Exhibit 10.1
Sale and Servicing Agreement
[EXECUTION COPY]
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SALE AND SERVICING
AGREEMENT
among
CPS AUTO RECEIVABLES TRUST 1997-3, as
Issuer,
CPS RECEIVABLES CORP., as
Seller,
CONSUMER PORTFOLIO SERVICES, INC., as
Servicer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as
Standby Servicer and Trustee
Dated as of August 1, 1997
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SALE AND SERVICING AGREEMENT dated as of August 1, 1997, among CPS AUTO
RECEIVABLES TRUST 1997-3, a Delaware business trust (the "Issuer"), CPS
RECEIVABLES CORP., a California corporation (the "Seller"), CONSUMER PORTFOLIO
SERVICES, INC., a California corporation (the "Servicer"), and NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION, a national banking association, in its capacity
as Standby Servicer and Trustee.
WHEREAS the Issuer desires to purchase a portfolio of receivables
arising in connection with motor vehicle retail installment sale contracts
acquired by Consumer Portfolio Services, Inc. or Samco Acceptance Corp. through
motor vehicle dealers and independent finance companies;
WHEREAS the Seller has purchased such receivables from Consumer
Portfolio Services, Inc. and Samco Acceptance Corp. and is willing to sell such
receivables to the Issuer;
WHEREAS the Issuer desires to purchase additional receivables arising
in connection with motor vehicle retail installment sale contracts to be
acquired by Consumer Portfolio Services, Inc. or Samco Acceptance Corp. through
motor vehicle dealers and independent finance companies;
WHEREAS the Seller has agreements to purchase such additional
receivables from Consumer Portfolio Services, Inc. and from Samco Acceptance
Corp. and is willing to sell such receivables to the Issuer;
WHEREAS the Servicer is willing to service all such receivables;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. Whenever used in this Agreement, the
following words and phrases shall have the following meanings:
"Accountants' Report" means the report of a firm of nationally
recognized independent accountants described in Section 4.11.
"Addition Notice" means, with respect to any transfer of Subsequent
Receivables to the Trust pursuant to Section 2.2 of this Agreement, notice of
the Seller's election to transfer Subsequent Receivables to the Trust, such
notice to designate the related Subsequent Transfer Date and the approximate
principal
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amount of Subsequent Receivables to be transferred on such Subsequent Transfer
Date.
"Administrative Receivable" means, with respect to any Collection
Period, a Receivable which the Servicer is required to purchase pursuant to
Section 4.7 with respect to such Collection Period.
"Affiliate" of any Person means any Person who directly or indirectly
controls, is controlled by, or is under direct or indirect common control with
such Person. For purposes of this definition, the term "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling", "controlled
by" and "under common control with" have meanings correlative to the foregoing.
"Aggregate Principal Balance" means, with respect to any date of
determination, the sum of the Principal Balances for all Receivables (other than
(i) any Receivable that became a Liquidated Receivable prior to the end of the
related Collection Period and (ii) any Receivable that became a Purchased
Receivable prior to the end of the related Collection Period) as of the date of
determination.
"Agreement" means this Sale and Servicing Agreement, as the same may be
amended and supplemented from time to time.
"Amount Financed" means, with respect to a Receivable, the aggregate
amount advanced under such Receivable toward the purchase price of the Financed
Vehicle and any related costs, including amounts advanced in respect of
accessories, insurance premiums, service and warranty contracts, other items
customarily financed as part of retail automobile installment sale contracts or
promissory notes, and related costs.
"Annual Percentage Rate" or "APR" of a Receivable means the annual
percentage rate of finance charges or service charges, as stated in the related
Contract.
"Assumed Reinvestment Rate" means 2.50% per annum.
"Assumption Date" shall have the meaning specified in Section 10.3(a).
"Bank of America" means Bank of America Trust and Savings Association
and its successors.
"Basic Documents" means this Agreement, the Certificate of Trust, the
Trust Agreement, the Indenture, each Purchase
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Agreement, each Subsequent Purchase Agreement, the Master Spread Account
Agreement, the Spread Account Supplement the Insurance Agreement, the
Indemnification Agreement, and other documents and certificates delivered in
connection therewith.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in the City of New York, the State in which the
Corporate Trust Office is located, the State in which the executive offices of
the Servicer are located or the State in which the principal place of business
of the Note Insurer is located shall be authorized or obligated by law,
executive order, or governmental decree to be closed.
"Certificate" has the meaning assigned to such term in the Trust
Agreement.
"Certificate Balance" has the meaning assigned to such term in the
Trust Agreement.
"Certificate Pool Factor" as of the close of business on any Payment
Date means a seven-digit decimal figure equal to the outstanding principal
amount of the Certificates divided by the original outstanding principal amount
of the Certificates.
"Certificate Prepayment Amount" means, as of the Payment Date on or
immediately following the last day of the Funding Period, after giving effect to
any transfer of Subsequent Receivables on such date, an amount equal to the
Certificateholders' pro rata share (based on the respective then-current
outstanding principal balance of each Class of Notes and the Certificates) of
the Pre-Funded Amount on such Payment Date (after giving effect to any
application thereof to acquire Subsequent Receivables on such Payment Date).
"Certificateholder" has the meaning assigned to such term in the Trust
Agreement.
"Certificateholders' Interest Carryover Shortfall" means, with respect
to any Payment Date, the excess of the Certificateholders' Interest
Distributable Amount for the preceding Payment Date over the amount that was
actually deposited in the Certificate Distribution Account on such preceding
Payment Date on account of the Certificateholders' Interest Distributable
Amount, plus interest on the amount of interest due but not paid to
Certificateholders on the preceding Payment Date, to the extent permitted by
law, at the Pass-Through Rate from such preceding Payment Date to but excluding
the current Payment Date.
"Certificateholders' Interest Distributable Amount" means, with respect
to any Payment Date, the sum of the
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Certificateholders' Monthly Interest Distributable Amount for such Payment Date
and the Certificateholders' Interest Carryover Shortfall for such Payment Date.
"Certificateholders' Monthly Interest Distributable Amount" means, (a)
for the first Payment Date, an amount equal to the product of (i) the
Pass-Through Rate, (ii) the initial principal balance of the Certificates and
(iii) a fraction, the numerator of which is the actual number of days elapsed
from and including the Closing Date to but excluding such first Payment Date,
and the denominator of which is 360 and (b) for any Payment Date after the first
Payment Date, an amount equal to the product of (i) one-twelfth of the
Pass-Through Rate and (ii) the principal balance of the Certificates as of the
close of the preceding Payment Date (after giving effect to all distributions on
account of principal on such preceding Payment Date).
"Certificateholders' Monthly Principal Distributable Amount" means,
with respect to any Payment Date, the Certificateholders' Percentage of the
Principal Distributable Amount.
"Certificateholders' Percentage" will (a) on any Payment Date prior to
the Payment Date on which the principal amount of the Class A-2 Notes is reduced
to zero, be 2.5%, (b) on the Payment Date on which the principal amount of the
Class A-2 Notes is reduced to zero and each Payment Date thereafter until the
principal amount of the Certificates is reduced to zero, be the percentage
equivalent of a fraction, the numerator of which is the principal amount of the
Certificates immediately prior to such Payment Date, and the denominator of
which is the Principal Distributable Amount.
"Certificateholders' Principal Carryover Shortfall" means, with respect
to any Payment Date, the excess of the Certificateholders' Principal
Distributable Amount for the preceding Payment Date over the amount that was
actually deposited in the Certificate Distribution Account on such preceding
Payment Date on account of the Certificateholders' Principal Distributable
Amount.
"Certificateholders' Principal Distributable Amount" means, with
respect to any Payment Date, (other than the Final Scheduled Payment Date), the
sum of the Certificateholders' Monthly Principal Distributable Amount for such
Payment Date and the Certificateholders' Principal Carryover Shortfall for such
Payment Date. The Certificateholders' Principal Distributable Amount of the
Final Scheduled Payment Date will equal the outstanding principal amount of the
Certificates.
"Class" means the Class A-1 Notes, the Class A-2 Notes or the Class B
Notes as the context requires.
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"Class A Noteholders' Interest Distributable Amount" means, with
respect to any Payment Date, the sum of (i) the Class A-1 Noteholders' Interest
Distributable Amount and (ii) the Class ▇- ▇ Noteholders' Interest Distributable
Amount.
"Class A Noteholders' Monthly Principal Distributable Amount" means,
with respect to any Payment Date, the Class A Noteholders' Percentage of the
Principal Distributable Amount.
"Class A Noteholders' Percentage" will (a) on any Payment Date on or
prior to the Target Payment Date, be 95%, (b) on any Payment Date after the
Target Payment Date but prior to the Payment Date on which the principal amount
of the Class A-2 Notes is reduced to zero, be 91%, (c) on the Payment Date on
which the principal amount of the Class A-2 Notes is reduced to zero, be the
percentage equivalent of a fraction, the numerator of which is the principal
amount of the Class A-2 Notes immediately prior to such Payment Date, and the
denominator of which is the sum of the then outstanding principal amount of the
Notes and the Certificates and (d) on any other Payment Date, be 0%.
"Class A Noteholders' Principal Carryover Shortfall" means, with
respect to any Payment Date, the excess of the Class A Noteholders' Principal
Distributable Amount for the preceding Payment Date over the amount that was
actually deposited in the Note Distribution Account on such Payment Date on
account of the Class A Noteholders' Principal Distributable Amount.
"Class A Noteholders' Principal Distributable Amount" means, with
respect to any Payment Date, (other than the Final Scheduled Payment Date for
any Class of Class A Notes), the sum of the Class A Noteholders' Monthly
Principal Distributable Amount for such Payment Date and the Noteholders'
Principal Carryover Shortfall for such Payment Date. The Class A Noteholders'
Principal Distributable Amount on the Final Scheduled Payment Date for any Class
of Class A Notes will equal the outstanding principal amount of such Class of
Class A Notes.
"Class A Notes" means the Class A-1 Notes and the Class A-2 Notes.
"Class A Target Amount" means, with respect to any Payment Date, an
amount equal to 90% of the Aggregate Principal Balance of the Receivables as of
such Payment Date after giving effect to all payments of principal on the
Receivables received during the related Collection Period.
"Class A-1 Interest Rate" means 6.10% per annum.
"Class A-1 Noteholders' Interest Carryover Shortfall" means, with
respect to any Payment Date, the excess of the Class A-1
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Noteholders' Interest Distributable Amount for the preceding Payment Date over
the amount that was actually deposited in the Note Distribution Account on such
preceding Payment Date on account of the Class A-1 Noteholders' Interest
Distributable Amount, plus interest on the amount of interest due but not paid
to Class A-1 Noteholders on the preceding Payment Date, to the extent permitted
by law, at the Class A-1 Interest Rate from such preceding Payment Date to but
excluding the current Payment Date.
"Class A-1 Noteholders' Interest Distributable Amount" means, with
respect to any Payment Date, the sum of the Class A-1 Noteholders' Monthly
Interest Distributable Amount for such Payment Date and the Class A-1
Noteholders' Interest Carryover
Shortfall for such Payment Date.
"Class A-1 Noteholders' Monthly Interest Distributable Amount" means,
(a) for the first Payment Date, an amount equal to the product of (i) the Class
A-1 Interest Rate, (ii) the initial principal balance of the Class A-1 Notes and
(iii) a fraction, the numerator of which is the actual number of days elapsed
from and including the Closing Date to but excluding such first Payment Date,
and the denominator of which is 360 and (b) for any Payment Date after the first
Payment Date, an amount equal to the product of (i) one-twelfth of the Class A-1
Interest Rate and (ii) the principal balance of the Class A-1 Notes as of the
close of the preceding Payment Date (after giving effect to all distributions on
account of principal on such preceding Payment Date).
"Class A-1 Notes" has the meaning assigned to such term in the
Indenture.
"Class A-1 Prepayment Amount" means, as of the Payment Date on or
immediately following the last day of the Funding Period, after giving effect to
any transfer of Subsequent Receivables on such date, an amount equal to the
Class A-1 Noteholders' pro rata share (based on the respective then-current
outstanding principal balance of each Class of Notes and the Certificates) of
the Pre-Funded Amount on such Payment Date (after giving effect to any
application thereof to acquire Subsequent Receivables on such Payment Date).
"Class A-2 Interest Rate" means 6.38% per annum.
"Class A-2 Noteholders' Interest Carryover Shortfall" means, with
respect to any Payment Date, the excess of the Class A-2 Noteholders' Interest
Distributable Amount for the preceding Payment Date over the amount that was
actually deposited in the Note Distribution Account on such preceding Payment
Date on account of the Class A-2 Noteholders' Interest Distributable Amount,
plus interest on the amount of interest due but not paid
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to Class A-2 Noteholders on the preceding Payment Date, to the extent permitted
by law, at the Class A-2 Interest Rate from such preceding Payment Date to but
excluding the current Payment Date.
"Class A-2 Noteholders' Interest Distributable Amount" means, with
respect to any Payment Date, the sum of the Class A-2 Noteholders' Monthly
Interest Distributable Amount for such Payment Date and the Class A-2
Noteholders' Interest Carryover
Shortfall for such Payment Date.
"Class A-2 Noteholders' Monthly Interest Distributable Amount" means,
(a) for the first Payment Date, an amount equal to the product of (i) the Class
A-2 Interest Rate, (ii) the initial principal balance of the Class A-2 Notes and
(iii) a fraction, the numerator of which is the actual number of days elapsed
from and including the Closing Date to but excluding such first Payment Date,
and the denominator of which is 360 and (b) for any Payment Date after the first
Payment Date, an amount equal to the product of (i) one-twelfth of the Class A-2
Interest Rate and (ii) the principal balance of the Class A-2 Notes as of the
close of the preceding Payment Date (after giving effect to all distributions on
account of principal on such preceding Payment Date).
"Class A-2 Notes" has the meaning assigned to such term in the
Indenture.
"Class A-2 Prepayment Amount" means, as of the Payment Date on or
immediately following the last day of the Funding Period, after giving effect to
any transfer of Subsequent Receivables on such date, an amount equal to the
Class A-2 Noteholders' pro rata share (based on the respective then-current
outstanding principal balance of each Class of Notes and the Certificates) of
the Pre-Funded Amount on such Payment Date (after giving effect to any
application thereof to acquire Subsequent Receivables on such Payment Date).
"Class B Deficiency" shall have the meaning specified in Section
5.5(c).
"Class B Interest Rate" means 10.65% per annum.
"Class B Noteholders' Interest Carryover Shortfall" means, with respect
to any Payment Date, the excess of the Class B Noteholders' Interest
Distributable Amount for the preceding Payment Date, over the amount that was
actually deposited in the Note Distribution Account on such preceding Payment
Date on account of the Class B Noteholders' Interest Distributable Amount, plus
interest on the amount of interest due but not paid to Class B Noteholders on
the preceding Payment Date, to the
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extent permitted by law, at the Class B Interest Rate from such preceding
Payment Date to but excluding the current Payment Date.
"Class B Noteholders' Interest Distributable Amount" means, with
respect to any Payment Date, the sum of the Class B Noteholders' Monthly
Interest Distributable Amount for such Payment Date and the Class B Noteholders'
Interest Carryover
Shortfall for such Payment Date.
"Class B Noteholders' Monthly Interest Distributable Amount" means,(a)
for the first Payment Date, an amount equal to the product of (i) the Class B
Interest Rate, (ii) the initial principal balance of the Class B Notes and (iii)
a fraction, the numerator of which is the actual number of days elapsed from and
including the Closing Date to but excluding such first Payment Date, and the
denominator of which is 360 and (b) for any Payment Date after the first Payment
Date, an amount equal to the product of (i) one-twelfth of the Class B Interest
Rate and (ii) the principal balance of the Class B Notes as of the close of the
preceding Payment Date (after giving effect to all distributions on account of
principal on such preceding Payment Date).
"Class B Noteholders' Monthly Principal Distributable Amount" means,
with respect to any Payment Date, the Class B Noteholders' Percentage of the
Principal Distributable Amount.
"Class B Noteholders' Percentage" will (a) on any Payment Date prior to
the Payment Date on which the principal amount of the Class A-2 Notes is reduced
to zero, be 2.5%, (b) on the Payment Date on which the principal amount of the
Class A-2 Notes is reduced to zero and each Payment Date thereafter until the
principal amount of the Class B Notes is reduced to zero, be the percentage
equivalent of a fraction, the numerator of which is the principal amount of the
Class B Notes immediately prior to such Payment Date, and the denominator of
which is the sum of the then outstanding principal amount of the Notes and the
Certificates.
"Class B Prepayment Amount" means, as of the Payment Date on or
immediately following the last day of the Funding Period, after giving effect to
any transfer of Subsequent Receivables on such date, an amount equal to the
Class B Noteholders' pro rata share (based on the respective then-current
outstanding principal balance of each Class of Notes and the Certificates) of
the Pre-Funded Amount on such Payment Date (after giving effect to any
application thereof to acquire Subsequent Receivables on such Payment Date).
"Class B Noteholders' Principal Carryover Shortfall" means, with
respect to any Payment Date, the excess of the Class B Noteholders' Principal
Distributable Amount for the preceding
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Payment Date over the amount that was actually paid to the Class B Noteholders
on such preceding Payment Date on account of the Class B Principal Distributable
Amount.
"Class B Noteholders' Principal Distributable Amount" means, with
respect to any Payment Date, (other than the Final Scheduled Payment Date), the
sum of the Class B Noteholders' Monthly Principal Distributable Amount for such
Payment Date and the Class B Noteholders' Principal Carryover Shortfall for such
close of the preceding Payment Date. The Class B Noteholders' Principal
Distributable Amount on the Final Scheduled Payment Date will equal the
outstanding principal amount of the Class B Notes.
"Class B Notes" has the meaning assigned to such term in the Indenture.
"Closing Date" means August 19, 1997.
"Code" shall have the meaning specified in Section 3.2.
"Collateral Agent" means Norwest Bank Minnesota, National Association,
in its capacity as Collateral Agent under the Master Spread Account Agreement.
"Collateral Agent Fee" means the fee payable to the Collateral Agent on
each Payment Date in an amount equal to one-twelfth of 0.01% of the aggregate
outstanding principal amount of the Securities on the last day of the second
preceding Collection Period; provided, however, that on the first Payment Date
the Trustee will be entitled to receive an amount equal to the product of (i)
the percentage equivalent of a fraction the numerator of which is the number
days from the Closing Date to but excluding the Payment Date and the denominator
of which is 360, (ii) 0.01% and (iii) the aggregate outstanding principal amount
of the Securities as of the Closing Date.
"Collection Account" means the account designated as such, established
and maintained pursuant to Section 5.1.
"Collection Period" means, with respect to the first Payment Date, the
period beginning on the close of business on the Initial Cutoff Date and ending
on the close of business on August 31, 1997. With respect to each subsequent
Payment Date, the preceding calendar month. Any amount stated "as of the close
of business of the last day of a Collection Period" shall give effect to the
following calculations as determined as of the end of the day on such last day:
(i) all applications of collections, and (ii) all distributions.
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"Confidential Information" means, in relation to any Person, any
written information delivered or made available by or on behalf of CPS or the
Seller to such Person in connection with or pursuant to this Agreement or the
transactions contemplated hereby which is proprietary in nature and clearly
marked or identified as being confidential information, other than information
(i) which was publicly known, or otherwise known to such Person, at the time of
disclosure (except pursuant to disclosure in connection with this Agreement),
(ii) which subsequently becomes publicly known through no act or omission by
such Person, or (iii) which otherwise becomes known to such Person other than
through disclosure by CPS or the Seller.
"Contract" means a motor vehicle retail installment sale contract.
"Controlling Party" shall be determined in accordance with the
provisions of Section 13.15.
"Corporate Trust Office" means (i) with respect to the Owner Trustee,
the principal corporate trust office of the Owner Trustee, which at the time of
execution of this agreement is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ with a copy to Bankers Trust Company, ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust and Agency Division,
and (ii) with respect to the Trustee and the Collateral Agent, the principal
corporate trust office of the Trustee, which at the time of execution of this
agreement is ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇.
"CPS" means Consumer Portfolio Services, Inc. a California corporation
and its successors.
