder
with respect to a breach of SECTION 4.2(a), 4.4, 4.5 or 4.6 shall be to require
the Servicer to repurchase Receivables pursuant to this SECTION 4.7; PROVIDED,
however, that the Servicer shall indemnify the Trustee, the Backup Servicer, the
Purchaser, the Note Purchasers and the Noteholders against all costs, expenses,
losses, damages, claims and liabilities, including reasonable fees and expenses
of counsel, which may be asserted against or incurred by any of them as a result
of third party claims arising out of the events or facts giving rise to such
breach.
SECTION 4.8. SERVICING FEE. The "SERVICING FEE" for each Settlement
Date shall be equal (a) to the sum of the following amount calculated for each
day in the related Accrual Period: the product of (i) the Servicing Fee
Percentage and (ii) the aggregate Principal Balance of the Eligible Receivables
minus the Excess Concentration Amount, if any, on such day and (iii) 1/360. The
Servicing Fee shall also include all late fees, prepayment charges and other
administrative fees or similar charges allowed by applicable law with respect to
Receivables, collected (from whatever source) on the Receivables. If the Backup
Servicer becomes the successor Servicer, the "Servicing Fee" payable to the
Backup Servicer as successor Servicer shall be determined in accordance with the
Servicing Assumption Agreement.
SECTION 4.9. SERVICER'S CERTIFICATE. No later than 12:00 noon New York
City time on each Determination Date, the Servicer shall deliver (in
computer-readable format reasonably acceptable to each such Person) to the
Trustee, each Note Purchaser, the Backup Servicer and the Purchaser, a
certificate substantially in the form of EXHIBIT A hereto (a "SERVICER'S
CERTIFICATE") containing among other things, (i) all information necessary to
enable the Trustee to make the distributions required by SECTION 5.7, (ii) all
information necessary for the Trustee to send statements to the Noteholders and
the Note Purchasers pursuant to SECTION 5.8(b) and 5.9, (iii) a listing of all
Purchased Receivables purchased as of the related Accounting Date, identifying
the Receivables so purchased, (iv) the calculation of the Class A Borrowing Base
and the Class B Borrowing Base, in each case as of the last day of the related
Accrual Period and (v) all information necessary to enable the Backup Servicer
to verify the information specified in SECTION 4.14(b) and to complete the
accounting required by SECTION 5.9. In addition to the information set forth in
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the preceding sentence, each Servicer's Certificate shall also contain the
following information: (a) whether a Servicer Termination Event or any other
Funding Termination Event has occurred; (b) the Servicer Delinquency Ratio as of
the end of the Related Accrual Period; (c) the Servicer Loss Ratio as of such
Determination Date; (d) so long as the Servicer is CPS, a certification that the
Servicer is in compliance with the financial covenants contained in Sections
10.1(i), (j) and (k) of this Agreement; and (e) such other information
reasonably requested by any Note Purchaser or any Noteholder. The Servicer shall
deliver to the Trustee, the Noteholders, the Note Purchasers, the Backup
Servicer and the Purchaser a hard copy (which may be a facsimile) of any such
Servicer's Certificate upon request of such Person.
SECTION 4.10. ANNUAL STATEMENT AS TO COMPLIANCE, NOTICE OF SERVICER
TERMINATION EVENT.
(a) The Servicer shall deliver to the Purchaser, to the
Trustee, the Note Purchasers and to the Noteholders and the Backup
Servicer, on or before March 31 of each year beginning March 31, 2007
(in the case of the Class A Note Purchaser and the Class A Noteholders)
or March 31, 2008 (in the case of each Class B Note Purchaser and the
Class B Noteholders), an Officer's Certificate, dated as of December 31
of the preceding year, stating that (i) a review of the activities of
the Servicer during the preceding 12-month period (or in the case of
the first such certificate for the Class B Note Purchasers and the
Class B Noteholders, the period from the initial Cutoff Date for the
first Class B Funding Date to December 31, 2007) and of its performance
under this Agreement has been made under such officer's supervision and
(ii) to the best of such officer's knowledge, based on such review, the
Servicer has fulfilled all its obligations under this Agreement
throughout such year (or, in the case of the first such certificate,
such shorter period), or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known
to such officer and the nature and status thereof.
(b) The Servicer shall deliver to the Trustee, the
Noteholders, the Note Purchasers and the Backup Servicer, promptly
after having obtained knowledge thereof, but in no event later than two
(2) Business Days thereafter, written notice in an Officer's
Certificate of any event which with the giving of notice or lapse of
time, or both, would become a Servicer Termination Event under SECTION
10.1.
SECTION 4.11. INDEPENDENT ACCOUNTANTS' REPORTS. The Servicer shall
cause a firm of nationally recognized independent certified public accountants
(the "INDEPENDENT ACCOUNTANTS"), who may also render other services to the
Servicer or to the Purchaser, to deliver to the Trustee, the Backup Servicer,
the Note Purchasers and the Noteholders, on or before April 30 of each year
beginning April 30, 2007, a report dated as of December 31 of the preceding year
in form and substance reasonably acceptable to the Note Purchasers (the
"ACCOUNTANTS' REPORT") and reviewing the Servicer's activities during the
preceding 12-month period, addressed to the Board of Directors of the Servicer,
to the Trustee, the Backup Servicer, the Note Purchasers and the Noteholders, to
the effect that such firm has examined the financial statements of the Servicer
and issued its report therefor and that such examination (1) was made in
accordance with generally accepted auditing standards, and accordingly included
such tests of the accounting records and such other auditing procedures as such
firm considered necessary in the circumstances; (2) included tests relating to
auto loans serviced for others in accordance with the requirements of the
Uniform Single Attestation Program for Mortgage Bankers (the "PROGRAM"), to the
extent the procedure in the Program are applicable to the servicing obligations
set forth in this Agreement; (3) included an examination of the delinquency and
loss statistics relating to the Servicer's portfolio of automobile and light
truck installment sale contracts and promissory notes and security agreements;
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 two randomly selected
Servicer's Certificates; (2) except as disclosed in the report, no exceptions or
errors in the Servicer's Certificates were found; and (3) the delinquency and
loss information relating to the Receivables and the stated amount of Liquidated
Receivables, if any, contained in the Servicer's Certificates were found to be
accurate. In the event such firm requires the Trustee and/or the Backup Servicer
to agree to the procedures performed by such firm, the Servicer shall direct the
Trustee and/or the Backup Servicer, as applicable, in writing to so agree; it
being understood and agreed that the Trustee and/or the Backup Servicer will
deliver such letter of agreement in conclusive reliance upon the direction of
the Servicer, and neither the Trustee nor the Backup Servicer makes any
independent inquiry or investigation as to, and shall have no obligation or
liability in respect of, the sufficiency, validity or correctness of such
procedures. The Report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
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SECTION 4.12. INDEPENDENT ACCOUNTANTS' REVIEW OF RECEIVABLE FILES.
Commencing on December 31, 2006 and, thereafter on each March 31, June 30,
September 30 and December 31, to the extent that the Class A Invested Amount on
any day in the calendar quarter then ending was greater than $10 million (or
such other dates as the Controlling Note Purchaser may determine in its
reasonable discretion from time to time by prior written notice to the Seller,
the Servicer and the Trustee), the Seller at its own expense shall cause
Independent Accountants reasonably acceptable to the Controlling Note Purchaser
to conduct a post-funding review of the Seller's compliance with its stated
underwriting policies and verify certain characteristics of the Receivables as
of each Funding Date. The Independent Accountants shall within ten Business Days
complete such physical inspection and limited review and execute and deliver to
Seller, the Servicer, the Trustee, each Note Purchaser and each Noteholder a
report summarizing the findings. If such review reveals, in the Controlling Note
Purchaser's reasonable opinion, an unsatisfactory number of exceptions, the
Controlling Note Purchaser, in its reasonable discretion, may require a full
review of a larger sample of the Receivables by the Independent Accountants at
the expense of the Seller.
SECTION 4.13. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
RECEIVABLES. The Servicer shall provide to representatives of the Trustee, the
Backup Servicer, each Note Purchaser and each Noteholder reasonable access to
the documentation regarding the Receivables. In each case, such access shall be
afforded without charge but only upon reasonable request and during normal
business hours. Nothing in this Section shall derogate from the obligation of
the Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors, and the failure of the Servicer to provide access as
provided in this Section as a result of such obligation shall not constitute a
breach of this Section.
SECTION 4.14. VERIFICATION OF SERVICER'S CERTIFICATE.
(a) Concurrently with the delivery by the Servicer of the
Servicer's Certificate each month, the Servicer will deliver to the
Trustee and the Backup Servicer and each Note Purchaser a computer
diskette (or other electronic transmission) in a format acceptable to
the Trustee and the Backup Servicer containing information with respect
to the Receivables as of the close of business on the last day of the
preceding Accrual Period which information is necessary for preparation
of the Servicer's Certificate. The Backup Servicer shall use such
computer diskette (or other electronic transmission) to verify certain
information specified in SECTION 4.14(b) contained in the Servicer's
Certificate delivered by the Servicer, and the Backup Servicer shall
notify the Servicer, the Note Purchasers and the Noteholders of any
discrepancies on or before the second Business Day following the
Determination Date. In the event that the Backup Servicer reports any
discrepancies, the Servicer and the Backup Servicer shall attempt to
reconcile such discrepancies by the related Settlement Date, but in the
absence of a reconciliation, the Servicer's Certificate shall control
for the purpose of calculations and distributions pursuant to clauses
(i) through (xi) of Section 5.7(a) hereof and clauses (i) through (iii)
of Section 5.7(b) hereof, in each case with respect to the related
Settlement Date. No payments shall be made to the Deposit Account
pursuant to, clause (xii) of Section 5.7(a) hereof or clause (iv) of
Section 5.7(b) hereof, in each case until any discrepancies shall have
been reconciled. In the event that the Backup Servicer and the Servicer
are unable to reconcile discrepancies with respect to a Servicer's
Certificate by the related Settlement Date, the Backup Servicer shall
notify the Note Purchasers and the Noteholders of such discrepancy in
writing and the Servicer shall cause a firm of nationally recognized,
independent certified public accountants, at the Servicer's expense, to
audit the Servicer's Certificate and, prior to the fifth day of the
following calendar month, reconcile the discrepancies. The effect, if
any, of such reconciliation shall be reflected in the Servicer's
Certificate for such next succeeding Determination Date. Other than the
duties specifically set forth in this Agreement, the Backup Servicer
shall have no obligations hereunder, including, without limitation, to
supervise, verify, monitor or administer the performance of the
Servicer. The Backup Servicer shall have no liability for any actions
taken or omitted by the Servicer. The duties and obligations of the
Backup Servicer shall be determined solely by the express provisions of
this Agreement and no implied covenants or obligations shall be read
into this Agreement against the Backup Servicer.
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(b) The Backup Servicer shall review each Servicer's
Certificate delivered pursuant to Section 4.14(a) and shall:
(i) confirm that such Servicer's Certificate is
complete on its face;
(ii) load the computer diskette (which shall be in a
format acceptable to the Backup Servicer) received from the
Servicer pursuant to SECTION 4.14(A) hereof, confirm that such
computer diskette is in a readable form and calculate and
confirm the aggregate of the Principal Balances of the
Receivables for the most recent Settlement Date; and
(iii) confirm that the Available Funds, the Class B
Available Funds, the Class A Noteholder's Principal
Distributable Amount, the Class A Noteholder's Interest
Distributable Amount, the Class B Noteholder's Principal
Distributable Amount, the Class B Noteholder's Interest
Distributable Amount, the Servicing Fee, the Backup Servicing
Fee, the Trustee Fee, the Servicer Delinquency Ratio and the
Servicer Loss Ratio in the Servicer's Certificate are accurate
based solely on the recalculation of the Servicer's
Certificate.
(c) Within 30 days of the effective date of any renewal of the
Term of the Class A Commitment pursuant to Section 2.05 of the Class A
Note Purchase Agreement, the Backup Servicer will cause an affiliate of
the Backup Servicer to data map to its servicing system all
servicing/loan file information, including all relevant borrower
contact information such as address and phone numbers as well as loan
balance and payment information, including comment histories and
collection notes. On or before the fifth calendar day of each month,
the Servicer will provide to an affiliate of the Backup Servicer and to
each Note Purchaser an electronic transmission of all servicing/loan
information, including all relevant borrower contact information such
as address and phone numbers as well as loan balance and payment
information, including comment histories and collection notes, and the
Backup Servicer will cause such affiliate to review each file to ensure
that it is in readable form and verify that the data balances conform
to the trial balance reports received from the Servicer. Additionally,
the Backup Servicer shall cause such affiliate to store each such file.
SECTION 4.15. RETENTION AND TERMINATION OF SERVICER. The Servicer
hereby covenants and agrees to act as such under this Agreement for monthly
terms commencing on the Class A Closing Date, with the most recent of such terms
commencing as of the date hereof and ending on January 31, 2007, which term may
be extended by the Controlling Note Purchaser for successive monthly terms
pursuant to written instructions delivered by the Controlling Note Purchaser to
the Servicer and the Trustee (or, at the discretion of the Controlling Note
Purchaser exercised pursuant to revocable written standing instructions from
time to time to the Servicer and the Trustee, for any specified number of terms
greater than one), until such time as the Notes, all other Secured Obligations
and any and all other amounts due and payable to the Note Purchasers and the
Noteholders pursuant to the Basic Documents have been paid in full (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"). The Servicer hereby agrees that,
upon its receipt of any such Servicer Extension Notice or other extension of its
term as Servicer, the Servicer shall become bound, for the duration of the term
covered by such Servicer Extension Notice or for the monthly term, as
applicable, to continue as the Servicer subject to and in accordance with the
other provisions of this Agreement. The Trustee agrees that if as of the
Business Day succeeding the Settlement Date occurring during any term of the
Servicer, the Trustee shall not have received any Servicer Extension Notice as
of such date, the Trustee shall, within five days thereafter, give written
notice of such non-receipt to each Note Purchaser and the Servicer and the
Servicer's term shall not be extended unless a Servicer Extension Notice is
received on or before the last day of such term. The Controlling Note Purchaser
shall have no liability to the other Note Purchasers or the Noteholders arising
out of or relating to any renewal or non-renewal of the term of the Servicer
pursuant to this Section 4.15.
SECTION 4.16. ERRORS AND OMISSIONS POLICY AND FIDELITY BOND. The
Servicer shall maintain an errors and omissions insurance policy and a fidelity
bond in such form and amount as is customary for comparable servicers engaged in
the business of servicing motor vehicle receivables.
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ARTICLE V
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ACCOUNTS; DISTRIBUTIONS; STATEMENTS TO THE NOTEHOLDER
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SECTION 5.1. ESTABLISHMENT OF PLEDGED ACCOUNTS.
(a) The Trustee, on behalf of the Noteholders and the Note
Purchasers, shall establish and maintain in its own name an Eligible
Account (the "COLLECTION ACCOUNT"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of
the Trustee on behalf of the Noteholders and the Note Purchasers. The
Collection Account shall initially be established with the Trustee.
(b) The Trustee, on behalf of the Noteholders and the Note
Purchasers, shall establish and maintain in its own name an Eligible
Account (the "NOTE DISTRIBUTION ACCOUNT"), bearing a designation
clearly indicating that the funds deposited therein are held for the
benefit of the Trustee on behalf of the Noteholders and the Note
Purchasers. The Note Distribution Account shall initially be
established with the Trustee.
(c) Funds on deposit in the Collection Account and the Note
Distribution Account (collectively, the "PLEDGED ACCOUNTS") shall be
invested by the Trustee (or any custodian with respect to funds on
deposit in any such account) in Eligible Investments selected in
writing by the Servicer or, after the resignation or termination of CPS
as Servicer, by the Controlling Note Purchaser (pursuant to standing
instructions or otherwise) or, with respect to Eligible Investments
related solely to the Class B Available Funds, the Class B Note
Purchasers. All such Eligible Investments shall be held by or on behalf
of the Trustee for the benefit of the applicable Noteholders and the
applicable Note Purchasers. Other than as permitted by the Controlling
Note Purchaser, funds on deposit in any Pledged Account shall be
invested in Eligible Investments that will mature so that such funds
will be available at the close of business on the Business Day
immediately preceding the following Settlement Date. Funds deposited in
a Pledged Account on the day immediately preceding a Settlement Date
upon the maturity of any Eligible Investments are not required to be
invested overnight. All Eligible Investments will be held to maturity.
Notwithstanding anything herein to the contrary, none of the Class A
Note Purchaser or the Class A Noteholders shall have any right, title
or interest in, or any right to direct the Trustee with respect to, any
Class B Available Funds (or Eligible Investments or Investment Earnings
related thereto) on deposit from time to time in the Pledged Accounts.
(d) All investment earnings of moneys deposited in the Pledged
Accounts shall be deposited (or caused to be deposited) by the Trustee
in the Collection Account for distribution pursuant to SECTION 5.7(a)
and, with respect to Investment Earnings related solely to the Class B
Available Funds, SECTION 5.7(b), as applicable, and any loss resulting
from such investments shall be charged to such account. The Servicer
will not direct the Trustee to make any investment of any funds held in
any of the Pledged Accounts unless the security interest granted and
perfected in such account will continue to be perfected in such
investment, in either case without any further action by any Person,
and, in connection with any direction to the Trustee to make any such
investment, if requested by the Trustee, the Servicer shall deliver to
the Trustee an Opinion of Counsel, acceptable to the Trustee, to such
effect.
(e) The Trustee shall not in any way be held liable by reason
of any insufficiency in any of the Pledged Accounts resulting from any
loss on any Eligible Investment included therein except for losses
attributable to the Trustee's negligence or bad faith or its failure to
make payments on such Eligible Investments issued by the Trustee, in
its commercial capacity as principal obligor and not as trustee, in
accordance with their terms.
(f) If (i) the Servicer or the Controlling Note Purchaser or,
solely with respect to the Class B Available Funds, the Class B Note
Purchasers, as applicable, shall have failed to give investment
directions for any funds on deposit in the Pledged Accounts to the
Trustee by 1:00 p.m. Eastern Time (or such other time as may be agreed
by the Purchaser and Trustee) on any Business Day; or (ii) an Event of
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Default shall have occurred and be continuing under the Indenture but
the Notes shall not have been declared due and payable, or, if the
Notes shall have been declared due and payable following an Event of
Default, amounts collected or receivable from the Receivables and the
Other Conveyed Property are being applied as if there had not been such
a declaration; then the Trustee shall, to the fullest extent
practicable, invest and reinvest funds in the Pledged Accounts in an
Eligible Investment described in PARAGRAPH (A) OR (F) of the definition
thereof.
(g) The Trustee shall possess all right, title and interest in
all funds on deposit from time to time in the Pledged Accounts and in
all proceeds thereof (including all Investment Earnings on the Pledged
Accounts) and all such funds, investments, proceeds and income shall be
part of Other Conveyed Property and the Collateral, except that any
such funds, investments, proceeds and income that relate to the Class B
Available Funds shall be solely part of the Additional Class B
Collateral. Except as otherwise provided herein, the Pledged Accounts
shall be under the sole dominion and control of the Trustee for the
benefit of the Noteholders and the Note Purchasers; provided, however,
that none of the Class A Note Purchaser or the Class A Noteholders
shall have any right, title or interest in any Class B Available Funds
(or Eligible Investments or Investment Earnings related thereto) on
deposit from time to time in the Pledged Accounts. If at any time any
of the Pledged Accounts ceases to be an Eligible Account, the Trustee
with the consent of the Controlling Note Purchaser shall within five
Business Days establish a new Pledged Account as an Eligible Account
and shall transfer any cash and/or any investments from the Pledged
Account that is no longer an Eligible Account to such new Pledged
Account. The Trustee shall promptly notify the Servicer, each Note
Purchaser and each Noteholder of any change in the location of any of
the aforementioned accounts. In connection with the foregoing, the
Trustee agrees that, in the event that any of the Pledged Accounts are
not accounts with the Trustee, the Trustee shall notify the Servicer,
each Note Purchaser and each Noteholder in writing promptly upon any of
such Pledged Accounts ceasing to be an Eligible Account.
(h) Notwithstanding anything to the contrary herein or in any
other document relating to a Trust Account, the "securities
intermediary's jurisdiction" (within the meaning of Section 8-110 of
the UCC) or the "bank's jurisdiction" (with the meaning of 9-304 of the
UCC) as applicable, with respect to each Pledged Account shall be the
State of New York.
(i) With respect to the Pledged Account Property, the Trustee
agrees that:
(i) any Pledged Account Property that is held in
deposit accounts shall be held solely in an Eligible Account;
and, except as otherwise provided herein, each such Eligible
Account shall be subject to the exclusive custody and control
of the Trustee and the Trustee shall have sole signature
authority with respect thereto;
(ii) any Pledged Account Property shall be delivered
to the Trustee in accordance with the definition of
"DELIVERY";
(iii) except as provided in clause (iv) below, the
Servicer shall have the power, revocable by the Controlling
Note Purchaser, to instruct the Trustee to make withdrawals
and payments from the Pledged Accounts for the purpose of
permitting the Servicer and the Trustee to carry out their
respective duties hereunder; and
(iv) the Servicer shall have the power, revocable by
the Class B Note Purchasers, to instruct the Trustee to make
withdrawals and payments of Class B Available Funds from the
Pledged Accounts for the purpose of permitting the Servicer
and the Trustee to carry out their respective duties
hereunder.
SECTION 5.2. ESTABLISHMENT OF DEPOSIT ACCOUNT
The Trustee shall establish and maintain the Deposit Account in the
name of CPS. The Deposit Account shall be established with the Trustee as the
Deposit Account Bank (as defined in the Account Control Agreement) and governed
and maintained in accordance with the provisions of the Account Control
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Agreement. All distributions made by the Issuer, the Purchaser, the Seller or
the Servicer to CPS in respect of CPS's equity interest in the Issuer shall be
deposited directly into the Deposit Account. Amounts on deposit in the Deposit
Account shall be invested by the Trustee (or any custodian with respect to funds
on deposit in any such account) in Eligible Investments selected in writing by
CPS (pursuant to standing instructions or otherwise). All investment earnings of
moneys deposited in the Deposit Account shall be held in the Deposit Account
until withdrawn by CPS (unless otherwise prohibited pursuant to Section 2 of the
Account Control Agreement), and any loss resulting from such investments shall
be charged to the Deposit Account
SECTION 5.3. CERTAIN REIMBURSEMENTS TO THE SERVICER. The Servicer will
be entitled to be reimbursed from amounts on deposit in the Collection Account
with respect to an Accrual Period for amounts previously deposited in the
Collection Account but later determined by the Servicer to have resulted from
mistaken deposits or postings or checks returned for insufficient funds. The
amount to be reimbursed hereunder shall be paid to the Servicer on the related
Settlement Date pursuant to SECTION 5.7(A)(II) upon certification by the
Servicer of such amounts prior to such Settlement Date and the provision of such
information to the Trustee and the Note Purchasers prior to such Settlement Date
as may be necessary in the opinion of the Controlling Note Purchaser to verify
the accuracy of such certification; provided, however, that the Servicer must
provide such certification within three months of it becoming aware of such
mistaken deposit, posting or returned check. In the event that the Controlling
Note Purchaser has not received evidence satisfactory to it of the Servicer's
entitlement to reimbursement pursuant to this Section prior to such Settlement
Date, the Controlling Note Purchaser shall give the Trustee notice to such
effect, following receipt of which the Trustee shall not make a distribution to
the Servicer in respect of such amount pursuant to SECTION 5.7, or if prior
thereto the Servicer has been reimbursed pursuant to SECTION 5.7, the Trustee
shall withhold such amounts from amounts otherwise distributable to the Servicer
on the next succeeding Settlement Date.
SECTION 5.4. APPLICATION OF COLLECTIONS. All collections for each
Accrual Period shall be applied by the Servicer as follows:
With respect to each Receivable (other than a Purchased Receivable),
payments by or on behalf of the Obligor shall be applied to interest and
principal in accordance with the Simple Interest Method.
SECTION 5.5. [RESERVED].
SECTION 5.6. DEPOSITS INTO THE COLLECTION ACCOUNT. The Servicer, the
Issuer, the Purchaser or the Seller, as the case may be, shall each deposit or
cause to be deposited in the Collection Account (i) the Available Funds and the
Class B Available Funds, and (ii) any amounts due the Trustee, any Noteholder,
any Note Purchaser, the Backup Servicer, the Purchaser (in each case, to the
extent not paid directly thereto) in respect of any indemnification obligation
of the Servicer, the Issuer, the Purchaser or the Seller under the Basic
Documents.
SECTION 5.7. DISTRIBUTIONS.
(a) On each Settlement Date prior to the acceleration of the
Notes following an Event of Default, the Trustee (based on the
information contained in the Servicer's Certificate delivered on the
related Determination Date) shall make the following distributions
(without duplication) in the following order of priority from the
Available Funds on deposit in the Collection Account:
(i) to the Backup Servicer and the Trustee, as
applicable, pro rata, in respect of the Backup Servicing Fee
(so long as the Backup Servicer is not acting as successor
Servicer), the Trustee Fee, reasonable expenses incurred in
connection with transitioning the servicing to the Backup
Servicer and all other reasonable out-of-pocket expenses
thereof (including counsel fees and expenses) and all unpaid
Backup Servicing Fees (so long as the Backup Servicer is not
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acting as successor Servicer), Trustee Fees, reasonable
expenses incurred in connection with transitioning the
servicing to the Backup Servicer and all other reasonable
out-of-pocket expenses (including counsel fees and expenses)
from prior Accrual Periods; PROVIDED, HOWEVER, that expenses
payable to each of the Backup Servicer and Trustee pursuant to
this clause (i), excluding amounts paid to the Backup Servicer
in respect of transition expenses, shall be limited to a total
of $25,000 per annum (calculated from November 15, 2006 to
November 14, 2007, and each succeeding 364-day period to the
extent the Term of the Class A Notes is extended pursuant to
the Class A Note Purchase Agreement); PROVIDED, FURTHER, that
the amount of transition expenses distributed to the Backup
Servicer during the term of this Agreement pursuant to this
clause (i) shall in no case exceed $50,000 in the aggregate;
(ii) to the Servicer in respect of the Servicing Fee
and all unpaid Servicing Fees from prior Accrual Periods and
all reimbursements to which the Servicer is entitled pursuant
to Section 5.3 and an amount, not to exceed $35,000 per annum,
for payment to the taxing authority of the State of Texas on
behalf of the Issuer for any Texas franchise or similar tax
due and owing by the Issuer (or with respect to the
Receivables) and not timely paid by the Servicer in accordance
with Section 9.1(m);
(iii) to the Note Distribution Account, the Class A
Noteholders' Interest Distributable Amount for such Accrual
Period;
(iv) to the Note Distribution Account, the Class A
Noteholders' Principal Distributable Amount for such
Settlement Date;
(v) to the Note Distribution Account, any Class A
Margin Call, the Class A Commitment Fee and all other fees,
expenses, indemnity payments (to the extent not paid directly)
and all other amounts owing to the Class A Note Purchaser
and/or any Class A Noteholder under the Basic Documents;
(vi) to the Note Distribution Account, the Class B
Noteholders' Interest Distributable Amount for such Accrual
Period;
(vii) to the Note Distribution Account, the Class B
Noteholders' Principal Distributable Amount for such
Settlement Date;
(viii) to the Servicer for payment to the taxing
authority of the State of Texas on behalf of the Issuer for
any Texas franchise or similar tax due and owing by the Issuer
(or with respect to the Receivables), the amount, if any, to
be paid to such taxing authority after giving effect to the
distribution pursuant to clause (ii) above and not timely paid
by the Servicer in accordance with Section 9.1(m);
(ix) to any successor Servicer, its servicing fees in
excess of the Servicing Fee and, to the extent not previously
paid by the predecessor Servicer pursuant to this Agreement,
reasonable transition expenses (up to a maximum of $50,000 in
the aggregate over the term of this Agreement) incurred in
becoming the successor Servicer;
(x) to the Backup Servicer and the Trustee, as
applicable, pro rata, in respect of reasonable out-of-pocket
expenses thereof (including counsel fees and expenses) and
reasonable out-of-pocket expenses (including counsel fees and
expenses) from prior Accrual Periods to the extent not paid
thereto pursuant to SECTION 5.7(a)(i) above;
(xi) to the Note Distribution Account, any Class B
Margin Call, the Class B Commitment Fee and all other fees,
expenses, indemnity payments (to the extent not paid directly)
and all other amounts owing to a Class B Note Purchaser and/or
any Class B Noteholder under the Basic Documents and the UBS
Basic Documents (including without limitation, all UBS Secured
Obligations); and
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(xii) to the Deposit Account, the remaining amount,
if any; provided that no amounts shall be paid to the Issuer
pursuant to this priority (xii) until any amounts owed to any
Noteholder and any Note Purchaser pursuant to the Basic
Documents have been paid in full and any discrepancies in the
Servicer's Certificate shall have been reconciled pursuant to
Section 4.14(a) hereof.
(b) On each Settlement Date prior to the acceleration of the
Notes following an Event of Default, the Trustee (based on the
information contained in the Servicer's Certificate delivered on the
related Determination Date) shall make the following distributions
(without duplication) in the following order of priority from the Class
B Available Funds on deposit in the Collection Account:
(i) to the Note Distribution Account, the Class B
Noteholders' Interest Distributable Amount for such Accrual
Period, to the extent not previously distributed pursuant to
Section 5.7(a)(vi);
(ii) to the Note Distribution Account, the Class B
Noteholders' Principal Distributable Amount for such
Settlement Date, to the extent not previously distributed
pursuant to Section 5.7(a)(vii);
(iii) to the Note Distribution Account, any Class B
Margin Call, the Class B Commitment Fee and all other fees,
expenses, indemnity payments (to the extent not paid directly)
and all other amounts owing to a Class B Note Purchaser and/or
any Class B Noteholder under the Basic Documents and the UBS
Basic Documents (including without limitation, all UBS Secured
Obligations), to the extent not previously distributed
pursuant to Section 5.7(a)(xi); and
(iv) to the Deposit Account, any remaining amounts;
provided that no amounts shall be paid to the Issuer pursuant
to this priority (iv) until any amounts owed to any Class B
Noteholder and any Class B Note Purchaser pursuant to the
Basic Documents and the UBS Basic Documents have been paid in
full and any discrepancies in the Servicer's Certificate shall
have been reconciled pursuant to Section 4.14(a) hereof.
(c) Following an acceleration of the Notes after an Event of
Default, any money or property that the Trustee collects pursuant to
Article V of the Indenture shall be paid pursuant to Section 5.6(a) of
the Indenture; provided, however, that Available Funds and Class B
Available Funds shall be applied in the order of priority specified in
SECTION 5.7(a) and SECTION 5.7(b) above, respectively.
(d) In the event that the Collection Account is maintained
with an institution other than the Trustee, the Servicer shall instruct
and cause such institution to make all deposits and distributions
pursuant to SECTIONS 5.7(a) and 5.7(b) on the related Settlement Date.
SECTION 5.8. NOTE DISTRIBUTION ACCOUNT.
(a) On each Settlement Date (based solely on the information
contained in the Servicer's Certificate), the Trustee shall distribute
all Available Funds on deposit in the Note Distribution Account to the
Noteholders in respect of the Notes to the extent of amounts due and
unpaid on the Notes for principal and interest, and to the Note
Purchasers and the Noteholders in respect of other amounts due and
owing under the Basic Documents, in the following amounts and in the
following order of priority (without duplication):
(i) to the Class A Noteholders, the Class A
Noteholders' Interest Distributable Amount; PROVIDED that if
there are not sufficient Available Funds in the Note
Distribution Account to pay the entire Class A Noteholders'
Interest Distributable Amount then due on the Class A Notes,
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the amount in the Note Distribution Account shall be applied
to the payment of such Class A Noteholders Interest
Distributable Amount pro rata among the Holders of the Class A
Notes;
(ii) to the Class A Noteholders, in reduction of the
Class A Invested Amount, the Class A Noteholders' Principal
Distributable Amount to pay principal on the Class A Notes
until the outstanding principal amount of the Class A Notes
has been reduced to zero; PROVIDED that if there are not
sufficient Available Funds remaining in the Note Distribution
Account after application of clause (i) above to pay the
entire Class A Noteholders' Principal Distributable Amount
then due on the Class A Notes, the Available Funds remaining
in the Note Distribution Account shall be applied to the
payment of such Class A Noteholders' Principal Distributable
Amount pro rata among the Holders of the Class A Notes;
(iii) to the Class A Noteholders, in reduction of the
Class A Invested Amount, in an amount necessary to cover any
Class A Margin Call; PROVIDED that if there are not sufficient
Available Funds remaining in the Note Distribution Account
after application of clauses (i) and (ii) above to pay the
entire amount of the Class A Margin Call, the Available Funds
remaining in the Note Distribution Account shall be applied to
the payment of such Class A Margin Call pro rata among the
Holders of the Class A Notes;
(iv) to the Class A Note Purchaser, the Class A
Commitment Fee;
(v) sequentially, to the Class A Note Purchaser and
the Class A Noteholders, in that order, any other amounts due
the Class A Note Purchaser and the Class A Noteholders,
respectively, pursuant to any of the Basic Documents; PROVIDED
that if there are not sufficient Available Funds remaining in
the Note Distribution Account after application of clauses (i)
through (iv) above to pay all of the other amounts due to the
Class A Note Purchaser and the Class A Noteholders,
respectively, pursuant to the Basic Documents, the Available
Funds remaining in the Note Distribution Account shall be
applied to the payment of such other amounts first, to the
Class A Note Purchaser, until the amounts due and owing to the
Class A Note Purchaser have been reduced to zero, and
thereafter, pro rata among the Holders of the Class A Notes;
(vi) to the Class B Noteholders, the Class B
Noteholders' Interest Distributable Amount; PROVIDED that if
there are not sufficient Available Funds remaining in the Note
Distribution Account after application of clauses (i) through
(v) above to pay the entire Class B Noteholders' Interest
Distributable Amount then due on the Class B Notes, the
Available Funds remaining in the Note Distribution Account
shall be applied to the payment of such Class B Noteholders'
Interest Distributable Amount pro rata among the Holders of
the Class B Notes;
(vii) to the Class B Noteholders, in reduction of the
Class B Invested Amount, the Class B Noteholders' Principal
Distributable Amount to pay principal on the Class B Notes
until the outstanding principal amount of the Class B Notes
has been reduced to zero; PROVIDED that if there are not
sufficient Available Funds remaining in the Note Distribution
Account after application of clauses (i) through (vi) above to
pay the entire Class B Noteholders' Principal Distributable
Amount then due on the Class B Notes, the Available Funds
remaining in the Note Distribution Account shall be applied to
the payment of such Class B Noteholders' Principal
Distributable Amount pro rata among the Holders of the Class B
Notes;
(viii) to the Class B Noteholders, in reduction of
the Class B Invested Amount, in an amount necessary to cover
any Class B Margin Call; PROVIDED that if there are not
sufficient Available Funds remaining in the Note Distribution
Account after application of clauses (i) through (vii) above
to pay the entire amount of the Class B Margin Call, the
Available Funds remaining in the Note Distribution Account
shall be applied to the payment of such Class B Margin Call
pro rata among the Holders of the Class B Notes;
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(ix) to each Class B Note Purchaser, its respective
pro rata portion of the Class B Commitment Fee; PROVIDED that
if there are not sufficient Available Funds remaining in the
Note Distribution Account after application of clauses (i)
through (viii) above to pay the entire amount of the Class B
Commitment Fee, the Available Funds remaining in the Note
Distribution Account shall be applied to the payment of such
Class B Commitment Fee pro rata among the Class B Note
Purchasers; and
(x) sequentially, to each Class B Note Purchaser and
the Class B Noteholders, in that order, any other amounts due
each Class B Note Purchaser and the Class B Noteholders,
respectively, pursuant to any of the Basic Documents; PROVIDED
that if there are not sufficient Available Funds remaining in
the Note Distribution Account after application of clauses (i)
through (ix) above to pay all of the other amounts due to the
Class B Note Purchaser and the Class B Noteholders,
respectively, pursuant to the Basic Documents, the Available
Funds remaining in the Note Distribution Account shall be
applied to the payment of such other amounts first, pro rata
to each Class B Note Purchaser, until the amounts due and
owing to each Class B Note Purchaser have been reduced to
zero, and thereafter, pro rata among the Holders of the Class
B Notes, until the amounts due and owing to each Class B
Noteholder have been reduced to zero.
(b) On each Settlement Date (based solely on the information
contained in the Servicer's Certificate), the Trustee shall distribute
all Class B Available Funds on deposit in the Note Distribution Account
to the Class B Noteholders in respect of the Class B Notes to the
extent of amounts due and unpaid on the Class B Notes for principal and
interest, and to the Class B Note Purchasers and the Class B
Noteholders in respect of other amounts due and owing under the Basic
Documents and the UBS Basic Documents (including without limitation,
the UBS Secured Obligations), in the following amounts and in the
following order of priority (without duplication):
(i) to the Class B Noteholders, the Class B
Noteholders' Interest Distributable Amount, to the extent not
distributed pursuant to Section 5.8(a)(vi); PROVIDED that if
there are not sufficient Class B Available Funds in the Note
Distribution Account to pay the entire Class B Noteholders'
Interest Distributable Amount then due on the Class B Notes,
the Class B Available Funds in the Note Distribution Account
shall be applied to the payment of such Class B Noteholders'
Interest Distributable Amount pro rata among the Holders of
the Class B Notes;
(ii) to the Class B Noteholders, in reduction of the
Class B Invested Amount, the Class B Noteholders' Principal
Distributable Amount, to the extent not distributed pursuant
to Section 5.8(a)(vii), to pay principal on the Class B Notes
until the outstanding principal amount of the Class B Notes
has been reduced to zero; PROVIDED that if there are not
sufficient Class B Available Funds remaining in the Note
Distribution Account after application of clause (i) above to
pay the entire Class B Noteholders' Principal Distributable
Amount then due on the Class B Notes, the Class B Available
Funds remaining in the Note Distribution Account shall be
applied to the payment of such Class B Noteholders' Principal
Distributable Amount pro rata among the Holders of the Class B
Notes;
(iii) to the Class B Noteholders, in reduction of the
Class B Invested Amount, in an amount necessary to cover any
Class B Margin Call, to the extent not distributed pursuant to
Section 5.8(a)(viii); PROVIDED that if there are not
sufficient Class B Available Funds remaining in the Note
Distribution Account after application of clauses (i) and (ii)
above to pay the entire amount of the Class B Margin Call, the
Class B Available Funds remaining in the Note Distribution
Account shall be applied to the payment of such Class B Margin
Call pro rata among the Holders of the Class B Notes;
(iv) to each Class B Note Purchaser, its respective
pro rata portion of the Class B Commitment Fee, to the extent
not distributed pursuant to Section 5.8(a)(ix); PROVIDED that
if there are not sufficient Class B Available Funds remaining
in the Note Distribution Account after application of clauses
(i) through (iii) above to pay the entire amount of the Class
B Commitment Fee, the Class B Available Funds remaining in the
Note Distribution Account shall be applied to the payment of
such Class B Commitment Fee pro rata among the Class B Note
Purchasers; and
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(v) sequentially, to each Class B Note Purchaser and
the Class B Noteholders, in that order, any other amounts due
each Class B Note Purchaser and the Class B Noteholders,
respectively, pursuant to any of the Basic Documents and the
UBS Basic Documents (including without limitation, the UBS
Secured Obligations), to the extent not previously distributed
pursuant to Section 5.8(a)(x); PROVIDED that if there are not
sufficient Class B Available Funds remaining in the Note
Distribution Account after application of clauses (i) through
(iv) above to pay all of the other amounts due to the Class B
Note Purchaser and the Class B Noteholders, respectively,
pursuant to the Basic Documents, the Class B Available Funds
remaining in the Note Distribution Account shall be applied to
the payment of such other amounts first, pro rata to each
Class B Note Purchaser, until the amounts due and owing to
each Class B Note Purchaser have been reduced to zero, and
thereafter, pro rata among the Holders of the Class B Notes,
until the amounts due and owing to each Class B Noteholder
have been reduced to zero.
(c) On each Settlement Date, the Trustee shall provide or make
available electronically (or, upon written request, by first class mail
or facsimile) to the Noteholders and the Note Purchasers the statement
or statements provided to the Trustee by the Servicer pursuant to
SECTION 5.9 hereof on such Settlement Date; PROVIDED HOWEVER, the
Trustee shall have no obligation to provide such information described
in this SECTION 5.8(B) until it has received the requisite information
from the Servicer.
SECTION 5.9. STATEMENTS TO NOTEHOLDERS. (a) On the Determination Date
(in accordance with SECTION 4.9), the Servicer shall provide to the Trustee, the
Note Purchasers and the Noteholders on the related Record Date a copy of the
Servicer's Certificate setting forth at least the following information as to
the Notes to the extent applicable in the form attached as hereto EXHIBIT A:
(i) the amount of such distribution allocable to
principal of each class of Notes;
(ii) the amount of such distribution allocable to
interest on or with respect to each class of Notes;
(iii) the aggregate of the Principal Balances of the
Receivables as of the close of business on the last day of the
preceding Accrual Period;
(iv) the Class A Invested Amount and the Class B
Invested Amount;
(v) the amount of the Servicing Fee paid to the
Servicer with respect to the related Accrual Period, and the
amount of any unpaid Servicing Fees and the change in such
amount from the prior Settlement Date;
(vi) (A) the amount of each of the Backup Servicing
Fee and the Trustee Fee paid to the Backup Servicer and the
Trustee as applicable, with respect to the related Accrual
Period, (B) the amount of any unpaid Backup Servicing Fees and
Trustee Fees and the change in such amounts from the prior
Settlement Date, (C) the amount of all expenses paid to the
Trustee and the Backup Servicer, with respect to the related
Accrual Period, and (D) the difference between the maximum per
annum amount payable to the Trustee and Backup Servicer in
respect of expenses (other than servicing transition expenses)
as set forth in Section 5.7(a)(i) and the amount paid to the
Backup Servicer and Trustee year-to-date (to and including the
related Settlement Date) in respect of such expenses;
(vii) the Class A Noteholders' Interest Carryover
Shortfall, the Class A Noteholders' Principal Carryover
Shortfall, the Class B Noteholders' Interest Carryover
Shortfall, and the Class B Noteholders' Principal Carryover
Shortfall, if any;
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(viii) the number of Receivables and the aggregate
gross amount scheduled to be paid thereon, including unearned
finance and other charges, for which the related Obligors are
delinquent in making Scheduled Receivable Payments for (a) 31
to 45 days and (d) 46 days or more, in each case as of the
last day of the related Accrual Period;
(ix) the amount of aggregate Realized Losses, if any,
for the related Accrual Period;
(x) the number of, and the aggregate Purchase Amounts
for, Receivables, if any, that were repurchased during the
related Interest Period and summary information as to losses
and delinquencies with respect to the Receivables as of the
end of the related Accrual Period;
(xi) the amount of any Texas Franchise Tax due and
owing by the Issuer to the taxing authority of the State of
Texas on or prior to the related Settlement Date or paid by
the Servicer on behalf of the Issuer since the prior
Settlement Date;
(xii) the cumulative amount of Realized Losses from
the initial Cutoff Date to the last day of the related Accrual
Period; and
(xiii) the Servicer Delinquency Ratio as of the end
of the related Accrual Period and the Servicer Loss Ratio as
of the related Determination Date.
(b) Within 60 days after the end of each calendar year,
commencing February 28, 2007, the Servicer shall deliver to the
Trustee, and the Trustee shall, provided it has received the necessary
information from the Servicer, promptly thereafter furnish to each
Noteholder (a) a report (prepared by the Servicer) as to the aggregate
of the amounts reported pursuant to subclauses (i), (ii), (v) and (vi)
of SECTION 5.9(a) for such preceding calendar year, and (b) such
information as may be reasonably requested by any Noteholder or
required by the Code and regulations thereunder, to enable such
Noteholder to prepare its Federal and State income tax returns. The
obligation of the Trustee set forth in this paragraph shall be deemed
to have been satisfied to the extent that substantially comparable
information shall be provided by the Servicer to such Noteholder
pursuant to any requirements of the Code.
(c) The Trustee may make available to the Note Purchasers and
the Noteholders via the Trustee's Internet Website, all statements
described herein and, with the consent or at the direction of the
Seller, such other information regarding the Notes and/or the
Receivables as the Trustee may have in its possession, but only with
the use of a password provided by the Trustee. The Trustee will make no
representation or warranties as to the accuracy or completeness of such
documents accurately posted and will assume no responsibility therefor.
The Trustee's Internet Website shall be initially located at
▇▇▇.▇▇▇▇▇▇▇.▇▇▇ or at such other address as shall be specified by the
Trustee from time to time in writing to the Noteholders and the Note
Purchasers. In connection with providing access to the Trustee's
Internet Website, the Trustee may require registration and the
acceptance of a disclaimer. The Trustee shall not be liable for the
dissemination of information in accordance with this Agreement.
SECTION 5.10. DIVIDEND OF INELIGIBLE RECEIVABLES. The Issuer may on the
last day of the month in which any Receivables are sold into a securitization
transaction distribute any Ineligible Receivables to the Seller as a dividend,
free of the deemed security interest referred to in Section 2.2 hereof; PROVIDED
THAT there is no Borrowing Base Deficiency immediately after such dividend.
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ARTICLE VI
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[RESERVED]
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ARTICLE VII
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THE PURCHASER
-------------
SECTION 7.1. REPRESENTATIONS OF PURCHASER. The Purchaser makes the
following representations on which the Noteholders shall be deemed to have
relied in purchasing the Notes and the applicable Note Purchasers shall have
been deemed to have relied in making each Advance. The representations speak as
of the execution and delivery of this Agreement and as of each Funding Date, and
shall survive the sale of the Receivables to the Purchaser and the pledge
thereof to the Trustee for the benefit of the Note Purchasers and the
Noteholders pursuant to the Indenture.
(a) ORGANIZATION AND GOOD STANDING. The Purchaser has been
duly formed and is validly existing as a limited liability company
solely under the laws of the state of Delaware and is in good standing
under the laws of the State of Delaware, with power and authority to
own its properties and to conduct its business as such properties are
currently owned and such business is currently conducted, and had at
all relevant times, and now has, power, authority and legal right to
acquire, own and pledge the Receivables and the Other Conveyed Property
pledged to the Trustee for the benefit of the Note Purchasers and the
Noteholders and to enter into and perform its other obligations under
this Agreement and each other Basic Document to which it is a party.
(b) DUE QUALIFICATION. The Purchaser is duly qualified to do
business as a foreign limited liability company in good standing, and
has obtained all necessary licenses and approvals in all jurisdictions
in which the ownership or lease of property or the conduct of its
business (including, without limitation, (i) the purchase of
Receivables from CPS, (ii) the pledge of Collateral to the Trustee for
the benefit of the Note Purchasers and the Noteholders pursuant to
Granting Clause I of the Indenture, (iii) the pledge of the Pledged
Subordinate Securities to the Trustee for the benefit of the Class B
Note Purchasers and the Class B Noteholders pursuant to Granting Clause
II of the Indenture, (iv) the pledge of the Bear Cross Collateral to
the UBS Indenture Trustee for the benefit of the Class B note
purchasers and the Class B noteholders under the UBS Basic Documents
pursuant to Granting Clause III of the Indenture, and (v) the
performance of its other obligations under this Agreement and each
other Basic Document) shall require such qualifications.
(c) POWER AND AUTHORITY. The Purchaser has the power (limited
liability company and other) and authority, and has all material
government licenses, authorizations, consents and approvals necessary
to own its assets and carry on its business as now being conducted, to
execute and deliver this Agreement and the other Basic Documents to
which it is a party and to carry out its terms and their terms,
respectively; the Purchaser has full power and authority to pledge (x)
the Collateral to be pledged to the Trustee for the benefit of the Note
Purchasers and the Noteholders by it pursuant to Granting Clause I of
the Indenture, (y) the Pledged Subordinate Securities to be pledged to
the Trustee for the benefit of the Class B Note Purchasers and the
Class B Noteholders by it pursuant to Granting Clause II of the
Indenture, and (z) the Bear Cross Collateral to be pledged to the UBS
Indenture Trustee for the benefit of the Class B note purchasers and
the Class B noteholders under the UBS Basic Documents by it pursuant to
Granting Clause III of the Indenture, and has duly authorized such
pledges to the Trustee and the UBS Indenture Trustee, as applicable,
for the benefit of the applicable Persons by all necessary corporate
action; and the execution, delivery and performance of this Agreement
and the Basic Documents to which the Purchaser is a party have been
duly authorized by the Purchaser by all necessary action.
(d) VALID SALE. BINDING OBLIGATIONS. (A) This Agreement
effects a valid sale of the Receivables and the Other Conveyed
Property, enforceable against the Seller and creditors of and
purchasers from the Seller, (B) Granting Clause I of the Indenture
constitutes a valid pledge of the Collateral which constitutes a first
priority perfected security interest in the Collateral, subject to the
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terms and provisions of the Intercreditor Agreement, in favor of the
Trustee for the benefit of the Noteholders and the Note Purchasers, (C)
Granting Clause II of the Indenture constitutes a valid pledge of the
Pledged Subordinate Securities which constitutes a first priority
perfected security interest in the Pledged Subordinate Securities in
favor of the Trustee for the benefit of the Class B Noteholders and the
Class B Note Purchasers, and (D) Granting Clause III of the Indenture
constitutes a valid pledge of the Bear Cross Collateral, subject to the
terms and provisions of the Intercreditor Agreement, which constitutes
a second priority perfected security interest in the Bear Cross
Collateral (subject only to the Lien Granted pursuant to Granting
Clause I of the Indenture) in favor of the UBS Indenture Trustee for
the benefit of the Class B noteholders and the Class B note purchasers
under the UBS Basic Documents, in each case enforceable against the
Issuer and creditors of and purchasers from the Issuer, and this
Agreement and the other Basic Documents to which the Purchaser is a
party, when duly executed and delivered, shall constitute legal, valid
and binding obligations of the Purchaser enforceable in accordance with
their respective terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting
the enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies, regardless of
whether such enforceability is considered in a proceeding in equity or
at law.
(e) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the other Basic Documents and the
fulfillment of the terms of this Agreement and the other Basic
Documents shall not conflict with, result in any breach of any of the
terms and provisions of or constitute (with or without notice, lapse of
time or both) a default under the Certificate of Formation or the LLC
Agreement, or any indenture, agreement, mortgage, deed of trust or
other instrument to which the Purchaser is a party or by which it is
bound, or result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, other than the Basic
Documents, or violate any law, order, rule, regulation, ordinance or
directive of any Governmental Authority applicable to the Purchaser of
any court or of any federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over
the Purchaser or any of its properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the Purchaser's knowledge, threatened against the
Purchaser, before any court, regulatory body, administrative agency or
other tribunal or governmental instrumentality having jurisdiction over
the Purchaser or its properties (A) asserting the invalidity of this
Agreement, any class of Notes or any of the Basic Documents, (B)
seeking to prevent the issuance of any class of Notes or the
consummation of any of the transactions contemplated by this Agreement
or any of the Basic Documents, (C) seeking any determination or ruling
that might materially and adversely affect the performance by the
Purchaser of its obligations under, or the validity or enforceability
of, this Agreement or any of the Basic Documents or otherwise have a
Material Adverse Effect or result in a Material Adverse Change in
respect of the Purchaser, or (D) relating to the Purchaser, the
Collateral, the Pledged Subordinate Securities or the Bear Cross
Collateral and which might adversely affect the federal or State
income, excise, franchise or similar tax attributes of the Notes.
(g) NO CONSENTS. The Purchaser is not required to obtain the
consent of any other Person and no consent, approval, authorization or
order of or declaration or filing with any governmental authority is
required for conduct of the Purchaser's business, the issuance or sale
of the Notes or the consummation of the other transactions contemplated
by this Agreement and the other Basic Documents, except such as have
been duly made or obtained or as may be required by the Basic
Documents.
(h) TAX RETURNS. The Purchaser has filed all federal and state
tax returns that are required to be filed and paid all taxes, including
any assessments received by it, to the extent that such taxes have
become due. Any taxes, fees and other governmental charges payable by
the Purchaser in connection with consummation of the transactions
contemplated by this Agreement and the other Basic Documents to which
the Purchaser is a party and the fulfillment of the terms of this
Agreement and the other Basic Documents to which the Purchaser is a
party have been paid or shall have been paid at or prior to the Closing
Date and as of each Funding Date.
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(i) OTHER OBLIGATIONS. The Purchaser is not in default in the
performance, observance or fulfillment of any obligation, covenant or
condition in any of the Basic Documents to which it is a party or in
any other agreement or instrument to which it is a party or by which it
is bound the result of which would have a Material Adverse Effect or
result in a Material Adverse Change.
(j) CHIEF EXECUTIVE OFFICE. The chief executive office of the
Purchaser is at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
(k) CERTIFICATE, STATEMENTS AND REPORTS. The officer's
certificates, statements, reports and other documents prepared by the
Purchaser and furnished by the Purchaser to the Trustee, any Note
Purchaser or any Noteholder pursuant to this Agreement or any other
Basic Document to which it is a party, or otherwise in connection with
the transactions contemplated hereby or thereby, when taken as a whole,
do not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements contained herein or
therein not misleading.