"CPS Purchase Agreement" means the Purchase Agreement dated as of
August 1, 1997 by and between the Seller and CPS, as such agreement may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof, relating to the purchase of the CPS Receivables by the Seller
from CPS.
"CPS Receivables" means a Receivable purchased by the Seller from CPS.
"Cram Down Loss" means, with respect to a Receivable, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the amount owed on a Receivable or otherwise modifying or restructuring
Scheduled Payments to be made on a Receivable, an amount equal to such reduction
in Principal Balance of such Receivable or the reduction in the net present
value (using as the discount rate the lower of the contract rate or the rate of
interest specified by the court in such order) of the Scheduled Payments as so
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modified or restructured. A "Cram Down Loss" shall be deemed to have occurred on
the date such order is entered.
"Cutoff Date" means the Initial Cutoff Date and/or the applicable
Subsequent Cutoff Date, as the context may require.
"Dealer" means, with respect to a Receivable, the seller of the related
Financed Vehicle, who originated and assigned such Receivable to CPS, who in
turn sold such Receivable to the Seller.
"Deficiency Claim Amount" shall have the meaning set forth in Section
5.5(a).
"Deficiency Claim Date" means, with respect to any Payment Date, the
fourth Business Day immediately preceding such Payment Date.
"Deficiency Notice" shall have the meaning set forth in Section 5.5(a).
"Delegation Notice" shall have the meaning specified in Section 9.5.
"Delivery" when used with respect to Trust Account Property means:
(a) with respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute "instruments"
within the meaning of Section 9- 105(l)(i) of the UCC and are susceptible of
physical delivery, transfer thereof to the Trustee or its nominee or custodian
by physical delivery to the Trustee or its nominee or custodian endorsed to, or
registered in the name of, the Trustee or its nominee or custodian or endorsed
in blank, and, with respect to a certificated security (as defined in Section
8-102 of the UCC) transfer thereof (i) by delivery of such certificated security
endorsed to, or registered in the name of, the Trustee or its nominee or
custodian or endorsed in blank to a financial intermediary (as defined in
Section 8-313 of the UCC) and the making by such financial intermediary of
entries on its books and records identifying such certificated securities as
belonging to the Trustee or its nominee or custodian and the sending by such
financial intermediary of a confirmation of the purchase of such certificated
security by the Trustee or its nominee or custodian, or (ii) by delivery thereof
to a "clearing corporation" (as 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
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identification by the clearing corporation of the certificated securities for
the sole and exclusive account of the financial intermediary, the maintenance of
such certificated securities by such clearing corporation or a "custodian bank"
(as defined in Section 8-102(4) of the UCC) or the nominee of either subject to
the clearing corporation's exclusive control, the sending of a confirmation by
the financial intermediary of the purchase by the Trustee or its nominee or
custodian of such securities and the making by such financial intermediary of
entries on its books and records identifying such certificated securities as
belonging to the Trustee or its nominee or custodian (all of the foregoing,
"Physical Property"), and, in any event, any such Physical Property in
registered form shall be in the name of the Trustee or its nominee or custodian;
and such additional or alternative procedures as may hereafter become
appropriate to effect the complete transfer of ownership of any such Trust
Account Property to the Trustee or its nominee or custodian, consistent with
changes in applicable law or regulations or the interpretation thereof;
(b) with respect to any security issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or by the Federal National Mortgage
Association that is a book-entry security held through the Federal Reserve
System pursuant to Federal book-entry regulations, the following procedures, all
in accordance with applicable law, including applicable Federal regulations and
Articles 8 and 9 of the UCC: book-entry registration of such Trust Account
Property to an appropriate book-entry account maintained with a Federal Reserve
Bank by a financial intermediary which is also a "depository" pursuant to
applicable Federal regulations and issuance by such financial intermediary of a
deposit advice or other written confirmation of such book-entry registration to
the Trustee or its nominee or custodian of the purchase by the Trustee or its
nominee or custodian of such book-entry securities; the making by such financial
intermediary of entries in its books and records identifying such book-entry
security held through the Federal Reserve System pursuant to Federal book-entry
regulations as belonging to the Trustee or its nominee or custodian and
indicating that such custodian folds such Trust Account Property solely as agent
for the Trustee or its nominee or custodian; and such additional or alternative
procedures as may hereafter become appropriate to effect complete transfer of
ownership of any such Trust Account Property to the Trustee or its nominee or
custodian, consistent with changes in applicable law or regulations or the
interpretation thereof; and
(c) with respect to any item of Trust Account Property that is an
uncertificated security under Article 8 of the UCC and that is not governed by
clause (b) above, registration on the books and records of the issuer thereof in
the name of the financial
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intermediary, the sending of a confirmation by the financial intermediary of the
purchase by the Trustee or its nominee or custodian of such uncertificated
security, the making by such financial intermediary of entries on its books and
records identifying such uncertificated certificates as belonging to the Trustee
or its nominee or custodian.
"Depositor" shall mean the Seller in its capacity as Depositor under
the Trust Agreement.
"Determination Date" means the earlier of (i) the seventh Business Day
of each calendar month and (ii) the fifth Business Day preceding the related
Payment Date.
"Draw Date" means with respect to any Payment Date, the third Business
Day immediately preceding such Payment Date.
"Eligible Account" means (i) a segregated trust account that is
maintained with a depository institution acceptable to the Note Insurer (so long
as an Insurer Default shall not have occurred and be continuing), or (ii) a
segregated direct deposit account maintained with a depository institution or
trust company organized under the laws of the United States of America, or any
of the States thereof, or the District of Columbia, having a certificate of
deposit, short-term deposit or commercial paper rating of at least "A-1" by
Standard & Poor's and "P-1" by Moody's and (so long as an Insurer Default shall
not have occurred and be continuing) acceptable to the Note Insurer.
"Eligible Investments" mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully guaranteed as to the
full and timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of the
United States of America or any State thereof (or any domestic branch of a
foreign bank) and subject to supervision and examination by Federal or State
banking or depository institution authorities; provided, however, that at the
time of the investment or contractual commitment to invest therein, the
commercial paper or other short-term unsecured debt obligations (other than such
obligations the rating of which is based on the credit of a Person other than
such depository institution or trust company) thereof shall be rated "A-1+" by
Standard & Poor's and "P-1" by Moody's;
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(c) commercial paper that, at the time of the investment or contractual
commitment to invest therein, is rated "A-1+" by Standard & Poor's and "P-1" by
Moody's;
(d) bankers' acceptances issued by any depository institution or trust
company referred to in clause (b) above;
(e) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed as to the full and timely payment by,
the United States of America or any agency or instrumentality thereof the
obligations of which are backed by the full faith and credit of the United
States of America, in either case entered into with (i) a depository institution
or trust company (acting as principal) described in clause (b) or (ii) a
depository institution or trust company whose commercial paper or other short
term unsecured debt obligations are rated "A-1+" by Standard & Poor's and "P-1"
by Moody's and long term unsecured debt obligations are rated "AAA" by Standard
& Poor's and "Aaa" by Moody's;
(f) with the prior written consent of the Note Insurer, money market
mutual funds registered under the Investment Company Act of 1940, as amended,
having a rating, at the time of such investment, from each of the Rating
Agencies in the highest investment category granted thereby; and
(g) any other investment as may be acceptable to the Note Insurer, as
evidenced by a writing to that effect, as may from time to time be confirmed in
writing to the Trustee by the Note Insurer.
Any of the foregoing Eligible Investments may be purchased by or
through the Owner Trustee or the Trustee or any of their respective Affiliates.
"ERISA" shall have the meaning specified in Section 3.2.
"FDIC" means the Federal Deposit Insurance Corporation.
"Final Scheduled Payment Date" means, with respect to each Class of
Notes and the Certificates, the December 2002 Payment Date.
"Financed Vehicle" means a new or used automobile, light truck, van or
minivan, together with all accessions thereto, securing an Obligor's
indebtedness under a Receivable.
"Funding Period" means the period beginning on and including the
Closing Date and ending on the first to occur of (a) the first date on which the
amount on deposit in the Pre-Funding Account (after giving effect to any
transfers therefrom in
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connection with the transfer of Subsequent Receivables to the Issuer on such
date) is less than $100,000, (b) the date on which an Event of Default or a
Servicer Termination Event occurs, (c) the date on which an Insolvency Event
occurs with respect to the Seller and (d) October 15, 1997.
"Indenture" means the Indenture dated as of August 1, 1997, between the
Issuer and Norwest Bank Minnesota, National Association, as Trustee, as the same
may be amended and
supplemented from time to time.
"Initial Cutoff Date" means July 31, 1997.
"Initial Receivables" means any Receivable conveyed to the Trust on the
Closing Date.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a petition against such Person or the entry of a decree or order for
relief by a court having jurisdiction in the premises in respect of such Person
or any substantial part of its property in an involuntary case under any
applicable federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official for such Person or for any substantial
part of its property, or ordering the winding-up or liquidation or such Person's
affairs, and such petition, decree or order shall remain unstayed and in effect
for a period of 60 consecutive days; or (b) the commencement by such Person of a
voluntary case under any applicable federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or the consent by such Person to
the entry of an order for relief in an involuntary case under any such law, or
the consent by such Person to the appointment of or taking possession by, a
receiver, liquidator, assignee, custodian, trustee, sequestrator, or similar
official for such Person or for any substantial part of its property, or the
making by such Person of any general assignment for the benefit of creditors, or
the failure by such Person generally to pay its debts as such debts become due,
or the taking of action by such Person in furtherance of any of the foregoing.
"Insurance Agreement" means the Insurance and Indemnity Agreement among
the Trust, CPS, the Seller, and the Note Insurer, dated as of August 1, 1997, as
such agreement may be amended, supplemented or otherwise modified from time to
time in accordance with the terms thereof.
"Insurance Agreement Event of Default" means an "Event of Default" as
defined in the Insurance Agreement.
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"Insurance Policy" means, with respect to a Receivable, any insurance
policy (including the insurance policies described in Section 4.4 hereof)
benefiting the holder of the Receivable providing loss or physical damage,
credit life, credit disability, theft, mechanical breakdown or similar coverage
with respect to the Financed Vehicle or the Obligor.
"Insurer Default" shall mean any one of the following events shall have
occurred and be continuing:
(i) the Note Insurer fails to make a payment required under
the Policy in accordance with its terms;
(ii) the Note Insurer (A) files any petition or commences any
case or proceeding under any provision or chapter of the United States
Bankruptcy Code, the New York Department of Insurance Code or similar
Federal or State law relating to insolvency, bankruptcy,
rehabilitation, liquidation or reorganization, (B) makes a general
assignment for the benefit of its creditors or (C) has an order for
relief entered against it under the United States Bankruptcy Code or
any other similar Federal or State law relating to insolvency,
bankruptcy, rehabilitation, liquidation or reorganization which is
final and nonappealable; or
(iii) a court of competent jurisdiction, the New York
Department of Insurance or other competent regulatory authority enters
a final and nonappealable order, judgment or decree (A) appointing a
custodian, trustee, agent or receiver for the Note Insurer or for all
or any material portion of its property or (B) authorizing the taking
of possession by a custodian, trustee, agent or receiver of the Note
Insurer (or the taking of possession of all or any material portion of
the property of the Note Insurer).
"Interest Period" means, with respect to any Payment Date, the period
from and including the Closing Date (in the case of the first Payment Date) or
from and including the most recent Payment Date on which interest has been paid
to but excluding such Payment Date.
"Interest Rate" means the Class A-1 Interest Rate, the Class A-2
Interest Rate or the Class B Interest Rate, as applicable.
"Interest Reserve Account" means the account designated as such,
established and maintained pursuant to Section 5.2.
"Interest Reserve Account Initial Deposit" means $1,038,063.19
deposited on the Closing Date.
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"Investment Earnings" means, with respect to any Payment Date and Trust
Account, the investment earnings on amounts on deposit in such Trust Account on
such Payment Date.
"Issuer" means CPS Auto Receivables Trust 1997-3.
"Lien" means a security interest, lien, charge, pledge, equity, or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Receivable by operation of law.
"Lien Certificate" means, with respect to a Financed Vehicle, an
original certificate of title, certificate of lien or other notification issued
by the Registrar of Titles of the applicable state to a secured party which
indicates that the lien of the secured party on the Financed Vehicle is recorded
on the original certificate of title. In any jurisdiction in which the original
certificate of title is required to be given to the obligor, the term "Lien
certificate" shall mean only a certificate or notification issued to a secured
party.
"Liquidated Receivable" means any Receivable (i) which has been
liquidated by the Servicer through the sale of the Financed Vehicle or (ii) for
which the related Financed Vehicle has been repossessed and 90 days have elapsed
since the date of such repossession or (iii) as to which an Obligor has failed
to make more than 90% of a Scheduled Payment of more than ten dollars for 120 or
more days as of the end of a Collection Period or (iv) with respect to which
proceeds have been received which, in the Servicer's judgment, constitute the
final amounts recoverable in respect of such Receivable.
"Lockbox Account" means an account maintained on behalf of the Trustee
by the Lockbox Bank pursuant to Section 4.2(c).
"Lockbox Agreement" means the Tri-Party Remittance Processing
Agreement, dated as of August 1, 1997, by and among the Lockbox Processor, the
Servicer and the Trustee, as such agreement may be amended or supplemented from
time to time, unless the Trustee shall cease to be a party thereunder, or such
agreement shall be terminated in accordance with its terms, in which event
"Lockbox Agreement" shall mean such other agreement, in form and substance
acceptable to the Controlling Party, among the Servicer, the Trustee and the
Lockbox Processor.
"Lockbox Bank" means as of any date a depository institution named by
the Servicer and acceptable to the Controlling Party at which the Lockbox
Account is established and maintained as of such date.
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"Lockbox Processor" means Bank of America and its successors and
assigns.
"Mandatory Redemption Date" means the earlier of (i) the Payment Date
in October 1997, and (ii) if the last day of the Funding Period occurs on or
prior to the Determination Date in October 1997, then on the first Payment Date
after the Funding Period ends.
"Master Spread Account Agreement" means the Master Spread Account
Agreement dated as of August 1, 1997 among the Note Insurer, the Seller and the
Collateral Agent, as the same may be modified, supplemented or otherwise amended
in accordance with the terms thereof.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., or its
successor.
"Net Liquidation Proceeds" means, with respect to a Liquidated
Receivable, all amounts realized with respect to such Receivable (other than
amounts withdrawn from the Spread Account and drawings under the Note Policy)
net of (i) reasonable expenses incurred by the Servicer in connection with the
collection of such Receivable and the repossession and disposition of the
Financed Vehicle and (ii) amounts that are required to be refunded to the
obligor on such Receivable; provided, however, that the Liquidation Proceeds
with respect to any Receivable shall in no event be less than zero.
"Note" shall have the meaning provided in Section 1.1 of the Indenture.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.1.
"Note Insurer" means Financial Security Assurance Inc., a stock
insurance company organized and created under the laws of the State of New York,
or its successors in interest.
"Note Policy" means the Financial Guaranty Insurance Policy No. 50618-N
issued by the Note Insurer for the benefit of the Holders of the Class A Notes
issued under the Indenture, including any endorsements thereto.
"Note Policy Claim Amount" means, with respect to a Payment Date, the
sum of: (I) the lesser of (i) the amount required to be distributed pursuant to
Section 5.7(b)(v), and (ii) the excess of the sum of the amounts required to be
distributed pursuant to Section 5.7(b)(i) through (v) over the sum of the Total
Distribution Amount and the amount distributed (or available to be distributed
pursuant to the Master Spread Account Agreement)
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in respect of the Deficiency Claim Amount, plus (II) the lesser of (i) the
amount required to be distributed pursuant to Section 5.7(b)(vii), and (ii) the
excess of the sum of the amounts required to be distributed pursuant to Section
5.7(b)(i) through (vii) over the sum of the Total Distribution Amount and the
amount distributed (or available to be distributed pursuant to the Master Spread
Account Agreement) in respect of the Deficiency Claim Amount.
"Note Pool Factor" for each Class of Notes as of the close of business
on any Payment Date means a seven-digit decimal figure equal to the outstanding
principal amount of such Class of Notes divided by the original outstanding
principal amount of such Class of Notes.
"Note Prepayment Amount" means, as of the Payment Date on or
immediately following the last day of the Funding Period, after giving effect to
any transfer of Subsequent Receivables on such date, an amount equal to the
Noteholders' pro rata share (based on the respective current outstanding
principal balance of each Class of Notes and the Certificates) of the Pre-Funded
Amount as of such Payment Date; provided, that if the aggregate remaining amount
in the Pre-Funding Account is $100,000 or less, such amount will be applied
exclusively to reduce the outstanding principal balance of the Class of Notes
then entitled to receive distributions of principal.
"Notes" means the Class A Notes and the Class B Notes.
"Objection Date" shall have the meaning specified in Section 9.5.
"Objection Notice" shall have the meaning specified in Section 9.5.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
Financed Vehicle and any other Person who owes payments under the Receivable.
"Officers' Certificate" means a certificate signed by the chairman of
the board, the president, any vice chairman of the board, any vice president,
the treasurer, the controller or assistant treasurer or any assistant
controller, secretary or assistant secretary of CPS, the Seller or the Servicer,
as appropriate.
"Opinion of Counsel" means a written opinion of counsel who may but
need not be counsel to the Seller or the Servicer, which counsel shall be
reasonably acceptable to the Trustee and the Note Insurer and which opinion
shall be acceptable in form and substance to the Trustee and, if such opinion or
a copy thereof
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is required by the provisions of this Agreement to be delivered to the Note
Insurer, to the Note Insurer.
"Original Pool Balance" means the sum, as of any date, of the Pool
Balance as of the Initial Cutoff Date, plus the aggregate Principal Balance of
the Subsequent Receivables, if any, sold to the Trust, as of their respective
Subsequent Cutoff Dates.
"Other Conveyed Property" means all property conveyed by the Seller to
the Trust pursuant to Section 2.1(b) through (h) of this Agreement and all
property described in Section 2.2(a)(ii) through (viii) of this Agreement which
is conveyed by the Seller to the Trust pursuant to a Subsequent Transfer
Agreement.
"Owner Trust Estate" has the meaning assigned to such term in the Trust
Agreement.
"Owner Trustee" means Bankers Trust (Delaware), not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, its successors
in interest or any successor Owner Trustee under the Trust Agreement.
"Pass-Through Rate" means 10.65% per annum.
"Payment Date" means, with respect to each Collection Period, the 15th
day of the following calendar month, or if such day is not a Business Day, the
immediately following Business Day, commencing on September 15, 1997.
"Person" means any individual, corporation, estate, partnership,
limited liability company, joint venture, association, joint stock company,
trust (including any beneficiary thereof), unincorporated organization or
government or any agency or political subdivision thereof.
"Physical Property" has the meaning assigned to such term in the
definition of "Delivery" above.
"Pool Balance" means, as of any date of determination, the aggregate
Principal Balance of the Receivables (excluding Purchased Receivables and
Liquidated Receivables).
"Post-Office Box" means the separate post-office box in the name of the
Trustee for the benefit of the Securityholders and the Note Insurer, established
and maintained pursuant to Section 4.1.
"Preference Claim" shall have the meaning specified in Section 6.2(b).
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"Pre-Funded Amount" means, with respect to any Payment Date, the amount
on deposit in the Pre-Funding Account, (exclusive of Pre-Funding Earnings) which
initially shall be $27,084,817.
"Pre-Funding Account" has the meaning specified in Section 5.1.
"Pre-Funding Earnings" means any Investment Earnings on amounts on
deposit in the Pre-Funding Account.
"Prepayment Amount" means the amount deposited in the Collection
Account from the Pre-Funding Account on the Mandatory Redemption Date pursuant
to Section 5.7(a)(ii) hereof.
"Principal Balance" of a Receivable, as of the close of business on the
last day of a Collection Period means the Amount Financed minus the sum of the
following amounts without duplication: (i) in the case of a Rule of 78's
Receivable, that portion of all Scheduled Payments actually received on or prior
to such day allocable to principal using the actuarial or constant yield method;
(ii) in the case of a Simple Interest Receivable, that portion of all Scheduled
Payments actually received on or prior to such day allocable to principal using
the Simple Interest Method; (iii) any payment of the Purchase Amount with
respect to the Receivable allocable to principal; (iv) any Cram Down Loss in
respect of such Receivable; and (v) any prepayment in full or any partial
prepayment applied to reduce the Principal Balance of the Receivable.