(l) LEGAL COUNSEL, ETC. The Purchaser consulted with its own
legal counsel and independent accountants to the extent it deems
necessary regarding the tax, accounting and regulatory consequences of
the transactions contemplated hereby, the Purchaser is not
participating in such transactions in reliance on any representations
of any other party, their affiliates, or their counsel with respect to
tax, accounting, regulatory or any other matters.
(m) NO DEFAULT. The Purchaser is not in default in the
performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in, and is not otherwise in default
under (i) any law or statute applicable to it, including, without
limitation, any Consumer Law, (ii) any judgment, decree, writ,
injunction, order, award or other action of any court or governmental
authority or arbitrator or any order, rule or regulation of any
federal, state, county, municipal or other governmental or public
authority or agency having or asserting jurisdiction over it or any of
its properties or (iii) (x) any indebtedness or any instrument or
agreement under or pursuant to which any such indebtedness has been, or
could be, issued or incurred or (y) any other instrument or agreement
to which it is a party or by which it is bound or any of its properties
is affected, including, without limitation, the Basic Documents, that
either individually or in the aggregate, (A) would result in a Material
Adverse Change with respect to the Purchaser, or in any impairment of
the right or ability of the Purchaser to carry on its business
substantially as now conducted or (B) would result in a Material
Adverse Effect.
(n) ERISA. The Purchaser does not maintain any Plans, and the
Purchaser agrees to notify each Note Purchaser in advance of forming
any Plans. Neither the Issuer nor any Affiliate of the Purchaser (other
than MFN under the MFN Financial Corporation Pension Plan and CPS under
its defined contribution (401(k)) plan) has any obligations or
liabilities with respect to any Plans or Multiemployer Plans, nor have
any such Persons had any obligations or liabilities with respect to any
such Plans during the five year period prior to the date this
representation is made or deemed made. The Purchaser will give notice
to each Note Purchaser and each Noteholder if at any time it or any
Affiliate has any obligations or liabilities with respect to any Plan
or Multiemployer Plan. All Plans maintained by the Purchaser or any
Affiliate are in substantial compliance with all applicable laws
(including ERISA). The Purchaser is not an employer under any
Multiemployer Plan.
(o) COMPLIANCE WITH LAWS. The Purchaser has complied and will
comply in all material respects with all applicable laws, rules,
regulations, judgments, agreements, decrees and orders with respect to
its business and properties.
ARTICLE VIII
------------
THE SELLER
----------
SECTION 8.1. REPRESENTATIONS OF SELLER. The Seller makes the following
representations on which the Purchaser shall be deemed to have relied in
acquiring the Receivables, the Noteholders shall be deemed to have relied in
purchasing the Notes and the applicable Note Purchasers shall have been deemed
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to have relied in making each Advance. The representations speak as of the
execution and delivery of this Agreement, as of the Closing Date and as of each
Funding Date, and shall survive the sale of the Receivables to the Purchaser and
the pledge thereof by the Purchaser to the Trustee for the benefit of the
Noteholders and the Note Purchasers pursuant to the Indenture.
(a) ORGANIZATION AND GOOD STANDING. The Seller has been duly
organized and is validly existing as a corporation solely under the
laws of the State of California and is in good standing under the laws
of the State of California, with power and authority to own its
properties and to conduct its business as such properties are currently
owned and such business is currently conducted, and had at all relevant
times, and now has, power, authority and legal right to acquire, own
and sell the Receivables and the Other Conveyed Property transferred to
the Purchaser and to perform its other obligations under this Agreement
or any other Basic Documents to which it is a party.
(b) DUE QUALIFICATION. The Seller is duly qualified to do
business as a foreign corporation in good standing and has obtained all
necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business
(including, without limitation, the origination or purchase of motor
vehicle retail installment sale contracts or installment promissory
note and security agreements, the sale of the Receivables to the
Purchaser hereunder, the servicing of the Receivables as required by
this Agreement, and its other obligations hereunder and under the other
Basic Documents) requires or shall require such qualification except
where the failure to so qualify or obtain such licenses or consents
would not result in a Material Adverse Effect or a Material Adverse
Change.
(c) POWER AND AUTHORITY. The Seller has the power (corporate
and other) and authority, and has all material government licenses,
authorizations, consents and approvals necessary to own its assets and
carry on its business as now being conducted, to execute and deliver
this Agreement and the other Basic Documents to which it is a party and
to carry out its terms and their terms, respectively; the Seller has
full power and authority to sell and assign the Receivables and the
Other Conveyed Property to be sold and assigned to and deposited with
the Purchaser by it and has duly authorized such sale and assignment to
the Purchaser by all necessary corporate action; and the execution,
delivery and performance of this Agreement and the Basic Documents to
which the Seller is a party have been duly authorized by the Seller by
all necessary corporate action.
(d) VALID SALE; BINDING OBLIGATIONS. This Agreement effects a
valid sale, transfer and assignment of the Receivables and the Other
Conveyed Property to the Purchaser, enforceable against the Seller and
creditors of and purchasers from the Seller; and this Agreement and the
Basic Documents to which the Seller is a party, when duly executed and
delivered, shall constitute legal, valid and binding obligations of the
Seller enforceable in accordance with their respective terms, except as
enforceability may be limited, by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by equitable limitations on the
availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(e) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the Basic Documents and the
fulfillment of the terms of this Agreement and the Basic Documents does
not conflict with, result in any breach of any of the terms and
provisions of or constitute (with or without notice, lapse of time or
both) a default under the certificate of incorporation or by-laws of
the Seller, or any indenture, agreement, mortgage, deed of trust or
other instrument to which the Seller is a party or by which it is
bound, or result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, other than the Basic
Documents, or violate any law, order, rule, regulation, ordinance or
directive of any Governmental Authority applicable to the Seller of any
court or of any federal or state regulatory body, administrative agency
or other governmental instrumentality having jurisdiction over the
Seller or any of its properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the Seller's knowledge, threatened against the Seller,
before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality having jurisdiction over the
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Seller or its properties (A) asserting the invalidity of this Agreement
or any of the Basic Documents, (B) seeking to prevent the issuance of
the Notes or the consummation of any of the transactions contemplated
by this Agreement or any of the Basic Documents, or (C) seeking any
determination or ruling that might materially and adversely affect the
performance by the Seller of its obligations under, or the validity or
enforceability of, this Agreement or any of the other Basic Documents
or otherwise have a Material Adverse Effect or result in a Material
Adverse Change in respect of the Seller or (D) relating to the Seller
or the Receivables or Other Conveyed Property and which might adversely
affect the federal or State income, excise, franchise or similar tax
attributes of the Notes.
(g) NO CONSENTS. No consent, approval, authorization or order
of or declaration or filing with any governmental authority is required
for the conduct of the Seller's business, the issuance or sale of the
Notes or the consummation of the other transactions contemplated by
this Agreement and the Basic Documents, except such as have been duly
made or obtained.
(h) FINANCIAL CONDITION. The Seller has a positive net worth
and is able to and does pay its liabilities as they mature. The Seller
is not in default under any obligation to pay money to any Person
except for matters being disputed in good faith which do not involve an
obligation of the Seller on a promissory note. The Seller will not use
the proceeds from the transactions contemplated by the Basic Documents
to give any preference to any creditor or class of creditors, and such
transactions will not leave the Seller with remaining assets which are
unreasonably small compared to its ongoing operations.
(i) FRAUDULENT CONVEYANCE. The Seller is not selling the
Receivables to the Purchaser with any intent to hinder, delay or
defraud any of its creditors; the Seller will not be rendered insolvent
as a result of the sale of the Receivables to the Purchaser.
(j) TAX RETURNS. The Seller has filed all material federal and
state tax returns that are required to be filed and paid all material
taxes, including any assessments received by it, to the extent that
such taxes have become due (other than taxes, the amount or validity of
which are currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP
have been provided on the books of the Seller). Any taxes, fees and
other governmental charges payable by the Seller in connection with
consummation of the transactions contemplated by this Agreement and the
other Basic Documents to which the Seller is a party and the
fulfillment of the terms of this Agreement and the other Basic
Documents to which the Seller is a party have been paid or shall have
been paid as of each Funding Date.
(k) CHIEF EXECUTIVE OFFICE. The Seller has more than one place
of business, and the chief executive office of the Seller is at ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and its organizational number is
1682500.
(l) CERTIFICATE, STATEMENTS AND REPORTS. The officer's
certificates, statements, reports and other documents prepared by
Seller and furnished by Seller to the Purchaser, the Trustee, any Note
Purchaser or any Noteholder pursuant to this Agreement or any other
Basic Document to which it is a party, or otherwise in connection with
the transactions contemplated hereby or thereby, when taken as a whole,
do not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements contained herein or
therein not misleading.
(m) LEGAL COUNSEL, ETC. Seller consulted with its own legal
counsel and independent accountants to the extent it deems necessary
regarding the tax, accounting and regulatory consequences of the
transactions contemplated hereby, Seller is not participating in such
transactions in reliance on any representations of any other party,
their affiliates, or their counsel with respect to tax, accounting and
regulatory matters.
(n) NO MATERIAL ADVERSE CHANGE AS OF SEPTEMBER 30, 2006. No
Material Adverse Change has occurred with respect to the Seller since
the end of the quarter reported on in the Seller's Form 10-Q filed with
the Commission on October 27, 2006.
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(o) NO DEFAULT. The Seller is not in default in the
performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in, and is not otherwise in default
under (i) any law or statute applicable to it, including, without
limitation, any Consumer Law, (ii) any judgment, decree, writ,
injunction, order, award or other action of any court or governmental
authority or arbitrator or any order, rule or regulation of any
federal, state, county, municipal or other governmental or public
authority or agency having or asserting jurisdiction over it or any of
its properties or (iii) (x) any indebtedness or any instrument or
agreement under or pursuant to which any such indebtedness has been, or
could be, issued or incurred or (y) any other instrument or agreement
to which it is a party or by which it is bound or any of its properties
is affected, including, without limitation, the Basic Documents, that
either individually or in the aggregate, (A) would result in a Material
Adverse Change with respect to the Seller, or in any impairment of the
right or ability of the Seller to carry on its business substantially
as now conducted or (B) would result in a Material Adverse Effect.
(p) OTHER OBLIGATIONS. The Seller is not in default in the
performance, observance or fulfillment of any obligation, covenant or
condition in any of the Basic Documents to which it is a party or in
any agreement or instrument to which it is a party or by which it is
bound the result of which would have a Material Adverse Effect or
result in a Material Adverse Change.
(q) ERISA. The Seller does not maintain any Plans (other than
its defined contribution (401(k)) plan and the MFN Financial
Corporation Pension Plan), and the Seller agrees to notify each Note
Purchaser in advance of forming any Plans. Neither the Seller nor any
Affiliate of the Seller (other than MFN under the MFN Financial
Corporation Pension Plan) has any obligations or liabilities with
respect to any Plans or Multiemployer Plans, nor have any such Persons
had any obligations or liabilities with respect to any such Plans
during the five year period prior to the date this representation is
made or deemed made. The Seller will give notice to each Note Purchaser
and each Noteholder if at any time it or any Affiliate has any
obligations or liabilities with respect to any Plan or Multiemployer
Plan. All Plans maintained by the Seller or any Affiliate are in
substantial compliance with all applicable laws (including ERISA). The
Seller is not an employer under any Multiemployer Plan.
(r) COMPLIANCE WITH LAWS. The Seller has complied and will
comply in all material respects with all applicable laws, rules,
regulations, judgments, agreements, decrees and orders with respect to
its business and properties.
SECTION 8.2. ADDITIONAL COVENANTS OF THE SELLER.
(a) SALE. The Seller agrees to treat the conveyances hereunder
as financings for tax and accounting purposes and as sales for all
other purposes (including without limitation legal and bankruptcy
purposes) on all relevant books, records, tax returns, financial
statements and other applicable documents.
(b) NON-PETITION. In the event of any breach of a
representation and warranty made by the Purchaser hereunder, the Seller
covenants and agrees that it will not take any action to pursue any
remedy that it may have hereunder, in law, in equity or otherwise,
until a year and a day have passed since the date on which each class
of Notes issued by the Issuer and any and all other amounts due and
owing to the Noteholders and the Note Purchasers pursuant to the Basic
Documents have been paid in full. The Purchaser and the Seller agree
that damages will not be an adequate remedy for breach of this covenant
and that this covenant may be specifically enforced by the Purchaser,
by the Trustee on behalf of the Noteholders and the Note Purchasers, by
any Note Purchaser or by any Noteholder.
(c) CHANGES TO SELLER'S CONTRACT PURCHASE GUIDELINES. The
Seller covenants that it will not make any material credit-related
changes to the Seller's Contract Purchase Guidelines without the prior
written consent of the Controlling Note Purchaser (which consent shall
not unreasonably be withheld). The Seller covenants to provide prompt
prior written notice to each Note Purchaser upon any material change
made to the Seller's Contract Purchase Guidelines.
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(d) COOPERATION. If an Event of Default shall have occurred
and be continuing, Seller shall cooperate with and provide all
information and access requested by the Trustee, any Note Purchaser
and/or any Noteholder in connection with any actions taken pursuant to
SECTION 5.4 of the Indenture.
(e) CONSENTS TO WAIVERS, AMENDMENTS OR MODIFICATIONS OF BASIC
DOCUMENTS. The Seller shall not consent to any waiver, amendment or
modification of the Basic Documents that could reasonably be expected
to have a Material Adverse Effect on any Note Purchaser or any
Noteholder without the prior written consent of (i) the Controlling
Noteholder and the Majority Noteholders of the Highest Priority Class
or (ii) if any such waiver, amendment or modification relates solely to
the Pledged Subordinate Securities, without the prior written consent
of the Class B Note Purchasers and the Class B Majority Noteholders, or
(iii) if any such waiver, amendment or modification relates solely to
the application of proceeds from the Bear Cross Collateral, without the
prior written consent of the Class B note purchasers and the Class B
majority noteholders under the UBS Basic Documents.
(f) OTHER LIENS OR INTERESTS. Except for the conveyances
hereunder and any other Lien created under any Basic Document, the
Seller will not sell, pledge, assign or transfer to any other Person,
or grant, create, incur, assume or suffer to exist any lien on any
interest therein, including, without limitation, any lien levied upon
the Conveyed Property by the State of Texas (or any taxing authority or
governmental agency of the State of Texas) as a result of the
non-payment of any Texas Franchise Tax, and the Seller shall defend the
right, title, and interest of the Purchaser in, to and under the
Receivables and the other Conveyed Property against all claims of third
parties claiming through or under the Seller.
SECTION 8.3. LIABILITY OF SELLER; INDEMNITIES.
(a) The Seller shall indemnify the Purchaser, the Backup
Servicer, the Trustee, each Noteholder, each Note Purchaser and their
respective officers, directors, agents and employees for any liability
as a result of the failure of a Receivable to be originated in
compliance with all requirements of law and for any breach of any of
its representations, warranties, covenants or other agreements
contained herein.
(b) The Seller shall defend, indemnify, and hold harmless the
Purchaser, the Backup Servicer, the Trustee, each Noteholder, each Note
Purchaser and their respective officers, directors, agents and
employees from and against any and all costs, expenses, losses,
damages, claims, and liabilities, arising out of or resulting from the
use, ownership, or operation by the Seller, any Affiliate thereof or
any of their respective agents or subcontractors, of a Financed
Vehicle.
(c) The Seller shall indemnify, defend and hold harmless the
Purchaser, the Backup Servicer, the Trustee, each Noteholder, each Note
Purchaser and their respective officers, directors, agents and
employees from and against any taxes that may at any time be asserted
against any such Person with respect to the transactions contemplated
in this Agreement and any of the Basic Documents (except any income
taxes arising out of fees paid to the Trustee and the Backup Servicer
and except any taxes to which the Trustee may otherwise be subject),
including without limitation any sales, gross receipts, general
corporation, tangible personal property, privilege or license taxes
(but, in the case of the Purchaser, not including any taxes asserted
with respect to federal or other income taxes arising out of
distributions on the Notes) and costs and expenses in defending against
the same.
(d) The Seller shall indemnify, defend and hold harmless the
Purchaser, the Backup Servicer, the Trustee, each Noteholder, each Note
Purchaser and their respective officers, directors, agents and
employees from and against any loss, liability or expense incurred by
reason of (i) the Seller's willful misfeasance, bad faith or negligence
in the performance of its obligations or duties under this Agreement,
or by reason of reckless disregard of its obligations or duties under
this Agreement and/or (ii) the Seller's or the Purchaser's violation of
federal or State securities laws in connection with the offering and
sale of the Notes.
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(e) The Seller shall indemnify, defend and hold harmless the
Trustee and the Backup Servicer and its officers, directors, employees
and agents from and against any and all costs, expenses, losses,
claims, damages and liabilities arising out of, or incurred in
connection with the acceptance or performance of the trusts and duties
set forth herein and in the Basic Documents except to the extent that
such cost, expense, loss, claim, damage or liability shall be due to
the willful misfeasance, bad faith or negligence (except for errors in
judgment) of the Trustee or the Backup Servicer.
(f) The Seller shall indemnify, defend and hold harmless the
Purchaser, the Backup Servicer, the Trustee, each Noteholder, each Note
Purchaser and their respective officers, directors, agents and
employees from and against any and all costs, expenses, losses, claims,
damages and liabilities arising out of or relating to the failure of a
Receivable to be originated in compliance with all requirements of law,
including without limitation all Consumer Laws, and for any breach of
any of the Seller's representations and warranties, covenants or other
agreements contained herein (including, without limitation, the
representations contained in SECTION 3.1 hereof) or in any other Basic
Document to which the Seller is a party.
Indemnification under this Section shall survive the resignation or
removal of the Servicer or the Trustee and the termination of this Agreement and
the other Basic Documents and shall include reasonable fees and expenses of
counsel and other expenses of litigation. These indemnity obligations shall be
in addition to any obligation that the Seller may otherwise have under
applicable law, hereunder or under any other Basic Document. If the Seller shall
have made any indemnity payments pursuant to this Section and the Person to or
on behalf of whom such payments are made thereafter shall collect any of such
amounts from others, such Person shall promptly repay such amounts to the
Seller, without interest.
Notwithstanding any provision of this Section 8.3 or any other
provision of this Agreement, nothing herein shall be construed as to require the
Seller to provide any indemnification hereunder or under any other Basic
Document for any costs, expenses, losses, claims, damages or liabilities arising
solely out of, or incurred solely in connection with, credit losses with respect
to the Receivables.
SECTION 8.4. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SELLER. Seller shall not merge or consolidate with any other
person, convey, transfer or lease substantially all its assets as an entirety to
another Person, or permit any other Person to become the successor to Seller's
business unless, after the merger, consolidation, conveyance, transfer, lease or
succession, the successor or surviving entity shall be capable of fulfilling the
duties of Seller contained in this Agreement and the other Basic Documents to
which it is a party. Any corporation or other Person (i) into which Seller may
be merged or consolidated, (ii) resulting from any merger or consolidation to
which Seller shall be a party, (iii) which acquires by conveyance, transfer, or
lease substantially all of the assets of Seller, or (iv) succeeding to the
business of Seller, in any of the foregoing cases shall execute an agreement of
assumption to perform every obligation of Seller under this Agreement and the
other Basic Documents to which it is a party and, whether or not such assumption
agreement is executed, shall be the successor to Seller under this Agreement and
the other Basic Documents to which it is a party without the execution or filing
of any paper or any further act on the part of any of the parties to this
Agreement, anything in this Agreement to the contrary notwithstanding; PROVIDED,
HOWEVER, that nothing contained herein shall be deemed to release Seller from
any obligation. Seller shall provide notice of any merger, consolidation or
succession pursuant to this Section to the Trustee, each Note Purchaser and each
Noteholder. Notwithstanding the foregoing, Seller shall not merge or consolidate
with any other Person or permit any other Person to become a successor to
Seller's business, unless (x) immediately after giving effect to such
transaction, no representation or warranty made pursuant to SECTION 8.1 shall
have been breached (for purposes hereof, such representations and warranties
shall be deemed made as of the date of the consummation of such transaction) and
no event that, after notice or lapse of time, or both, would become an Event of
Default shall have occurred and be continuing, (y) Seller shall have delivered
to the Trustee, each Note Purchaser and each Noteholder an Officer's Certificate
and an Opinion of Counsel each stating that such consolidation, merger or
succession and such agreement of assumption comply with this Section and that
all conditions precedent, if any, provided for in this Agreement relating to
such transaction have been complied with, and (z) Seller shall have delivered to
the Trustee, each Note Purchaser and each Noteholder an Opinion of Counsel,
stating in the opinion of such counsel, either (A) all financing statements and
continuation statements and amendments thereto have been authorized and filed
that are necessary to preserve and protect the interest of the Purchaser and the
Trustee for the benefit of the Noteholders and the Note Purchasers in the
Opinion Collateral and reciting the details of the filings or (B) no such action
shall be necessary to preserve and protect such interest.
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SECTION 8.5. [RESERVED].
SECTION 8.6. REPORTING REQUIREMENTS. (a) The Seller shall furnish, or
cause to be furnished to each Noteholder and each Note Purchaser:
(i) AUDIT REPORT. As soon as available and in any
event within 90 days after the end of each fiscal year of the
Seller, a copy of the consolidated balance sheet of the Seller
and its Affiliates as at the end of such fiscal year, together
with the related statements of earnings, stockholders' equity
and cash flows for such fiscal year, prepared in reasonable
detail and in accordance with GAAP certified by independent
certified public accountants of recognized national standing
as shall be selected by the Seller.
(ii) QUARTERLY STATEMENTS. As soon as available, but
in any event within 45 days after the end of each fiscal
quarter (except the fourth fiscal quarter) of the Seller,
copies of the unaudited condensed consolidated balance sheet
of the Seller and its Affiliates as at the end of such fiscal
quarter and the related unaudited statements of earnings,
stockholders' equity and cash flows for the portion of the
fiscal year through such fiscal quarter (and as to the
statements of earnings for such fiscal quarter) in each case
setting forth in comparative form the figures for the
corresponding periods of the previous fiscal year, prepared in
reasonable detail and in accordance with GAAP applied
consistently throughout the periods reflected therein and
certified by the chief financial or accounting officer of the
Seller as presenting fairly the financial condition and
results of operations of the Seller and its Affiliates
(subject to normal year-end adjustments).
(b) For so long as Seller is subject to the reporting
requirements of Section 13(a) of the Exchange Act, its filing of the
annual and quarterly reports required under said act, on a timely
basis, shall be deemed compliance with this Section 8.6.
ARTICLE IX
----------
THE SERVICER
------------
SECTION 9.1. REPRESENTATIONS AND COVENANTS OF SERVICER. The Servicer
(and the Backup Servicer, in the case of clause (j) below) makes the following
representations and covenants on which the Purchaser shall be deemed to have
relied in acquiring the Receivables, on which the Noteholders shall be deemed to
have relied in purchasing the Notes and on which the applicable Note Purchasers
shall be deemed to have relied in making each Advance. The representations speak
as of the execution and delivery of this Agreement and as of the Closing Date,
in the case of Receivables conveyed by the Closing Date, and as of the
applicable Funding Date, in the case of Receivables conveyed by such Funding
Date, and the representations and covenants shall survive the sale of the
Receivables to the Purchaser and the pledge thereof to the Trustee for the
benefit of the Noteholders and the Note Purchasers pursuant to the Indenture.
(a) ORGANIZATION AND GOOD STANDING. The Servicer has been duly
organized and is validly existing as a corporation and in good standing
under the laws of the State of California, with power, authority and
legal right to own its properties and to conduct its business as such
properties are currently owned and such business is presently
conducted, and had at all relevant times, and shall have, power,
authority and legal right to acquire, own and service the Receivables.
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(b) DUE QUALIFICATION. The Servicer is duly qualified to do
business as a foreign corporation in good standing and has obtained all
necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business
(including the servicing of the Receivables as required by this
Agreement) requires or shall require such qualification except where
the failure to so qualify or obtain such licenses or consents would not
result in a Material Adverse Effect or a Material Adverse Change.
(c) POWER AND AUTHORITY. The Servicer has the power and
authority to execute and deliver this Agreement and the Basic Documents
to which it is a party and to carry out its terms and their terms,
respectively, and the execution, delivery and performance of this
Agreement and the Basic Documents to which it is a party have been duly
authorized by the Servicer by all necessary corporate action.
(d) BINDING OBLIGATION. This Agreement and the Basic Documents
to which the Servicer is a party shall constitute legal, valid and
binding obligations of the Servicer enforceable in accordance with
their respective terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, or other similar laws affecting
the enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies, regardless of
whether such enforceability is considered in a proceeding in equity or
at law.
(e) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the Basic Documents to which to the
Servicer is a party, and the fulfillment of the terms of this Agreement
and the Basic Documents to which the Servicer is a party, shall not
conflict with, result in any breach of any of the terms and provisions
of, or constitute (with or without notice or lapse of time) a default
under, the articles of incorporation or bylaws of the Servicer, or any
indenture, agreement, mortgage, deed of trust or other instrument to
which the Servicer is a party or by which it is bound or any of its
properties are subject, or result in the creation or imposition of any
Lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument,
other than the Basic Documents, or violate any law, order, rule or
regulation applicable to the Servicer of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or any of its
properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the Servicer's knowledge, threatened against the
Servicer, before any court, regulatory body, administrative agency or
other tribunal or governmental instrumentality having jurisdiction over
the Servicer or its properties (A) asserting the invalidity of this
Agreement or any of the Basic Documents, (B) seeking to prevent the
issuance of the Notes or the consummation of any of the transactions
contemplated by this Agreement or any of the Basic Documents, or (C)
seeking any determination or ruling that might materially and adversely
affect the performance by the Servicer of its obligations under, or the
validity or enforceability of, this Agreement or any of the other Basic
Documents or otherwise have a Material Adverse Effect or result in a
Material Adverse Change, or (D) relating to the Servicer and which
might adversely affect the federal or state income, excise, franchise
or similar tax attributes of the Notes.
(g) NO CONSENTS. No consent, approval, authorization or order
of or declaration or filing with any governmental authority is required
for the issuance or sale of the Notes or the consummation of the other
transactions contemplated by this Agreement and the other Basic
Documents, except such as have been duly made or obtained.
(h) TAXES. The Servicer has filed all federal and state tax
returns that are required to be filed and paid all taxes, including any
assessments received by it, to the extent that such taxes have become
due (other than taxes, the amount or validity of which are currently
being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on
the books of the Servicer). Any taxes, fees and other governmental
charges payable by the Servicer in connection with consummation of the
transactions contemplated by this Agreement and the other Basic
Documents to which the Servicer is a party and the fulfillment of the
terms of this Agreement and the other Basic Documents to which the
Servicer is a party have been paid or shall have been paid as of each
Funding Date.
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(i) CHIEF EXECUTIVE OFFICE. The Servicer hereby represents and
warrants to the Trustee that the Servicer's principal place of business
and chief executive office is ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(j) DATA MAPPING. Neither the Servicer nor the Backup Servicer
is aware of any fact that would cause such Person reasonably to believe
that the Servicer's servicing data cannot be mapped from the Servicer's
system to the Backup Servicer's system.
(k) CHANGES TO SERVICING GUIDELINES. The Servicer covenants
that it will not make any material changes to the Servicing Guidelines
prior to the Termination Date without the prior written consent of the
Controlling Note Purchaser (which consent shall not unreasonably be
withheld) and prior written notice to each Class B Note Purchaser.
(l) COOPERATION. If an Event of Default shall have occurred
and be continuing, Servicer shall cooperate with and provide all
information and access reasonably requested by the Trustee, any Note
Purchaser or any Noteholder in connection with any actions taken
pursuant to SECTION 5.4 of the Indenture.
(m) TEXAS FRANCHISE TAX. The Servicer agrees to make timely
payment, when due, of any Texas Franchise Tax that may be imposed,
assessed or levied by the taxing authority of the State of Texas on or
in respect of the Conveyed Property, the Seller, the Servicer, the
Purchaser or the Issuer.
SECTION 9.2. LIABILITY OF SERVICER; INDEMNITIES.
(a) The Servicer (in its capacity as such) shall be liable
hereunder only to the extent of the obligations in this Agreement
specifically undertaken by the Servicer and the representations made by
the Servicer in the Basic Documents to which it is a party.
(i) The Servicer shall defend, indemnify and hold
harmless the Purchaser, the Trustee, the Backup Servicer, each
Noteholder, each Note Purchaser and their respective officers,
directors, agents and employees from and against any and all
costs, expenses, losses, damages, claims and liabilities,
arising out of or resulting from the use, ownership,
repossession or operation by the Servicer or any Affiliate or
agent or sub-contractor thereof of any Financed Vehicle.
(ii) The Servicer, so long as CPS is the Servicer,
shall indemnify, defend and hold harmless the Purchaser, the
Trustee, the Backup Servicer, each Noteholder, each Note
Purchaser and their respective officers, directors, agents and
employees from and against any taxes that may at any time be
asserted against any of such parties with respect to the
transactions contemplated in this Agreement and the other
Basic Documents, including, without limitation, any sales,
gross receipts, general corporation, tangible personal
property, privilege or license taxes (but not including any
federal or other income taxes, including franchise taxes
(other than as set forth in subparagraph (vi) below) asserted
with respect to, and as of the date of, the sale of the
Receivables and the Other Conveyed Property to the Purchaser,
the pledge thereof to the Trustee for the benefit of the Note
Purchasers and the Noteholders or the issuance and original
sale of the Notes) and costs and expenses in defending against
the same.
(iii) The Servicer shall indemnify, defend and hold
harmless the Purchaser, the Trustee, the Backup Servicer, each
Noteholder, each Note Purchaser and their respective officers,
directors, agents and employees from and against any and all
costs, expenses, losses, claims, damages, and liabilities to
the extent that such cost, expense, loss, claim, damage, or
liability arose out of, or was imposed upon the Purchaser, the
Trustee, the Backup Servicer, such Noteholder or such Note
Purchaser through the negligence, willful misfeasance or bad
faith of the Servicer in the performance of its obligations or
duties under this Agreement or by reason of reckless disregard
of its obligations or duties under this Agreement or as a
result of a breach of any representation, warranty, covenant
or other agreement made by the Servicer in this Agreement or
in any other Basic Document to which it is a party.
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(iv) The Servicer shall indemnify, defend, and hold
harmless the Trustee and the Backup Servicer from and against
all costs, expenses, losses, claims, damages, and liabilities
arising out of or incurred in connection with the acceptance
or performance of the trusts and duties herein contained,
except to the extent that such cost, expense, loss, claim,
damage or liability: (A) shall be due to the willful
misfeasance, bad faith, or negligence (except for errors in
judgment) of the Trustee or the Backup Servicer, as applicable
or (B) relates to any tax other than the taxes with respect to
which the Servicer shall be required to indemnify the Trustee
or the Backup Servicer.
(v) The Servicer shall indemnify, defend and hold
harmless the Purchaser, the Backup Servicer, the Trustee, each
Noteholder, each Note Purchaser and their respective officers,
directors, agents and employees from and against any and all
costs, expenses, losses, claims, damages and liabilities
arising out of or relating to the failure of a Receivable to
be serviced in compliance with all requirements of law,
including without limitation all Consumer Laws, and for any
breach of any of the Servicer's representations and
warranties, covenants or other agreements contained herein or
in any other Basic Document to which the Servicer is a party.
(vi) The Servicer, so long as CPS is the Servicer,
shall indemnify, defend and hold harmless the Purchaser, the
Trustee, the Backup Servicer, each Noteholder, each Note
Purchaser and their respective officers, directors, agents and
employees from and against any Texas Franchise Tax asserted
against any of such parties with respect to the transactions
contemplated in this Agreement and the other Basic Documents
and costs and expenses in defending against the same.
(b) Notwithstanding the foregoing, the Servicer shall not be
obligated to defend, indemnify, and hold harmless any Noteholder or any
Note Purchaser for any losses, claims, damages or liabilities incurred
by such Noteholder or such Note Purchaser 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 any
Note by such Noteholder or the Note Purchaser with the assets of a plan
subject to such provisions of ERISA or the Code.
(c) For purposes of this SECTION 9.2, in the event of the
termination of the rights and obligations of the Servicer (or any
successor thereto pursuant to SECTION 9.3) as Servicer pursuant to
SECTION 10.1, or a resignation by such Servicer pursuant to this
Agreement, such Servicer shall be deemed to be the Servicer pending
appointment of a successor Servicer pursuant to SECTION 10.2. The
provisions of this SECTION 9.2(c) shall in no way affect the survival
pursuant to SECTION 9.2(d) of the indemnification by the Servicer
provided by SECTION 9.2(a).
(d) Indemnification under this SECTION 9.2 shall survive the
termination of this Agreement and the other Basic Documents and any
resignation or removal of CPS or any successor Servicer as Servicer and
shall include reasonable fees and expenses of counsel and expenses of
litigation. These indemnity obligations shall be in addition to any
obligation that the Servicer may otherwise have under applicable law,
hereunder or under any other Basic Document. If the Servicer shall have
made any indemnity payments pursuant to this Section and the recipient
thereafter collects any of such amounts from others, the recipient
shall promptly repay such amounts to the Servicer, without interest.
SECTION 9.3. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF THE SERVICER OR BACKUP SERVICER.
(a) The Servicer shall not merge or consolidate with any other
Person, convey, transfer or lease all or substantially all of its
assets as an entirety to another Person, or permit any other Person to
become the successor to the Servicer's business unless, after the
merger, consolidation, conveyance, transfer, lease or succession, the
successor or surviving entity shall be capable of fulfilling the duties
of the Servicer contained in this Agreement and the other Basic
Documents to which it is a party. Any corporation or other Person (i)
into which the Servicer may be merged or consolidated, (ii) resulting
from any merger or consolidation to which the Servicer shall be a
party, (iii) which acquires by conveyance, transfer, or lease
substantially all of the assets of the Servicer, or (iv) succeeding to
the business of the Servicer, in any of the foregoing cases shall
execute an agreement of assumption to perform every obligation of the
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Servicer under this Agreement and the other Basic Documents to which it
is a party and, whether or not such assumption agreement is executed,
shall be the successor to the Servicer under this Agreement and the
other Basic Documents to which it is a party without the execution or
filing of any paper or any further act on the part of any of the
parties to this Agreement, anything in this Agreement to the contrary
notwithstanding; PROVIDED, HOWEVER, that nothing contained herein shall
be deemed to release the Servicer from any obligation. The Servicer
shall provide notice of any merger, consolidation or succession
pursuant to this Section to the Trustee, each Note Purchaser and each
Noteholder. Notwithstanding the foregoing, the Servicer shall not merge
or consolidate with any other Person or permit any other Person to
become a successor to the Servicer's business, unless (x) immediately
after giving effect to such transaction, no representation or warranty
made pursuant to SECTION 9.1 shall have been breached (for purposes
hereof, such representations and warranties shall be deemed made as of
the date of the consummation of such transaction) and no event that,
after notice or lapse of time, or both, would become Event of Default
shall have occurred and be continuing, (y) the Servicer shall have
delivered to the Trustee, each Note Purchaser and each Noteholder an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption
comply with this Section and that all conditions precedent, if any,
provided for in this Agreement relating to such transaction have been
complied with, and (z) the Servicer shall have delivered to the
Trustee, each Note Purchaser and each Noteholder an Opinion of Counsel,
stating in the opinion of such counsel, either (A) all financing
statements and continuation statements and amendments thereto have been
executed and filed that are necessary to preserve and protect the
interest of the Purchaser and the Trustee for the benefit of the
Noteholders and the Note Purchasers in the Opinion Collateral and
reciting the details of the filings or (B) no such action shall be
necessary to preserve and protect such interest.
(b) Any Person (i) into which the Backup Servicer (in its
capacity as Backup Servicer or successor Servicer) may be merged or
consolidated, (ii) resulting from any merger or consolidation to which
the Backup Servicer shall be a party, (iii) which acquires by
conveyance, transfer or lease substantially all of the assets of the
Backup Servicer, or (iv) succeeding to the business of the Backup
Servicer, in any of the foregoing cases shall execute an agreement of
assumption to perform every obligation of the Backup Servicer under
this Agreement and, whether or not such assumption agreement is
executed, shall be the successor to the Backup Servicer under this
Agreement without the execution or filing of any paper or any further
act on the part of any of the parties to this Agreement, anything in
this Agreement to the contrary notwithstanding; PROVIDED, HOWEVER, that
nothing contained herein shall be deemed to release the Backup Servicer
from any obligation.
SECTION 9.4. [RESERVED]
SECTION 9.5. DELEGATION OF DUTIES. The Servicer may at any time
delegate duties under this Agreement to sub-contractors who are in the business
of servicing automotive receivables with the prior written consent of the
Controlling Note Purchaser (which consent shall not unreasonably be withheld);
PROVIDED, HOWEVER, that no such delegation or subcontracting of duties by the
Servicer shall relieve the Servicer of its responsibility with respect to such
duties.
SECTION 9.6. SERVICER AND BACKUP SERVICER NOT TO RESIGN. Subject to the
provisions of SECTION 9.3, neither the Servicer nor the Backup Servicer shall
resign from the obligations and duties imposed on it by this Agreement as
Servicer or Backup Servicer except (i) upon a determination that by reason of a
change in legal requirements the performance of its duties under this Agreement
would cause it to be in violation of such legal requirements in a manner which
would have a material adverse effect on the Servicer or the Backup Servicer, as
the case may be, and the Controlling Note Purchaser does not elect to waive the
obligations of the Servicer or the Backup Servicer, as the case may be, to
perform the duties which render it legally unable to act or to delegate those
duties to another Person or, (ii) in the case of the Backup Servicer, upon the
prior written consent of the Controlling Note Purchaser. Any such determination
permitting the resignation of the Servicer or Backup Servicer pursuant to clause
(i) in the immediately preceding sentence shall be evidenced by an Opinion of
Counsel to such effect delivered and acceptable to the Trustee and the
Controlling Note Purchaser. No resignation of the Servicer shall become
effective until the Backup Servicer or an entity acceptable to the Controlling
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Note Purchaser shall have assumed the responsibilities and obligations of the
Servicer. No resignation of the Backup Servicer shall become effective until an
entity acceptable to the Controlling Note Purchaser shall have assumed the
responsibilities and obligations of the Backup Servicer; provided, however, that
in the event a successor Backup Servicer is not appointed within 60 days after
the Backup Servicer has given notice of its resignation and has provided the
Opinion of Counsel required by this SECTION 9.6, the Backup Servicer may
petition a court for its removal.
ARTICLE X
---------
DEFAULT
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SECTION 10.1. SERVICER TERMINATION EVENTS. For purposes of this
Agreement and the other Basic Documents, each of the following shall constitute
a "SERVICER TERMINATION EVENT":
(a) Any failure by the Servicer to deliver or cause to be
delivered any proceeds or payment required to be so delivered under
this Agreement or any other Basic Document within one (1) Business Day
of the date when the same becomes due;
(b) Failure by the Servicer to deliver, or cause to be
delivered, to each Noteholder, each Note Purchaser, the Trustee and the
Backup Servicer, any Servicer's Certificate by the Determination Date
prior to the related Settlement Date, which failure continues
unremedied for a period of two (2) Business Days;
(c) Failure by the Servicer to perform or observe in any
material respect any term, covenant, or agreement under this Agreement
or any other Basic Document (other than any term, covenant or agreement
referred to in another subparagraph of this SECTION 10.1), which
failure materially and adversely affects the rights of the Controlling
Note Purchaser or the Noteholders of the Highest Priority Class and is
not cured within 30 calendar days after written notice is received by
the Servicer from the Trustee, the Controlling Note Purchaser or a
Noteholder of the Highest Priority Class or after discovery of such
failure by a Responsible Officer of the Servicer;
(d) Any representation, warranty or statement of the Servicer
made in this Agreement or any other Basic Document to which it is a
party or any certificate, report or other writing delivered pursuant
hereto or thereto shall prove to be incorrect in any material respect
as of the time when the same shall have been made, and such
incorrectness materially and adversely affects the rights of the
Controlling Note Purchaser or the Noteholders of the Highest Priority
Class and is not cured within 30 calendar days after written notice is
received by the Servicer from the Trustee, the Controlling Note
Purchaser or a Noteholder of the Highest Priority Class or after
discovery of such failure by a Responsible Officer of the Servicer;
(e) An application is made by the Servicer for the appointment
of a receiver, trustee or custodian for the Collateral, the Pledged
Subordinate Securities, the Bear Cross Collateral or any other material
assets of Purchaser or the Servicer; a petition under any section or
chapter of the Bankruptcy Code or federal or State law or regulation
shall be filed by the Servicer, or the Servicer shall make an
assignment for the benefit of its creditors, or any case or proceeding
shall be filed by the Servicer for its dissolution, liquidation, or
termination; or the Servicer ceases to conduct its business;
(f) The Servicer is enjoined, restrained or prevented by court
order from conducting all or any material part of its business affairs,
or a petition under any section or chapter of the Bankruptcy Code or
any similar federal or State law or regulation is filed against the
Servicer, or any case or proceeding is filed against the Servicer, for
its dissolution or liquidation, and such injunction, restraint,
petition, case or proceeding is not dismissed within sixty (60) days
after the entry of filing thereof;
(g) An Event of Default shall have occurred (so long as CPS is
Servicer);
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(h) The occurrence of any of the following trigger events: (i)
the three-month rolling average Servicer Delinquency Ratio exceeds (A)
6.00% during the Accrual Periods from April to September or (B) 6.50%
during the Accrual Periods from October to March; or (ii) the Servicer
Loss Ratio exceeds (A) 7.50% during the Accrual Periods from May to
October or (B) 8.25% during the Accrual Periods from November to April;
(i) The Servicer fails to maintain minimum Consolidated Total
Adjusted Equity of $60,000,000 as of the end of any fiscal quarter;
(j) The Servicer exceeds a maximum leverage ratio (total
liabilities less all non-recourse debt/Consolidated Total Adjusted
Equity) of six times as of the end of any fiscal quarter; and
(k) The Servicer fails to maintain cash and cash equivalents
of at least $8.5 million as of the end of any calendar month.
In the event that the Servicer, the Seller, the Issuer, the Purchaser
or the Trustee gains knowledge of the occurrence of a Servicer Termination
Event, the Servicer, the Seller, the Issuer, the Purchaser or the Trustee, as
applicable, shall promptly notify each Note Purchaser and each Noteholder in
writing of such occurrence; PROVIDED, THAT, the Servicer shall be deemed to
satisfy such obligation upon its delivery of an Officer's Certificate in
accordance with SECTION 4.10 hereof.
SECTION 10.2. CONSEQUENCES OF A SERVICER TERMINATION EVENT OR
NON-EXTENSION OF TERM OF SERVICER. If a Servicer Termination Event shall occur
and be continuing, the Controlling Note Purchaser and the Majority Noteholders
of the Highest Priority Class, by notice given in writing to the Backup
Servicer, each other Noteholder, each other Note Purchaser and the Servicer, may
terminate all of the rights and obligations of the Servicer under this
Agreement. The outgoing Servicer shall be entitled to its pro rata share of the
Servicing Fee for the number of days in the Accrual Period prior to the
effective date of its termination. On or after the receipt by the Servicer of
such written notice or upon non-extension of the servicing term as referred to
in SECTION 4.15, all authority, power, obligations and responsibilities of the
Servicer under this Agreement, whether with respect to the Notes or the
Receivables and Other Conveyed Property or otherwise, automatically shall pass
to, be vested in and become obligations and responsibilities of the Backup
Servicer (or such other successor Servicer appointed by the Controlling Note
Purchaser and the Majority Noteholders of the Highest Priority Class under
SECTION 10.3); PROVIDED, HOWEVER, that the successor Servicer shall have no
liability with respect to any obligation which was required to be performed by
the outgoing Servicer prior to the date that the successor Servicer becomes the
Servicer or any claim of a third party based on any alleged action or inaction
of the outgoing Servicer, which obligations and claims shall remain those of the
outgoing Servicer. The successor Servicer is authorized and empowered by this
Agreement to execute and deliver, on behalf of the outgoing Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement of the Receivables and the Other Conveyed Property and related
documents to show the Purchaser as lienholder or secured party on the related
Lien Certificates, or otherwise. The outgoing Servicer agrees to cooperate with
the successor Servicer in effecting the termination of the responsibilities and
rights of the outgoing Servicer under this Agreement, including, without
limitation, the transfer to the successor Servicer for administration by it of
all cash amounts that shall at the time be held by the outgoing Servicer for
deposit, or have been deposited by the outgoing Servicer, in the Collection
Account or thereafter received with respect to the Receivables and the delivery
to the successor Servicer of all Receivable Files that shall at the time be held
by the outgoing Servicer and a computer tape in readable form as of the most
recent Business Day containing all information necessary to enable the successor
Servicer to service the Receivables and the Other Conveyed Property. All
reasonable costs and expenses (including reasonable attorneys' fees) incurred in
connection with transferring any Receivable Files to the successor Servicer and
amending this Agreement to reflect such succession as Servicer pursuant to this
SECTION 10.2 shall be paid by the predecessor Servicer upon presentation of
reasonable documentation of such costs and expenses. In addition, any successor
Servicer shall be entitled to payment from the immediate predecessor Servicer
for reasonable transition expenses incurred in connection with acting as
successor Servicer, and to the extent not so paid, such payment shall be made
pursuant to SECTION 5.7 hereof. Upon receipt of notice of the occurrence of a
Servicer Termination Event or the non-extension of the Servicer's term, the
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Trustee shall give notice thereof to each Noteholder and each Note Purchaser. If
requested by the Controlling Note Purchaser and the Majority Noteholders of the
Highest Priority Class, the successor Servicer shall terminate the Lockbox
Agreement and direct the Obligors to make all payments under the Receivables
directly to the successor Servicer (in which event the successor Servicer shall
process such payments in accordance with SECTION 4.2(e)), or to a lockbox
established by the successor Servicer at the direction of the Controlling Note
Purchaser, at the successor Servicer's expense. The outgoing Servicer shall
grant the Trustee, the successor Servicer, each Note Purchaser and each
Noteholder reasonable access to the outgoing Servicer's premises at the outgoing
Servicer's expense.
SECTION 10.3. APPOINTMENT OF SUCCESSOR.
(a) On and after the time the Servicer receives a notice of
termination pursuant to SECTION 10.2, upon non-extension of the
servicing term as referred to in SECTION 4.15, or upon the resignation
of the Servicer pursuant to SECTION 9.6, the outgoing 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 (i) 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 or (ii) such time as a successor Servicer shall
assume all of the rights and obligations of the predecessor Servicer
hereunder and under any other Basic Document; PROVIDED, HOWEVER, that
the outgoing Servicer shall not be relieved of its duties, obligations
and liabilities as Servicer until a successor Servicer has assumed such
duties, obligations and liabilities. Notwithstanding the preceding
sentence, if the Backup Servicer or any other successor Servicer shall
not have assumed the duties, obligations and liabilities of the
Servicer within 45 days of the termination, non-extension or
resignation described in this SECTION 10.3, the outgoing Servicer may
petition a court of competent jurisdiction to appoint any Eligible
Servicer as the successor to the outgoing Servicer. Pending appointment
as successor Servicer, the Backup Servicer (or such other Person as
shall have been appointed by the Controlling Note Purchaser and the
Majority Noteholders of the Highest Priority Class) shall act as
successor Servicer unless it is legally unable to do so, in which event
the outgoing Servicer shall continue to act as Servicer until a
successor has been appointed and accepted such appointment. In the
event of termination of the Servicer, ▇▇▇▇▇ Fargo Bank, National
Association, as the Backup Servicer shall assume the obligations of
Servicer hereunder on the date (the "ASSUMPTION Date") specified in the
written notice delivered by the Trustee to the Backup Servicer and the
Servicer pursuant to SECTION 10.2 or, in the event that the Controlling
Note Purchaser and the Majority Noteholders of the Highest Priority
Class shall have determined that a Person other than the Backup
Servicer shall be the successor Servicer in accordance with SECTION
10.2, on the date of the execution of a written assumption agreement by
such Person to serve as successor Servicer. Notwithstanding the Backup
Servicer's assumption of, and its agreement to perform and observe, all
duties, responsibilities and obligations of the Seller as Servicer, or
any successor Servicer, under this Agreement arising on and after the
Assumption Date, the Backup Servicer shall not be deemed to have
assumed or to become liable for, or otherwise have any liability for
any duties, responsibilities, obligations or liabilities of the Seller
or any other Servicer arising on or before the Assumption Date, whether
provided for by the terms of this Agreement, arising by operation of
law or otherwise, including, without limitation, any liability for any
duties, responsibilities, obligations or liabilities of the Seller or
any other Servicer arising on or before the Assumption Date under
SECTION 4.7 or 9.2 of this Agreement, regardless of when the liability,
duty, responsibility or obligation of the Seller or any other Servicer
therefor arose, whether provided by the terms of this Agreement,
arising by operation of law or otherwise. Notwithstanding the above, if
the Backup Servicer shall be legally unable or unwilling to act as
Servicer, the Backup Servicer, the Trustee or the Controlling Note
Purchaser and the Majority Noteholders of the Highest Priority Class
may petition a court of competent jurisdiction to appoint any Eligible
Servicer as the successor to the outgoing Servicer. Pending appointment
pursuant to the preceding sentence, the Backup Servicer shall act as
successor Servicer unless it is legally unable to do so, in which event
the outgoing Servicer shall continue to act as Servicer until a
successor has been appointed and accepted such appointment. Subject to
SECTION 9.6, no provision of this Agreement shall be construed as
relieving the Backup Servicer of its obligation to succeed as successor
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Servicer upon the termination of the Servicer pursuant to SECTION 10.2,
the non-extension of the Servicer's term pursuant to SECTION 4.15 or
the resignation of the Servicer pursuant to SECTION 9.6. If upon the
termination of the Servicer pursuant to SECTION 10.2, the non-extension
of the Servicer's term pursuant to SECTION 4.15 or the resignation of
the Servicer pursuant to SECTION 9.6, the Controlling Note Purchaser
and the Majority Noteholders of the Highest Priority Class appoint a
successor Servicer other than the Backup Servicer, the Backup Servicer
shall not be relieved of its duties as Backup Servicer hereunder.
(b) Any successor Servicer shall be entitled to such
compensation (whether payable out of the Collection Account or
otherwise) as the outgoing Servicer would have been entitled to under
this Agreement if the outgoing Servicer had not resigned or been
terminated hereunder or had been renewed for an additional servicing
term hereunder.
SECTION 10.4. NOTIFICATION TO THE NOTEHOLDERS AND NOTE PURCHASERS. Upon
any termination of, or appointment of a successor to, the Servicer, the Trustee
shall give prompt written notice thereof to each Noteholder and each Note
Purchaser.
SECTION 10.5. WAIVER OF PAST DEFAUlTS. The Controlling Note Purchaser
and the Majority Noteholders of the Highest Priority Class may waive in writing
any default by the Servicer in the performance of its obligations under this
Agreement and the consequences thereof. Upon any such waiver of a past default,
such default shall cease to exist, and any Servicer Termination Event arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereto.
SECTION 10.6. ACTION UPON CERTAIN FAILURES OF THE SERVICER. In the
event that the Trustee shall have knowledge of any failure of the Servicer
specified in SECTION 10.1 that would give rise to a right of termination under
such Section upon the Servicer's failure to remedy the same after notice, the
Trustee shall give notice thereof to the Servicer, each Note Purchaser and each
Noteholder. For all purposes of this Agreement (including, without limitation,
this SECTION 10.6), the Trustee shall not be deemed to have knowledge of any
failure of the Servicer as specified in SECTIONS 10.1(c) through (h) unless
notified thereof in writing by the Servicer, any Note Purchaser or any
Noteholder. The Trustee shall be under no duty or obligation to investigate or
inquire as to any potential failure of the Servicer specified in SECTION 10.1.
SECTION 10.7. CONTINUED ERRORS. Notwithstanding anything contained
herein to the contrary, if the Backup Servicer becomes successor Servicer it is
authorized to accept and rely on all of the accounting, records (including
computer records) and work of the prior Servicer relating to the Receivables
(collectively, the "PREDECESSOR SERVICER WORK PRODUCT") without any audit or
other examination thereof, and the Backup Servicer as successor Servicer shall
have no duty, responsibility, obligation or liability for the acts and omissions
of the prior Servicer. If any error, inaccuracy, omission or incorrect or
non-standard practice or procedure (collectively, "ERRORS") exist in any
Predecessor Servicer Work Product and such Errors make it materially more
difficult to service or should cause or materially contribute to the Backup
Servicer as successor Servicer making or continuing any Errors (collectively,
"CONTINUED ERRORS"), the Backup Servicer as successor Servicer shall have no
duty or responsibility for such Continued Errors; PROVIDED, HOWEVER, that the
Backup Servicer as successor Servicer agrees to use its best efforts to prevent
further Continued Errors. In the event that the Backup Servicer as successor
Servicer becomes aware of Errors or Continued Errors, the Backup Servicer as
successor Servicer shall, with the prior consent of the Controlling Note
Purchaser, use its best efforts to reconstruct and reconcile such data as is
commercially reasonable to correct such Errors and Continued Errors and to
prevent future Continued Errors. The Backup Servicer as successor Servicer shall
be entitled to recover its costs thereby expended in accordance with SECTIONS
5.7(a)(i) and 5.7(a)(ix) hereof.
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ARTICLE XI
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MISCELLANEOUS PROVISIONS
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SECTION 11.1. AMENDMENT.