"Principal Distributable Amount" means, with respect to any Payment
Date, the sum of (i) the principal portion of all Scheduled Payments received
during the preceding Collection Period on Rule of 78's Receivables (excluding
Net Liquidation Proceeds) and all payments of principal received on Simple
Interest Receivables during such preceding Collection Period; (ii) the principal
portion of all prepayments in full received during the preceding Collection
Period (including prepayments in full resulting from collections with respect to
a Receivable received during the preceding Collection Period (without
duplication of amounts included in clause (i) above and clause (iv) below);
(iii) the portion of the Purchase Amount allocable to principal of each
Receivable that became a Purchased Receivable as of the last day of the
preceding Collection Period and, at the option of the Note Insurer the Principal
Balance of each Receivable that was required to be but was not so purchased or
repurchased (without duplication of amounts referred to in clauses (i) and (ii)
above); (iv) the Principal Balance of each Receivable that first became a
Liquidated Receivable during the preceding Collection Period (without
duplication of the amounts included in clauses (i) and (ii) above); and (v) the
aggregate amount of Cram Down Losses with respect to the Receivables that
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have occurred during the preceding Collection Period (without duplication of
amounts referred to in clauses (i) through (iv) above); and (vi) following the
acceleration of the Notes pursuant to Section 5.2 of the Indenture, the amount
of money or property collected pursuant to Section 5.4 of the Indenture since
the preceding Determination Date by the Trustee or Controlling Party for
distribution pursuant to Section 5.7 hereof.
"Program" shall have the meaning specified in Section 4.11.
"Purchase Agreement" means the CPS Purchase Agreement and/or the Samco
Purchase Agreement.
"Purchase Amount" means, with respect to a Receivable, the Principal
Balance and all accrued and unpaid interest on the Receivable, after giving
effect to the receipt of any moneys collected (from whatever source) on such
Receivable, if any.
"Purchased Receivable" means a Receivable purchased as of the close of
business on the last day of a Collection Period by the Servicer pursuant to
Section 4.7 or repurchased by the Seller or CPS pursuant to Section 3.2 or
Section 11.1(a).
"Rating Agency" means each of Moody's and Standard & Poor's, and any
successors thereof. If no such organization or successor maintains a rating on
the Securities, "Rating Agency" shall be a nationally recognized statistical
rating organization or other comparable Person designated by the Note Insurer
(so long as an Insurer Default shall not have occurred and be continuing),
notice of which designation shall be given to the Trustee, the Owner Trustee and
the Servicer.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 3 days' (or such shorter period as shall be
acceptable to each Rating Agency) prior notice thereof and that each of the
Rating Agencies shall have notified the Seller, the Servicer, the Note Insurer,
the Owner Trustee and the Trustee in writing that such action will not result in
a reduction or withdrawal of the then current rating of any Class of Notes or
the Certificates.
"Realized Losses" means, with respect to any Receivable that becomes a
Liquidated Receivable, the excess of the Principal Balance of such Liquidated
Receivable over Net Liquidation Proceeds to the extent allocable to principal.
"Receivable" means each retail installment sale contract for a Financed
Vehicle listed on Schedule A (which Schedule A may be in the form of microfiche)
and all rights and obligations thereunder except for Receivables that shall have
become
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Purchased Receivables, as such Schedule shall be amended to reflect the transfer
of Subsequent Receivables to the Trust.
"Receivable Files" means the documents specified in Section 3.3.
"Record Date" means, with respect to any Payment Date, the tenth day of
the calendar month in which such Payment Date occurs.
"Registrar of Titles" means, with respect to any state, the
governmental agency or body responsible for the registration of, and the
issuance of certificates of title relating to, motor vehicles and liens thereon.
"Requisite Reserve Amount" means as of the Initial Closing Date
$1,038,063.19 and as of any Payment Date thereafter during the Funding Period an
amount equal to the difference between: (a) the product of (i) the weighted
average of the Interest Rates and the Pass-Through Rate for each Class of Notes
and the Certificates (based on the outstanding principal amount of each Class of
Notes and the Certificates) divided by 360, (ii) the Pre-Funded Amount on such
date and (iii) the number of days until the October 15, 1997 Payment Date and
(b) the product of (i) the Assumed Reinvestment Rate divided by 360, (ii) the
Pre-Funded Amount on such date and (iii) the number of days until the October
15, 1997 Payment Date. On the October 15, 1997 Payment Date, the Requisite
Reserve Amount will be $0.
"Rule of 78's Receivable" means any Receivable under which the portion
of a payment allocable to earned interest (which may be referred to in the
related retail installment sale contract as an add-on finance charge) and the
portion allocable to the Amount Financed is determined according to the method
commonly referred to as the "Rule of 78's" method or the "sum of the months'
digits" method or any equivalent method.
"Samco" means Samco Acceptance Corp., a subsidiary of CPS.
"Samco Purchase Agreement" means the Purchase Agreement, dated as of
August 1, 1997 by and between Samco and the Seller, as such agreement may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof, relating to the purchase of the Samco Receivables by the
Seller from Samco.
"Samco Receivables" means a Receivable purchased by the Seller from
Samco.
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"Schedule of Receivables" means the schedule of all retail installment
sales contracts and promissory notes originally held as part of the Trust which
is attached as Schedule A, as amended from time to time.
"Scheduled Payment" means, with respect to any Collection Period for
any Receivable, the amount set forth in such Receivable as required to be paid
by the Obligor in such Collection Period (without giving effect to deferments of
payments pursuant to Section 4.2 or any rescheduling of payments in any
insolvency or similar proceedings).
"Securities" means the Notes and the Certificates.
"Security Majority" means a majority by principal amount of the
Noteholders so long as the Notes are outstanding and a majority by Certificate
Balance of the Certificateholders thereafter.
"Securityholders" means the Noteholders and the Certificateholders.
"Seller" means CPS Receivables Corp., a California corporation, and its
successors in interest to the extent permitted hereunder.
"Series 1997-3 Spread Account" means the account designated as such,
established and maintained pursuant to the Spread Account Supplement.
"Servicer" means Consumer Portfolio Services, Inc., as the servicer of
the Receivables, and each successor Servicer pursuant to Section 10.3.
"Servicer Termination Event" means an event specified in Section 10.1.
"Servicer's Certificate" means a certificate completed and executed by
a Servicing Officer and delivered pursuant to Section 4.9, substantially in the
form of Exhibit B.
"Servicing Assumption Agreement" means the Servicing Assumption
Agreement, dated as of August 1, 1997 among CPS, the Standby Servicer and the
Trustee, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.
"Servicing Fee" has the meaning specified in Section 4.8.
"Servicing Fee Rate" shall be 2.00% per annum, payable monthly,
provided, however, that if the Standby Servicer becomes
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the successor Servicer, the "Servicing Rate" shall be equal to a percentage per
annum determined pursuant to the Servicing Assumption Agreement not to exceed
3.00% per annum.
"Servicing Officer" means any Person whose name appears on a list of
Servicing Officers delivered to the Trustee and the Note Insurer, as the same
may be amended from time to time.
"Simple Interest Method" means the method of allocating a fixed level
payment between principal and interest, pursuant to which the portion of such
payment that is allocated to interest is equal to the product of the APR
multiplied by the unpaid balance multiplied by the period of time (expressed as
a fraction of a year, based on the actual number of days in the calendar month
and the actual number of days in the calendar year) elapsed since the preceding
payment of interest was made and the remainder of such payment is allocable to
principal.
"Simple Interest Receivable" means a Receivable under which the portion
of the payment allocable to interest and the portion allocable to principal is
determined in accordance with the Simple interest Method.
"Specified Spread Account Requisite Amount" has the meaning specified
in the Spread Account Supplement.
"Spread Account Supplement" means the Series 1997-3 Supplement to the
Master Spread Account Agreement dated as of August 1, 1997 among the Note
Insurer, the Seller and the Collateral Agent, as the same may be modified,
supplemented or otherwise amended in accordance with the terms thereof.
"Standard & Poor's" means Standard & Poor's Ratings Services, or its
successor.
"Standby Fee" means the fee payable to the Standby Servicer so long as
CPS is the Servicer, on each Payment Date in an amount equal to one-twelfth of
0.06% of the aggregate outstanding principal amount of the Securities on the
last day of the second preceding Collection Period; provided, however, that on
the first Payment Date the Trustee will be entitled to receive an amount equal
to the product of (i) the percentage equivalent of a fraction the numerator of
which is the number days from the Closing Date to but excluding the first
Payment Date and the denominator of which is 360, (ii) 0.06% and (iii) the
aggregate outstanding principal amount of the Securities as of the Closing Date.
"Standby Servicer" means Norwest Bank Minnesota, National Association,
in its capacity as Standby Servicer pursuant to the terms of the Servicing
Assumption Agreement or such Person as
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shall have been appointed Standby Servicer pursuant to Section 9.2(c).
"Subsequent Cutoff Date" means (i) the last day of the month preceding
the month in which particular Subsequent Receivables are conveyed to the Trust
pursuant to this Agreement or (ii) if any such Subsequent Receivable is
originated in the month of the related Subsequent Transfer Date, the date of
origination.
"Subsequent Purchase Agreement" means an agreement by and between the
Seller and CPS or the Seller and Samco pursuant to which the Seller will acquire
Subsequent Receivables.
"Subsequent Receivables" means the Receivables transferred to the
Issuer pursuant to Section 2.2, which shall be listed on Schedule A to the
related Subsequent Transfer Agreement.
"Subsequent Spread Account Deposit" means, with respect to each
Subsequent Transfer Date, an amount equal to 3.5% of the aggregate principal
balance of related Subsequent Receivables as of the related Subsequent Cutoff
Date transferred to the Trust on such Subsequent Transfer Date from amounts
released from the Pre-Funding Account.
"Subsequent Transfer Agreement" means the agreement among the Issuer,
the Seller and the Servicer, substantially in the form of Exhibit A.
"Subsequent Transfer Date" means, with respect to Subsequent
Receivables, any date, occurring not more frequently than once per month, during
the Funding Period on which Subsequent Receivables are to be transferred to the
Trust pursuant to this Agreement, and a Subsequent Transfer Agreement is
executed and delivered to the Trust.
"Target Payment Date" means the first Payment Date on which the Class A
Target Amount equals or exceeds the then outstanding principal balance of the
Class A Notes.
"Total Distribution Amount" means, for each Payment Date, the sum of
the following amounts with respect to the preceding Collection Period: (i) all
collections on the Receivables, (ii) Net Liquidation Proceeds received during
the Collection Period with respect to Liquidated Receivables; (iii) all Purchase
Amounts deposited in the Collection Account during the related Collection
Period; (iv) Investment Earnings for the related Payment Date; (v) following the
acceleration of the Notes pursuant to Section 5.2 of the Indenture, the amount
of money or property collected pursuant to Section 5.7 of the Indenture since
the preceding Payment Date by the Trustee or Controlling Party for distribution
pursuant to Section 5.6 and Section 5.8 hereof,
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(vi) any amount deposited into the Collection Account on such Payment Date
pursuant to Section 5.2(c) hereof, and (vii) the proceeds of any purchase or
sale of the assets of the Trust described in Section 11.1 hereof.
"Trigger Event" has the meaning assigned thereto in the Spread Account
Supplement.
"Trust" means the Issuer.
"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), and all proceeds of the foregoing.
"Trust Accounts" has the meaning assigned thereto in Section 5.1.
"Trust Agreement" means the Trust Agreement dated as of August 14, 1997
between the Seller and the Owner Trustee as amended and restated by an amended,
dated as of August 19, 1997, between the Depositor and the Owner Trustee, as the
same may be further amended or supplemented from time to time.
"Trust Officer" means, (i) in the case of the Trustee, any vice
president, any assistant vice president, any assistant secretary, any assistant
treasurer, any trust officer, or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject, and (ii) in the case of the Owner
Trustee, any officer in the corporate trust office of the Owner Trustee or any
agent of the Owner Trustee under a power of attorney with direct responsibility
for the administration of this Agreement or any of the Basic Documents on behalf
of the Owner Trustee.
"Trust Property" means the property and proceeds conveyed pursuant to
Section 2.1, together with certain monies paid on or after the Initial Cutoff
Date, the Insurance Policies, the Collection Account (including all Eligible
Investments therein and all proceeds therefrom), the Lockbox Account, the
Pre-Funding Account, the Interest Reserve Account and certain other rights under
this Agreement. Although the Seller has pledged the Spread Account to the
Trustee and the Note Insurer pursuant to the Master Spread Account Agreement,
the Spread Account shall not under any circumstances be deemed to be a part of
or otherwise includable in the Trust or the Trust Property.
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"Trust Receipt" has the meaning assigned thereto by Section 3.5.
"Trustee" means the Person acting as Trustee under the Indenture, its
successors in interest and any successor trustee under the Indenture.
"Trustee Fee" means the fee payable to the Trustee on each Payment Date
an amount equal to one-twelfth of 0.01% of the aggregate outstanding principal
amount of the Securities on the last day of the second preceding Collection
Period; provided, however, that on the first Payment Date the Trustee will be
entitled to receive an amount equal to the product of (i) the percentage
equivalent of a fraction the numerator of which is the number days from the
Closing Date to but excluding the first Payment Date and the denominator of
which is 360, (ii) 0.01% and (iii) the aggregate outstanding principal amount of
the Securities as of the Closing Date.
"UCC" means the Uniform Commercial Code as in effect in the relevant
jurisdiction on the date of the Agreement.
SECTION 1.2. Other Definitional Provisions.
(a) Capitalized terms used herein and not otherwise defined herein have
the meanings assigned to them in the Indenture or, if not defined therein, in
the Trust Agreement.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any instrument governed hereby and in any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein.
(c) Accounting terms used but not defined or partly defined in this
Agreement, in any instrument governed hereby or in any certificate or other
document made or delivered pursuant hereto, to the extent not defined, shall
have the respective meanings given to them under generally accepted accounting
principles as in effect on the date of this Agreement or any such instrument,
certificate or other document, as applicable. To the extent that the definitions
of accounting terms in this Agreement or in any such instrument, certificate or
other document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement or
in any such instrument, certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement.
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(e) Section, Schedule and Exhibit references contained in this
Agreement are references to Sections, Schedules and Exhibits in or to this
Agreement unless otherwise specified; and the term "including" shall mean
"including without limitation."
(f) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
(g) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as the same may from time to time be amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments and instruments associated therewith; all
references to a Person include its permitted successors and assigns.
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.1. Conveyance of Initial Receivables. In consideration of the
Issuer's delivery to or upon the order of the Seller on the Closing Date of the
net proceeds from the sale of the Notes and the Certificates and the other
amounts to be distributed from time to time to the Seller in accordance with the
terms of this Agreement, the Seller does hereby sell, transfer, assign, set over
and otherwise convey to the Issuer, without recourse (subject to the obligations
set forth herein):
(a) all right, title and interest of the Seller in and to the
Initial Receivables listed in Schedule A hereto and, with respect to
Initial Receivables that are Rule of 78's Receivables, all monies due
or to become due thereon after the Initial Cutoff Date (including
Scheduled Payments due after the Initial Cutoff Date (including
principal prepayments relating to such Scheduled Payments) but received
by the Seller or CPS on or before the Initial Cutoff Date) and, with
respect to Initial Receivables that are Simple Interest Receivables,
all monies received thereunder after the Initial Cutoff Date and all
Net Liquidation Proceeds received with respect to such Initial
Receivables on or after the Initial Cutoff Date;
(b) all right, title and interest of the Seller in and to the
security interests in the Financed Vehicles granted by Obligors
pursuant to the Receivables and any other interest of the Seller in
such Financed Vehicles, including,
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without limitation, the certificates of title or, with respect to such
Financed Vehicles in the State of Michigan, all other evidence of
ownership with respect to such Financed Vehicles;
(c) all right, title and interest of the Seller in and to any
proceeds from claims on any physical damage, credit life and credit
accident and health insurance policies or certificates relating to the
Financed Vehicles or the Obligors;
(d) all right, title and interest of the Seller in and to the
Purchase Agreements, including a direct right to cause CPS to purchase
Initial Receivables from the Trust under certain circumstances;
(e) all right, title and interest of the Seller in and to
refunds for the costs of extended service contracts with respect to
Financed Vehicles securing Initial Receivables, refunds of unearned
premiums with respect to credit life and credit accident and health
insurance policies or certificates covering an Obligor or Financed
Vehicle or his or her obligations with respect to a Financed Vehicle
and any recourse to Dealers for any of the foregoing;
(f) the Receivable File related to each Initial Receivable;
(g) all amounts and property from time to time held in or
credited to the Collection Account, the Pre-Funding Account, the
Interest Reserve Account or the Lockbox Account; and
(h) the proceeds of any and all of the foregoing.
It is the intention of the Seller that the transfer and assignment
contemplated by this Agreement shall constitute a sale of the Receivables and
other Trust Property from the Seller to the Issuer and the beneficial interest
in and title to the Receivables and the other Trust Property shall not be part
of the Seller's estate in the event of the filing of a bankruptcy petition by or
against the Seller under any bankruptcy law. In the event that, notwithstanding
the intent of the Seller, the transfer and assignment contemplated hereby is
held not to be a sale, this Agreement shall constitute a grant of a security
interest in the property referred to in this Section 2.1 for the benefit of the
Securityholders and the Note Insurer.
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SECTION 2.2. Conveyance of Subsequent Receivables.
(a) Subject to the conditions set forth in paragraph (b) below, in
consideration of the Issuer's delivery on each related Subsequent Transfer Date
to or upon the order of the Seller of the amount described in Section 5.10(a) to
be delivered to the Seller, the Seller does hereby sell, transfer, assign, set
over and otherwise convey to the Issuer without recourse (subject to the
obligations set forth herein):
(i) all right, title and interest of the Seller in and to the
Subsequent Receivables listed in Schedule A to the related Subsequent
Transfer Agreement and, with respect to Subsequent Receivables that are
Rule of 78's Receivables, all monies due or to become due thereon after
the related Subsequent Cutoff Date (including Scheduled Payments due
after the related Subsequent Cutoff Date (including principal
prepayments relating to such Scheduled Payments) but received by the
Seller or CPS on or before the related Subsequent Cutoff Date) and,
with respect to Subsequent Receivables that are Simple Interest
Receivables, all monies received thereunder after the related
Subsequent Cutoff Date and all Liquidation Proceeds and Recoveries
received with respect to such Subsequent Receivables on or after the
related Subsequent Cutoff Date;
(ii) all right, title and interest of the Seller in and to the
security interests in the Financed Vehicles granted by Obligors
pursuant to the Subsequent Receivables and any other interest of the
Seller in such Financed Vehicles, including, without limitation, the
certificates of title or, with respect to such Financed Vehicles in the
State of Michigan, all other evidence of ownership with respect to such
Financed Vehicles;
(iii) all right, title and interest of the Seller in and to
any proceeds from claims on any physical damage, credit life and credit
accident and health insurance policies or certificates relating to the
Financed Vehicles or the Obligors;
(iv) all right, title and interest of the Seller in and to the
Subsequent Purchase Agreements, including a direct right to cause CPS
to purchase Subsequent Receivables from the Trust under certain
circumstances;
(v) all right, title and interest of the Seller in and to
refunds for the costs of extended service contracts with respect to
Financed Vehicles securing Subsequent Receivables, refunds of unearned
premiums with respect to credit life and credit accident and health
insurance
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policies or certificates covering an Obligor or Financed Vehicle or his
or her obligations with respect to a Financed Vehicle and any recourse
to Dealers for any of the foregoing;
(vi) the Receivable File related to each Subsequent
Receivable;
(vii) the proceeds of any and all of the foregoing.