(a) This Agreement may not be waived, amended or otherwise
modified except in a writing signed by the parties hereto, the
Controlling Note Purchaser and the Majority Noteholders of the Highest
Priority Class; PROVIDED, HOWEVER, that, no such amendment shall,
without the prior written consent of each Note Purchaser and each
Noteholder, (i) modify or have the effect of modifying Sections 5.7 or
5.8 or this SECTION 11.1 or (ii) eliminate or materially alter any
party's delivery or notice obligations to the Noteholders; PROVIDED,
FURTHER, that no such waiver, amendment or modification shall, without
the prior written consent of the affected Note Purchaser and each
Noteholder of a class of Notes affected thereby:
(i) change the date of payment of any installment of
principal of or interest on a class of Notes or any other
amount owed by the Issuer, the Purchaser, the Servicer or the
Seller under the Basic Documents, or reduce the Percentage
Interest of the Notes, the interest rate thereon, change the
provision of this Agreement relating to the application of
collections on, or the proceeds of the sale of, the
Collateral, the Pledged Subordinate Securities or, subject to
the terms and provisions of the Intercreditor Agreement, the
Bear Cross Collateral to payment of principal of or interest
on a class of Notes or any other amount owed by the Issuer,
the Purchaser, the Servicer or the Seller under the Basic
Documents, or change any place of payment where, or the coin
or currency in which, a class of Notes or the interest thereon
or any other amount owed by the Issuer, the Purchaser, the
Seller or the Servicer under the Basic Documents is payable;
(ii) impair the right to institute suit for the
enforcement of the provisions of this Agreement requiring the
application of funds available therefor, as provided in
SECTION 5.8, to the payment of any such amount due on a class
of Notes or any other amount owed by the Issuer, the
Purchaser, the Servicer or the Seller under the Basic
Documents on or after the respective due dates thereof;
(iii) reduce the Percentage Interest, the consent of
the Holders of which is required for any such amendment,
waiver or modification, or eliminate the requirement that the
applicable Note Purchaser consent thereto, or the consent of
the Holders of which or the applicable Note Purchaser is
required for any waiver of compliance with certain provisions
of this Agreement or certain defaults hereunder and their
consequences provided for in this Agreement;
(iv) modify or alter the provisions of the proviso to
the definition of the term "OUTSTANDING";
(v) modify any provision of this Section or to
provide that certain additional provisions of this Agreement
or the other Basic Documents cannot be modified or waived
without the consent of the Controlling Note Purchaser and the
Majority Noteholders of the Highest Priority Class; or
(vi) modify any of the provisions of this Agreement
in such manner as to affect the calculation of the amount or
timing of any payment of (x) interest or principal due on a
class of Notes on any Settlement Date (including the
calculation of any of the individual components of such
calculation) or (y) any amount due to any Note Purchaser from
the Issuer, the Purchaser, the Servicer or the Seller under
the Basic Documents.
(b) Prior to the execution of any amendment, waiver or consent to this
Agreement the Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment, waiver or consent is
authorized or permitted by this Agreement and the Opinion of Counsel referred to
in SECTION 11.2(i)(i).
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(c) The Trustee may, but shall not be obligated to, enter into
any such amendment, waiver or consent which affects the Trustee's own
rights, duties or immunities under this Agreement or otherwise.
(d) Upon the termination of CPS as Servicer and the
appointment of the Backup Servicer as Servicer hereunder, all
amendments to the terms of this Agreement specified in the Servicing
Assumption Agreement shall become a part of this Agreement, as if this
Agreement was amended to reflect such changes in accordance with this
SECTION 11.1.
SECTION 11.2. PROTECTION OF TITLE TO PROPERTY.
(a) The Seller, the Purchaser, the Issuer or the Servicer or
each of them shall authorize, execute (if necessary) and file such
financing statements and cause to be authorized, executed (if
necessary) and filed such continuation statements, all in such manner
and in such places and take such other action as may be required by law
fully to preserve, maintain and protect the interest of the Purchaser
and the interests of (i) subject to the terms and provisions of the
Intercreditor Agreement, the Trustee for the benefit of the Noteholders
and the Note Purchasers in the Collateral and in the proceeds thereof,
(ii) the Class B Note Purchasers and the Class B Noteholders in the
Pledged Subordinate Securities and in the proceeds thereof, and (iii)
subject to the terms and provisions of the Intercreditor Agreement, the
UBS Indenture Trustee in the Bear Cross Collateral and the proceeds
thereof for the benefit of the Class B note purchasers and the Class B
noteholders under the UBS Basic Documents. The Seller shall deliver (or
cause to be delivered) to each Noteholder, each Note Purchaser and the
Trustee file-stamped copies of, or filing receipts for, any document
filed as provided above, as soon as available following such filing.
(b) None of the Seller, the Purchaser, the Issuer or the
Servicer shall change its name, identity, jurisdiction of organization,
form of organization or corporate structure in any manner that would,
could or might make any financing statement or continuation statement
filed in accordance with PARAGRAPH (A) above seriously misleading
within the meaning of Section 9-506(a) of the UCC, unless it shall have
given each Noteholder, each Note Purchaser and the Trustee at least
thirty (30) days' prior written notice thereof and shall have promptly
filed appropriate amendments to all previously filed financing
statements or continuation statements. Promptly upon such filing, the
Purchaser, the Seller, the Issuer or the Servicer, as the case may be,
shall deliver an Opinion of Counsel to the Trustee, each Note
Purchaser, each Noteholder and the UBS Indenture Trustee, in a form and
substance reasonably satisfactory to the Controlling Note Purchaser,
stating either (A) all financing statements and continuation statements
have been authorized, executed and filed that are necessary fully to
preserve and protect the interest of the Purchaser and (i) subject to
the terms and provisions of the Intercreditor Agreement, the Trustee
for the benefit of the Noteholders and the Note Purchasers in the
Collateral and the proceeds thereof, (ii) the Class B Noteholders and
the Class B Note Purchasers in the Pledged Subordinate Securities and
the proceeds thereof, and (iii) subject to the terms and provisions of
the Intercreditor Agreement, the UBS Indenture Trustee in the Bear
Cross Collateral and the proceeds thereof for the benefit of the Class
B note purchasers and the Class B noteholders under the UBS Basic
Documents, and reciting the details of such filings or referring to
prior Opinions of Counsel in which such details are given, or (B) no
such action shall be necessary to preserve and protect such interest.
(c) Each of the Seller, the Purchaser, the Issuer and the
Servicer shall have an obligation to give each Noteholder, each Note
Purchaser and the Trustee at least 60 days' prior written notice of any
relocation of its chief executive office or a change in its corporate
structure, jurisdiction of organization or name and shall file
amendments, continuation statements and new financing statements if, as
a result of such relocation or change, the applicable provisions of the
UCC would require the filing of any amendment of any previously filed
financing or continuation statement or of any new financing statement
to fully preserve and protect the interest of the Purchaser and (i)
subject to the terms and provisions of the Intercreditor Agreement, the
Trustee on behalf of the Noteholders and the Note Purchasers in the
Collateral and the proceeds thereof, (ii) the Class B Noteholders and
the Class B Note Purchasers in the Pledged Subordinate Securities and
the proceeds thereof, and (iii) subject to the terms and provisions of
the Intercreditor Agreement, the UBS Indenture Trustee in the Bear
Cross Collateral and the proceeds thereof for the benefit of the Class
B note purchasers and the Class B noteholders under the UBS Basic
Documents. The Servicer shall at all times be organized under the laws
of the United States (or any State thereof) and maintain its chief
executive office and jurisdiction of organization, within the United
States of America.
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(d) The Servicer shall maintain accounts and records as to
each Receivable accurately and in sufficient detail to permit (i) the
reader thereof to know at any time the status of such Receivable,
including payments and recoveries made and payments owing (and the
nature of each) and (ii) reconciliation between payments or recoveries
on (or with respect to) each Receivable and the amounts from time to
time deposited in the Collection Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that,
from and after the time of sale under this Agreement of the Receivables
and the Other Conveyed Property to the Purchaser, the Servicer's master
computer records (including any backup archives) that refer to a
Receivable shall indicate clearly the interest of the Purchaser in such
Receivable and that such Receivable is owned by the Purchaser and
pledged to the Trustee for the benefit of the Note Purchasers and the
Noteholders. Indication of the Purchaser's and the Trustee's interest
in a Receivable shall be deleted from or modified on the Servicer's
computer systems when, and only when, the related Receivable shall have
been paid in full or repurchased.
(f) If at any time the Seller or the Servicer shall propose to
sell, grant a security interest in or otherwise transfer any interest
in automotive receivables to any prospective purchaser, lender or other
transferee, the Servicer shall give to such prospective purchaser,
lender or other transferee computer tapes, records or printouts
(including any restored from backup archives) that, if they shall refer
in any manner whatsoever to any Receivable, shall indicate clearly that
such Receivable has been sold and is owned by the Purchaser and pledged
to the Trustee for the benefit of the Noteholders and the Note
Purchasers.
(g) The Servicer shall permit the Trustee, the Backup
Servicer, each Note Purchaser and each Noteholder and their respective
agents upon reasonable notice and at any time during normal business
hours to inspect, audit, and make copies of and abstracts from the
Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to any Noteholder
or any Note Purchaser or to the Trustee, within five Business Days, a
list of all Receivables (by contract number and name of Obligor) then
pledged to the Trustee for the benefit of the Note Purchasers and the
Noteholders, together with a reconciliation of such list to the
Schedule of Receivables and to each of the Servicer's Certificates
furnished before such request indicating removal of Receivables from
the lien of the Indenture.
(i) The Servicer shall deliver to each Note Purchaser, each
Noteholder and the Trustee:
(i) promptly after the execution and delivery of this
Agreement and, if required pursuant to SECTION 11.1, of each
amendment, waiver, or consent, an Opinion of Counsel, in form
and substance satisfactory to the Controlling Note Purchaser
and (to the extent such Opinion of Counsel relates to Opinion
Collateral consisting of Pledged Subordinate Securities) the
Class B Note Purchasers and (to the extent such Opinion of
Counsel relates to Opinion Collateral consisting of Bear Cross
Collateral) the Class B note purchasers under the UBS Basic
Documents, stating that in the opinion of such counsel, either
(A) all financing statements and continuation statements have
been authorized, executed and filed that are necessary fully
to preserve and protect the interest of the Purchaser and the
Trustee for the benefit of the applicable Noteholders and the
applicable Note Purchasers in the Opinion Collateral, and
reciting the details of such filings or referring to a prior
Opinion of Counsel in which such details are given, or (B) no
such action shall be necessary to preserve and protect such
interest; and
(ii) within 90 days after the beginning of each
calendar year beginning with the first calendar year beginning
more than three months after the Closing Date, an Opinion of
Counsel, dated as of a date during such 90-day period, stating
that, the opinion of such counsel, either (a) all financing
statements and continuation statement have been authorized,
executed and filed that are necessary fully to preserve and
protect the interest of the Purchaser and the Trustee for the
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benefit of the applicable Noteholders and the applicable Note
Purchasers in the Receivables and the Opinion Collateral, and
reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (b) no
such action shall be necessary to preserve and protect such
interest.
Each Opinion of Counsel referred to in clause (i) or (ii) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
Subject to SECTION 4.5, the Seller hereby authorizes the Controlling
Note Purchaser, the Trustee and their respective agents to file such financing
statements and continuation statements and take such other actions as the
Controlling Note Purchaser or the Trustee may deem advisable in connection with
the security interest granted by the Seller pursuant to SECTION 2.2 to the
extent permitted by applicable law. Any such financing statements and
continuation statements shall be prepared by the Issuer or the Controlling Note
Purchaser.
SECTION 11.3. NOTICES. All demands, notices and communications upon or
to the Seller, the Backup Servicer, the Servicer, the Purchaser, the Trustee,
the Backup Servicer, any Note Purchaser or any Noteholder under this Agreement
shall be in writing, via facsimile (with telephonic confirmation of receipt),
personally delivered, or mailed by certified mail, return receipt requested, and
shall be deemed to have been duly given upon receipt (a) in the case of the
Seller, to Consumer Portfolio Services, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇, Attention: General Counsel, Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇; (b) in the case
of the Servicer, to Consumer Portfolio Services, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: General Counsel, Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇; (c) in
the case of the Purchaser, to Page Three Funding LLC, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: General Counsel, Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇; (d) in
the case of the Trustee or the Backup Servicer at the Corporate Trust Office;
(e) in the case of the initial Class A Noteholder and the Class A Note
Purchaser, to Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇▇▇; Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇; Telephone: ▇▇▇-▇▇▇-▇▇▇▇, Telecopy:
▇▇▇-▇▇▇-▇▇▇▇; with a copy to Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇; Attn: ▇▇▇▇▇ ▇▇▇▇▇▇; Telephone: ▇▇▇-▇▇▇-▇▇▇▇,
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇; (f) in the case of the initial Class B Noteholders and
the Class B Note Purchasers, to The Patriot Group, LLC, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇, Telecopy (▇▇▇) ▇▇▇-▇▇▇▇; and to
Waterfall Eden Fund, LP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇; Attention: ▇▇▇▇ ▇▇▇▇; Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇; and (g) in the case of
any subsequent Noteholders, at the address reflected on the Note Register. Any
Note Purchaser may deliver to the Noteholders any notices, reports, Servicer's
Certificates or any other documentation delivered to such Note Purchaser
hereunder or under any other Basic Document, but is under no obligation to so
deliver such documentation and shall not be liable for the content thereof. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the Noteholders or
Note Purchasers shall receive such notice.
SECTION 11.4. ASSIGNMENT. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
permitted assigns. Notwithstanding anything to the contrary contained herein,
except as provided in SECTIONS 8.4, 9.3 and this SECTION 11.4 and as provided in
the provisions of this Agreement concerning the resignation of the Servicer,
this Agreement may not be assigned by the Purchaser, the Seller, the Issuer or
the Servicer without the prior written consent of the Trustee, the Backup
Servicer, the Controlling Note Purchaser and the Majority Noteholders of the
Highest Priority Class; PROVIDED HOWEVER THAT, notwithstanding the foregoing,
the Issuer may pledge all of its right, title and interest herein to the Trustee
for the benefit of the Noteholders and the Note Purchasers without the prior
written consent of the Trustee, the Backup Servicer, the Controlling Note
Purchaser and the Majority Noteholders of the Highest Priority Class.
SECTION 11.5. LIMITATIONS ON RIGHTS OF OTHERS. The provisions of this
Agreement are solely for the benefit of the parties hereto and for the benefit
of each Note Purchaser and each Noteholder as a third-party beneficiary. Except
as provided in the following sentence, nothing in this Agreement, whether
express or implied, shall be construed to give to any other Person any legal or
equitable right, remedy or claim in the Collateral, the Pledged Subordinate
Securities or the Bear Cross Collateral or under or in respect of this Agreement
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or any covenants, conditions or provisions contained herein. Notwithstanding the
foregoing, each of the UBS Indenture Trustee, each Class B note purchaser and
each Class B noteholder under the UBS Basic Documents shall be deemed to be a
third-party beneficiary with respect to this Agreement to the same extent as if
it was a party hereto, subject to the terms of the Intercreditor Agreements.
SECTION 11.6. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.7. SEPARATE COUNTERPARTS. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument. Any signature page to this Agreement
containing a manual signature may be delivered by facsimile transmission or
other electronic communication device capable of transmitting or creating a
printable written record, and when so delivered shall have the effect of
delivery of an original manually signed signature page.
SECTION 11.8. HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.9. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.10. ASSIGNMENT TO TRUSTEE. The Seller hereby acknowledges
and consents to any mortgage, pledge, assignment and grant of a security
interest by the Purchaser to the Trustee pursuant to the Indenture for the
benefit of the Noteholders and the Note Purchasers of all right, title and
interest of the Purchaser in, to and under the Receivables and Other Conveyed
Property and/or the assignment of any or all of the Purchaser's rights and
obligations hereunder to the Trustee for the benefit of the Noteholders and the
Note Purchasers.
SECTION 11.11. NONPETITION COVENANTS. Notwithstanding any prior
termination of this Agreement, the Servicer and the Seller shall not, prior to
the date which is one year and one day after the day upon which the outstanding
principal amount of each class of Notes has been reduced to zero, all Secured
Obligations and all other amounts due and payable to the Note Purchasers and the
Noteholders pursuant to the Basic Documents have been paid in full, acquiesce,
petition or otherwise invoke or cause the Purchaser to invoke the process of any
court or government authority for the purpose of commencing or sustaining a case
against the Purchaser under any federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Purchaser or any substantial part
of its property, or ordering the winding up or liquidation of the affairs of the
Purchaser.
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SECTION 11.12. LIMITATION OF LIABILITY OF TRUSTEE. Notwithstanding
anything contained herein to the contrary, this Agreement has been executed and
delivered by ▇▇▇▇▇ Fargo Bank, National Association, not in its individual
capacity but solely as Trustee and Backup Servicer and in no event shall ▇▇▇▇▇
Fargo Bank, National Association, have any liability for the representations,
warranties, covenants, agreements or other obligations of the Purchaser
hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the assets
of the Purchaser.
SECTION 11.13. INDEPENDENCE OF THE SERVICER. For all purposes of this
Agreement, the Servicer shall be an independent contractor and shall not be
subject to the supervision of the Purchaser, the Trustee and Backup Servicer
with respect to the manner in which it accomplishes the performance of its
obligations hereunder. Unless expressly authorized by this Agreement, the
Servicer shall have no authority to act for or represent the Purchaser in any
way and shall not otherwise be deemed an agent of the Purchaser.
SECTION 11.14. NO JOINT VENTURE. Nothing contained in this Agreement
(i) shall constitute the Servicer and the Purchaser as members of any
partnership, joint venture, association, syndicate, unincorporated business or
other separate entity, (ii) shall be construed to impose any liability as such
on any of them or (iii) shall be deemed to confer on any of them any express,
implied or apparent authority to incur any obligation or liability on behalf of
the others, except as expressly provided in this Agreement and the other Basic
Documents.
SECTION 11.15. SPECIAL SUPPLEMENTAL AGREEMENT. If any party to this
Agreement is unable to sign any amendment or supplement due to its dissolution,
winding up or comparable circumstances, then the consent of the Controlling Note
Purchaser and the Majority Noteholders of the Highest Priority Class shall be
sufficient to amend this Agreement without such party's signature.
SECTION 11.16. FULL RECOURSE TO THE ISSUER AND THE PURCHASER. The
obligations of the Issuer and the Purchaser under this Agreement and the other
Basic Documents to which it is a party shall be full recourse obligations of the
Issuer and the Purchaser. Notwithstanding the foregoing, no recourse shall be
had for the payment of any amount owing hereunder or for the payment of any fee
hereunder or any other obligation of, or claim against, the Issuer or the
Purchaser arising out of or based upon any provision herein or under any other
Basic Document, against any member, employee, officer, agent, director or
authorized person of the Issuer or the Purchaser or any Affiliate thereof except
as the Issuer or the Purchaser may have expressly agreed and except that any
such partner, owner or beneficiary shall be fully liable, to the extent provided
by applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity;
PROVIDED, HOWEVER, that the foregoing shall not relieve any such person or
entity of any liability they might otherwise have as a result of fraudulent
actions or omissions taken by them. Nothing contained in this Section shall
limit or be deemed to limit any obligations of the Issuer, the Purchaser, the
Seller or the Servicer hereunder or under any other Basic Document, which
obligations are full recourse obligations of the Issuer, the Purchaser, the
Seller and the Servicer, respectively.
SECTION 11.17. ACKNOWLEDGEMENT OF ROLES. The parties expressly
acknowledge and consent to ▇▇▇▇▇ Fargo Bank, National Association acting in the
multiple capacities of Backup Servicer and Trustee. The parties agree that ▇▇▇▇▇
Fargo Bank, National Association in such multiple capacities shall not be
subject to any claim, defense or liability arising from its performance in any
such capacity based on conflict of interest principles, duty of loyalty
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principles or other breach of fiduciary duties to the extent that any such
conflict or breach arises from the performance by ▇▇▇▇▇ Fargo Bank, National
Association of any other such capacity or capacities in accordance with this
Agreement or any other Basic Documents to which it is a party.
SECTION 11.18. TERMINATION. Except as otherwise provided herein, the
respective obligations and responsibilities of the Seller, the Purchaser, the
Issuer, the Servicer, the Backup Servicer and the Trustee created hereby shall
terminate on the Termination Date; PROVIDED, HOWEVER, in any case there shall be
delivered to the Trustee, each Note Purchaser and each Noteholder an Opinion of
Counsel that all applicable preference periods under federal, State and local
bankruptcy, insolvency and similar laws have expired with respect to the
payments pursuant to this SECTION 11.18. The Servicer shall promptly notify the
Trustee, the Seller, the Issuer, each Note Purchaser and each Noteholder of any
prospective termination pursuant to this SECTION 11.18.
SECTION 11.19. SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, OR ANY LEGAL PROCESS WITH RESPECT TO ITSELF OR
ANY OF ITS PROPERTY, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT, ANY
OTHER BASIC DOCUMENT OR ANY DOCUMENT RELATED HERETO OR THERETO. EACH OF THE
PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
SECTION 11.20. WAIVER OF TRIAL BY JURY. THE PARTIES HERETO EACH WAIVE
THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, ANY OTHER BASIC DOCUMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY PARTY AGAINST THE OTHER PARTY,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE. THE PARTIES
HERETO EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER
AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF
THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT,
ANY OTHER BASIC DOCUMENT OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT OR ANY OTHER BASIC DOCUMENT.
SECTION 11.21. PROCESS AGENT. Each of the Purchaser, Seller, Servicer
and Trustee agrees that the process by which any proceedings in the State of New
York are begun may be served on it by being delivered by certified mail at the
chief executive office or corporate trust office, as applicable, or at its
registered office for the time being. If such person is not or ceases to be
effectively appointed to accept service of process on the Purchaser's, Seller's,
Servicer's or Trustee's behalf, the Purchaser, Seller, Servicer or Trustee, as
applicable, shall, on the written demand of the process agent, appoint a further
person in the State of New York to accept service of process on its behalf and,
failing such appointment within 15 days, the process agent shall be entitled to
appoint such a person by written notice to the Purchaser, Seller, Servicer or
Trustee, as applicable. Nothing in this sub-clause shall affect the right of the
process agent to serve process in any other manner permitted by law.
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SECTION 11.22. SET-OFF
(a) Each of the Seller, the Purchaser, the Issuer and the
Servicer agrees that it shall have no right of set-off or banker's lien
against, and no right to otherwise deduct from, any funds held in any
account described herein or in the Basic Documents for any amount owed
to it by any Note Purchaser or any Noteholder.
(b) In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of such rights, during the
continuance of any Event of Default hereunder:
(i) each Note Purchaser is hereby authorized at any
time and from time to time, without notice to the Purchaser or
the Issuer, such notice being hereby expressly waived, to
set-off any obligation owing by such Note Purchaser or any of
its Affiliates to the Purchaser or the Issuer, or against any
funds or other property of the Purchaser or the Issuer, held
by or otherwise in the possession of such Note Purchaser or
any of its Affiliates, the respective obligations of the
Purchaser or the Issuer to such Note Purchaser under this
Agreement and the other Basic Documents and irrespective of
whether or not such Note Purchaser shall have made any demand
hereunder or thereunder; provided that if a Class B Note
Purchaser elects to exercise its right of set-off pursuant to
this clause (i) at any time that it is not the Controlling
Note Purchaser, such Class B Note Purchaser shall pay the
amount of any such set-off to the Trustee for deposit into the
Collection Account for application pursuant to Section 5.7
hereof; and
(ii) each Note Purchaser is hereby authorized at any
time and from time to time, without notice to the Seller or
the Servicer, such notice being hereby expressly waived, to
set-off any obligation owing by such Note Purchaser or any of
its Affiliates to the Seller or the Servicer, or against any
funds or other property of the Seller or the Servicer held by
or otherwise in the possession of such Note Purchaser or any
of its Affiliates, the respective obligations of the Seller or
the Servicer to such Note Purchaser under this Agreement and
the other Basic Documents and irrespective of whether or not
such Note Purchaser shall have made any demand hereunder or
thereunder; provided that if a Class B Note Purchaser elects
to exercise its right of set-off pursuant to this clause (ii)
at any time that it is not the Controlling Note Purchaser,
such Class B Note Purchaser shall pay the amount of any such
set-off to the Trustee for deposit into the Collection Account
for application pursuant to Section 5.7 hereof.
SECTION 11.23. NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise
and no delay in exercising any right, remedy, power or privilege hereunder,
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise hereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exhaustive of any rights, remedies, powers and privileges provided by law.
SECTION 11.24. MERGER AND INTEGRATION. Except as specifically stated
otherwise herein, this Agreement and the other Basic Documents sets forth the
entire understanding of the parties relating to the subject matter hereof, and
all prior understandings, written or oral, are superseded by this Agreement and
the other Basic Documents. This Agreement may not be modified, amended, waived
or supplemented except as provided herein.
SECTION 11.25. INTERCREDITOR AGREEMENT TO CONTROL. The rights,
obligations and remedies of the parties to this Agreement and under the other
Basic Documents are subject in all respects to the terms and provisions of the
Intercreditor Agreements; provided, however that to the extent such rights,
obligations and remedies relate to the UBS Cross Collateral, such rights,
obligations and remedies are subject in all respects to the terms and provisions
of the UBS Intercreditor Agreement. In the event of any conflict between the
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terms of this Agreement or any other Basic Document and the Intercreditor
Agreement, the Intercreditor Agreement shall control. In addition, in the event
of any conflict between the terms of this Agreement or any other Basic Document
and the UBS Intercreditor Agreement that relates to the UBS Cross Collateral,
the UBS Intercreditor Agreement shall control..
SECTION 11.26. CONTROLLING NOTE PURCHASER; MAJORITY NOTEHOLDERS OF
HIGHEST PRIORITY CLASS. Notwithstanding anything contained in this Agreement or
the other Basic Documents to the contrary, in taking or refraining from taking
any action with respect to this Agreement or any other Basic Document, (i) the
Class A Note Purchaser, when acting as Controlling Note Purchaser, will be
acting solely for its own benefit, and (ii) any Class A Noteholder, when acting
as one of the Majority Noteholders of the Highest Priority Class, shall be
acting solely for its own benefit, and in each case not as agent, fiduciary or
in any other capacity on behalf of the Issuer, the Purchaser, the Seller, the
Servicer, any Class B Note Purchaser, any Class B Noteholder or any other
Person. The interests of the Class A Note Purchaser and the Class A Noteholders
may be adverse to the interests of the Issuer, the Purchaser, the Seller, the
Servicer, the Class B Note Purchasers and the Class B Noteholders (or any of
them), and the Class A Note Purchaser and the Class A Noteholders are not
obligated to consider the interests of the Issuer, the Purchaser, the Seller,
the Servicer, any Class B Note Purchaser, any Class B Noteholder or any other
Person in taking or refraining from taking any action under this Agreement or
any other Basic Document (including without limitation making any determination
of Market Value, making any determination of market value of Pledged Subordinate
Securities, determining whether or not to extend the Servicer's term, declaring
an Event of Default, declaring a Class A Funding Termination Event, declaring a
Servicer Termination Event, agreeing to any amendments to or waivers under any
Basic Document, accelerating the Class A Notes or exercising any other rights or
remedies under any Basic Document or applicable law). Accordingly, any action
taken or omitted by the Class A Note Purchaser or any Class A Noteholder under
this Agreement or any other Basic Document may not be in the interests of, and
may be directly adverse to the interests of, the Issuer, the Purchaser, the
Seller, the Servicer, the Class B Note Purchasers and the Class B Noteholders
(or any of them). In addition, except as otherwise expressly provided in this
Agreement or the other Basic Documents, the Class A Note Purchaser or any Class
A Noteholder may waive or modify the terms of this Agreement or any other Basic
Document from time to time without the consent of any Class B Note Purchaser or
any Class B Noteholder, and shall, if an Event of Default, a Class A Funding
Termination Event or a Servicer Termination Event shall occur, have the sole and
absolute discretion to exercise rights and remedies under the Basic Documents
(except with respect to the Pledged Subordinate Securities, the UBS Cross
Collateral (subject to the UBS Intercreditor Agreement) and the Class B
Available Funds), including without limitation to terminate the Servicer and/or
to cause an acceleration of the Class A Notes and the liquidation of the
Collateral, in each case without regard to the interests of the Issuer, the
Purchaser, the Seller, the Servicer, any Class B Note Purchaser, any Class B
Noteholder or any other Person. The Issuer, the Purchaser, the Seller, the
Servicer, the Class B Note Purchasers and the Class B Noteholders hereby waive
any and all conflicts of interest (if any) that may arise in respect of the
exercise of any such rights or remedies by the Class A Note Purchaser or any
Class A Noteholder.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective duly authorized officers as of
the day and the year first above written.
PAGE THREE FUNDING LLC, as Purchaser and Issuer
By:________________________________________
Name:
Title:
CONSUMER PORTFOLIO SERVICES, INC., as
Seller and Servicer
By:________________________________________
Name:
Title:
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION, not in its
individual capacity, but solely as Backup Servicer
and Trustee
By:________________________________________
Name:
Title:
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ANNEX A---DEFINED TERMS
"ACCOUNT CONTROL AGREEMENT" means that Deposit Account Control
Agreement dated as of November 15, 2005, by and among CPS, the Note Purchaser
and ▇▇▇▇▇ Fargo Bank, National Association, as amended by Amendment No. 1
thereto dated as of January 12, 2007, by and among CPS, the Note Purchasers and
▇▇▇▇▇ Fargo Bank, National Association, as such agreement may be further
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof.
"ACCOUNTING DATE" means, with respect to any Determination
Date, the close of business on the day immediately preceding such Determination
Date.
"ACCOUNTANTS' REPORT" means the report of a firm of nationally
recognized independent accountants described in SECTION 4.11 of the Sale and
Servicing Agreement.
"ACCRUAL PERIOD" means a calendar month; provided that the
initial Accrual Period for the Class A Notes shall be the period from and
including the day after the Cutoff Date for the initial Class A Funding Date to
and including December 14, 2005, and the initial Accrual Period for the Class B
Notes shall be the period from and including the day after the Cutoff Date for
the initial Class B Funding Date to and including February 15, 2007.
"ACT" has the meaning specified in SECTION 11.3 of the
Indenture.
"ADDITIONAL CLASS B COLLATERAL" means, collectively, the
collateral granted pursuant to Granting Clause II of the Indenture and Granting
Clause III of the UBS Indenture.
"ADDITION NOTICE" means, with respect to any transfer of
Receivables to the Purchaser pursuant to SECTION 2.1 of the Sale and Servicing
Agreement, notice of the Seller's election to transfer Receivables to the
Purchaser, such notice to designate the related Funding Date and the aggregate
principal amount of Receivables to be transferred on such Funding Date,
substantially in the form of EXHIBIT G to the Sale and Servicing Agreement.
"ADVANCE" means, with respect to the Class A Notes, a Class A
Advance and with respect to the Class B Notes, a Class B Advance.
"ADVANCE AMOUNT" means, with respect to the Class A Notes, the
Class A Advance Amount and with respect to the Class B Notes, the Class B
Advance Amount.
"AFFILIATE" of any Person means any Person who directly or
indirectly controls, is controlled by, or is under direct or indirect common
control with such Person. For purposes of this definition, the term "CONTROL"
when used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling", "CONTROLLED BY" and "UNDER COMMON CONTROL WITH" have meanings
correlative to the foregoing. In addition, for purposes of this definition, any
fund or investment vehicle, whether existing as of the Class B Closing Date or
thereafter formed, which is managed by any Person, shall be deemed to by an
"Affiliate" of such Person.
"AMOUNT FINANCED" means, with respect to a Receivable, the
aggregate amount advanced under such Receivable toward the purchase price of the
Financed Vehicle and any related costs, including amounts advanced in respect of
accessories, insurance premiums, service and warranty contracts, other items
customarily financed as part of a Contract, 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.
"ASSIGNMENT" means an assignment from the Seller to the
Purchaser with respect to the Receivables and Other Conveyed Property to be
conveyed by the Seller to the Purchaser on any Funding Date, in substantially
the form of EXHIBIT F to the Sale and Servicing Agreement.
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"ASSUMPTION DATE" has the meaning set forth in SECTION 10.3(A)
of the Sale and Servicing Agreement.
"AUTHORIZED OFFICER" means, with respect to the Servicer or
the Issuer, any officer or agent acting pursuant to a power of attorney of the
Servicer or the Issuer, as the case may be, who is authorized to act therefor
and who is identified on the list of Authorized Officers delivered by such
Person to the Trustee and each Note Purchaser on the Class B Closing Date (as
such list may be modified or supplemented from time to time thereafter).
"AVAILABLE FUNDS" means, for each Settlement Date, the sum of
the following amounts with respect to the preceding Accrual Period, without
duplication: (i) all collections on the Receivables; (ii) all Net Liquidation
Proceeds received during such Accrual Period with respect to Liquidated
Receivables; (iii) the Purchase Amount of each Receivable repurchased by the
Seller or the Purchaser during such Accrual Period; (iv) Investment Earnings in
respect of Available Funds for the related Settlement Date; (v) all amounts
received during such Accrual Period pursuant to Receivable Insurance Policies
with respect to any Financed Vehicles; (vi) cash received from a Class A Margin
Call and/or a Class B Margin Call; (vii) any amounts received during such
Accrual Period (including, without limitation, all proceeds from any
Securitization Transaction) in respect of Collateral that is released from the
Lien Granted by Granting Clause I and Granting Clause III of the Indenture in
connection with an optional prepayment of a class of Notes in accordance with
Section 10.1 of the Indenture; and (viii) any amounts received during such
Accrual Period from a Class B Note Purchaser pursuant to Section 11.22(b) of the
Sale and Servicing Agreement.
"BACKUP SERVICER" means ▇▇▇▇▇ Fargo Bank, National
Association in its capacity as Backup Servicer pursuant to the terms of the
Servicing Assumption Agreement or such Person as shall have been appointed
Backup Servicer pursuant to Section 9.3(b) or 9.6 of the Sale and Servicing
Agreement.
"BACKUP SERVICING FEE" means (A) the fee payable to the Backup
Servicer so long as the Seller or any successor Servicer (other than the Backup
Servicer) is the Servicer, on each Settlement Date in the amount equal to $1,800
per monthly data transmission received by the Backup Servicer pursuant to
Section 4.14 of the Sale and Servicing Agreement and (B) any other amounts
payable to the Backup Servicer pursuant to the Fee Schedule.
"BANKRUPTCY CODE" means the Bankruptcy Reform Act of 1978, as
amended from time to time, and as codified as 11 U.S.C. Section 101 ET SEQ.
"BASIC DOCUMENTS" means the Notes, the Indenture, the Sale and
Servicing Agreement, the Lockbox Agreement, each Note Purchase Agreement, the
LLC Agreement, each Assignment, the Pledge Agreement, the Servicing Assumption
Agreement, the Consent and Agreement, the Servicer Termination Side Letter, the
Account Control Agreement, the Intercreditor Agreement, the UBS Intercreditor
Agreement and other documents and certificates delivered in connection
therewith.
"BEAR CROSS COLLATERAL" has the meaning specified in Granting
Clause III of the Indenture.
"BEAR ▇▇▇▇▇▇▇ WAREHOUSE FACILITY" means the transactions
contemplated by the Basic Documents.
"BORROWING BASE" means, with respect to the Class A Notes, the
Class A Borrowing Base and with respect to the Class B Notes, the Class B
Borrowing Base.
"BORROWING BASE DEFICIENCY" means, with respect to the Class A
Notes, a Class A Borrowing Base Deficiency and with respect to the Class B
Notes, a Class B Borrowing Base Deficiency.
"BUSINESS DAY" means any (i) day other than a Saturday, a
Sunday or other day on which commercial banks located in the states of
Minnesota, California or New York are authorized or obligated to be closed and
(ii) if the applicable Business Day relates to the determination of LIBOR, a day
which is a day for trading by and between banks in the London interbank
eurodollar market.
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"CASUALTY" means, with respect to a Financed Vehicle, the
total loss or destruction of such Financed Vehicle.
"CHANGE OF CONTROL" means a change resulting when (i) the
Seller no longer owns 100% of the membership interests in the Purchaser, (ii)
the Seller or the Purchaser merges or consolidates with, or sells all or
substantially all of its assets to any other Person, or (iii) any Unrelated
Person or any Unrelated Persons, acting together, that would constitute a Group
together with any Affiliates or Related Persons thereof (in each case also
constituting Unrelated Persons) shall at any time Beneficially Own more than 50%
of the aggregate voting power of all classes of Voting Stock of the Seller. As
used herein, (a) "Beneficially Own" shall mean "beneficially own" as defined in
Rule 13d-3 of the Exchange Act, or any successor provision thereto; provided,
however, that, for purposes of this definition, a Person shall not be deemed to
Beneficially Own securities tendered pursuant to a tender or exchange offer made
by or on behalf of such Person or any of such Person's Affiliates until such
tendered securities are accepted for purchase or exchange; (b) "Group" shall
mean a "group" for purposes of Section 13(d) of the Exchange Act; (c) "Unrelated
Person" shall mean at any time any Person other than the Seller or any of its
Subsidiaries and other than any trust for any employee benefit plan of the
Seller or any of its Subsidiaries; (d) "Related Person" shall mean any other
Person owning (1) 5% or more of the outstanding common stock of such Person, or
(2) 5% or more of the Voting Stock of such Person; and (e) "Voting Stock" of any
Person shall mean the capital stock or other indicia of equity rights of such
Person which at the time has the power to vote for the election of one or more
members of the Board of Directors (or other governing body) of such Person.
"CLASS A ADVANCE" has the meaning assigned to the term
"Advance" in paragraph 4 of the recitals to the Class A Note Purchase Agreement.
"CLASS A ADVANCE AMOUNT" means, as of any Class A Funding
Date, an amount not less than $2,000,000 and not more than the lesser of (i) the
excess of the Class A Maximum Invested Amount over the Class A Invested Amount
as of such Class A Funding Date and (ii) the excess of the Class A Borrowing
Base over the Class A Invested Amount as of such Class A Funding Date.
"CLASS A ADVANCE RATE" means 83%.
"CLASS A ADVANCE REQUEST" has the meaning given to such term
in Section 2.03(a) of the Class A Note Purchase Agreement.
"CLASS A APPLICABLE MARGIN" means 2.00%; provided that on any
day on which an Event of Default shall exist, the Class A Applicable Margin
shall be the Class A Default Applicable Margin.
"CLASS A BORROWING BASE" means, as of any date of
determination, an amount equal to the lesser of (A) the excess of (I) 98% of the
Market Value over (II) the Net Class B Invested Amount, (B) the excess of (I)
the product of (a) the Net Eligible Receivables Balance and (b) the Maximum
Advance Rate over (II) the Net Class B Invested Amount, (C) 88% of the Market
Value, and (D) the product of (a) the Class A Advance Rate and (b) the Net
Eligible Receivables Balance.
"CLASS A BORROWING BASE CERTIFICATE" means, with respect to
any transfer of Receivables, the certificate of the Servicer setting forth the
calculation of the Class A Borrowing Base, substantially in the form of EXHIBIT
A to the Class A Note Purchase Agreement.
"CLASS A BORROWING BASE DEFICIENCY" means, as of any date of
determination, the positive excess, if any, of the Class A Invested Amount over
the Class A Borrowing Base, after application of funds, if any, by the Trustee
in reduction of the Class A Invested Amount as contemplated by Section 3.05 of
the Class A Note Purchase Agreement.
"CLASS A CLOSING DATE" means November 15, 2005.
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"CLASS A COMMITMENT" means the obligation of the Class A Note
Purchaser to make Class A Advances to the Issuer pursuant to the terms and
subject to the conditions of the Class A Note Purchase Agreement and the other
Basic Documents, which obligation shall be deemed terminated following the
occurrence and continuance of a Class A Funding Termination Event if any and all
amounts due to the Class A Note Purchaser and/or the Class A Noteholders
pursuant to the Basic Documents have been paid in full.
"CLASS A COMMITMENT FEE" means, with respect to any Settlement
Date, for so long as no Funding Termination Event shall have occurred and be
continuing, a fee in an amount equal to the product of (a) a fraction, the
numerator of which is the actual number of days elapsed in the related Accrual
Period and the denominator of which is 360, (b) twenty-five basis point (0.25%)
and (c) the excess, if any, of (i) the Class A Maximum Invested Amount over (ii)
the daily average of the Class A Invested Amount for the immediately preceding
Accrual Period set forth in the related Servicer's Certificate as and to the
extent verified by the Class A Note Purchaser.
"CLASS A DEFAULT APPLICABLE MARGIN" means 4.00%.
"CLASS A FACILITY TERMINATION DATE" means the earlier of (a)
the Class A Scheduled Maturity Date or (b) the date of the occurrence of an
Event of Default.
"CLASS A FUNDING DATE" means the Business Day on which a Class
A Advance occurs.
"CLASS A FUNDING TERMINATION EVENT" means the occurrence and
continuance of any one of the following events, unless waived in writing by the
Class A Note Purchaser in its sole and absolute discretion: (i) an Event of
Default; (ii) CPS is terminated as servicer under any other warehouse financing
facility or term securitization transaction (other than any warehouse financing
facility or term securitization transaction as to which the receivables related
thereto were originated exclusively by SeaWest, TFC or MFN); (iii) failure by
the Issuer or the Servicer to accept a proposed assignee in accordance with
Section 8.03(c)(iii) of the Class A Note Purchase Agreement or (iv) ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇. shall not hold the position of President of CPS.
"CLASS A HOLDERS" or "CLASS A NOTEHOLDERS" means the Persons
in whose name the Class A Notes are registered on the Note Register, which on
the Class B Closing Date shall be Bear ▇▇▇▇▇▇▇ Securities Corp. or an Affiliate
thereof.
"CLASS A INITIAL ADVANCE" means the first Class A Advance that
is funded on or after the Closing Date.
"CLASS A INVESTED AMOUNT" means, with respect to any date of
determination, the aggregate principal amount (including all Class A Advance
Amounts as of such date) of the Class A Notes at such date of determination.
"CLASS A MAJORITY NOTEHOLDERS" means Holders of Class A Notes
that in the aggregate constitute more than 50% of the Percentage Interests of
all Class A Notes.
"CLASS A MARGIN CALL" has the meaning given to such term in
Section 3.05(c) of the Class A Note Purchase Agreement.
"CLASS A MAXIMUM INVESTED AMOUNT" means $200,000,000.
"CLASS A NOTES" means the Floating Rate Variable Funding
Notes, Class A, each substantially in the form set forth in EXHIBIT A-1 to the
Indenture.
"CLASS A NOTE INTEREST RATE" means for any day during any
Interest Period the sum of (i) LIBOR calculated as of the related LIBOR
Determination Date and (ii) the Class A Applicable Margin for such day;
PROVIDED, HOWEVER, that the Class A Note Interest Rate will in no event be
higher than the maximum rate permitted by law.
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"CLASS A NOTE PURCHASE AGREEMENT" means the Amended and
Restated Note Purchase Agreement dated as of January 12, 2007 among Bear,
▇▇▇▇▇▇▇ & Co. Inc., the Issuer, the Purchaser, the Seller and the Servicer, as
the same may be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof.
"CLASS A NOTE PURCHASER" means Bear, ▇▇▇▇▇▇▇ & Co. Inc. and
its successors and permitted assigns.
"CLASS A NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL" means,
with respect to any Settlement Date, the excess of the Class A Noteholders'
Interest Distributable Amount for the preceding Settlement Date over the amount
that was actually deposited in the Note Distribution Account on such preceding
Settlement Date on account of the Class A Noteholders' Interest Distributable
Amount.
"CLASS A NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means,
with respect to any Settlement Date, the sum of the Class A Noteholders' Monthly
Interest Distributable Amount for such Settlement Date and the Class A
Noteholders' Interest Carryover Shortfall for such Settlement Date, if any, plus
interest on the Class A Noteholders' Interest Carryover Shortfall, to the extent
permitted by law, at the Class A Note Interest Rate for the related Interest
Period(s), from and including the preceding Settlement Date to, but excluding,
the current Settlement Date.
"CLASS A NOTEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT"
means, with respect to any Settlement Date, the sum of the interest amounts
accrued on the Class A Notes on each day during the related Interest Period. The
interest amount accrued on the Class A Notes on any day during any Interest
Period shall equal the product of (i) the Class A Note Interest Rate for such
day and (ii) the Class A Invested Amount on such day and (iii) 1/360.
"CLASS A NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means,
with respect to any Settlement Date (A) prior to the Class A Facility
Termination Date, the Class A Borrowing Base Deficiency, if any, and (B) upon
and after the Class A Facility Termination Date, the Class A Invested Amount.
"CLASS A SCHEDULED MATURITY DATE" means November 8, 2007 or
such later date as agreed upon pursuant to SECTION 2.05 of the Class A Note
Purchase Agreement.
"CLASS A TERM" has the meaning given to such term in SECTION
2.05 of the Class A Note Purchase Agreement.
"CLASS B ADVANCE" has the meaning set forth in paragraph 4 of
the recitals to the Class B Note Purchase Agreement.
"CLASS B ADVANCE AMOUNT" means, as of any Class B Funding
Date, an amount not less than $250,000 and not more than the lesser of (i) the
excess of the Class B Maximum Invested Amount over the Class B Invested Amount
as of such Class B Funding Date and (ii) the excess of the Class B Borrowing
Base over the Class B Invested Amount as of such Class B Funding Date.
"CLASS B ADVANCE REQUEST" has the meaning set forth in Section
2.03(a) of the Class B Note Purchase Agreement.
"CLASS B APPLICABLE MARGIN" means 5.50%; provided that on any
day on which an Event of Default shall exist, the Class B Applicable Margin
shall be the Class B Default Applicable Margin.
"CLASS B AVAILABLE FUNDS" means, for each Settlement Date, (i)
all amounts collected during the related Accrual Period in respect of the
Additional Class B Collateral; (ii) Investment Earnings in respect of Class B
Available Funds for the related Settlement Date; (iii) any amounts received
during the related Accrual Period in respect of Additional Class B Collateral
that are released from the Lien Granted by Granting Clause II of the Indenture
in connection with an optional prepayment of the Class B Notes in accordance
with Section 10.1 of the Indenture, (iv) any amounts received during the related
Accrual Period in respect of UBS Cross Collateral that is released from the Lien
Granted by Granting Clause III of the UBS Indenture in connection with an
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optional prepayment of the Class B notes issued pursuant to the UBS Indenture in
accordance with Section 10.1 thereof; and (v) any Pre-Funding Proceeds deposited
by the Issuer into the Collection Account pursuant to Section 10.1 of the
Indenture.
"CLASS B BORROWING BASE" means, as of any date of
determination, an amount equal to the sum of (1) the lesser of (A) the excess of
(I) 96% of the Market Value over (II) the Class A Invested Amount and (B) the
excess of (I) the product of (a) the Net Eligible Receivables Balance and (b)
the Maximum Advance Rate over (II) the Class A Invested Amount, and (2) 50% of
the market value (as determined by the lead placement agent of the related
Securitization Transaction) of any Pledged Subordinate Securities (excluding,
for purposes of such calculation, any Pledged Subordinate Securities that
constitute residual interest securities); provided, however, that for purposes
of this definition, the market value of any Pledged Subordinate Securities shall
be deemed to equal zero from and after 31 days after the related Securitization
Closing Date, and the Pledged Subordinate Securities shall only support the
Class B Advances in respect of Receivables that have been sold into the related
Securitization Transaction.
"CLASS B BORROWING BASE CERTIFICATE" means, with respect to
any transfer of Receivables, the certificate of the Servicer setting forth the
calculation of the Class B Borrowing Base, substantially in the form of EXHIBIT
A to the Class B Note Purchase Agreement.
"CLASS B BORROWING BASE DEFICIENCY" means, as of any date of
determination, the positive excess, if any, of the Class B Invested Amount over
the Class B Borrowing Base, after application of funds, if any, by the Trustee
in reduction of the Class B Invested Amount as contemplated by Section 3.05 of
the Class B Note Purchase Agreement.
"CLASS B CLOSING DATE" means January 12, 2007.
"CLASS B COMMITMENT" means the collective obligation of the
Class B Note Purchasers to make their respective pro rata portion of the Class B
Advances to the Issuer pursuant to the terms and subject to the conditions of
the Class B Note Purchase Agreement and the other Basic Documents.
"CLASS B COMMITMENT FEE" means (I) with respect to any
Settlement Date occurring prior to the UBS Warehouse Facility Amendment Date,
for so long as no Funding Termination Event shall have occurred and be
continuing, a fee in an amount equal to the product of (a) a fraction, the
numerator of which is the actual number of days elapsed in the related Accrual
Period and the denominator of which is 360, (b) fifty basis points (0.50%) and
(c) the excess, if any, of (i) the Class B Maximum Invested Amount over (ii) the
greater of (1) $6,250,000 and (2) the daily average of the Class B Invested
Amount for the immediately preceding Accrual Period set forth in the related
Servicer's Certificate as and to the extent verified by each Class B Note
Purchaser; and (II) with respect to any Settlement Date occurring from and after
the UBS Warehouse Facility Amendment Date, for so long as no Funding Termination
Event shall have occurred and be continuing, a fee in an amount equal to the
product of (a) a fraction, the numerator of which is the actual number of days
elapsed in the related Accrual Period and the denominator of which is 360, (b)
twenty-five basis points (0.25%) and (c) the excess, if any, of (i) the Class B
Maximum Invested Amount over (ii) the greater of (1) $3,125,000 and (2) the
daily average of the Class B Invested Amount for the immediately preceding
Accrual Period set forth in the related Servicer's Certificate as and to the
extent verified by each Class B Note Purchaser.
"CLASS B DEFAULT" means any occurrence that is, or with notice
or the lapse of time or both would become, a Class B Event of Default.
"CLASS B DEFAULT APPLICABLE MARGIN" means 7.50%.
"CLASS B EVENT OF DEFAULT" means (i) a default in the payment
of any interest or principal on the Class B Notes or any other amount due with
respect to the Class B Notes or any amount due to any Class B Note Purchaser
under any Basic Document when the same becomes due and payable, which default
continues for a period of one (1) Business Day, (ii) the occurrence and
continuance of a Class B Borrowing Base Deficiency that is not cured within one
(1) Business Day, (iii) the Trustee shall for any reason cease to have a first
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priority perfected security interest in the Pledged Subordinate Securities for
the benefit of the Class B Noteholders and the Class B Note Purchasers, (iv) the
Trustee shall for any reason cease to have a second priority perfected security
interest in the UBS Cross Collateral (subject only to the prior Liens granted
pursuant to the UBS Basic Documents), for the benefit of the Class B Noteholders
and the Class B Note Purchasers; or (v) the failure by the Issuer, the
Purchaser, the Servicer or the Seller to perform or observe any term, covenant,
or agreement under the Basic Documents, which failure materially and adversely
affects the rights of the Class B Note Purchasers and/or the Class B Noteholders
(as determined by a Class B Note Purchaser or the Class B Majority Noteholders
in their sole discretion) and is not cured within 30 calendar days after written
notice is received by the Issuer, the Purchaser, the Servicer or the Seller, as
applicable, from the Trustee, a Class B Note Purchaser or a Class B Noteholder
or after discovery of such failure by a Responsible Officer of the Issuer, the
Purchaser, the Servicer or the Seller, as applicable.
"CLASS B FACILITY RENEWAL FEE" has the meaning specified in
Section 2.05(a) of the Class B Note Purchase Agreement.
"CLASS B FACILITY TERMINATION DATE" means the earlier of (a)
the Class B Scheduled Maturity Date, (b) the date of the occurrence of an Event
of Default specified in Section 5.1(a)(v), (vi) or (viii) of the Indenture, and
(c) the date of the occurrence of any Event of Default (other than an Event of
Default specified in Section 5.1(a)(v), (vi) or (viii) of the Indenture) if the
Class B Note Purchaser is the Controlling Note Purchaser on such date.
"CLASS B FUNDING DATE" means the Business Day on which a Class
B Advance occurs.
"CLASS B FUNDING TERMINATION EVENT" means the occurrence and
continuance of (i) a Class A Funding Termination Event, or (ii) a Class B Event
of Default.
"CLASS B HOLDERS" or "CLASS B NOTEHOLDERS" means the Persons
in whose name the Class B Notes are registered on the Note Register, which shall
initially be The Patriot Group, LLC and Waterfall Eden Fund, LP.
"CLASS B INITIAL ADVANCE" means the first Class B Advance that
is funded on or after the Closing Date.
"CLASS B INVESTED AMOUNT" means, with respect to any date of
determination, the aggregate principal amount (including all outstanding Class B
Advances as of such date) of the Class B Notes at such date of determination.
"CLASS B MAJORITY NOTEHOLDERS" means Holders of Class B Notes
that in the aggregate constitute more than 50% of the Percentage Interests of
all Class B Notes.
"CLASS B MARGIN CALL" has the meaning given to such term in
Section 3.05(c) of the Class B Note Purchase Agreement.
"CLASS B MAXIMUM INVESTED AMOUNT" means, as of any date,
$25,000,000, less the outstanding amount of any UBS Secured Obligations on such
date.
"CLASS B NOTES" means the Floating Rate Variable Funding
Notes, Class B, each substantially in the form set forth in EXHIBIT A-2 to the
Indenture.