(b) The Seller shall transfer to the Issuer the Subsequent Receivables
and the other property and rights related thereto described in paragraph (a)
above only upon the satisfaction of each of the following conditions on or prior
to the related Subsequent Transfer Date:
(i) the Seller shall have provided the Trustee, the Owner
Trustee, the Note Insurer and the Rating Agencies with an Addition
Notice not later than five days prior to such Subsequent Transfer Date
and shall have provided any information reasonably requested by any of
the foregoing with respect to the Subsequent Receivables;
(ii) the Seller shall have delivered to the Owner Trustee and
the Trustee a duly executed Subsequent Transfer Agreement which shall
include supplements to Schedule A, listing the Subsequent Receivables;
(iii) the Seller shall, to the extent required by Section 4.2
of this Agreement, have deposited in the Collection Account all
collections in respect of the Subsequent Receivables;
(iv) as of each Subsequent Transfer Date, (A) the Seller shall
not be insolvent and shall not become insolvent as a result of the
transfer of Subsequent Receivables on such Subsequent Transfer Date,
(B) the Seller shall not intend to incur or believe that it shall incur
debts that would be beyond its ability to pay as such debts mature, (C)
such transfer shall not have been made with actual intent to hinder,
delay or defraud any Person and (D) the assets of the Seller shall not
constitute unreasonably small capital to carry out its business as
conducted;
(v) the Funding Period shall not have terminated;
(vi) after giving effect to any transfer of Subsequent
Receivables on a Subsequent Transfer Date, the Receivables then owned
by the Trust shall meet the following criteria (based on the
characteristics of the Initial Receivables on the Initial Cutoff Date
and the Subsequent Receivables on
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the related Subsequent Cutoff Dates): (a) the weighted average APR of
such Receivables will not be less than 1% below the weighted average
APR of the Initial Receivables on the Cutoff Date, (b) the weighted
average remaining term of such Receivables will be within a range of 55
to 60 months, (c) not more than 95% of the aggregate principal balance
of such Receivables will represent financing of used Financed Vehicles
and (d) no fewer than 45% of the Subsequent Receivables will be
originated under the CPS alpha program, (e) not more than 13% of the
Subsequent Receivables will be originated under the CPS delta program,
(f) not more than 13.5% of the Subsequent Receivables will be
originated under the CPS first time buyer program and (g) no fewer than
20% and no more than 40% of the Subsequent Receivables will be
originated under the CPS standard program, and the Trust, the Trustee,
the Owner Trustee and the Note Insurer shall have received written
confirmation from a firm of certified independent public accountants as
to the satisfaction of the criteria in clauses (a) through (g) above;
(vii) each of the representations and warranties made by the
Seller pursuant to Section 3.1 with respect to the Subsequent
Receivables to be transferred on such Subsequent Transfer Date shall be
true and correct as of the related Subsequent Transfer Date, and the
Seller shall have performed all obligations to be performed by it
hereunder on or prior to such Subsequent Transfer Date;
(viii) the Seller shall, at its own expense, on or prior to
the Subsequent Transfer Date indicate in its computer files that the
Subsequent Receivables identified in the Subsequent Transfer Agreement
have been sold to the Trust pursuant to this Agreement;
(ix) the Seller shall have taken any action required to
maintain the first priority perfected ownership interest of the Trust
in the Owner Trust Estate and the first priority perfected security
interest of the Trustee in the Collateral;
(x) no selection procedures adverse to the interests of the
Securityholders or the Note Insurer shall have been utilized in
selecting the Subsequent Receivables;
(xi) the addition of any such Subsequent Receivables shall not
result in a material adverse tax consequence to the Trust or the
Securityholders;
(xii) the Seller shall have delivered (A) to the Rating
Agencies and the Note Insurer an Opinion of Counsel with respect to the
transfer of such Subsequent Receivables
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substantially in the form of the Opinion of Counsel delivered to the
Rating Agencies and the Note Insurer on the Closing Date and (B) to the
Trustee the Opinion of Counsel required by Section 13.2(i)(1);
(xiii) each Rating Agency shall have confirmed that the rating
on the Notes shall not be withdrawn or reduced as a result of the
transfer of such Subsequent Receivables to the Trust;
(xiv) the Note Insurer (so long as no Insurer Default shall
have occurred and be continuing), in its absolute and sole discretion,
shall have approved the transfer of such Subsequent Receivables to the
Trust and the Note Insurer shall have been reimbursed for any fees and
expenses incurred by the Note Insurer in connection with the granting
of such approval;
(xv) the Seller shall simultaneously transfer the Subsequent
Spread Account Deposit to the Collateral Agent with respect to the
Subsequent Receivables transferred on such Subsequent Transfer Date;
and
(xvi) the Seller shall have delivered to the Note Insurer and
the Trustee an Officers' Certificate confirming the satisfaction of
each condition precedent specified in this paragraph (b).
The Seller covenants that in the event any of the foregoing conditions
precedent are not satisfied with respect to any Subsequent Receivable on the
date required as specified above, the Seller will immediately repurchase such
Subsequent Receivable from the Trust, at a price equal to the Purchase Amount
thereof, in the manner specified in Section 4.7.
SECTION 2.3. Further Encumbrance of Trust Property.
(a) Immediately upon the conveyance to the Trust by the Seller of any
item of the Trust Property pursuant to Section 2.1 or 2.2, all right, title and
interest of the Seller in and to such item of Trust Property shall terminate,
and all such right, title and interest shall vest in the Trust, in accordance
with the Trust Agreement and Sections 3802 and 3805 of the Business Trust
Statute (as defined in the Trust Agreement).
(b) Immediately upon the vesting of the Trust Property in the Trust,
the Trust shall have the sole right to pledge or otherwise encumber, such Trust
Property. Pursuant to the Indenture, the Trust shall grant a security interest
in the Trust Property to secure the repayment of the Notes. The Certificates
shall represent beneficial ownership interests in the Trust
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Property, and the Certificateholders shall be entitled to receive distributions
with respect thereto as set forth herein.
(c) Following the payment in full of the Notes and the release and
discharge of the Indenture, all covenants of the Issuer under Article III of the
Indenture shall, until all amounts due in respect of the Certificates have been
paid in full, remain as covenants of the Issuer for the benefit of the
Certificateholders, enforceable by the Certificateholders to the same extent as
such covenants were enforceable by the Noteholders prior to the discharge of the
Indenture. Any rights of the Trustee under Article III of the Indenture,
following the discharge of the Indenture, shall vest in the Certificateholders.
(d) The Trustee shall, at such time as there are no Securities
outstanding and all sums due to the Trustee pursuant to the Indenture and this
Agreement, have been paid, release any remaining portion of the Trust Property
to the Certificateholders.
ARTICLE III
THE RECEIVABLES
SECTION 3.1. Representations and Warranties of Seller. The Seller makes
the following representations and warranties as to the Receivables to the Note
Insurer, the Issuer and to the Trustee on which the Issuer relies in acquiring
the Receivables and on which the Note Insurer relies in issuing the Note Policy.
Such representations and warranties speak as of the execution and delivery of
this Agreement and as of the Closing Date, in the case of the Initial
Receivables, and as of the related Subsequent Transfer Date, in case of the
Subsequent Receivables, but shall survive the sale, transfer and assignment of
the Receivables to the Issuer and the pledge thereof to the Trustee pursuant to
the Indenture.
(i) Characteristics of Receivables. (A) Each Receivable (1)
has been originated in the United States of America by a Dealer for the
retail sale of a Financed Vehicle in the ordinary course of such
Dealer's business, has been fully and properly executed by the parties
thereto and has been purchased by CPS (or, with respect to the Samco
Receivables, Samco) in connection with the sale of Financed Vehicles by
the Dealers, (2) has created a valid, subsisting, and enforceable first
priority perfected security interest in favor of CPS (or, with respect
to the Samco Receivables, Samco) in the Financed Vehicle, which
security interest has been assigned by CPS (or, with respect to the
Samco Receivables, Samco) to the Seller, which in
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turn has assigned such security interest to the Trustee, (3) contains
customary and enforceable provisions such that the rights and remedies
of the holder or assignee thereof shall be adequate for realization
against the collateral of the benefits of the security, (4) provides
for level monthly payments that fully amortize the Amount Financed over
the original term (except for the last payment, which may be different
from the level payment) and yield interest at the Annual Percentage
Rate, (5) has an Annual Percentage Rate of not less than 11.26%, (6)
that is a Rule of 78's Receivable provides for, in the event that such
contract is prepaid, a prepayment that fully pays the Principal Balance
and includes a full month's interest, in the month of prepayment, at
the Annual Percentage Rate, (7) is a Rule of 78's Receivable or a
Simple Interest Receivable, and (8) was originated by a Dealer and was
sold by the Dealer without any fraud or misrepresentation on the part
of such Dealer.
(B) Approximately 90.41% of the aggregate Principal Balance of
the Receivables, constituting 92.53% of the number of contracts, as of
the Cutoff Date, represents financing of used automobiles, light
trucks, vans or minivans; the remainder of the Receivables represent
financing of new automobiles, light trucks, vans or minivans;
approximately 18.59% of the aggregate Principal Balance of the
Receivables as of the Cutoff Date were originated in the State of
California; approximately 48.42% of the aggregate Principal Balance of
the Receivables as of the Cutoff Date were originated under the CPS
alpha program; approximately 9.45% of the aggregate Principal Balance
of the Receivables as of the Cutoff Date were originated under the CPS
delta program; approximately 9.94% of the aggregate Principal Balance
of the Receivables as of the Cutoff Date were originated under the CPS
first time buyer program; approximately 32.18% of the aggregate
Principal Balance of the Receivables were originated under the CPS
standard program; the remaining 0.01% of the aggregate Principal
Balance of the Receivables as of the Cutoff Date were acquired by CPS
from unaffiliated parties; approximately 4.04% of the aggregate
Principal Balance of the Receivables are Samco Receivables; no
Receivable shall have a payment that is more than 30 days overdue as of
the Cutoff Date; 31.86% of the aggregate Principal Balance of the
Receivables are Rule of 78's Receivables and 68.14% of the aggregate
Principal Balance of the Receivables are Simple Interest Receivables;
each Receivable shall have a final scheduled payment due no later than
August 31, 2002; each Receivable has an original term to maturity of
not more than 60 months and a weighted average original term to
maturity of 57 months and a remaining term to maturity of not more than
60 months and a weighted average remaining term to maturity of
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56 months; and each Receivable was originated on or before the Cutoff
Date.
(ii) Schedule of Receivables. The information with respect to
the Receivables set forth in Schedule A to this Agreement is true and
correct in all material respects as of the close of business on the
Cutoff Date, and no selection procedures adverse to the Noteholders
have been utilized in selecting the Receivables.
(iii) Compliance with Law. Each Receivable, the sale of the
Financed Vehicle and the sale of any physical damage, credit life and
credit accident and health insurance and any extended service contracts
complied at the time the related Receivable was originated or made and
at the execution of this Agreement complies in all material respects
with all requirements of applicable Federal, State, and local laws, and
regulations thereunder including, without limitation, usury laws, the
Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the
Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the
Federal Trade Commission Act, the ▇▇▇▇▇▇▇▇-▇▇▇▇ Warranty Act, the
Federal Reserve Board's Regulations B and Z, the Soldiers' and Sailors'
Civil Relief Act of 1940, the Texas Consumer Credit Code, the
California Automobile Sales Finance Act and State adaptations of the
National Consumer Act and of the Uniform Consumer Credit Code, and
other consumer credit laws and equal credit opportunity and disclosure
laws.
(iv) No Government Obligor. None of the Receivables are due
from the United States of America or any State or from any agency,
department, or instrumentality of the United States of America or any
State.
(v) Security Interest in Financed Vehicle. Immediately
subsequent to the sale, assignment and transfer thereof to the Trust,
each Receivable shall be secured by a validly perfected first priority
security interest in the Financed Vehicle in favor of the Trust as
secured party, and such security interest is prior to all other liens
upon and security interests in such Financed Vehicle which now exist or
may hereafter arise or be created (except, as to priority, for any tax
liens or mechanics' liens which may arise after the Closing Date).
(vi) Receivables in Force. No Receivable has been satisfied,
subordinated or rescinded, nor has any Financed Vehicle been released
from the lien granted by the related Receivable in whole or in part.
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(vii) No Waiver. No provision of a Receivable has been waived.
(viii) No Amendments. No Receivable has been amended, except
as such Receivable may have been amended to grant extensions which
shall not have numbered more than (a) one extension of one calendar
month in any calendar year or (b) three such extensions in the
aggregate.
(ix) No Defenses. No right of rescission, setoff, counterclaim
or defense exists or has been asserted or threatened with respect to
any Receivable. The operation of the terms of any Receivable or the
exercise of any right thereunder will not render such Receivable
unenforceable in whole or in part or subject to any such right of
rescission, setoff, counterclaim, or defense.
(x) No Liens. As of the Cutoff Date there are no liens or
claims existing or which have been filed for work, labor, storage or
materials relating to a Financed Vehicle that shall be liens prior to,
or equal or coordinate with, the security interest in the Financed
Vehicle granted by the Receivable.
(xi) No Default; Repossession. Except for payment
delinquencies continuing for a period of not more than thirty days as
of the Cutoff Date, no default, breach, violation or event permitting
acceleration under the terms of any Receivable has occurred; and no
continuing condition that with notice or the lapse of time would
constitute a default, breach, violation or event permitting
acceleration under the terms of any Receivable has arisen; and the
Seller shall not waive and has not waived any of the foregoing; and no
Financed Vehicle shall have been repossessed as of the Cutoff Date.
(xii) Insurance; Other. (A) Each Obligor has obtained
insurance covering the Financed Vehicle as of the execution of the
Receivable insuring against loss and damage due to fire, theft,
transportation, collision and other risks generally covered by
comprehensive and collision coverage, and each Receivable requires the
Obligor to obtain and maintain such insurance naming CPS (or, with
respect to the Samco Receivables, Samco) and its successors and assigns
as an additional insured, (B) each Receivable that finances the cost of
premiums for credit life and credit accident and health insurance is
covered by an insurance policy or certificate of insurance naming CPS
(or with respect to the Samco Receivables, Samco) as policyholder
(creditor) under each such insurance policy and certificate of
insurance and (C) as to each Receivable that finances the cost of an
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extended service contract, the respective Financed Vehicle which
secures the Receivable is covered by an extended service contract.
(xiii) Title. It is the intention of the Seller that the
transfer and assignment herein contemplated constitute a sale of the
Receivables from the Seller to the Trust and that the beneficial
interest in and title to such Receivables not be part of the Seller's
estate in the event of the filing of a bankruptcy petition by or
against the Seller under any bankruptcy law. No Receivable has been
sold, transferred, assigned, or pledged by the Seller to any Person
other than the Trust. Immediately prior to the transfer and assignment
herein contemplated, the Seller had good and marketable title to each
Receivable and was the sole owner thereof, free and clear of all liens,
claims, encumbrances, security interests, and rights of others, and,
immediately upon the transfer thereof, the Trust for the benefit of the
Noteholders and the Note Insurer shall have good and marketable title
to each such Receivable and will be the sole owner thereof, free and
clear of all liens, encumbrances, security interests, and rights of
others, and the transfer has been perfected under the UCC.
(xiv) Lawful Assignment. No Receivable has been originated in,
or is subject to the laws of, any jurisdiction under which the sale,
transfer, and assignment of such Receivable under this Agreement or
pursuant to transfers of the Securities shall be unlawful, void, or
voidable. The Seller has not entered into any agreement with any
account debtor that prohibits, restricts or conditions the assignment
of any portion of the Receivables.
(xv) All Filings Made. All filings (including, without
limitation, UCC filings) necessary in any jurisdiction to give the
Trust a first priority perfected ownership interest in the Receivables
and the proceeds thereof and the other Conveyed Property have been
made, taken or performed.
(xvi) Receivable File; One Original. CPS has delivered to the
Trustee a complete Receivable File with respect to each Receivable.
There is only one original executed copy of each Receivable.
(xvii) Chattel Paper. Each Receivable constitutes "chattel
paper" under the UCC.
(xviii) Title Documents. (A) If the Receivable was originated
in a State in which notation of a security interest on the title
document of the related Financed
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Vehicle is required or permitted to perfect such security interest, the
title document of the related Financed Vehicle for such Receivable
shows, or if a new or replacement title document is being applied for
with respect to such Financed Vehicle the title document (or, with
respect to Receivables originated in the State of Michigan, all other
evidence of ownership with respect to such Financed Vehicle) will be
received within 180 days and will show, CPS (or, with respect to the
Samco Receivables, Samco) named as the original secured party under the
related Receivable as the holder of a first priority security interest
in such Financed Vehicle, and (B) if the Receivable was originated in a
State in which the filing of a financing statement under the UCC is
required to perfect a security interest in motor vehicles, such filings
or recordings have been duly made and show CPS (or, with respect to the
Samco Receivables, Samco) named as the original secured party under the
related Receivable, and in either case, the Trust has the same rights
as such secured party has or would have (if such secured party were
still the owner of the Receivable) against all parties claiming an
interest in such Financed Vehicle. With respect to each Receivable for
which the title document of the related Financed Vehicle has not yet
been returned from the Registrar of Titles, CPS has received written
evidence from the related Dealer that such title document showing CPS
(or, with respect to the Samco Receivables, Samco) as first lienholder
has been applied for.
(xix) Valid and Binding Obligation of Obligor. Each Receivable
is the legal, valid and binding obligation of the Obligor thereunder
and is enforceable in accordance with its terms, except only as such
enforcement may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally, and all
parties to such contract had full legal capacity to execute and deliver
such contract and all other documents related thereto and to grant the
security interest purported to be granted thereby.
(xx) Tax Liens. As of the Cutoff Date, there is no lien
against the related Financed Vehicle for delinquent taxes.
(xxi) Characteristics of Obligors. As of the date of each
Obligor's application for the loan from which the related Receivable
arises, such Obligor (a) did not have any material past due credit
obligations or any personal or real property repossessed or wages
garnished within one year prior to the date of such application, unless
such amounts have been repaid or discharged through bankruptcy, (b) was
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not the subject of any Federal, State or other bankruptcy, insolvency
or similar proceeding pending on the date of application that is not
discharged, (c) had not been the subject of more than one Federal,
State or other bankruptcy, insolvency or similar proceeding, and (d)
was domiciled in the United States.
(xxii) Origination Date. Each Receivable has an origination
date on or after April 10, 1995.
(xxiii) Maturity of Receivables. Each Receivable has an
original term to maturity of not less than [ ] months and not more than
60 months; the weighted average original term to maturity of the
Receivables is 57 months as of the Cutoff Date; the remaining term to
maturity of each Receivable was 60 months or less as of the Cutoff
Date; the weighted average remaining term to maturity of the
Receivables was 56 months as of the Cutoff Date.
(xxiv) Scheduled Payments. Each Receivable had an original
principal balance of not less than $2,197 nor more than $28,752 had an
outstanding principal balance as of the Cutoff Date of not less than
$2,197 nor more than $28,752 and has a first Scheduled Payment due on
or prior to October 11, 1997.
(xxv) Origination of Receivables. Based on the billing address
of the Obligors and the Principal Balances as of the Cutoff Date,
approximately 18.59% of the aggregate Principal Balance of the
Receivables represents Receivables that were originated in California,
approximately 8.07% of the aggregate Principal Balance of the
Receivables represents Receivables that were originated in Louisiana,
approximately 7.69% of the aggregate Principal Balance of the
Receivables represents Receivables that were originated in Texas,
approximately 7.25% of the aggregate Principal Balance of the
Receivables represents Receivables that were originated in Pennsylvania
and the remaining 58.40% of the aggregate Principal Balance of the
Receivables represents Receivables that were originated in other
States.
(xxvi) Post-Office Box. On or prior to the next billing period
after the Cutoff Date, CPS will notify each Obligor to make payments
with respect to its respective Receivables after the Cutoff Date
directly to the Post-Office Box, and will provide each Obligor with a
monthly statement in order to enable such Obligors to make payments
directly to the Post-Office Box.
(xxvii) Location of Receivable Files. A complete Receivable
File with respect to each Receivable has been or
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prior to the Closing Date will be delivered to the Trustee at the
location listed in Schedule B.
(xxviii) Casualty. No Financed Vehicle has suffered a
Casualty.
(xxix) Principal Balance/Number of Contracts. As of the Cutoff
Date, the total aggregate principal balance of the Receivables was
$122,915,183. The Receivables are evidenced by 9,826 Contracts.