"CLASS B NOTE INTEREST RATE" means for any day during any
Interest Period the sum of (i) LIBOR calculated as of the related LIBOR
Determination Date and (ii) the Class B Applicable Margin for such day;
PROVIDED, HOWEVER, that the Class B Note Interest Rate will in no event be
higher than the maximum rate permitted by law.
"CLASS B NOTE PURCHASE AGREEMENT" means the Note Purchase
Agreement dated as of January 12, 2007 among each Class B Note Purchaser, the
Issuer, the Purchaser, the Seller and the Servicer, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.
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"CLASS B NOTE PURCHASER" means each of The Patriot Group, LLC
and Waterfall Eden Fund, LP and their respective successors and permitted
assigns.
"CLASS B NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL" means,
with respect to any Settlement Date, the excess of the Class B Noteholders'
Interest Distributable Amount for the preceding Settlement Date over the amount
that was actually deposited in the Note Distribution Account on such preceding
Settlement Date on account of the Class B Noteholders' Interest Distributable
Amount.
"CLASS B NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means,
with respect to any Settlement Date, the sum of the Class B Noteholders' Monthly
Interest Distributable Amount for such Settlement Date and the Class B
Noteholders' Interest Carryover Shortfall for such Settlement Date, if any, plus
interest on the Class B Noteholders' Interest Carryover Shortfall, to the extent
permitted by law, at the Class B Note Interest Rate for the related Interest
Period(s), from and including the preceding Settlement Date to, but excluding,
the current Settlement Date.
"CLASS B NOTEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT"
means, with respect to any Settlement Date, the sum of the interest amounts
accrued on the Class B Notes on each day during the related Interest Period. The
interest amount accrued on the Class B Notes on any day during the portion of
any Interest Period occurring prior to the UBS Warehouse Facility Amendment Date
shall equal the product of (i) the Class B Note Interest Rate for such day and
(ii) the greater of (x) the Class B Invested Amount on such day and (y)
$6,250,000 (which is 25.0% of the Class B Maximum Invested Amount) and (iii)
1/360. The interest amount accrued on the Class B Notes on any day during the
portion of any Interest Period occurring from and after the UBS Warehouse
Facility Amendment Date shall equal the product of (i) the Class B Note Interest
Rate for such day and (ii) the greater of (x) the Class B Invested Amount on
such day and (y) $3,125,000 (which is 12.5% of the Class B Maximum Invested
Amount) and (iii) 1/360.
"CLASS B NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means,
with respect to any Settlement Date (A) prior to the Class B Facility
Termination Date, the Class B Borrowing Base Deficiency, if any, and (B) upon
and after the Class B Facility Termination Date, the Class B Invested Amount.
"CLASS B SCHEDULED MATURITY DATE" means January 11, 2008 or
such later date as agreed upon pursuant to SECTION 2.05 of the Class B Note
Purchase Agreement.
"CLASS B TERM" has the meaning given to such term in SECTION
2.05 of the Class B Note Purchase Agreement.
"CLEARING AGENCY" means an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act, or any successor
provision thereto. The initial Clearing Agency shall be The Depository Trust
Company.
"CLOSING DATE" means, with respect to the Class A Notes, the
Class A Closing Date and with respect to the Class B Notes, the Class B Closing
Date.
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time, and Treasury Regulations promulgated thereunder.
"COLLATERAL" has the meaning specified in the Granting Clause
I of the Indenture.
"COLLECTION ACCOUNT" means the account designated as such,
established and maintained pursuant to SECTION 5.1 of the Sale and Servicing
Agreement.
"COMMISSION" means the United States Securities and Exchange
Commission.
"COMMITMENT" means, with respect to the Class A Notes, the
Class A Commitment and with respect to the Class B Notes, the Class B
Commitment.
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"CONCENTRATION LIMITS" means with respect to Eligible
Receivables:
(i) Eligible Receivables that are Section 341 Receivables
shall not at any time represent more than 3% of the aggregate Principal
Balance of Eligible Receivables;
(ii) Eligible Receivables the Obligors of which are
contractually delinquent with respect to more than 10% of a Scheduled
Receivable Payment by more than 30 days, but less than 46 days, shall
not at any time represent more than 4% of the aggregate Principal
Balance of Eligible Receivables;
(iii) Eligible Receivables originated under Seller's "First
Time Buyer Program" and "Mercury/Delta Program" shall not at any time
represent more than 15% of the aggregate Principal Balance of Eligible
Receivables;
(iv) Seasoned Receivables shall not represent more than
$3,000,000 in aggregate Principal Balance of the Eligible Receivables;
(v) Unless an Opinion of Counsel, in form and substance
satisfactory to the Controlling Note Purchaser, has been delivered to
the Trustee and the Note Purchasers addressing (i) the form of Contract
used by Seller in such State and (ii) the security interest of the
Trustee in the Financed Vehicles titled in such State in the absence of
any retitling of such Financed Vehicles, Eligible Receivables
originated in any one State shall not in the aggregate at any time
represent more than 10% of the aggregate Principal Balance of Eligible
Receivables; and
(vi) Receivables evidenced by installment promissory note and
security agreements (i.e. direct loans) shall not at any time represent
more than 10% of the Aggregate Principal Balance of the Receivables.
"CONSENT AND AGREEMENT" means that Consent and Agreement dated
as of November 15, 2005, made by the Issuer, as amended by Amendment No. 1
thereto dated as of January 12, 2007, as such Consent and Agreement may be
further amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof.
"CONSOLIDATED TOTAL ADJUSTED EQUITY" of any Person means, with
respect to any fiscal quarter, the total shareholders' equity of such Person and
its consolidated Subsidiaries that, in accordance with GAAP, is reflected on the
consolidated balance sheet of such Person and its consolidated Subsidiaries for
such fiscal quarter, MINUS the aggregate amount of such Person's and its
consolidated Subsidiaries intangible assets, including without limitation,
goodwill, franchises, licenses, patents, trademarks, tradenames, copyrights and
service marks.
"CONSUMER LAWS" means federal and State usury laws, the
Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the ▇▇▇▇▇▇▇▇-▇▇▇▇ Warranty Act, the Federal Reserve Board's
Regulations B and Z, the Servicemembers Civil Relief Act, the California
Military Reservist Relief Act, the Texas Consumer Credit Code, the California
Automobile Sales Finance Act, State adaptations of the National Consumer Act and
of the Uniform Consumer Credit Code and all other federal, State and local
consumer credit laws and equal credit opportunity and disclosure laws and
regulations thereunder.
"CONSUMER LENDER" means a Person that is licensed under
applicable law to originate loans to natural persons resident in one or more of
the United States of America and authorized by CPS to participate in its direct
lending program, and includes the Seller.
"CONTRACT" means a motor vehicle retail installment sale
contract or, in the case of a Contract originated by a Consumer Lender, an
installment promissory note and security agreement, in each case relating to the
sale or refinancing of new or used automobiles, light duty trucks, vans or
minivans, and any other documents related thereto from time to time.
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"CONTROLLING NOTE PURCHASER" means solely the Class A Note
Purchaser until the Class A Notes and all other amounts then due and owing to
the Class A Note Purchaser and the Class A Noteholders under the Basic Documents
have been paid in full and the Class A Commitment has terminated, and
thereafter, the Class B Note Purchasers, acting together.
"CORPORATE TRUST OFFICE" means with respect to the Trustee,
the principal office of the Trustee at which at any particular time its
corporate trust business shall be administered which office is located at Sixth
Street and Marquette Avenue, MAC N9311-161, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at
such other address as the Trustee may designate from time to time by notice to
the Note Purchasers, the Servicer, the Issuer, or the principal corporate trust
office of any successor Trustee (the address of which the successor Trustee will
notify the Note Purchaser).
"CPS" means Consumer Portfolio Services, Inc., a California
corporation.
"CRAM DOWN LOSS" means, with respect to a Receivable, if a
court of appropriate jurisdiction in an insolvency proceeding shall have issued
an order reducing the amount owed on a Receivable or otherwise modifying or
restructuring Scheduled Receivable Payments to be made on a Receivable, an
amount equal to such reduction in the Principal Balance of such Receivable or
the reduction in the net present value (using as the discount rate the lower of
the contract rate or the rate of interest specified by the court in such order)
of the Scheduled Receivable Payments as so modified or restructured. A "CRAM
DOWN LOSS" shall be deemed to have occurred on the date such order is entered.
"CUTOFF DATE" means, with respect to a Receivable or
Receivables, the date specified as such for such Receivable or Receivables in
the Schedule of Receivables attached to the Sale and Servicing Agreement or to
the applicable Assignment.
"DATA TAPE FIELDS" has the meaning given such term in Section
2.1(b)(i) of the Sale and Servicing Agreement.
"DEALER" means, with respect to a Receivable, the seller of
the related Financed Vehicle, who originated and assigned such Receivable to the
Seller, which Dealer shall not be an Affiliate of the Seller (including, without
limitation, MFN Financial Corporation and TFC Enterprises, Inc.).
"DEFAULT" means any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.
"DEFAULT APPLICABLE MARGIN" means, with respect to the Class A
Notes, the Class A Default Applicable Margin and with respect to the Class B
Notes, the Class B Default Applicable Margin.
"DEFECTIVE RECEIVABLE" means a Receivable that is subject to
repurchase pursuant to SECTION 3.2 or SECTION 4.7 of the Sale and Servicing
Agreement.
"DELIVERY" means, when used with respect to Pledged Account
Property:
(i) the perfection and priority of a security interest in such
Pledged Account Property which is governed by the law of a jurisdiction which
has adopted the 1978 Revision to Article 8 of the UCC (and not the 1994 Revision
to Article 8 of the UCC as referred to in (II) below):
(a) with respect to bankers' acceptances, commercial
paper, negotiable certificates of deposit and other obligations that
constitute "INSTRUMENTS" within the meaning of Section 9-102(a)(47) 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
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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 Pledged 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 Pledged 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
Pledged 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 Pledged 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 Pledged 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 securities as belonging to the Trustee or its nominee or
custodian; or
(ii) the perfection and priority of a security interest in
such Pledged 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 9-102(a)(47) 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 Pledged 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:
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(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)(l4) of the UCC)
acting on behalf of the Trustee if the certificated security
has been specially indorsed to the Trustee by an effective
indorsement.
(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
Pledged 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 Pledged 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) who either becomes the registered owner of the
uncertificated security on behalf of the Trustee, or having
become the registered owner acknowledges that it holds for the
Trustee;
(2) the issuer thereof has agreed that it
will comply with instructions originated by the Trustee
without further consent of the registered owner thereof;
(e) with respect to a "SECURITY ENTITLEMENT" (as
defined in Section 8-102(a)(17) of the UCC):
(1) if a securities intermediary (A)
indicates by book entry that a "FINANCIAL ASSET" (as defined
in Section 8-102(a)(9) of the UCC) has been credited to the
Trustee's "SECURITIES ACCOUNT" (as defined in Section 8-501(a)
of the UCC), (B) receives a financial asset (as so defined)
from the Trustee or acquires a financial asset for the
Trustee, and in either case, accepts it for credit to the
Trustee's securities account (as so defined), (C) becomes
obligated under other law, regulation or rule to credit a
financial asset to the Trustee's securities account, or (D)
has agreed that it will comply with "ENTITLEMENT ORDERS" (as
defined in Section 8-102(a)(8) of the UCC) originated by the
Trustee, without further consent by the "ENTITLEMENT HOLDER"
(as defined in Section 8-l02(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
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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;
(f) in each case of delivery contemplated pursuant to
CLAUSES (a) through (e) of SUBSECTION (ii) hereof, the Trustee shall
make appropriate notations on its records, and shall cause the same to
be made on the records of its nominees, indicating that such Trust
Property which constitutes a security is held in trust pursuant to and
as provided in the Sale and Servicing Agreement.
"DEPOSIT ACCOUNT" means that deposit account established
pursuant to the Account Control Agreement.
"DETERMINATION DATE" means, with respect to any Settlement
Date, the fourth Business Day preceding such Settlement Date.
"DOLLAR" means lawful money of the United States.
"ELIGIBLE ACCOUNT" means either (i) a segregated trust account
that is maintained with a depository institution acceptable to the Controlling
Note Purchaser, 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 acceptable to
the Controlling Note Purchaser.
"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+"
or better 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+"
or better 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+" or better 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;
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(f) 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 Standard & Poor's and Moody's in
the highest investment category granted thereby; and
(g) any other investment as may be acceptable to the
Controlling Note Purchaser, as evidenced by a writing to that effect,
as may from time to time be confirmed in writing to the Trustee by the
Controlling Note Purchaser.
Any of the foregoing Eligible Investments may be purchased by
or through the Trustee or any of its Affiliates.
"ELIGIBLE RECEIVABLES" means, as of any date of determination,
Receivables (a) that have been originated or acquired by the Seller in
accordance with the Seller's Contract Purchase Guidelines; (b) that are secured
by a first-priority perfected security interest in the related Financed Vehicle;
(c) as to which the representations and warranties set forth in Section 3.1 of
the Sale and Servicing Agreement are true and correct; (d) that are not more
than 45 days past due with respect to more than 10% of the Scheduled Receivable
Payment as of such date of determination; (e) as to which the related Obligor
has not been the subject of a bankruptcy proceeding since the origination of the
Receivable (other than any Obligor the related Receivable of which is a Section
341 Receivable); (f) as to which the Servicer has not repossessed the related
Financed Vehicle or charged-off the related Contract; (g) that have not been
owned by the Purchaser and pledged to the Trustee for the benefit of the
Noteholders and the Note Purchasers for more than 180 days; and (h) that have
not been otherwise rejected by the Controlling Note Purchaser, in its sole
discretion, as a result of deficiencies with respect to such Receivable
discovered during the Controlling Note Purchaser's due diligence review, prior
to the related Funding thereof.
"ELIGIBLE SERVICER" means a Person approved to act as
"SERVICER" under the Sale and Servicing Agreement by the Note Purchaser.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"EVENT OF DEFAULT" has the meaning specified in SECTION 5.1
of the Indenture.
"EXCESS CONCENTRATION AMOUNT" means the aggregate amount by
which (without duplication) the aggregate Principal Balance of Eligible
Receivables sold to the Purchaser under the Sale and Servicing Agreement exceeds
any of the Concentration Limits; provided, however, that in determining which
Receivables to exclude for purposes of complying with any Concentration Limit,
the Purchaser shall exclude Receivables starting with those having the oldest
origination dates.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXECUTIVE OFFICER" means, with respect to any corporation,
the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, Senior Vice President, any Vice President, the Secretary or the
Treasurer of such corporation; with respect to any limited liability company,
the manager and any individuals appointed to any of the preceding offices by the
manager; and with respect to any partnership, any general partner thereof.
"FACILITY TERMINATION DATE" means, with respect to the Class A
Notes, the Class A Facility Termination Date and with respect to the Class B
Notes, the Class B Facility Termination Date.
"FDIC" means the Federal Deposit Insurance Corporation.
"FEE SCHEDULE" means that certain notice captioned "Schedule
of Fees for CPS - Bear ▇▇▇▇▇▇▇ Warehouse" from ▇▇▇▇▇ Fargo Bank, National
Association, as acknowledged by the Servicer as of November 15, 2005.
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"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.
"FUNDING DATE" means, with respect to the Class A Notes, a
Class A Funding Date and with respect to the Class B Notes, a Class B Funding
Date.
"FUNDING TERMINATION EVENT" means, with respect to the Class A
Notes, a Class A Funding Termination Event and with respect to the Class B
Notes, a Class B Funding Termination Event.
"FUNDING TRUST" means CPS Receivables Funding Trust, a
Delaware statutory trust.
"FUNDING TRUST CERTIFICATE" means a certificate issued by
Funding Trust that evidences a 100% fractional undivided ownership interest in
one or more instruments or certificates, each of which evidences not less than
99.00% of the residual interest in a securitization trust for a Securitization
Transaction and represents the right to receive amounts to be distributed or
paid to the holders of the residual interests pursuant to the related
Securitization Documents.
"GAAP" means U.S. generally accepted accounting principles
occasioned by the promulgation of rules, regulations, pronouncements or opinions
by the Financial Accounting Standards Board, the American Institute of Certified
Public Accountants or the Securities and Exchange Commission (or successors
thereto or agencies with similar functions) from time to time.
"GOVERNMENTAL AUTHORITY" means the United States of America,
any state, local or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory, or administrative
functions thereof pertaining thereto.
"GRANT" means to mortgage, pledge, bargain, sell, warrant,
alienate, remise, release, convey, assign, transfer, create, ▇▇▇▇▇ ▇ ▇▇▇▇ upon
and a security interest in and right of set-off against, deposit, set over and
confirm pursuant to the Indenture or the Pledge Agreement, as applicable. A
Grant of the Collateral, Pledged Subordinate Securities, Bear Cross Collateral
or Pledged Collateral, as the case may be, or of any other agreement or
instrument shall include all rights, powers and options (but none of the
obligations) of the granting party thereunder, including, as and to the extent
provided in the Basic Documents, the immediate and continuing right (after an
Event of Default) to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral, Pledged Subordinate
Securities, Bear Cross Collateral or Pledged Collateral, as the case may be, and
all other moneys payable thereunder, to give and receive notices and other
communications, to make waivers or other agreements, to exercise all rights and
options, to bring proceedings in the name of the granting party or otherwise and
generally to do and receive anything that the granting party is or may be
entitled to do or receive thereunder or with respect thereto.
"HIGHEST PRIORITY CLASS" means (i) the Class A Notes, for so
long as they are Outstanding and the Class A Commitment has not been terminated,
and (ii) if the Class A Notes are no longer Outstanding and all amounts owed to
the Class A Noteholders and the Class A Note Purchaser pursuant to the Basic
Documents have been paid in full and the Class A Commitment has been terminated,
the Class B Notes.
"HOLDER" or "NOTEHOLDER" means a Class A Noteholder or a Class
B Noteholder, as the context may require.
"INDEBTEDNESS" means, with respect to any Person at any time,
any (a) indebtedness or liability of such Person for borrowed money whether or
not evidenced by bonds, debentures, notes, repurchase agreements and similar
arrangements, or other instruments, or for the deferred purchase price of
property or services (including trade obligations); (b) obligations of such
Person as lessee under leases which should be, in accordance with GAAP, recorded
as capital leases; (c) current liabilities of such Person in respect of unfunded
vested benefits under plans covered by Title IV of ERISA; (d) obligations issued
for or liabilities incurred on the account of such Person; (e) obligations or
liabilities of such Person arising under acceptance facilities; (f) obligations
of such Person under any guarantees, endorsements (other than for collection or
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deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any Person
or otherwise to assure a creditor against loss; (g) obligations of others
secured by any lien on property or assets of such Person, whether or not the
obligations have been assumed by such Person; or (h) obligations of such Person
under any interest rate or currency exchange agreement.
"INDENTURE" means the Amended and Restated Indenture dated as
of January 12, 2007, between the Issuer and ▇▇▇▇▇ Fargo Bank, National
Association, as Trustee, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof.
"INDEPENDENT" means, when used with respect to any specified
Person, that the person (a) is in fact independent of the Issuer, the Seller,
the Purchaser, the Servicer and any Affiliate of any of the foregoing persons,
(b) does not have any direct financial interest or any material indirect
financial interest in the Issuer, the Seller, the Purchaser, the Servicer or any
Affiliate of any of the foregoing Persons and (c) is not connected with the
Issuer, the Seller, the Purchaser, the Servicer or any Affiliate of any of the
foregoing Persons as an officer, employee, promoter, underwriter, trustee,
partner, director or Person performing similar functions.
"INELIGIBLE RECEIVABLE" means any Receivable other than an
Eligible Receivable.
"INSOLVENCY EVENT" means, with respect to a specified Person,
(a) the institution of a proceeding or the filing of a petition against such
Person seeking the entry of a decree or order for relief by a court having
jurisdiction in the premises in respect of such Person or any substantial part
of its property in an involuntary case under any applicable federal or state
bankruptcy, insolvency or other similar law now or hereafter in effect, seeking
the appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for such Person or for any substantial part of
its property, or ordering the winding-up or liquidation of such Person's
affairs, and such proceeding or petition, decree or order shall remain unstayed
or undismissed for a period of 60 consecutive days or an order or decree for the
requested relief is earlier entered or issued; or (b) the commencement by such
Person of a voluntary case under any applicable federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or the consent by
such Person to the entry of an order for relief in an involuntary case under any
such law, or the consent by such Person to the appointment of or taking
possession by, a receiver, liquidator, assignee, custodian, trustee,
sequestrator, or similar official for such Person or for any substantial part of
its property, or the making by such Person of any general assignment for the
benefit of creditors, or the failure by such Person generally to pay its debts
as such debts become due, or the taking of action by such Person in furtherance
of any of the foregoing.
"INTERCREDITOR AGREEMENT" means that certain Intercreditor
Agreement dated as of January 12, 2007 by and among the Class A Note Purchaser,
the Class A Noteholder, the Class B Note Purchasers, the Class B Noteholders,
the Issuer, the Purchaser, the Seller, the Servicer and the Trustee.
"INTERCREDITOR AGREEMENTS" means the Intercreditor Agreement
and the UBS Intercreditor Agreement.
"INTEREST PERIOD" means, with respect to a class of Notes and
any Settlement Date, the period from, and including, the immediately preceding
Settlement Date (or from and including the initial Funding Date for such class
of Notes, in the case of the first Settlement Date for a class of Notes) to, but
excluding, such Settlement Date.
"INVESTED AMOUNT" means, with respect to the Class A Notes,
the Class A Invested Amount and with respect to the Class B Notes, the Class B
Invested Amount.
"INVESTMENT COMPANY ACT" has the meaning set forth in SECTION
5.01(d) of each Note Purchase Agreement.
"INVESTMENT EARNINGS" means, with respect to any Settlement
Date and any Pledged Account, the investment earnings on Pledged Account
Property and deposited into such Pledged Account during the related Accrual
Period pursuant to SECTION 5.1(d) of the Sale and Servicing Agreement.
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"ISSUER" means Page Three Funding LLC until a successor
replaces it in accordance with the terms of the Indenture and, thereafter, means
the successor and, for purposes of any provision contained herein, each other
obligor on the Notes.
"ISSUER ORDER" and "ISSUER REQUEST" means a written order or
request signed in the name of the Issuer by any one of its Authorized Officers
and delivered to the Trustee.
"LIBOR" means, with respect to any Interest Period, the rate
for one-month deposits in U.S. dollars determined on the related LIBOR
Determination Date by the Controlling Note Purchaser by reference to the London
Inter-Bank Offered Rate, as such rate appears as "BBBAM - Page DE8 4a" on
Bloomberg (or such other publicly-available service or services publishing such
rates selected by Controlling Note Purchaser in its reasonable discretion and
communicated to the Issuer) at or about 11 a.m. New York City time; PROVIDED
FURTHER, that if no rate appears on Bloomberg, on any such date of determination
LIBOR shall be determined as follows:
LIBOR will be determined at approximately 11:00 a.m., New York
City time, on the related LIBOR Determination Date on the basis of (a) the
arithmetic mean of the rates at which one-month deposits in U.S. dollars are
offered to prime banks in the London interbank market by four (4) major banks in
the London interbank market selected by the Controlling Note Purchaser and in a
principal amount of not less than $150,000,000 that is representative for a
single transaction in such market at such time, if at least two (2) such
quotations are provided, or (b) if fewer than two (2) quotations are provided as
described in the preceding clause (a), the arithmetic mean of the rates, as
requested by the Controlling Note Purchaser, quoted by three (3) major banks in
New York City, selected by the Controlling Note Purchaser, at approximately
11:00 A.M., New York City time, on such LIBOR Determination Date, one-month
deposits in United States dollars to leading European banks and in a principal
amount of not less than $150,000,000 that is representative for a single
transaction in such market at such time.
"LIBOR BUSINESS DAY" means any day on which banks in London,
England and The City of New York are open and conducting transactions in foreign
currency and exchange.
"LIBOR DETERMINATION DATE" means, with respect to any Interest
Period, the second LIBOR Business Day immediately preceding the first day of
such Interest Period; PROVIDED, HOWEVER, the LIBOR Determination Date for the
first Interest Period shall be the second LIBOR Business Day immediately
preceding the initial Funding Date.
"LIEN" means a security interest, lien, charge, pledge,
equity, or encumbrance of any kind, other than tax liens, mechanics' liens and
any liens that attach to the respective Receivable by operation of law as a
result of an Obligor's failure to pay an obligation.
"LIEN CERTIFICATE" means, with respect to a Financed Vehicle,
an original certificate of title, certificate of lien or other notification
issued by the Registrar of Titles of the applicable state to a secured party
which indicates that the lien of the secured party on the Financed Vehicle is
recorded on the original certificate of title. In any jurisdiction in which the
original certificate of title is required to be given to the obligor, the term
"LIEN CERTIFICATE" shall mean only a certificate or notification issued to a
secured party.
"LIQUIDATED RECEIVABLE" means any Receivable (i) which has
been liquidated by the Servicer through the sale of the Financed Vehicle or (ii)
for which the related Financed Vehicle has been repossessed and 90 days have
elapsed since the date of such repossession or (iii) as to which an Obligor has
failed to make more than 90% of a Scheduled Receivable Payment of more than ten
dollars for 120 (or, if the related Financed Vehicle has been repossessed, 210)
or more days as of the end of a Accrual 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. For purposes of this
definition, a Receivable shall be deemed a "Liquidated Receivable" upon the
first to occur of the events specified in items (i) through (iv) of the previous
sentence.
"LLC AGREEMENT" means the Limited Liability Company Agreement
of Page Three Funding, LLC dated as of October 27, 2005, entered into by CPS, as
amended by Amendment No. 1 thereto dated as of January 12, 2007, and as such
agreement may be further amended, supplemented or otherwise modified from time
to time in accordance with the terms thereof.
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"LOCKBOX ACCOUNT" means an account established and maintained
in the name of the Issuer for the benefit of Trustee for the further benefit of
the Noteholders and the Note Purchasers by the Lockbox Bank pursuant to SECTION
4.2(b) of the Sale and Servicing Agreement.
"LOCKBOX AGREEMENT" means the Multiparty Agreement Relating to
Lockbox Services, dated as of November 15, 2005, by and among the Lockbox
Processor, the Purchaser, the Servicer and the Trustee, as amended by Amendment
No. 1 thereto dated as of January 12, 2007, by and among the Lockbox Processor,
the Purchaser, the Servicer and the Trustee, as such agreement may be further
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof, unless the Trustee shall cease to be a party thereunder, or
such agreement shall be terminated in accordance with its terms, in which event
"LOCKBOX AGREEMENT" shall mean such other agreement, in form and substance
acceptable to the Controlling Note Purchaser, among the Servicer, the Purchaser,
and the Lockbox Processor and any other appropriate parties.