(xxx) Full Amount Advanced. The full amount of each Receivable
has been advanced to each Obligor, and there are no requirements for
future advances thereunder. The Obligor with respect to the Receivable
does not have any option under the Receivable to borrow from any person
additional funds secured by the Financed Vehicle.
SECTION 3.2. Repurchase upon Breach.
(a) The Seller, the Servicer, the Note Insurer, the Trustee or (upon
actual knowledge of a Responsible Officer thereof) the Owner Trustee, as the
case may be, shall inform the other parties to this Agreement promptly, in
writing, upon the discovery of any breach of the Seller's representations and
warranties made pursuant to Section 3.1 (without regard to any limitations
therein as to the Seller's knowledge). Unless the breach shall have been cured
by the last day of the second Collection Period following the discovery thereof
by the Trustee or the Note Insurer or receipt by the Trustee, the Owner Trustee
and the Note Insurer of notice from the Seller or the Servicer of such breach,
CPS shall repurchase any Receivable if the value of such Receivable is
materially and adversely affected by the breach as of the last day of such
second Collection Period (or, at CPS's option, the last day of the first
Collection Period following the discovery) and, in the event that the breach
relates to a characteristic of the Receivables in the aggregate, and if the
interests of the Trust, the Noteholders or the Certificateholders are materially
and adversely affected by such breach, unless the breach shall have been cured
by the last day of such second Collection Period, CPS shall purchase such
aggregate Principal Balance of Receivables, such that following such purchase
such representation shall be true and correct with respect to the remainder of
the Receivables in the aggregate. In consideration of the purchase of the
Receivable, CPS shall remit the Purchase Amount, in the manner specified in
Section 5.6. For purposes of this Section, the Purchase Amount of a Receivable
which is not consistent with the warranty pursuant to Section 3.1(i)(A)(4) or
(A)(5) shall include such additional amount as shall be necessary to provide the
full amount of interest as contemplated therein. The sole remedy of the Issuer,
the Owner Trustee, the Trustee,
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the Securityholders or the Note Insurer with respect to a breach of
representations and warranties pursuant to Section 3.1 shall be to enforce CPS's
obligation to purchase such Receivables pursuant to the CPS Purchase Agreement;
provided, however, that CPS shall indemnify the Trustee, the Owner Trustee, the
Standby Servicer, the Collateral Agent, the Note Insurer, the Trust and the
Securityholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third party claims
arising out of the events or facts giving rise to such breach. Upon receipt of
the Purchase Amount and written instructions from the Servicer, the Trustee
shall release to CPS or its designee the related Receivables File and shall
execute and deliver all reasonable instruments of transfer or assignment,
without recourse, as are prepared by the Seller and delivered to the Trustee and
necessary to vest in CPS or such designee title to the Receivable including a
Trustee's Certificate in the form of Exhibit F-1. If it is determined that
consummation of the transactions contemplated by this Agreement and the other
transaction documents referenced in this Agreement, the servicing and operation
of the Trust pursuant to this Agreement and such other documents, or the
ownership of a Note or Certificate by a Holder constitutes a violation of the
prohibited transaction rules of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or the Internal Revenue Code of 1986, as amended
(the "Code") or any successor statutes of similar impact, together with the
regulations thereunder, to which no statutory exception or administrative
exemption applies, such violation shall not be treated as a breach of the
Seller's representations and warranties made pursuant to Section 3.1 if not
otherwise such a breach.
(b) Pursuant to Section 2.1 of this Agreement, the Seller conveyed to
the Trust all of the Seller's right, title and interest in its rights and
benefits, but none of its obligations or burdens, under the Purchase Agreements
including the Seller's rights under the Purchase Agreements and the delivery
requirements, representations and warranties and the cure or repurchase
obligations of CPS under the CPS Purchase Agreement. The Seller hereby
represents and warrants to the Trust that such assignment is valid, enforceable
and effective to permit the Trust to enforce such obligations of CPS under the
CPS Purchase Agreement.
SECTION 3.3. Custody of Receivables Files.
(a) In connection with the sale, transfer and assignment of the
Receivables and the other Conveyed Property to the Trust pursuant to this
Agreement the Trustee shall act as custodian of the following documents or
instruments in its possession which
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shall be delivered to the Trustee on or before the Closing Date (with respect to
each Receivable):
(i) The fully executed original of the Receivable (together
with any agreements modifying the Receivable, including without
limitation any extension agreements);
(ii) The original certificate of title in the name of CPS (or,
with respect to the Samco Receivables, Samco) or such documents that
CPS shall keep on file, in accordance with its customary procedures,
evidencing the security interest of CPS (or, with respect to the Samco
Receivables, Samco) in the Financed Vehicle or, if not yet received, a
copy of the application therefor showing CPS (or, with respect to the
Samco Receivables, Samco) as secured party.
(b) Upon payment in full of any Receivable, the Servicer will notify
the Trustee pursuant to a certificate of an officer of the Servicer (which
certificate shall include a statement to the effect that all amounts received in
connection with such payments which are required to be deposited in the
Collection Account pursuant to Section 4.1 have been so deposited) and shall
request delivery of the Receivable and Receivable File to the Servicer.
SECTION 3.4. Acceptance of Receivable Files by Trustee. The Trustee
acknowledges receipt of files which the Seller has represented are the
Receivable Files. The Trustee has reviewed the Receivable Files and has
determined that it has received a file for each Receivable identified in
Schedule A to this Agreement. The Trustee declares that it holds and will
continue to hold such files and any amendments, replacements or supplements
thereto and all other Trust Assets as Trustee in trust for the use and benefit
of all present and future Securityholders. The Trustee agrees to review each
file delivered to it no later than 45 days after the Closing Date or applicable
Subsequent Transfer Date to determine whether such Receivable Files contain the
documents referred to in Section 3.3(i) and (ii). If the Trustee has found or
finds that a file for a Receivable has not been received, or that a file is
unrelated to the Receivables identified in Schedule A to this Agreement or that
any of the documents referred to in Section 3.3(i) or (ii) are not contained in
a Receivable File, the Trustee shall inform CPS, the Seller, the Owner Trustee
and the Note Insurer promptly, in writing, of the failure to receive a file with
respect to such Receivable (or of the failure of any of the aforementioned
documents to be included in the Receivable File) or shall return to CPS as the
Seller's designee any file unrelated to a Receivable identified in Schedule A to
this Agreement (it being understood that the Trustee's obligation to review the
contents of any Receivable File shall be limited as
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set forth in the preceding sentence). Unless such defect with respect to such
Receivable File shall have been cured by the last day of the second Collection
Period following discovery thereof by the Trustee, CPS shall repurchase any such
Receivable as of such last day. In consideration of the purchase of the
Receivable, CPS shall remit the Purchase Amount, in the manner specified in
Section 5.6. The sole remedy of the Trustee, the Trust, or the Securityholders
with respect to a breach pursuant to this Section 3.4 shall be to require CPS to
purchase the applicable Receivables pursuant to this Section 3.4. Upon receipt
of the Purchase Amount and written instructions from the Servicer, the Trustee
shall release to CPS or its designee the related Receivable File and shall
execute and deliver all reasonable instruments of transfer or assignment,
without recourse, as are prepared by CPS and delivered to the Trustee and are
necessary to vest in CPS or such designee title to the Receivable including a
Trustee's Certificate in the form of Exhibit F-1. The Trustee shall make a list
of Receivables for which an application for a certificate of title but not an
original certificate of title or, with respect to Receivables originated in the
State of Michigan, a "Form RD108" stamped by the Department of Motor Vehicles,
is included in the Receivable File as of the date of its review of the
Receivable Files and deliver a copy of such list to the Servicer, the Owner
Trustee and the Note Insurer. On the date which is 180 days following the
Closing Date (or applicable Subsequent Transfer Date) or the next succeeding
Business Day, the Trustee shall inform CPS and the other parties to this
Agreement and the Note Insurer of any Receivable for which the related
Receivable File on such date does not include an original certificate of title
or, with respect to Financed Vehicles in the State of Michigan, for which the
related Receivable File on such date does not include a "Form RD108" stamped by
the Department of Motor Vehicles, and CPS shall repurchase any such Receivable
as of the last day of the current Collection Period.
SECTION 3.5. Access to Receivable Files. The Trustee shall permit the
Servicer and the Note Insurer access to the Receivable Files at all reasonable
times during the Trustee's normal business hours. The Trustee shall, within two
Business Days of the request of the Servicer, the Owner Trustee or the Note
Insurer, execute such documents and instruments as are prepared by the Servicer,
the Owner Trustee or the Note Insurer and delivered to the Trustee, as the
Servicer, the Owner Trustee or the Note Insurer deems necessary to permit the
Servicer, in accordance with its customary servicing procedures, to enforce the
Receivable on behalf of the Trust and any related insurance policies covering
the Obligor, the Receivable or Financed Vehicle so long as such execution in the
Trustee's sole discretion does not conflict with this Agreement and will not
cause it undue risk or liability. The Trustee shall not be obligated to release
any
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document from any Receivable File unless it receives a trust receipt signed by a
Servicing Officer in the form of Exhibit C hereto (the "Trust Receipt"). Such
Trust Receipt shall obligate the Servicer to return such document(s) to the
Trustee when the need therefor no longer exists unless the Receivable shall be
liquidated, in which case, upon receipt of a certificate of a Servicing Officer
substantially in the form of Exhibit D hereto to the effect that all amounts
required to be deposited in the Collection Account with respect to such
Receivable have been so deposited, the Trust Receipt shall be released by the
Trustee to the Servicer.
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.1. Duties of the Servicer. The Servicer, as agent for the
Trust, the Securityholders and the Note Insurer (to the extent provided herein)
shall manage, service, administer and make collections on the Receivables with
reasonable care, using that degree of skill and attention customary and usual
for institutions which service motor vehicle retail installment contracts
similar to the Receivables and, to the extent more exacting, that the Servicer
exercises with respect to all comparable automotive receivables that it services
for itself or others. The Servicer's duties shall include collection and posting
of all payments, responding to inquiries of Obligors on such Receivables,
investigating delinquencies, sending payment statements to Obligors, reporting
tax information to Obligors, accounting for collections, furnishing monthly and
annual statements to the Trustee, the Owner Trustee and the Note Insurer with
respect to distributions. Without limiting the generality of the foregoing, and
subject to the servicing standards set forth in this Agreement, the Servicer is
authorized and empowered by the Trust to execute and deliver, on behalf of
itself, the Trust or the Securityholders, any and all instruments of
satisfaction or cancellation, or partial or full release or discharge, and all
other comparable instruments, with respect to such Receivables or to the
Financed Vehicles securing such Receivables and/or the certificates of title or,
with respect to Financed Vehicles in the State of Michigan, other evidence of
ownership with respect to such Financed Vehicles. If the Servicer shall commence
a legal proceeding to enforce a Receivable, the Trust shall thereupon be deemed
to have automatically assigned, solely for the purpose of collection, such
Receivable to the Servicer. If in any enforcement suit or legal proceeding it
shall be held that the Servicer may not enforce a Receivable on the ground that
it shall not be a real party in interest or a holder entitled to enforce such
Receivable, the Trust shall, at the Servicer's expense and
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direction, take steps to enforce such Receivable, including bringing suit in its
name or the name of the Securityholders. The Servicer shall prepare and furnish,
and the Trustee and the Owner Trustee shall execute, any powers of attorney and
other documents reasonably necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties hereunder.
SECTION 4.2. Collection of Receivable Payments; Modifications of
Receivables; Lockbox Agreements.
(a) Consistent with the standards, policies and procedures required by
this Agreement, the Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Receivables as and
when the same shall become due and shall follow such collection procedures as it
follows with respect to all comparable automotive receivables that it services
for itself or others; provided, however, that the Servicer shall notify each
Obligor to make all payments with respect to the Receivables to the Post-Office
Box. The Servicer will provide each Obligor with a monthly statement in order to
notify such Obligors to make payments directly to the Post-Office Box. The
Servicer shall allocate collections between principal and interest in accordance
with the customary servicing procedures it follows with respect to all
comparable automotive receivables that it services for itself or others and in
accordance with the terms of this Agreement. Except as provided below, the
Servicer, for so long as CPS is the Servicer, may grant extensions on a
Receivable; provided, however, that the Servicer may not grant more than one
extension per calendar year with respect to a Receivable or grant an extension
with respect to a Receivable for more than one calendar month or grant more than
three extensions in the aggregate with respect to a Receivable without the prior
written consent of the Note Insurer and provided, further, that if the Servicer
extends the date for final payment by the Obligor of any Receivable beyond the
last day of the penultimate Collection Period preceding the Final Scheduled
Payment Date, it shall promptly purchase the Receivable from the Trust in
accordance with the terms of Section 4.7 hereof (and for purposes thereof, the
Receivable shall be deemed to be materially and adversely affected by such
breach). If the Servicer is not CPS, the Servicer may not make any extension on
a Receivable without the prior written consent of the Note Insurer. The Servicer
may in its discretion waive any late payment charge or any other fees that may
be collected in the ordinary course of servicing a Receivable. Notwithstanding
anything to the contrary contained herein, the Servicer shall not agree to any
alteration of the interest rate on any Receivable or of the amount of any
Scheduled Payment on Receivables.
(b) The Trustee shall establish the Lockbox Account in the name of the
Trustee for the benefit of the Securityholders and
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the Note Insurer. Pursuant to the Lockbox Agreement, the Trustee has authorized
the Servicer to direct dispositions of funds on deposit in the Lockbox Account
to the Collection Account (but not to any other account), and no other Person,
save the Lockbox Processor and the Trustee, has authority to direct disposition
of funds on deposit in the Lockbox Account. The Trustee shall have no liability
or responsibility with respect to the Lockbox Processor's directions or
activities as set forth in the preceding sentence. The Lockbox Account shall be
established pursuant to and maintained in accordance with the Lockbox Agreement
and shall be a demand deposit account initially established and maintained with
Bank of America, or at the request of the Note Insurer (unless an Insurer
Default shall have occurred and be continuing) an Eligible Account satisfying
clause (i) of the definition thereof; provided, however, that the Trustee shall
give the Servicer prior written notice of any change made at the request of the
Note Insurer in the location of the Lockbox Account. The Trustee shall establish
and maintain the Post-Office Box at a United States Post Office Branch in the
name of the Trustee for the benefit of the Securityholders and the Note Insurer.
(c) Notwithstanding any Lockbox Agreement, or any of the provisions of
this Agreement relating to the Lockbox Agreement, the Servicer shall remain
obligated and liable to the Trust, the Trustee and Securityholders for servicing
and administering the Receivables and the other Conveyed Property in accordance
with the provisions of this Agreement without diminution of such obligation or
liability by virtue thereof.
(d) In the event the Servicer shall for any reason no longer be acting
as such, the Standby Servicer or a successor Servicer shall thereupon assume all
of the rights and obligations of the outgoing Servicer under the Lockbox
Agreement. In such event, the successor Servicer shall be deemed to have assumed
all of the outgoing Servicer's interest therein and to have replaced the
outgoing Servicer as a party to the Lockbox Agreement to the same extent as if
such Lockbox Agreement had been assigned to the successor Servicer, except that
the outgoing Servicer shall not thereby be relieved of any liability or
obligations on the part of the outgoing Servicer to the Lockbox Bank under such
Lockbox Agreement. The outgoing Servicer shall, upon request of the Trustee, but
at the expense of the outgoing Servicer, deliver to the successor Servicer all
documents and records relating to the Lockbox Agreement and an accounting of
amounts collected and held by the Lockbox Bank and otherwise use its best
efforts to effect the orderly and efficient transfer of any Lockbox Agreement to
the successor Servicer. In the event that the Note Insurer (so long as an
Insurer Default shall not have occurred and be continuing) or Holders of Class A
Notes evidencing more than 50% of the outstanding principal balance of the Class
A Notes (if an
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Insurer Default shall have occurred and be continuing) shall elect to change the
identity of the Lockbox Bank, the Servicer, at its expense, shall cause the
Lockbox Bank to deliver, at the direction of the Note Insurer (so long as an
Insurer Default shall not have occurred and be continuing) or Holders of Class A
Notes evidencing more than 50% of the outstanding principal balance of the Class
A Notes (if an Insurer Default shall have occurred and be continuing) to the
Trustee or a successor Lockbox Bank, all documents and records relating to the
Receivables and all amounts held (or thereafter received) by the Lockbox Bank
(together with an accounting of such amounts) and shall otherwise use its best
efforts to effect the orderly and efficient transfer of the Lockbox
arrangements.
(e) On each Business Day, pursuant to the Lockbox Agreement, the
Lockbox Processor will transfer any payments from Obligors received in the
Post-Office Box to the Lockbox Account. Within two Business Days of receipt of
funds into the Lockbox Account, the Servicer shall cause the Lockbox Bank to
transfer funds from the Lockbox Account to the Collection Account. In addition,
the Servicer shall remit all payments by or on behalf of the Obligors received
by the Servicer with respect to the Receivables (other than Purchased
Receivables), and all Liquidation Proceeds no later than the Business Day
following receipt directly (without deposit into any intervening account) into
the Lockbox Account or the Collection Account.
SECTION 4.3. Realization Upon Receivables. On behalf of the Trust, the
Securityholders and the Note Insurer, the Servicer shall use its best efforts,
consistent with the servicing procedures set forth herein, to repossess or
otherwise convert the ownership of the Financed Vehicle securing any Receivable
as to which the Servicer shall have determined eventual payment in full is
unlikely. The Servicer shall commence efforts to repossess or otherwise convert
the ownership of a Financed Vehicle on or prior to the date that an Obligor has
failed to make more than 90% of a Scheduled Payment thereon in excess of $10 for
120 days or more; provided, however, that the Servicer may elect not to commence
such efforts within such time period if in its good faith judgment it determines
either that it would be impracticable to do so or that the proceeds ultimately
recoverable with respect to such Receivable would be increased by forbearance.
The Servicer shall follow such customary and usual practices and procedures as
it shall deem necessary or advisable in its servicing of automotive receivables,
consistent with the standards of care set forth in Section 4.2, which may
include reasonable efforts to realize upon any recourse to Dealers and selling
the Financed Vehicle at public or private sale. The foregoing shall be subject
to the provision that, in any case in which the Financed Vehicle shall have
suffered damage, the Servicer shall not expend funds in connection with the
repair or
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the repossession of such Financed Vehicle unless it shall determine in its
discretion that such repair and/or repossession will increase the proceeds
ultimately recoverable with respect to such Receivable by an amount greater than
the amount of such expenses.
SECTION 4.4. Insurance.
(a) The Servicer, in accordance with the servicing procedures and
standards set forth herein, shall require that (i) each Obligor shall have
obtained insurance covering the Financed Vehicle, as of the date of the
execution of the Receivable, insuring against loss and damage due to fire,
theft, transportation, collision and other risks generally covered by
comprehensive and collision coverage and each Receivable requires the Obligor to
maintain such physical loss and damage insurance naming CPS (or, with respect to
the Samco Receivables, Samco) and its successors and assigns as an additional
insured, (ii) each Receivable that finances the cost of premiums for credit life
and credit accident and health insurance is covered by an insurance policy or
certificate naming CPS (or, with respect to the Samco Receivables, Samco) as
policyholder (creditor) and (iii) as to each Receivable that finances the cost
of an extended service contract, the respective Financed Vehicle which secures
the Receivable is covered by an extended service contract.
(b) To the extent applicable, the Servicer shall not take any action
which would result in noncoverage under any of the insurance policies referred
to in Section 4.4(a) which, but for the actions of the Servicer, would have been
covered thereunder. The Servicer, on behalf of the Trust, shall take such
reasonable action as shall be necessary to permit recovery under any of the
foregoing insurance policies. Any amounts collected by the Servicer under any of
the foregoing insurance policies shall be deposited in the Collection Account
pursuant to Section 5.2.
SECTION 4.5. Maintenance of Security Interests in Vehicles.