"LOCKBOX BANK" means as of any date a depository institution
named by the Servicer and acceptable to the Majority Noteholders of the Highest
Priority Class of Notes and the Controlling Note Purchaser at which the Lockbox
Account is established and maintained as of such date.
"LOCKBOX PROCESSOR" means ▇▇▇▇▇ Fargo Bank, National
Association and its successors and assigns.
"MAJORITY NOTEHOLDERS" means, in the case of the Class A
Notes, the Class A Majority Noteholders and in the case of the Class B Notes,
the Class B Majority Noteholders.
"MARGIN CALL" means, in the case of the Class A Notes, a Class
A Margin Call and in the case of the Class B Notes, a Class B Margin Call.
"MARKET VALUE" means, on any Business Day, the value of the
Receivables as determined by the daily-run structured arb report as calculated
by the Controlling Note Purchaser in its sole and absolute discretion.
"MATERIAL ADVERSE CHANGE" means (a) in respect of any Person,
a material adverse change in (i) the business, financial condition, results of
operations, prospects or properties of such Person, or (ii) the ability of such
Person to perform its obligations under any of the Basic Documents to which it
is a party, in each case in a manner that materially and adversely affects any
Noteholder, any Note Purchaser or the value, collectibility or marketability of
any class of Notes, (b) in respect of any Receivable, a material adverse change
in (i) the value or marketability of such Receivable, or (ii) the probability
that amounts now or hereafter due in respect of such Receivable will be
collected on a timely basis, in each case in a manner that materially and
adversely affects the Noteholders of the Highest Priority Class, the Controlling
Note Purchaser or the value, collectibility or marketability of the Highest
Priority Class of Notes, or the ability of the Trustee on behalf of the
Noteholders and the Note Purchasers to realize the benefits of the security
afforded under the Basic Documents.
"MATERIAL ADVERSE EFFECT" means an effect on (a) the value or
marketability of the Receivables or any of the other Collateral (including,
without limitation, the enforceability or collectibility of the Receivables);
(b) the business, operations, properties, condition (financial or otherwise) or
prospects of the Seller, the Servicer, the Purchaser or the Issuer, in each
case, individually or taken as a whole; (c) the validity or enforceability of
this or any of the other Basic Documents or the rights or remedies of the
Trustee, any Note Purchaser or any Noteholder hereunder or thereunder or the
validity, perfection or priority of any Lien in favor of any Note Purchaser, any
Noteholder or the Trustee for the benefit of any Note Purchaser and any
Noteholder granted thereunder; (d) the timely payment of the principal of or
interest on any Advances or other amounts payable under the Basic Documents; or
(e) the ability of the Seller, the Servicer, the Purchaser or the Issuer to
perform its obligations under any Basic Document to which it is a party, in each
case that materially and adversely affects any Noteholder, any Note Purchaser or
the value, collectability or marketability of any class of Notes.
"MAXIMUM ADVANCE RATE" means 93%.
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"MAXIMUM INVESTED AMOUNT" means, in the case of the Class A
Notes, the Class A Maximum Invested Amount and in the case of the Class B Notes,
the Class B Maximum Invested Amount.
"MFN" means MFN Financial Corporation, a Delaware corporation.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc., or its
successor.
"MULTIEMPLOYER PLAN" means a Plan which is a multiemployer
plan as defined in ▇▇▇▇▇▇▇ ▇▇▇▇(▇)(▇) of ERISA.
"NET ACQUISITION FEE" means, for any Receivable, (a) the sum
of (i) PLAUSA3 and (ii) PLASFE less (b) PLTDIF, in each case, as reflected in
the Data Tape Fields delivered prior to each Funding Date pursuant to Section
2.1(b)(i) of the Sale and Servicing Agreement, which amount shall represent the
difference between the original Principal Balance of the related Receivable and
the amount paid by the Seller to the Dealer or Consumer Lender (if such Consumer
Lender is not the Seller) for such Receivable (without giving effect to the
Seller netting from such amount the first payment due with respect to such
Receivable).
"NET CLASS B INVESTED AMOUNT" means, as of any date of
determination, the excess of (x) the Class B Invested Amount, over (y) 50% of
the market value of such Pledged Subordinate Securities as provided by the
Servicer to the Class B Note Purchasers pursuant to Section 3.05(a) of the Class
B Note Purchase Agreement.
"NET ELIGIBLE RECEIVABLES BALANCE" means, as of any date of
determination, the excess of (a) the aggregate Principal Balance of all Eligible
Receivables as of such date of determination (after giving effect to any
Available Funds allocable to principal payments made by the related Obligors)
over (b) the Excess Concentration Amount for the Eligible Receivables.
"NET LIQUIDATION PROCEEDS" means, with respect to a Liquidated
Receivable, all amounts realized with respect to such Receivable 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 the reasonable cost of legal counsel with the enforcement of a Liquidated
Receivable and (ii) amounts that are required to be refunded to the Obligor on
such Receivable; PROVIDED, HOWEVER, that the Net Liquidation Proceeds with
respect to any Receivable shall in no event be less than zero.
"NOTES" means the Class A Notes and/or the Class B Notes, as
the context may require.
"NOTE DISTRIBUTION ACCOUNT" means the account designated as
such, established and maintained pursuant to SECTION 5.1(b) of the Sale and
Servicing Agreement.
"NOTE INTEREST RATE" means, with respect to the Class A Notes,
the Class A Note Interest Rate, and with respect to the Class B Notes, the Class
B Note Interest Rate.
"NOTE PAYING AGENT" means the Trustee or any other Person that
meets the eligibility standards for the Trustee specified in SECTION 6.11 of the
Indenture and is authorized by the Issuer to make the payments to and
distributions from the Collection Account and the Note Distribution Account,
including payment of principal of or interest on each class of Notes on behalf
of the Issuer.
"NOTE PURCHASE AGREEMENT" means the Class A Note Purchase
Agreement, in the case of the Class A Notes, or the Class B Note Purchase
Agreement, in the case of the Class B Notes.
"NOTE PURCHASER" means the Class A Note Purchaser, in the case
of the Class A Notes, or a Class B Note Purchaser, in the case of the Class B
Notes.
"NOTE REGISTER" and "NOTE REGISTRAR" have the respective
meanings specified in Section 2.4 of the Indenture.
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"OBLIGOR" on a Receivable means the purchaser or co-purchasers
of the Financed Vehicle and any other Person who owes payments under the
Receivable.
"OFFICER'S CERTIFICATE" means a certificate signed by the
chairman of the board, the president, any vice chairman of the board, any vice
president, the treasurer, the controller or assistant treasurer or any assistant
controller, secretary or assistant secretary of the Seller, the Purchaser or the
Servicer, as appropriate.
"OPINION COLLATERAL" has the meaning set forth in Section
3.6(a) of the Indenture.
"OPINION OF COUNSEL" means a written opinion of counsel who
may be but need not be counsel to the Purchaser, the Seller or the Servicer,
which counsel shall be reasonably acceptable to the Trustee and the applicable
Note Purchaser and which opinion shall be acceptable in form and substance to
the Trustee and to the applicable Note Purchaser.
"OTHER CONVEYED PROPERTY" means all property conveyed by the
Seller to the Purchaser pursuant to SECTIONS 2.1 (a)(ii) through (xi) of the
Sale and Servicing Agreement and Section 2 of each Assignment.
"OUTSTANDING" means, as of the date of determination, the
Notes theretofore authenticated and delivered under the Indenture except:
(i) Notes theretofore canceled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes the payment for which money in the necessary amount
has been theretofore deposited with the Trustee or any Note Paying
Agent in trust for the Holders of such Notes (provided, however, that
if such Notes are to be prepaid, notice of such prepayment has been
duly given pursuant to the Indenture, satisfactory to the Trustee); and
(iii) Notes in exchange for or in lieu of one or more other
Notes which have been authenticated and delivered pursuant to the
Indenture unless proof satisfactory to the Trustee is presented that
any such Note is held by a bona fide purchaser.
"PERCENTAGE INTEREST" means, with respect to any Class A Note
or Class B Note, the percentage interest as specified on the face of such Note,
which when multiplied by the applicable Invested Amount outstanding on any date
of determination shall equal the principal amount outstanding on such Note as of
such date.
........."PERSON" means any individual, corporation, estate,
partnership, limited liability company, joint venture, association, joint stock
company, trust (including any beneficiary thereof), unincorporated organization
or government or any agency or political subdivision thereof.
"PHYSICAL PROPERTY" has the meaning given to such term in the
definition of "Delivery" above.
"PLAN" means any Person that is (i) an "employee benefit plan"
(as defined in Section 3(3) of ERISA) that is subject to the provisions of Title
I of ERISA, (ii) a "plan" (as defined in Section 4975(e)(1) of the Code) that is
subject to Section 4975 of the Code or (ii) any entity whose underlying assets
include assets of a plan described in (i) or (ii) above by reason of such plan's
investment in the entity.
"PLEDGE AGREEMENT" means the Amended and Restated Pledge and
Security Agreement dated as of January 12, 2007 by and among CPS, the Class A
Note Purchaser and each Class B Note Purchaser, as such agreement may be further
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof.
"PLEDGED ACCOUNT PROPERTY" means the Pledged Accounts, all
amounts and investments held from time to time in any Pledged Account (whether
in the form of deposit accounts, Physical Property, book-entry securities,
uncertificated securities or otherwise), and all proceeds of the foregoing.
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"PLEDGED ACCOUNTS" has the meaning assigned thereto in SECTION
5.1(C) of the Sale and Servicing Agreement.
"PLEDGED COLLATERAL" has the meaning assigned thereto in the
Pledge Agreement.
"PLEDGED SUBORDINATE SECURITY" means any subordinate classes
of asset-backed securities (including, without limitation, residual interest
securities) issued pursuant to a Securitization Transaction that are not sold on
the related Securitization Closing Date and which are paid to the Issuer as part
of the consideration for the sale of the related Receivables in such
Securitization Transaction, and that are delivered by the Issuer, as the owner
thereof, to the Trustee pursuant to Section 3.3 of the Sale and Servicing
Agreement and pledged by the Issuer to the Trustee for the benefit of the Class
B Note Purchasers and the Class B Noteholders pursuant to Granting Clause II of
the Indenture.
"POST-OFFICE BOX" means the separate post-office box
established and maintained by the Servicer in the name of the Purchaser for the
benefit of the Trustee for the further benefit of the Noteholders and the Note
Purchasers, established and maintained pursuant to SECTION 4.2 of the Sale and
Servicing Agreement.
"PRE-FUNDING PROCEEDS" has the meaning assigned thereto in
Section 10.1 of the Indenture.
"PRINCIPAL BALANCE" of a Receivable means the Amount Financed
minus the sum of the following amounts without duplication: (i) that portion of
all Scheduled Receivable Payments actually received on or prior to such day
allocable to principal using the Simple Interest Method; (ii) any Cram Down Loss
in respect of such Receivable; and (iii) any prepayment in full or any partial
prepayment applied to reduce the principal balance of the Receivable, all
measured as of the close of business on such day.
"PROCEEDING" means any suit in equity, action at law or other
judicial or administrative proceeding.
"PROGRAM" has the meaning specified in SECTION 4.11 of the
Sale and Servicing Agreement.
"PURCHASE AMOUNT" means, on any date with respect to a
Defective Receivable, the sum of (a) the Principal Balance of such Receivable as
of the date of purchase of such Receivable, and (b) all accrued and unpaid
interest on the Receivable.
"PURCHASE PRICE" means, with respect to each Receivable and
related Other Conveyed Property transferred to the Purchaser on the Closing Date
or on any Funding Date, an amount equal to the Principal Balance of such
Receivable as of the Closing Date or such Funding Date, as applicable.
"PURCHASED RECEIVABLE" means a Receivable purchased by the
Servicer pursuant to SECTION 4.7 of the Sale and Servicing Agreement or
repurchased by the Seller pursuant to SECTION 3.2 of the Sale and Servicing
Agreement.
"PURCHASER" means Page Three Funding LLC.
"PURCHASER PROPERTY" means the Receivables and Other Conveyed
Property, together with certain monies received after the related Cutoff Date,
the Receivables Insurance Policies, the Collection Account (including all
Eligible Investments therein and all proceeds therefrom), the Lockbox Account
and certain other rights under the Sale and Servicing Agreement.
"REALIZED LOSSES" means, with respect to any Receivable that
becomes a Liquidated Receivable, the excess of the Principal Balance of such
Liquidated Receivable over Net Liquidation Proceeds allocable to principal
thereof.
"RECEIVABLE" means each Contract listed on the Schedule of
Receivables and all rights and obligations thereunder, except for Receivables
that have become Purchased Receivables and, for the avoidance of doubt, shall
include all Related Receivables (other than Related Receivables that have become
Purchased Receivables).
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"RECEIVABLE FILES" means the documents specified in SECTION
3.3(a) of the Sale and Servicing Agreement.
"RECEIVABLES INSURANCE POLICY" means, with respect to a
Receivable, any insurance policy (including the insurance policies described in
SECTION 4.4 of the Sale and Servicing Agreement) benefiting the holder of the
Receivable providing loss or physical damage, credit life, credit accident,
health, credit disability, theft, mechanical breakdown or similar coverage with
respect to the Financed Vehicle or the Obligor, including without limitation any
GAP, vendor's single interest or other collateral protection insurance policy or
coverage.
"RECORD DATE" means, with respect to a Settlement Date, the
close of business on the day immediately preceding such Settlement Date.
"REGISTRAR OF TITLES" means, with respect to any state, the
governmental agency or body responsible for the registration of, and the
issuance of certificates of title relating to, motor vehicles and liens thereon.
"RELATED RECEIVABLES" means, with respect to a Funding Date,
the Receivables listed on SCHEDULE A to the applicable Assignment executed and
delivered by the Seller with respect to such Funding Date.
"RELEASE REQUEST" has the meaning specified in SECTION 3.5 of
the Sale and Servicing Agreement.
"REPOSSESSED RECEIVABLE" means a Receivable with respect to
which the earliest of the following shall have occurred: (i) the date the
Financed Vehicle is actually repossessed and (ii) 30 days after the date the
Financed Vehicle is authorized for repossession.
"RESPONSIBLE OFFICER" means, in the case of the Trustee, the
chairman or vice-chairman of the board of directors, the chairman or
vice-chairman of the executive committee of the board of directors, the
president, vice-president, assistant vice-president or managing director, the
secretary, and assistant secretary 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 such
officer's knowledge of and familiarity with the particular subject.
"RULE 144A INFORMATION" has the meaning set forth in SECTION
3.26 of the Indenture.
"SALE AND SERVICING AGREEMENT" means the Amended and Restated
Sale and Servicing Agreement dated as of January 12, 2007, among Page Three
Funding LLC, as Purchaser and Issuer, CPS, as Seller and Servicer, and ▇▇▇▇▇
Fargo Bank, National Association, as the Backup Servicer and the Trustee, as the
same may be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof.
"SCHEDULED MATURITY DATE" means, with respect to the Class A
Notes, the Class A Scheduled Maturity Date and with respect to the Class B
Notes, the Class B Scheduled Maturity Date.
"SCHEDULED RECEIVABLE PAYMENT" means, with respect to any
Accrual Period for any Receivable, the amount set forth in such Receivable as
required to be paid by the Obligor in such Accrual Period. If after the Class A
Closing Date, the Obligor's obligation under a Receivable with respect to an
Accrual Period has been modified so as to differ from the amount specified in
such Receivable (i) as a result of the order of a court in an insolvency
proceeding involving the Obligor, (ii) pursuant to the Servicemembers Civil
Relief Act, or (iii) as a result of modifications or extensions of the
Receivable permitted by Section 4.2 of the Sale and Servicing Agreement, the
Scheduled Receivable Payment with respect to such Accrual Period shall refer to
the Obligor's payment obligation with respect to such Accrual Period as so
modified.
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"SCHEDULE OF RECEIVABLES" means the schedule of all
Receivables purchased by the Purchaser pursuant to the Sale and Servicing
Agreement and each Assignment, which is attached as Schedule A to the Sale and
Servicing Agreement, as amended or supplemented from time to time upon each
Assignment of Receivables or in accordance with the terms of the Sale and
Servicing Agreement.
"SEASONED RECEIVABLE" shall mean an Eligible Receivable that
was sold to the Purchaser and pledged to the Trustee for the benefit of the
Noteholders and the Note Purchasers more than 31 days after the Seller paid the
related Dealer or Consumer Lender (if such Consumer Lender is not the Seller)
for such Eligible Receivable.
"SEAWEST" means SeaWest Financial Corporation, a California
corporation.
"SECTION 341 MEETING" means a meeting held pursuant to Section
341(a) of the United States Bankruptcy Code (as the same may be amended from
time to time) in which an Obligor subject to a Insolvency Event under Chapter 7
of the United States Bankruptcy Code has presented his/her plan to the
bankruptcy court and all of his/her creditors.
"SECTION 341 RECEIVABLE" means a Receivable, the Obligor of
which has completed a Section 341 Meeting as of the applicable Cutoff Date.
"SECURED OBLIGATIONS" means all amounts and obligations which
the Issuer or the Purchaser may at any time owe under the Basic Documents to, or
on behalf of the Noteholders, the Note Purchasers and/or the Trustee for the
benefit of the Noteholders and the Note Purchasers (or any of them), in each
case whether now owed or hereafter arising.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIZATION CLOSING DATE" shall mean the closing date for
a Securitization Transaction.
"SECURITIZATION DOCUMENTS" shall mean, collectively, all
agreements, documents, instruments and certificates executed and delivered in
connection with any Securitization Transaction.
"SECURITIZATION TRANSACTION" means a securitization of
Receivables.
"SELLER" means Consumer Portfolio Services, Inc., and its
successors in interest to the extent permitted hereunder.
"SELLER'S CONTRACT PURCHASE GUIDELINES" means CPS's
established "Contract Purchase Guidelines", as the same may be amended from time
to time in accordance with Section 8.2(c) of the Sale and Servicing Agreement.
"SERVICER" means, initially, Consumer Portfolio Services,
Inc., as the servicer of the Receivables, and each successor Servicer pursuant
to SECTION 10.3 of the Sale and Servicing Agreement.
"SERVICER DELINQUENCY RATIO" means, as of the end of any
Accrual Period, a percentage equal to (i) the aggregate outstanding principal
balance as of the end of any Accrual Period of all automobile receivables
serviced by the Servicer or any Affiliate thereof (excluding automobile
receivables acquired or originated by MFN, TFC or SeaWest) as to which more than
10% of the scheduled receivable payment is more than 30 days contractually
delinquent as of the end of the immediately preceding Accrual Period, including
all receivables for which the related financed vehicle has been repossessed and
the proceeds thereof have not yet been realized by the Servicer divided by (ii)
the aggregate outstanding principal balance of all automobile receivables
serviced by the Servicer or any Affiliate thereof as of the end of the relevant
Accrual Period (excluding automobile receivables acquired or originated by MFN,
TFC or SeaWest).
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"SERVICER EXTENSION NOTICE" has the meaning specified in
SECTION 4.15 of the Sale and Servicing Agreement.
"SERVICER LOSS RATIO" means, as of any date, the average of
the loss ratios (expressed as a percentage) for the three Accrual Periods
immediately preceding such date, as computed based on the methodology set forth
in the Servicer's then most recent report on Form 10-Q or Form 10-K, as
applicable, for calculation of net losses on automobile receivables originated
and serviced by the Servicer (excluding all automobile receivables originated or
acquired by MFN, TFC or SeaWest).
"SERVICER TERMINATION EVENT" means an event specified in
SECTION 10.1 of the Sale and Servicing Agreement.
"SERVICER TERMINATION SIDE LETTER" means the Amended and
Restated Servicer Termination Side Letter dated January 12, 2007, from the
Controlling Note Purchaser to the Servicer, as the same may be further amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.
"SERVICER'S CERTIFICATE" means a certificate completed and
executed by a Servicing Officer and delivered pursuant to SECTION 4.9 of the
Sale and Servicing Agreement, substantially in the form of EXHIBIT A to the Sale
and Servicing Agreement.
"SERVICING ASSUMPTION AGREEMENT" means the Servicing
Assumption Agreement, dated as of November 15, 2005, among Consumer Portfolio
Services, Inc., as Seller and Servicer, the Backup Servicer and the Trustee, as
amended by Amendment No. 1 thereto dated as of January 12, 2007, as the same may
be further amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof.
"SERVICING FEE" has the meaning specified in SECTION 4.8 of
the Sale and Servicing Agreement.
"SERVICING FEE PERCENTAGE" means 2.50%, provided that if
Backup Servicer is the Servicer, the Servicing Fee Percentage shall be
determined in accordance with Servicing Assumption Agreement.
"SERVICING GUIDELINES" means CPS's established servicing
guidelines, as the same may be amended from time to time in accordance with
Section 9.1(k) of the Sale and Servicing Agreement.
"SERVICING OFFICER" means any Person whose name appears on a
list of Servicing Officers delivered to the Trustee and the Note Purchasers, as
the same may be amended, modified or supplemented from time to time.
"SETTLEMENT DATE" means, with respect to each Accrual Period,
the 15th day of the following calendar month, or if such day is not a Business
Day, the immediately following Business Day.
"SIMPLE INTEREST METHOD" means the method of allocating a
fixed level payment between principal and interest, pursuant to which the
portion of such payment that is allocated to interest is equal to the product of
the APR multiplied by the unpaid balance multiplied by the period of time
(expressed as a fraction of a year, based on the actual number of days in the
calendar month and the actual number of days in the calendar year) elapsed since
the preceding payment of interest was made and the remainder of such payment is
allocable to principal.
"SIMPLE INTEREST RECEIVABLE" means a Receivable under which
the portion of the payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
"STANDARD & POOR'S" means Standard & Poor's Ratings Services,
a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or its successor.
"STATE" means any one of the 50 states of the United States of
America or the District of Columbia.
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"SUBSIDIARY" means, with respect to any Person, any
corporation, partnership, association or other business entity of which a
majority of the outstanding shares of capital stock or other equity interests
having ordinary voting power for the election of directors or their equivalent
is at the time owned by such Person directly or through one or more
Subsidiaries.
"TAXES" has the meaning set forth in SECTION 3.04 of each Note
Purchase Agreement.
"TERM" means, with respect to the Class A Notes, the Class A
Term and with respect to the Class B Notes, the Class B Term.
"TERMINATION DATE" means the date on which the Trustee shall
have received payment and performance of all Secured Obligations and disbursed
such payments in accordance with the Basic Documents and any and all other
amounts due and payable to the Note Purchasers and the Noteholders pursuant to
the Basic Documents have been paid in full.
"TEXAS FRANCHISE TAX" means any tax imposed by the State of
Texas pursuant to Tex. Tax Code ▇▇▇. ss. 171.001 (▇▇▇▇▇▇ 2005), as amended by
Tex. H.B. 3, 79th Leg., 3d C.S. (2006).
"TFC" means The Finance Company, Inc., a Virginia corporation.
"TRUST ESTATE" means all money, instruments, rights and other
property that are subject or intended to be subject to the lien and security
interest of the Indenture for the benefit of the Noteholders and the Note
Purchasers, including all Collateral Granted to the Trustee for the benefit of
the Noteholders and the Note Purchasers pursuant to Granting Clause I of the
Indenture, all Pledged Subordinate Securities Granted to the Trustee for the
benefit of the Class B Noteholders and the Class B Note Purchasers pursuant to
Granting Clause II of the Indenture, and all UBS Cross Collateral Granted to the
Trustee for the benefit of the Class B Noteholders and the Class B Note
Purchasers pursuant to Granting Clause III of the UBS Indenture.
"TRUST RECEIPT" means a trust receipt in substantially the
form of EXHIBIT B to the Sale and Servicing Agreement.
"TRUSTEE" means ▇▇▇▇▇ Fargo Bank, National Association, a
national banking association, not in its individual capacity but as trustee
under the Indenture, or any successor trustee under the Indenture.
"TRUSTEE FEE" means (A) the fee payable to the Trustee on each
Settlement Date in an amount equal to the greater of $2,000 and (b) one-twelfth
of 0.04% of the aggregate outstanding principal amount of the Notes on the first
day of the related Accrual Period, and (B) any other amounts payable to the
Trustee pursuant to the Fee Schedule, including Custodial Fees.
"UBS BASIC DOCUMENTS" has the meaning assigned to the term
"Basic Documents" in Annex A to the UBS Sale and Servicing Agreement.
"UBS CROSS COLLATERAL" has the meaning specified in Granting
Clause III of the UBS Indenture.
"UBS INDENTURE" means the Amended and Restated Indenture dated
as of April 18, 2006 between Page Funding LLC and ▇▇▇▇▇ Fargo Bank, National
Association, as trustee, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof.
"UBS INDENTURE TRUSTEE" means ▇▇▇▇▇ Fargo Bank, National
Association, a national banking association, not in its individual capacity but
as trustee under the UBS Indenture, or any successor trustee under the UBS
Indenture.
"UBS INTERCREDITOR AGREEMENT" means the Intercreditor
Agreement by and among UBS Real Estate Securities Inc., The Patriot Group, LLC,
Waterfall Eden Fund, LP, Page Funding, LLC, CPS and the UBS Indenture Trustee,
as the same may be amended, supplemented or otherwise modified from time to time
in accordance with the terms thereof.
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"UBS SALE AND SERVICING AGREEMENT" means the Second Amended
and Restated Sale and Servicing Agreement dated as of April 18, 2006, by and
among Page Funding LLC, as Purchaser and Issuer, CPS, as Seller and Servicer,
and ▇▇▇▇▇ Fargo Bank, National Association, as the Backup Servicer and the
Trustee, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.
"UBS SECURED OBLIGATIONS" means all amounts and obligations
which Page Funding LLC may at any time owe under the UBS Warehouse Facility to,
or on behalf of, the holders of the Class B notes issued thereunder, the Class B
note purchasers thereunder and/or the UBS Indenture Trustee for the benefit of
the holders of the Class B notes issued thereunder and the Class B note
purchasers thereunder, in each case whether now owed or hereafter arising.
"UBS WAREHOUSE FACILITY" means the transactions contemplated
by the UBS Basic Documents.
"UBS WAREHOUSE FACILITY AMENDMENT DATE" means the date on
which the UBS Basic Documents are amended and restated in a manner that
substantially conforms to the terms and provisions of the Basic Documents as
they apply to the issuance of the Class B Notes, as determined in the reasonable
discretion of the Class B Note Purchasers.
"UBS WAREHOUSE FACILITY TERMINATION DATE" means the date on
which the commitment of the Class A note purchaser to make advances under the
UBS Basic Documents is terminated in accordance with the terms of the UBS Basic
Documents, unless such commitment is extended by the Class A note purchaser in
accordance with the terms of the UBS Basic Documents.
"UCC" means the Uniform Commercial Code as in effect in the
relevant jurisdiction, as amended from time to time.
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