(a) Consistent with the policies and procedures required by this
Agreement, the Servicer shall take such steps on behalf of the Trust as are
necessary to maintain perfection of the security interest created by each
Receivable in the related Financed Vehicle, including but not limited to
obtaining the execution by the Obligors and the recording, registering, filing,
rerecording, re-filing, re-recording, re-registering and refiling of all
security agreements, financing statements and continuation statements or
instruments as are necessary to maintain the security interest granted by the
Obligors under the respective Receivables. The Trustee hereby authorizes the
Servicer, and the Servicer agrees, to take any and all steps necessary to
re-perfect or continue the perfection of such security interest on
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behalf of the Trust as necessary because of the relocation of a Financed Vehicle
or for any other reason. In the event that the assignment of a Receivable to the
Trust is insufficient, without a notation on the related Financed Vehicle's
certificate of title, or without fulfilling any additional administrative
requirements under the laws of the state in which the Financed Vehicle is
located, to perfect a security interest in the related Financed Vehicle in favor
of the Trust, the Servicer hereby agrees that CPS's designation as the secured
party on the certificate of title is in its capacity as Servicer as agent of the
Trust.
(b) Upon the occurrence of an Insurance Agreement Event of Default, the
Note Insurer may (so long as an Insurer Default shall not have occurred and be
continuing) instruct the Trustee and the Servicer to take or cause to be taken,
or, if an Insurer Default shall have occurred, upon the occurrence of a Servicer
Termination Event, the Trustee and the Servicer shall take or cause to be taken
such action as may, in the opinion of counsel to the Trustee, which opinion
shall not be an expense of the Trustee, be necessary to perfect or re-perfect
the security interests in the Financed Vehicles securing the Receivables in the
name of the Trust by amending the title documents of such Financed Vehicles or
by such other reasonable means as may, in the opinion of counsel to the Trustee,
which opinion shall not be an expense of the Trustee, be necessary or prudent.
CPS hereby agrees to pay all expenses related to such perfection or reperfection
and to take all action necessary therefor. The Servicer hereby agrees to pay all
expenses related to such perfection or reperfection and to take all action
necessary therefor. In addition, prior to the occurrence of an Insurance
Agreement Event of Default, the Controlling Party may instruct the Trustee and
the Servicer to take or cause to be taken such action as may, in the opinion of
counsel to the Controlling Party, be necessary to perfect or re-perfect the
security interest in the Financed Vehicles underlying the Receivables in the
name of the Trust, including by amending the title documents of such Financed
Vehicles or by such other reasonable means as may, in the opinion of counsel to
the Controlling Party, be necessary or prudent; provided, however, that if the
Controlling Party requests (unless an Insurer Default shall have occurred and be
continuing) that the title documents be amended prior to the occurrence of an
Insurance Agreement Event of Default, the out-of-pocket expenses of the Servicer
or the Trustee in connection with such action shall be reimbursed to the
Servicer or the Trustee, as applicable, by the Controlling Party.
SECTION 4.6. Additional Covenants of Servicer. The Servicer shall not
release the Financed Vehicle securing each Receivable from the security interest
granted by such Receivable in whole or in part except in the event of payment in
full by the
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Obligor thereunder or repossession, nor shall the Servicer impair the rights of
the Securityholders in such Receivables, nor shall the Servicer amend a
Receivable, except that extensions may be granted in accordance with Section
4.2.
SECTION 4.7. Purchase of Receivables Upon Breach of Covenant. Upon
discovery by any of the Servicer, the Note Insurer, the Owner Trustee or the
Trustee of a breach of any of the covenants set forth in Section 4.2(a), 4.4,
4.5 or 4.6, the party discovering such breach shall give prompt written notice
to the others; provided, however, that the failure to give any such notice shall
not affect any obligation of the Servicer under this Section 4.7. Unless the
breach shall have been cured by the last day of the second Collection Period
following such discovery (or, at the Servicer's election, the last day of the
first following Collection Period), the Servicer shall purchase any Receivable
materially and adversely affected by such breach. In consideration of the
purchase of such Receivable, the Servicer shall remit the Purchase Amount in the
manner specified in Section 5.6. The sole remedy of the Trustee, the Trust, the
Owner Trustee, the Note Insurer or the Securityholders with respect to a breach
of Section 4.2(a), 4.4, 4.5 or 4.6 shall be to require the Servicer to
repurchase Receivables pursuant to this Section 4.7; provided, however, that the
Servicer shall indemnify the Trustee, the Standby Servicer, the Collateral
Agent, the Note Insurer, the Owner Trustee, the Trust and the Securityholders
against all costs, expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel, which may be asserted against or
incurred by any of them as a result of third party claims arising out of the
events or facts giving rise to such breach. If it is determined that the
management, administration and servicing of the Receivables and operation of the
Trust pursuant to this Agreement constitutes a violation of the prohibited
transaction rules of ERISA or the Code to which no statutory exception or
administrative exemption applies, such violation shall not be treated as a
breach of Section 4.2(a), 4.4, 4.5 or 4.6 if not otherwise such a breach.
SECTION 4.8. Servicing Fee. (a) The Servicing Fee for the initial
Payment Date shall be equal to the sum of (i) the product of (x) the percentage
equivalent of a fraction the numerator of which is the number days from the
Closing Date to but excluding the first Payment Date and the denominator of
which is 360, (y) 2.00% and (z) the Pool Balance as of the close of business on
the second preceding Collection Period plus (ii) the product of (x) the
percentage equivalent of a fraction the numerator of which is the number days
from the Closing Date to but excluding the first Payment Date and the
denominator of which is 360, (y) 0.08% and (z) the aggregate outstanding
principal amount of the Securities as of the close of business on the last day
of the second preceding Collection Period; provided, however, that with respect
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to the first Payment Date the Servicer will be entitled to receive a Servicing
Fee equal to the sum of (i) the product of one-twelfth times 2.0% of the
Original Pool Balance plus (ii) the product of one-twelfth times 0.08% of the
aggregate outstanding principal amount of the Securities as of the Closing Date.
The Servicing Fee shall also include all late fees, prepayment charges
including, in the case of a Rule of 78's Receivable that is prepaid in full, to
the extent not required by law to be remitted to the related Obligor, the
difference between the Principal Balance of such Rule of 78's Receivable (plus
accrued interest to the date of prepayment) and the principal balance of such
Receivable computed according to the "Rule of 78's", and other administrative
fees or similar charges allowed by applicable law with respect to Receivables,
collected (from whatever source) on the Receivables.
SECTION 4.9. Servicer's Certificate. By 10:00 a.m., Minneapolis time,
on each Determination Date, the Servicer shall deliver to the Trustee, the Owner
Trustee, the Note Insurer, the Rating Agencies and the Seller a Servicer's
Certificate containing all information necessary to make the distributions
pursuant to Section 5.7 (including, if required, withdrawals from the Spread
Account) for the Collection Period preceding the date of such Servicer's
Certificate and all information necessary for the Trustee to send statements to
the Securityholders and the Note Insurer pursuant to Sections 5.8(c) and 5.9(b).
Receivables to be purchased by the Servicer or to be purchased by CPS shall be
identified by the Servicer by account number with respect to such Receivable (as
specified in Schedule A).
SECTION 4.10. Annual Statement as to Compliance, Notice of Servicer
Termination Event.
(a) The Servicer shall deliver to the Owner Trustee, the Trustee, the
Standby Servicer, the Note Insurer and each Rating Agency, on or before July 31
of each year beginning July 31, 1998, an Officer's Certificate, dated as of
March 31 of such year, stating that (i) a review of the activities of the
Servicer during the preceding 12-month period (or, in the case of the first such
certificate, the period from the Cutoff Date to March 31, 1998) and of its
performance under this Agreement has been made under such officer's supervision
and (ii) to the best of such officer's knowledge, based on such review, the
Servicer has fulfilled all its obligations under this Agreement throughout such
year (or, in the case of the first such certificate, such shorter period), or,
if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof. The Trustee shall send a copy of such certificate and the report
referred to in Section 4.11 to the Rating Agencies. The Trustee
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shall forward a copy of such certificate as well as the report referred to in
Section 4.11 to each Securityholders.
(b) The Servicer shall deliver to the Owner Trustee, the Trustee, the
Standby Servicer, the Note Insurer, the Collateral Agent, and each Rating
Agency, promptly after having obtained knowledge thereof, but in no event later
than two (2) Business Days thereafter, written notice in an Officer's
Certificate of any event which with the giving of notice or lapse of time, or
both, would become a Servicer Termination Event under Section 10.1.
SECTION 4.11. Annual Independent Accountants' Report. The Servicer
shall cause a firm of nationally recognized independent certified public
accountants (the "Independent Accountants"), who may also render other services
to the Servicer or to the Seller, to deliver to the Trustee, the Owner Trustee,
the Standby Servicer, the Note Insurer and each Rating Agency, on or before July
31 of each year beginning July 31, 1998, a report dated as of March 31 of such
year (the "Accountants' Report") and reviewing the Servicer's activities during
the preceding 12-month period (or, in the case of the first such report, the
period from the Cutoff Date to March 31, 1998), addressed to the Board of
Directors of the Servicer, to the Owner Trustee, the Trustee, the Standby
Servicer and to the Note Insurer, to the effect that such firm has examined the
financial statements of the Servicer and issued its report therefor and that
such examination (1) was made in accordance with generally accepted auditing
standards, and accordingly included such tests of the accounting records and
such other auditing procedures as such firm considered necessary in the
circumstances; (2) included tests relating to auto loans serviced for others in
accordance with the requirements of the Uniform Single Audit Program for
Mortgage Bankers (the "Program"), to the extent the procedures in the Program
are applicable to the servicing obligations set forth in this Agreement; (3)
included an examination of the delinquency and loss statistics relating to the
Servicer's portfolio of automobile and light truck installment sales contracts;
and (4) except as described in the report, disclosed no exceptions or errors in
the records relating to automobile and light truck loans serviced for others
that, in the firm's opinion, paragraph four of the Program requires such firm to
report. The accountant's report shall further state that (1) a review in
accordance with agreed upon procedures was made of three randomly selected
Servicer Certificates; (2) except as disclosed in the report, no exceptions or
errors in the Servicer Certificates were found; and (3) the delinquency and loss
information, relating to the Receivables contained in the Servicer Certificates
were found to be accurate. In the event such firm requires the Trustee and/or
the Standby Servicer to agree to the procedures performed by such firm, the
Servicer shall direct the Trustee and/or the
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Standby Servicer, as applicable, in writing to so agree; it being understood and
agreed that the Trustee and/or the Standby Servicer will deliver such letter of
agreement in conclusive reliance upon the direction of the Servicer, and neither
the Trustee nor the Standby Servicer makes any independent inquiry or
investigation as to, and shall have no obligation or liability in respect of,
the sufficiency, validity or correctness of such procedures.
The Report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
SECTION 4.12. Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to representatives of the Trustee, the
Owner Trustee, the Standby Servicer and the Note Insurer reasonable access to
the documentation regarding the Receivables. In each case, such access shall be
afforded without charge but only upon reasonable request and during normal
business hours. Nothing in this Section shall derogate from the obligation of
the Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors, and the failure of the Servicer to provide access as
provided in this Section as a result of such obligation shall not constitute a
breach of this Section.
SECTION 4.13. Verification of Servicer's Certificate. (a) On or before
the fifth calendar day of each month, the Servicer will deliver to the Trustee
and the Standby Servicer a computer diskette (or other electronic transmission)
in a format acceptable to the Trustee and the Standby Servicer containing
information with respect to the Receivables as of the close of business on the
last day of the preceding Collection Period which information is necessary for
preparation of the Servicer's Certificate. The Standby Servicer shall use such
computer diskette (or other electronic transmission) to verify certain
information specified in Section 4.13(b) contained in the Servicer's Certificate
delivered by the Servicer, and the Standby Servicer shall notify the Servicer
and the Note Insurer of any discrepancies on or before the second Business Day
following the Determination Date. In the event that the Standby Servicer reports
any discrepancies, the Servicer and the Standby Servicer shall attempt to
reconcile such discrepancies prior to the second Business Day prior to the
related Payment Date, but in the absence of a reconciliation, the Servicer's
Certificate shall control for the purpose of calculations and distributions with
respect to the related Payment Date. In the event that the Standby Servicer and
the Servicer are unable to reconcile discrepancies with respect to a Servicer's
Certificate by the related Payment Date, the Servicer shall cause a firm of
independent certified public accountants, at the Servicer's
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expense, to audit the Servicer's Certificate and, prior to the fifth calendar
day of the following month, reconcile the discrepancies. The effect, if any, of
such reconciliation shall be reflected in the Servicer's Certificate for such
next succeeding Determination Date. Other than the duties specifically set forth
in this Agreement, the Standby Servicer shall have no obligations hereunder,
including, without limitation, to supervise, verify, monitor or administer the
performance of the Servicer. The Standby Servicer shall have no liability for
any actions taken or omitted by the Servicer. The duties and obligations of the
Standby Servicer shall be determined solely by the express provisions of this
Agreement and no implied covenants or obligations shall be read into this
Agreement against the Standby Servicer.
(b) The Standby Servicer shall review each Servicer's Certificate
delivered pursuant to Section 4.13(a) and shall:
(i) confirm that such Servicer's Certificate is complete on
its face;
(ii) load the computer diskette (which shall be in a format
acceptable to the Standby Servicer) received from the Servicer pursuant
to Section 4.13(a) hereof, confirm that such computer diskette is in a
readable form and calculate and confirm the Principal Balance of each
Receivable for the most recent Payment Date;
(iii) confirm that the Total Distribution Amount, the
Principal Distributable Amount, the Class A Noteholders' Principal
Distributable Amount, the Class A-1 Noteholders' Interest Distributable
Amount, the Class A-2 Noteholders' Interest Distributable Amount, the
Class B Noteholders' Interest Distributable Amount, the Class B
Noteholders' Principal Distributable Amount, the Certificateholders'
Interest Distributable Amount, the Certificateholders' Principal
Distributable Amount, the Standby Fee, the Servicing Fee, the Trustee
Fee, the amount on deposit in the Spread Account, and the Premium in
the Servicer's Certificate are accurate based solely on the
recalculation of the Servicer's Certificate; and
(iv) confirm the calculation of the performance tests set
forth in the Spread Account Agreement.
SECTION 4.14. Retention and Termination of Servicer. The Servicer
hereby covenants and agrees to act as such under this Agreement for an initial
term commencing on the Closing Date and ending on December 31, 1997, which term
shall be automatically extended by the Note Insurer for successive terms of
ninety (90) days each as specified in a writing delivered by the Note Insurer
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prior to the expiration of each current term to the Servicer and the Trustee
which provides that the Servicer will be automatically extended for a succeeding
ninety (90) day term unless an Event of Default shall have occurred and be
continuing, in which case the Note Insurer may extend the Servicer in its sole
discretion (or, at the discretion of the Note Insurer exercised pursuant to
revocable written standing instructions from time to time to the Servicer and
the Trustee, for any specified number of terms greater than one), until such
time as the Notes have been paid in full, all amounts due to the
Certificateholders have been paid and until the Termination of the Trust. Each
such notice (including each notice pursuant to standing instructions, which
shall be deemed delivered at successive ninety (90) day intervals for so long as
such instructions are in effect) (a "Servicer Extension Notice") shall be
delivered by the Note Insurer to the Trustee and the Servicer. The Servicer
hereby agrees that, upon its receipt of any such Servicer Extension Notice, the
Servicer shall become bound, for the duration of the term covered by such
Servicer Extension Notice, to continue as the Servicer subject to and in
accordance with the other provisions of this Agreement. If an Insurer Default
has occurred and is continuing, the term of the Servicer's appointment hereunder
shall be deemed to have been extended until such time, if any, as such Insurer
Default has been cured unless such appointment is terminated sooner in
accordance with the terms of this Agreement).
SECTION 4.15. Fidelity Bond. The Servicer shall maintain a fidelity
bond in such form and amount as is customary for entities acting as custodian of
funds and documents in respect of consumer contracts on behalf of institutional
investors.
ARTICLE V
TRUST ACCOUNTS; DISTRIBUTIONS;
STATEMENTS TO SECURITYHOLDERS
SECTION 5.1. Establishment of Trust Accounts.
(a) (i) The Trustee, on behalf of the Securityholders and the Note
Insurer, shall establish and maintain in its own name an Eligible Account (the
"Collection Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Trustee on behalf of the
Securityholders and the Note Insurer.
(ii) The Trustee, on behalf of the Noteholders, shall establish and
maintain in its own name an Eligible Account (the "Note Distribution Account"),
bearing a designation clearly indicating that the funds deposited therein are
held for the
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benefit of the Trustee on behalf of the Noteholders and the Note Insurer. The
Note Distribution Account shall initially be established with the Trustee.
(iii) The Trustee, on behalf of the Securityholders and the Note
Insurer, shall establish and maintain in its own name an Eligible Account (the
"Pre-Funding Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Trustee on behalf of the
Securityholders and the Note Insurer.
(b) Funds on deposit in the Collection Account, the Pre-Funding
Account, the Note Distribution Account and the Interest Reserve Account
(collectively, the "Trust Accounts") shall be invested by the Trustee (or any
custodian with respect to funds on deposit in any such account) in Eligible
Investments selected in writing by the Servicer (pursuant to standing
instructions or otherwise). All such Eligible Investments shall be held by or on
behalf of the Trustee for the benefit of the Noteholders and/or the
Certificateholders and the Note Insurer, as applicable. Other than as permitted
by the Rating Agencies and the Note Insurer, funds on deposit in any Account
shall be invested in Eligible Investments that will mature so that such funds
will be available at the close of business on the Business Day immediately
preceding the following Payment Date. Funds deposited in a Trust Account on the
day immediately preceding a Payment Date upon the maturity of any Eligible
Investments are not required to be invested overnight. All Eligible investments
will be held to maturity.
(c) All investment earnings of moneys deposited in the Trust Accounts
shall be deposited (or caused to be deposited) by the Trustee in the Collection
Account for distribution pursuant to Section 5.7(b), and any loss resulting from
such investments shall be charged to such account. The Servicer will not direct
the Trustee to make any investment of any funds held in any of the Trust
Accounts unless the security interest granted and perfected in such account will
continue to be perfected in such investment, in either case without any further
action by any Person, and, in connection with any direction to the Trustee to
make any such investment, if requested by the Trustee, the Servicer shall
deliver to the Trustee an Opinion of Counsel, acceptable to the Trustee, to such
effect.
(d) The Trustee shall not in any way be held liable by reason of any
insufficiency in any of the Trust Accounts resulting from any loss on any
Eligible Investment included therein except for losses attributable to the
Trustee's negligence or bad faith or its failure to make payments on such
Eligible Investments issued by the Trustee, in its commercial
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capacity as principal obligor and not as trustee, in accordance with their
terms.
(e) If (i) the Servicer shall have failed to give investment directions
for any funds on deposit in the Trust Accounts to the Trustee by 2:00 p.m.
Eastern Time (or such other time as may be agreed by the Issuer and Trustee) on
any Business Day; or (ii) a Default or Event of Default shall have occurred and
be continuing with respect to the Notes but the Notes shall not have been
declared due and payable, or, if such Notes shall have been declared due and
payable following an Event of Default, amounts collected or receivable from the
Trust Property are being applied as if there had not been such a declaration;
then the Trustee shall, to the fullest extent practicable, invest and reinvest
funds in the Trust Accounts in one or more Eligible Investments.
(f) The Trustee shall possess all right, title and interest in all
funds on deposit from time to time in the Trust Accounts and in all proceeds
thereof (including all Investment Earnings on the Collection Account) and all
such funds, investments, proceeds and income shall be part of the Owner Trust
Estate. Except as otherwise provided herein, the Trust Accounts shall be under
the sole dominion and control of the Trustee for the benefit of the Noteholders
and/or the Certificateholders, as the case may be, and the Note Insurer. If at
any time any of the Trust Accounts ceases to be an Eligible Account, the
Servicer with the consent of the Note Insurer shall within five Business Days
establish a new Trust Account as an Eligible Account and shall transfer any cash
and/or any investments to such new Trust Account. The Servicer shall promptly
notify the Rating Agencies and the Owner Trustee of any change in the location
of any of the aforementioned accounts. In connection with the foregoing, the
Servicer agrees that, in the event that any of the Trust Accounts are not
accounts with the Trustee, the Servicer shall notify the Trustee in writing
promptly upon any of such Trust Accounts ceasing to be an Eligible Account.
(i) With respect to the Trust Account Property, the Trustee agrees
that:
(A) any Trust Account Property that is held in deposit
accounts shall be held solely in the Eligible Accounts; and, except as
otherwise provided herein, each such Eligible Account shall be subject
to the exclusive custody and control of the Trustee, and the Trustee
shall have sole signature authority with respect thereto;
(B) any Trust Account Property that constitutes Physical
Property shall be delivered to the Trustee in accordance with paragraph
(a) of the definition of "Delivery" and shall be
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held, pending maturity or disposition, solely by the Trustee or a
financial intermediary (as such term is defined in Section 8-313(4) of
the UCC) acting solely for the Trustee;
(C) any Trust Account Property that is a book- entry security
held through the Federal Reserve System pursuant to Federal book-entry
regulations shall be delivered in accordance with paragraph (b) of the
definition of "Delivery" and shall be maintained by the Trustee,
pending maturity or disposition, through continued book-entry
registration of such Trust Account Property as described in such
paragraph; and
(D) any Trust Account Property that is an "uncertificated
security" under Article 8 of the UCC and that is not governed by clause
(C) above shall be delivered to the Trustee in accordance with
paragraph (c) of the definition of "Delivery" and shall be maintained
by the Trustee, pending maturity or disposition, through continued
registration of the Trustee's (or its nominees) ownership of such
security.
(g) The Servicer shall have the power, revocable by the Note Insurer
or, with the consent of the Note Insurer by the Trustee or by the Owner Trustee
with the consent of the Trustee, to instruct the Trustee to make withdrawals and
payments from the Trust Accounts for the purpose of permitting the Servicer and
the Trustee to carry out its respective duties hereunder.
SECTION 5.2. Interest Reserve Account.
(a) The Servicer shall cause the Trustee to establish and maintain an
Eligible Account (the "Interest Reserve Account") with the Trustee, bearing a
designation clearly indicating that the funds deposited therein are held in
trust for the benefit of the Noteholders, the Certificateholders and the Note
Insurer.
(b) On or prior to the Closing Date, the Seller shall deposit an amount
equal to the Interest Reserve Account Initial Deposit into the Interest Reserve
Account.
(c) On the Determination Date for each of the September, 1997 and
October, 1997 Payment Dates, to the extent that the Servicer's Certificate
indicates that the funds on deposit in the Interest Reserve Account are in
excess of the Requisite Reserve Amount for such Payment Date, the Trustee will
withdraw such excess from the Interest Reserve Account and deposit such amount
in the Collection Account for distribution pursuant to Section 5.7(b) on the
related Payment Date. Any amounts remaining in the Interest Reserve Account on
the Payment Date which immediately follows the end of the Funding Period after
taking into account the transfer pursuant to Section 5.7(a)(i) shall be remitted
by the Trustee to the Seller. Upon any such
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distribution to the Seller, the Noteholders, the Certificateholders and the Note
Insurer will have no further rights in, or claims to, such amounts.
SECTION 5.3. Certain Reimbursements to the Servicer. The Servicer will
be entitled to be reimbursed from amounts on deposit in the Collection Account
with respect to a Collection Period for amounts previously deposited in the
Collection Account but later determined by the Servicer to have resulted from
mistaken deposits or postings or checks returned for insufficient funds. The
amount to be reimbursed hereunder shall be paid to the Servicer on the related
Payment Date pursuant to Section 5.7(b)(i) upon certification by the Servicer of
such amounts and the provision of such information to the Trustee and the Note
Insurer as may be necessary in the opinion of the Note Insurer to verify the
accuracy of such certification. In the event that the Note Insurer has not
received evidence satisfactory to it of the Servicer's entitlement to
reimbursement pursuant to this Section, the Note Insurer shall (unless an
Insurer Default shall have occurred and be continuing) give the Trustee notice
to such effect, following receipt of which the Trustee shall not make a
distribution to the Servicer in respect of such amount pursuant to Section 5.7,
or if the Servicer prior thereto has been reimbursed pursuant to Section 5.7,
the Trustee shall withhold such amounts from amounts otherwise distributable to
the Servicer on the next succeeding Payment Date.
SECTION 5.4. Application of Collections. All collections for each
Collection Period shall be applied by the Servicer as follows:
With respect to each Receivable (other than a Purchased Receivable),
payments by or on behalf of the Obligor shall be applied, in the case of a Rule
of 78's Receivable, first, to the Scheduled Payment of such Rule of 78's
Receivable and, second, to any late fees accrued with respect to such Rule of
78's Receivable and, in the case of a Simple Interest Receivable, to interest
and principal in accordance with the Simple Interest Method.
SECTION 5.5. Withdrawals from Spread Account. (a) In the event that the
Servicer's Certificate with respect to any Determination Date shall state that
the Total Distribution Amount with respect to such Determination Date is
insufficient (taking into account the application of the Total Distribution
Amount to the payment required to be made on the related Payment Date pursuant
to Section 5.7(b)(vi)) to make the payments required to be made on the related
Payment Date pursuant to Section 5.7(b)(i), (ii), (iii), (iv), (v), (vii) or
(viii) (such deficiency being a "Deficiency Claim Amount"), then on the fourth
Business Day immediately preceding the related Payment Date, the
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Trustee shall deliver to the Collateral Agent, the Owner Trustee, the Note
Insurer, and the Servicer, by hand delivery, telex or facsimile transmission, a
written notice (a "Deficiency Notice") specifying the Deficiency Claim Amount
for such Payment Date. Such Deficiency Notice shall direct the Collateral Agent
to remit such Deficiency Claim Amount (to the extent of the funds available to
be distributed pursuant to the Spread Account Agreement) to the Trustee for
deposit in the Collection Account and distribution pursuant to Sections
5.7(b)(i), (ii), (iii), (iv), (v), (vii) and/or (viii), as applicable.
(b) Any Deficiency Notice shall be delivered by 10:00 a.m., New York
City time, on the fourth Business Day preceding such Payment Date. The amounts
distributed by the Collateral Agent to the Trustee pursuant to a Deficiency
Notice shall be deposited by the Trustee into the Collection Account pursuant to
Section 5.6.
(c) In the event that the Servicer's Certificate with respect to any
Determination Date shall state that the Total Distribution Amount with respect
to such Payment Date is insufficient to make the payments to the Note
Distribution Account required to be made on the related Payment Date pursuant to
Section 5.7(b)(vi) or (x) (such deficiency being a "Class B Deficiency"), then
on the fourth Business Day immediately preceding the related Payment Date, the
Trustee shall deliver to the Collateral Agent, the Owner Trustee and the
Servicer, by hand delivery, telex or facsimile transmission, a written notice
specifying the amount of the Class B Deficiency for such Payment Date. Such
notice shall direct the Collateral Agent to remit to the Trustee an amount equal
to such Class B Deficiency (but only to the extent that, pursuant to the Master
Spread Account Agreement, funds are required to be released from the Spread
Account to the Seller on the related Payment Date and are available for
application on account of such Class B Deficiency) for deposit into the
Collection Account and, subject to Section 5.5(e) below, distribution pursuant
to Section 5.7(b)(vi) and/or Section 5.7(b)(x), as applicable, and any funds so
remitted to the Trustee shall be deemed to have been released to the Seller and
paid to the Trustee at the direction of the Seller.
(d) In the event that the Servicer's Certificate with respect to any
Determination Date shall state that the Total Distribution Amount with respect
to such Payment Date is insufficient to make the payments to the Certificate
Distribution Account required to be made on the related Payment Date pursuant to
Section 5.7(b)(vi) or (x) or pursuant to Section 5.7(b)(xii) or (xiii)(such
deficiency being a "Certificate Deficiency"), then on the fourth Business Day
immediately preceding the related Payment Date, the Trustee shall deliver to the
Collateral Agent, the Owner Trustee and the Servicer, by hand delivery, telex or
facsimile transmission, a written notice specifying the amount of
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the Certificate Deficiency for such Payment Date. Such notice shall direct the
Collateral Agent to remit to the Trustee an amount equal to such Certificate
Deficiency (but only to the extent that, pursuant to the Master Spread Account
Agreement, funds are required to be released from the Spread Account to the
Seller on the related Payment Date and are available for application on account
of such Certificate Deficiency) for deposit into the Collection Account and,
subject to Section 5.5(e) below, distribution pursuant to (A) Section 5.7(b)(vi)
and/or Section 5.7(b)(x) or (B) Section 5.7(b)(xii) or (xiii), as applicable,
and any funds so remitted to the Trustee shall be deemed to have been released
to the Seller and paid to the Trustee at the direction of the Seller.
(e) Notwithstanding anything to the contrary contained in (c) or (d)
above, unless an Event of Default has occurred and is continuing, then amounts
received by the Trustee on account of a Class B Deficiency or Certificate
Deficiency shall be applied pro rata (on the basis of the Class B Deficiency and
Certificate Deficiency outstanding) to pay such Class B Deficiency and
Certificate Deficiency. If an Event of Default has occurred and is continuing,
then amounts received by the Trustee on account of a Class B Deficiency or
Certificate Deficiency shall be applied first to pay the outstanding Class B
Deficiency pursuant to Section 5.7(b)(vi) and/or (x) and second, to the extent
of any remaining funds, to pay the outstanding Certificate Deficiency pursuant
to Section 5.7(b)(xii) and/or (xiii).
SECTION 5.6. Additional Deposits.
(a) The Servicer or CPS, as the case may be, shall deposit or cause to
be deposited in the Collection Account the aggregate Purchase Amount with
respect to Purchased Receivables and the Servicer shall deposit or cause to be
deposited therein all amounts to be paid under Section 4.8(b) or 11.1. All such
deposits shall be made, in immediately available funds, on the Business Day
preceding the Determination Date. On or before the third Business Day preceding
each Payment Date, the Trustee shall remit to the Collection Account any amounts
delivered to the Trustee by the Collateral Agent pursuant to Section 5.5.
SECTION 5.7. Distributions.
(a) On each Payment Date, the Trustee shall (based solely on the
information contained in the Servicer's Certificate delivered on the related
Determination Date)cause to be made the following transfers and distributions in
the amounts set forth in the Servicer's Certificate for such Payment Date:
(i) During the Funding Period, from the Interest Reserve
Account to the Collection Account, in immediately
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available funds, the amount withdrawn from the Interest Reserve Account
pursuant to Section 5.2(c) with respect to such Payment Date; and
(ii) If such Payment Date is the Mandatory Redemption Date,
from the Pre-Funding Account to the Collection Account, in immediately
available funds, the Pre-Funded Amount after giving effect to the
purchase of Subsequent Receivables, if any, on the Mandatory Redemption
Date.
(b) On each Payment Date, the Trustee (based on the information
contained in the Servicer's Certificate delivered on the related Determination
Date) shall make the following distributions in the following order of priority:
(i) to the Servicer, from the Total Distribution Amount, the
Servicing Fee and all unpaid Servicing Fees from prior Collection
Periods; provided, however, that as long as CPS is the Servicer and
Norwest Bank Minnesota, National Association is the Standby Servicer,
the Trustee will first pay to the Standby Servicer out of the Servicing
Fee otherwise payable to CPS an amount equal to the Standby Fee;
(ii) in the event the Standby Servicer becomes the successor
Servicer, to the Standby Servicer from the Total Distribution Amount
(as such Total Distribution Amount has been reduced by payments
pursuant to clause (i) above), to the extent not previously paid by the
predecessor Servicer pursuant to the Sale and Servicing Agreement,
reasonable transition expenses (up to a maximum of $50,000 for all such
expenses) incurred in becoming successor Servicer;
(iii) to the Trustee and the Owner Trustee, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) and (ii) above), the fees payable
thereto for services pursuant to the Indenture and the Trust Agreement
(the "Trustee Fee") and reasonable out-of-pocket expenses thereof,
(including counsel fees and expenses) and all unpaid Trustee Fees and
all unpaid reasonable out-of-pocket expenses (including counsel fees
and expenses) from prior Collection Periods; provided, however, that
unless an Event of Default shall have occurred and be continuing,
expenses payable to the Trustee and the Owner Trustee pursuant to this
clause (iii) and expenses payable to the Collateral Agent pursuant to
clause (iv) below shall be limited to a total of $50,000 per annum;
(iv) to the Collateral Agent, from the Total Distribution
Amount (as such Total Distribution Amount has been reduced by payments
pursuant to clauses (i) through
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(iii) above), all fees and expenses payable to the Collateral Agent
with respect to such Payment Date;
(v) to the Note Distribution Account, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant Total to clauses (i) through (iv) above), the
Class A Noteholders' Interest Distributable Amount for such Payment
Date;
(vi) to the Note Distribution Account and, unless an Event of
Default has occurred and is continuing, the Certificate Distribution
Account, pro rata, from the Total Distribution Amount (as such Total
Distribution Amount has been reduced by payments pursuant to clauses
(i) through (v) above) the Class B Noteholders' Interest Distributable
Amount and, unless an Event of Default has occurred and in continuing,
the Certificateholders' Interest Distributable Amount, respectively,
for such Payment Date;
(vii) to the Note Distribution Account, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) through (vi) above), the Class A
Noteholders' Principal Distributable Amount plus, on the Mandatory
Redemption Date, the Class A Note Prepayment Amount for such Payment
Date;
(viii) to the Note Insurer, from the Total Distribution Amount
(as such Total Distribution Amount has been reduced by payments made
pursuant to clauses (i) through (vii) above), any amounts owing to the
Note Insurer under this Agreement and the Insurance Agreement and not
paid;
(ix) in the event any Person other than the Standby Servicer
becomes the successor Servicer, to such successor Servicer, from the
Total Distribution Amount (as such Total Distribution Amount has been
reduced by payments pursuant to clauses (i) through (viii) above) to
the extent not previously paid by the predecessor Servicer, reasonable
transition expenses (up to a maximum of $50,000 for all such expenses)
incurred in acting as successor Servicer;
(x) to the Note Distribution Account and, unless an Event of
Default has occurred and in continuing, the Certificate Distribution
Account, pro rata, from the Total Distribution Amount (as such Total
Distribution Amount has been reduced by payments pursuant to clauses
(i) through (ix) above), the Class B Noteholders' Principal
Distributable Amount and, unless an Event of Default has occurred and
is continuing, the Certificateholders'
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▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, respectively, for such Payment Date;
(xi) until the Target Payment Date, to the Note Distribution
Account, the remaining Total Distribution Amount, if any, for payment
to the holders of the then paying Class A Notes as a payment of
principal;
(xii) if an Event of Default shall have occurred and be
continuing, to the Certificate Distribution Account, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) through (xi) above), the
Certificateholders' Interest Distributable Amount;
(xiii) if an Event of Default shall have occurred and be
continuing, to the Certificate Distribution Account, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) through (xii) above), the
Certificateholders' Principal Distributable Amount; and
(xiv) after the Target Payment Date, to the Collateral Agent,
for deposit into the Spread Account, the remaining Total Distribution
Amount, if any;
provided, however, that, (A) following an acceleration of the Notes, (B) if an
Insurer Default shall have occurred and be continuing and an Event of Default
pursuant to Section 5.1(i), 5.1(ii), 5.1(iv), 5.1(v) or 5.1(vi) of the Indenture
shall have occurred and be continuing or (C) the receipt of Insolvency Proceeds
pursuant to Section 11.1(b), the Total Distribution Amount (including any such
Insolvency Proceeds) shall be paid to the Noteholders and the
Certificateholders, pursuant to Section 5.6(a) of the Indenture.
(c) In the event that the Collection Account is maintained with an
institution other than the Trustee, the Servicer shall instruct and cause such
institution to make all deposits and distributions pursuant to Section 5.7(b) on
the related Payment Date.
SECTION 5.8. Note Distribution Account.
(a) On each Payment Date, the Trustee shall distribute all amounts on
deposit in the Note Distribution Account to Noteholders in respect of the Notes
to the extent of amounts due and unpaid on the Notes for principal and interest
in the following amounts and in the following order of priority:
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(i) to the Holders of the Class A Notes the Class A Interest
Distributable Amount; provided that if there are not sufficient funds
in the Note Distribution Account to pay the entire amount then due on
each Class of Class A Notes, the amount in the Note Distribution
Account shall be applied to the payment of such interest on each Class
of Class A Notes pro rata on the basis of the amount of accrued and
unpaid interest due on each Class of Class A Notes;
(ii) to the Holders of the Class B Notes, the Class B
Noteholders' Interest Distributable Amount; provided that if there are
not sufficient funds remaining in the Note Distribution Account to pay
the entire Class B Interest Distributable Amount, the amount in the
Note Distribution Account shall be applied to the payment of such
interest on the Class B Notes pro rata on the basis of the amount of
accrued and unpaid interest due on the Class B Notes;
(iii) any amounts deposited in the Note Distribution Account
with respect to the Note Prepayment Amount, shall be distributed to the
Class A-1 Noteholders on account of the Class A-1 Prepayment Amount and
to the Class A-2 Noteholders on account of the Class A-2 Prepayment
Amount, pro rata, on the basis of the Class A-1 Prepayment Amount and
the Class A-2 Prepayment Amount;
(iv) to the Holders of the Class A-1 Notes, the Class A
Noteholders' Principal Distributable Amount until the outstanding
principal balance of the Class A-1 Notes is reduced to zero; and
(v) to the Holders of the Class A-2 Notes, the Class A
Noteholders' Principal Distributable Amount (as reduced by any
distribution on such Payment Date pursuant to (iv) above) until the
outstanding principal balance of the Class A-2 Notes is reduced to
zero; and
(vi) to the holders of the Class B Notes, the Class B
Noteholders' Principal Distributable Amount until the outstanding
principal amount of the Class B Notes is reduced to zero.
(b) The rights of the Class B Noteholders to receive distributions in
respect of the Class B Notes pursuant to Section 5.8(a)(ii) on a Payment Date
shall be and hereby are subordinated to the payment of the amounts distributable
pursuant to Section 5.8(a)(i). The rights of the Class B Noteholders to receive
distributions in respect of the Class B Notes pursuant to Section 5.8(a)(vi) on
a Payment Date shall be and hereby are subordinated to the payment of the
amounts distributable pursuant to Sections 5.8(a)(i) through (v). At such time
as the Class A Notes are paid in full and the Note Insurer has received payment
in full for all amounts owed to the Note Insurer, the Class B Noteholders
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shall be entitled to exercise all rights granted to the Class A Noteholders
under this Agreement to the extent that the exercise of such rights does not
conflict with the provisions of the Spread Account Agreement.
(c) On each Payment Date, the Trustee shall send to each Noteholder the
statement provided to the Trustee by the Servicer pursuant to Section 5.11
hereof on such Payment Date.
(d) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to a Noteholder, such tax shall reduce the
amount otherwise distributable to the Noteholder in accordance with this
Section. The Trustee is hereby authorized and directed to retain from amounts
otherwise distributable to the Noteholders sufficient funds for the payment of
any tax that is legally owed by the Trust (but such authorization shall not
prevent the Trustee from contesting any such tax in appropriate proceedings, and
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings). The amount of any withholding tax imposed with respect to a
Noteholder shall be treated as cash distributed to such Noteholder at the time
it is withheld by the Trust and remitted to the appropriate taxing authority.
If, after consultations with experienced counsel, the Trustee determines that
there is a reasonable likelihood that withholding tax is payable with respect to
a distribution (such as a distribution to a non-US Noteholder), the Trustee may
in its sole discretion withhold such amounts in accordance with this clause (d).
In the event that a Noteholder wishes to apply for a refund of any such
withholding tax, the Trustee shall reasonably cooperate with such Noteholder in
making such claim so long as such Noteholder agrees to reimburse the Trustee for
any out-of-pocket expenses incurred.
(e) Distributions required to be made to Noteholders on any Payment
Date shall be made to each Noteholder of record on the preceding Record Date
either by wire transfer, in immediately available funds, to the account of such
Holder at a bank or other entity having appropriate facilities therefor, if (i)
such Noteholder shall have provided to the Note Registrar appropriate written
instructions at least five Business Days prior to such Payment Date and such
Holder's Notes in the aggregate evidence a denomination of not less than
$1,000,000 or (ii) such Noteholder is the Seller, or an Affiliate thereof, or,
if not, by check mailed to such Noteholder at the address of such holder
appearing in the Note Register; provided, however, that, unless Definitive Notes
have been issued pursuant to Section 2.12 of the Indenture, with respect to
Notes registered on the Record Date in the name of the nominee of the Clearing
Agency (initially, such nominee to be Cede & Co.), distributions will be made by
wire transfer in immediately available funds to the account designated by such
nominee. Notwithstanding the foregoing, the final distribution
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in respect of any Note (whether on the Final Scheduled Payment Date or
otherwise) will be payable only upon presentation and surrender of such Note at
the office or agency maintained for that purpose by the Note Registrar pursuant
to Section 2.4 of the Indenture.
SECTION 5.9. [RESERVED]
SECTION 5.10. Pre-Funding Account.
(a) On the Closing Date, the Trustee will deposit, on behalf of the
Seller, in the Pre-Funding Account $27,084,817 from the proceeds of the sale of
the Notes and the Certificates. On each Subsequent Transfer Date, the Servicer
shall instruct the Trustee to withdraw from the Pre-Funding Account (i) an
amount equal to the Principal Balance of the Subsequent Receivables transferred
to the Issuer on such Subsequent Transfer Date and to distribute such amount to
or upon the order of the Seller upon satisfaction of the conditions set forth in
this Agreement with respect to such transfer and (ii) an amount equal to the
Subsequent Spread Account Deposit on such Subsequent Transfer Date upon
satisfaction of the conditions set forth in this Agreement with respect to such
transfer.
(b) If the Pre-Funded Amount has not been reduced to zero on the date
on which the Funding Period ends after giving effect to any reductions in the
Pre-Funded Amount on such date, the Servicer shall instruct the Trustee to
withdraw from the Pre-Funding Account on the Mandatory Redemption Date the
Pre-Funded Amount (exclusive of any Pre-Funding Earnings) and deposit an amount
equal to the Note Prepayment Amount in the Note Distribution Account and the
Certificate Prepayment Amount in the Certificate Distribution Account.
(c) All Pre-Funding Earnings will be deposited in the Collection
Account on each Payment Date and deemed to be part of the Total Distribution
Amount.
SECTION 5.11. Statements to Securityholders. On or prior to each
Payment Date, the Servicer shall provide to the Trustee and the Owner Trustee
(with a copy to the Note Insurer and the Rating Agencies) for the Trustee to
forward to each Noteholder of record, and the Owner Trustee to distribute to the
Certificateholders, a statement setting forth at least the following information
as to the Notes and the Certificates to the extent applicable:
(i) the amount of such distribution allocable to principal of
each Class of Notes and the Certificates;
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(ii) the amount of such distribution allocable to interest on
or with respect to each Class of Notes and the Certificates;
(iii) the amount of such distribution payable out of amounts
withdrawn from the Spread Account or pursuant to a claim on the Note
Policy;
(iv) the Pool Balance as of the close of business on the last
day of the preceding Collection Period;
(v) the aggregate outstanding principal amount of each Class
of Notes and the Certificates, the Note Pool Factor for each such Class
and the Certificate Pool Factor after giving effect to payments
allocated to principal reported under clause (i) above;
(vi) the amount of the Servicing Fee (inclusive of the Standby
Fee paid to the Standby Servicer) paid to the Servicer with respect to
the related Collection Period, and the amount of any unpaid Servicing
Fees (inclusive of the Standby Fee) and the change in such amount from
that of the prior Payment Date;
(vii) the Class A-1 Noteholders' Interest Carryover Shortfall,
the Class A-2 Noteholders' Interest Carryover Shortfall, the Class B
Noteholders' Interest Carryover Shortfall, the Certificateholders'
Interest Carryover Shortfall, the Class A Noteholders' Principal
Carryover Shortfall, the Class B Noteholders' Principal Carryover
Shortfall and the Certificateholders' Principal Carryover Shortfall;
(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 payments between 31 and 59 days and 60 days or more;
(ix) the amount of the aggregate Realized Losses, if any, for
the second preceding Collection Period;
(x) the number and the aggregate Purchase Amounts for
Receivables, if any, that were repurchased in such period and summary
information as to losses and delinquencies with respect to the
Receivables;
(xi) for Payment Dates during the Funding Period (if any), the
remaining Pre-Funded Amount;
(xii) for the final Subsequent Transfer Date, the amount of
any remaining Pre-Funded Amount that has not been used to fund the
purchase of Subsequent Receivables; and
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(xiii) the cumulative amount of Realized Losses, since the
Initial Cutoff Date to the last day of the related Collection Period.
Each amount set forth pursuant to paragraph (i), (ii), (iii), (vi), (vii), (x)
and (xi) above shall be expressed as a dollar amount per $1,000 of the initial
principal balance of the Notes (or Class thereof) or Certificates, as
applicable.
ARTICLE VI
THE NOTE POLICY
SECTION 6.1. Claims Under Note Policy.
(a) In the event that the Trustee has delivered a Deficiency Notice
with respect to any Determination Date pursuant to Section 5.5 hereof, the
Trustee shall on the related Draw Date determine the Note Policy Claim Amount
for the related Payment Date. If the Note Policy Claim Amount for such Payment
Date is greater than zero, the Trustee shall furnish to the Note Insurer no
later than 12:00 noon New York City time on the related Draw Date a completed
Notice of Claim (as defined in (b) below) in the amount of the Note Policy Claim
Amount. Amounts paid by the Note Insurer pursuant to a claim submitted under
this Section 6.1. shall be deposited by the Trustee into the Note Distribution
Account for payment to Noteholders on the related Payment Date.
(b) Any notice delivered by the Trustee to the Note Insurer pursuant to
Section 6.1(a) shall specify the Note Policy Claim Amount claimed under the Note
Policy and shall constitute a "Notice of Claim" (as defined in the Note Policy)
under the Note Policy. In accordance with the provisions of the Note Policy, the
Note Insurer is required to pay to the Trustee the Note Policy Claim Amount
properly claimed thereunder by 12:00 noon, New York City time, on the later of
(i) the third Business Day (as defined in the Note Policy) following receipt on
a Business Day of the Notice of Claim, and (ii) the applicable Payment Date. Any
payment made by the Note Insurer under the Note Policy shall be applied solely
to the payment of the Notes, and for no other purpose.
(c) The Trustee shall (i) receive as attorney-in-fact of each Class A
Noteholder any Note Policy Claim Amount from the Note Insurer and (ii) deposit
the same in the Note Distribution Account for distribution to Class A
Noteholders. Any and all Note Policy Claim Amounts disbursed by the Trustee from
claims made under the Note Policy shall not be considered payment by the Trust
or from the Series 1997-3 Spread Account with respect to such Notes, and shall
not discharge the obligations of the Trust
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with respect thereto. The Insurer shall, to the extent it makes any payment with
respect to the Class A Notes, become subrogated to the rights of the recipients
of such payments to the extent of such payments. Subject to and conditioned upon
any payment with respect to the Class A Notes by or on behalf of the Note
Insurer, the Trustee and the Class A Noteholders shall assign to the Note
Insurer all rights to the payment of interest or principal with respect to the
Class A Notes which are then due for payment to the extent of all payments made
by the Note Insurer, and the Note Insurer may exercise any option, vote, right,
power or the like with respect to the Class A Notes to the extent that it has
made payment pursuant to the Note Policy. To evidence such subrogation, the Note
Registrar (as defined in the Indenture) shall note the Note Insurer's rights as
subrogee upon the register of Noteholders upon receipt from the Note Insurer of
proof of payment by the Note Insurer of any Noteholders' Interest Distributable
Amount or Noteholders' Principal Distributable Amount. The foregoing subrogation
shall in all cases be subject to the rights of the Class A Noteholders to
receive all Scheduled Payments (as defined in the Note Policy) in respect of the
Notes.
(d) The Trustee shall keep a complete and accurate record of all funds
deposited by the Note Insurer into the Note Distribution Account and the
allocation of such funds to payment of interest on and principal paid in respect
of any Class A Note. The Insurer shall have the right to inspect such records at
reasonable times upon one Business Day's prior notice to the Trustee.
(e) The Trustee shall be entitled to enforce on behalf of the Class A
Noteholders the obligations of the Note Insurer under the Note Policy.
Notwithstanding any other provision of this Agreement or any Basic Documents,
the Class A Noteholders are not entitled to make any claims under the Note
Policy or institute proceedings directly against the Note Insurer.
SECTION 6.2. Preference Claims.
(a) In the event that the Trustee has received a certified copy of an
order of the appropriate court that any Scheduled Payment (as defined in the
Note Policy) paid on a Class A Note has been avoided in whole or in part as a
preference payment under applicable bankruptcy law, the Trustee shall so notify
the Note Insurer, shall comply with the provisions of the Note Policy to obtain
payment by the Note Insurer of such avoided payment, and shall, at the time it
provides notice to the Note Insurer, notify Holders of the Class A Notes by mail
that, in the event that any Class A Noteholder's payment is so recoverable, such
Class A Noteholder will be entitled to payment pursuant to the terms of the Note
Policy. The Trustee shall furnish to the Note Insurer its records evidencing the
payments of principal of and
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interest on Class A Notes, if any, which have been made by the Trustee and
subsequently recovered from Class A Noteholders, and the dates on which such
payments were made. Pursuant to the terms of the Note Policy, the Note Insurer
will make such payment on behalf of the Class A Noteholder to the receiver,
conservator, debtor-in-possession or trustee in bankruptcy named in the order
(as defined in the Note Policy) and not to the Trustee or any Class A Noteholder
directly (unless a Class A Noteholder has previously paid such payment to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy, in which
case the Note Insurer will make such payment to the Trustee for distribution to
such Class A Noteholder upon proof of such payment reasonably satisfactory to
the Note Insurer).
(b) The Trustee shall promptly notify the Note Insurer of any
proceeding or the institution of any action (of which the Trustee has actual
knowledge) seeking the avoidance as a preferential transfer under applicable
bankruptcy, insolvency, receivership, rehabilitation or similar law (a
"Preference Claim") of any distribution made with respect to the Notes. Each
Holder, by its purchase of Notes, and the Trustee hereby agree that so long as
an Insurer Default shall not have occurred and be continuing, the Note Insurer
may at any time during the continuation of any proceeding relating to a
Preference Claim direct all matters relating to such Preference Claim including,
without limitation, (i) the direction of any appeal of any order relating to any
Preference Claim and (ii) the posting of any surety, supersedeas or performance
bond pending any such appeal at the expense of the Note Insurer, but subject to
reimbursement as provided in the Insurance Agreement. In addition, and without
limitation of the foregoing, as set forth in Section 6.1(c), the Note Insurer
shall be subrogated to, and each Noteholder and the Trustee hereby delegate and
assign, to the fullest extent permitted by law, the rights of the trustee and
each Noteholder in the conduct of any proceeding with respect to a Preference
Claim, including, without limitation, all rights of any party to an adversary
proceeding action with respect to any court order issued in connection with any
such Preference Claim.
SECTION 6.3. Surrender of Note Policy. The Trustee shall surrender the
Note Policy to the Note Insurer for cancellation upon the expiration of such
policy in accordance with the terms thereof.
ARTICLE VII
[Reserved]
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ARTICLE VIII
THE SELLER
SECTION 8.1. Representations of Seller. The Seller makes the following
representations on which the Note Insurer shall be deemed to have relied in
executing and delivering the Note Policy and on which the Issuer is deemed to
have relied in acquiring the Receivables. The representations speak as of the
execution and delivery of this Agreement and as of the Closing Date, in the case
of Initial Receivables, and as of the applicable Subsequent Transfer Date, in
the case of Subsequent Receivables, and shall survive the sale of the
Receivables to the Issuer and the pledge thereof to the Trustee pursuant to the
Indenture.
(a) Organization and Good Standing. The Seller has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of California, with power and authority to
own its properties and to conduct its business as such properties are
currently owned and such business is currently conducted, and had at
all relevant times, and now has, power, authority and legal right to
acquire, own and sell the Receivables and the other Conveyed Property
transferred to the Trust.
(b) Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business shall
require such qualifications.
(c) Power and Authority. The Seller has the power and
authority to execute and deliver this Agreement and the Basic Documents
to which it is a party and to carry out its terms and their terms,
respectively; the Seller has full power and authority to sell and
assign the Receivables and the Other Conveyed Property to be sold and
assigned to and deposited with the Trust by it and has duly authorized
such sale and assignment to the Trust by all necessary corporate
action; and the execution, delivery and performance of this Agreement
and the Basic Documents to which the Seller is a party have been duly
authorized by the Seller by all necessary corporate action.
(d) Valid Sale, Binding Obligations. This Agreement effects a
valid sale, transfer and assignment of the Receivables and the Other
Conveyed Property, enforceable against the Seller and creditors of and
purchasers from the Seller; and this Agreement and the Basic Documents
to which the Seller is a party, when duly executed and delivered,
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shall constitute legal, valid and binding obligations of the Seller
enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting the enforcement of creditors' rights
generally and by equitable limitations on the availability of specific
remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the Basic Documents and the
fulfillment of the terms of this Agreement and the Basic Documents
shall not conflict with, result in any breach of any of the terms and
provisions of or constitute (with or without notice, lapse of time or
both) a default under the certificate of incorporation or by-laws of
the Seller, or any indenture, agreement, mortgage, deed of trust or
other instrument to which the Seller is a party or by which it is
bound, or result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, other than the Basic
Documents, or violate any law, order, rule or regulation applicable to
the Seller of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Seller or any of its properties.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the Seller's knowledge, threatened against the Seller,
before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality having jurisdiction over the
Seller or its properties (A) asserting the invalidity of this
Agreement, the Securities or any of the Basic Documents, (B) seeking to
prevent the issuance of the Securities or the consummation of any of
the transactions contemplated by this Agreement or any of the Basic
Documents, (C) seeking any determination or ruling that might
materially and adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability of, this Agreement
or any of the Basic Documents, or (D) relating to the Seller and which
might adversely affect the federal or state income, excise, franchise
or similar tax attributes of the Securities.
(g) No Consents. No consent, approval, authorization or order
of or declaration or filing with any governmental authority is required
for the issuance or sale of the Securities or the consummation of the
other transactions
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contemplated by this Agreement, except such as have been duly made or
obtained.
(h) Tax Returns. The Seller has filed on a timely basis all
tax returns required to be filed by it and paid all taxes, to the
extent that such taxes have become due.
(i) Chief Executive Office. The chief executive office of the
Seller is at 2 ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
SECTION 8.2. [Reserved].
SECTION 8.3. Liability of Seller; Indemnities. The Seller shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement.
(a) The Seller shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Trust, the Note Insurer, the Standby Servicer and the
Trustee from and against any taxes that may at any time be asserted against any
such Person with respect to the transactions contemplated in this Agreement and
any of the Basic Documents (except any income taxes arising out of fees paid to
the Owner Trustee, the Trustee and the Note Insurer and except any taxes to
which the Owner Trustee, or the Trustee may otherwise be subject to), including
any sales, gross receipts, general corporation, tangible personal property,
privilege or license taxes (but, in the case of the Issuer, not including any
taxes asserted with respect to, federal or other income taxes arising out of
distributions on the Notes and the Certificates) and costs and expenses in
defending against the same.
(b) The Seller shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Trustee, the Note Insurer and the Securityholders from
and against any loss, liability or expense incurred by reason of (i) the
Seller's willful misfeasance, bad faith or negligence in the performance of its
duties under this Agreement, or by reason of reckless disregard of its
obligations and duties under this Agreement and (ii) the Seller's or the
Issuer's violation of Federal or state securities laws in connection with the
offering and sale of the Notes and the Certificates.
(c) The Seller shall indemnify, defend and hold harmless the Owner
Trustee, the Trustee, and the Standby Servicer and its officers, directors,
employees and agents from and against any and all costs, expenses, losses,
claims, damages and liabilities arising out of, or incurred in connection with
the acceptance or performance of the trusts and duties set forth herein and in
the Basic Documents except to the extent that such cost, expense, loss, claim,
damage or liability shall be due to the willful
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misfeasance, bad faith or negligence (except for errors in judgment) of the
Owner Trustee.
Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Trustee and the termination of this
Agreement or the Indenture or the Trust Agreement, as applicable, and shall
include reasonable fees and expenses of counsel and other expenses of
litigation. If the Seller shall have made any indemnity payments pursuant to
this Section and the Person to or on behalf of whom such payments are made
thereafter shall collect any of such amounts from others, such Person shall
promptly repay such amounts to the Seller, without interest.
SECTION 8.4. Merger or Consolidation of, or Assumption of the
Obligations of, Seller. Any Person (a) into which the Seller may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Seller shall be a party or (c) which may succeed to the properties and assets of
the Seller substantially as a whole, which Person in any of the foregoing cases
executes an agreement of assumption to perform every obligation of the Seller
under this Agreement, shall be the successor to the Seller hereunder without the
execution or filing of any document or any further act by any of the parties to
this Agreement; provided, however, that (i) the Seller shall have received the
written consent of the Note Insurer prior to entering into any such transaction,
(ii) immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 3.1 shall have been breached and no Servicer
Termination Event, and no event which, after notice or lapse of time, or both,
would become a Servicer Termination Event shall have happened and be continuing,
(iii) the Seller shall have delivered to the Owner Trustee, the Trustee and the
Note Insurer an Officers' Certificate and an Opinion of Counsel each stating
that such consolidation, merger or succession and such agreement of assumption
comply with this Section and that all conditions precedent, if any, provided for
in this Agreement relating to such transaction have been complied with, (iv) the
Rating Agency Condition shall have been satisfied with respect to such
transaction and (v) the Seller shall have delivered to the Owner Trustee, the
Trustee and the Note Insurer an Opinion of Counsel stating that, in the opinion
of such counsel, either (A) all financing statements and continuation statements
and amendments thereto have been executed and filed that are necessary fully to
preserve and protect the interest of the Owner Trustee and the Trustee,
respectively, in the Receivables and reciting the details of such filings or (B)
no such action shall be necessary to preserve and protect such interest.
Notwithstanding anything herein to the contrary, the execution of the foregoing
agreement of assumption and compliance with clauses (i), (ii), (iii), (iv)
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and (v) above shall be conditions to the consummation of the transactions
referred to in clauses (a), (b) or (c) above.
SECTION 8.5. Limitation on Liability of Seller and Others. The Seller
and any director or officer or employee or agent of the Seller may rely in good
faith on the advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
under any Basic Document. The Seller shall not be under any obligation to appear
in, prosecute or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
SECTION 8.6. Seller May Own Certificates or Notes. The Seller and any
Affiliate thereof may in its individual or any other capacity become the owner
or pledgee of Certificates or Notes with the same rights as it would have if it
were not the Seller or an Affiliate thereof, except as expressly provided herein
or in any Basic Document. Notes or Certificates so owned by the Seller or such
Affiliate shall have an equal and proportionate benefit under the provisions of
the Basic Documents, without preference, priority or distinction as among all of
the Notes or Certificates; provided, however, that any Notes owned by the Seller
or any Affiliate thereof, during the time such Notes are so owned by them, shall
be without voting rights for any purpose set forth in the Basic Documents and
the Notes shall not be entitled to the benefits of the Note Policy. The Seller
shall notify the Owner Trustee, the Trustee and the Note Insurer promptly after
it or any of its Affiliates become the owner of a Certificate or a Note.
ARTICLE IX
THE SERVICER
SECTION 9.1. Representations of Servicer. The Servicer makes the
following representations on which the Note Insurer shall be deemed to have
relied in executing and delivering the Note Policy and on which the Issuer is
deemed to have relied in acquiring the Receivables. The representations speak as
of the execution and delivery of this Agreement and as of the Closing Date, in
the case of the Initial Receivables, and as of the applicable Subsequent
Transfer Date, in the case of the Subsequent Receivables, and shall survive the
sale of the Receivables to the Issuer and the pledge thereof to the Trustee
pursuant to the Indenture.
(a) Organization and Good Standing. The Servicer has been duly
organized and is validly existing and in good standing under the laws
of its jurisdiction of organization,
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with power, authority and legal right to own its properties and to
conduct its business as such properties are currently owned and such
business is presently conducted, and had at all relevant times, and
shall have, power, authority and legal right to acquire, own and
service the Receivables;
(b) Due Qualification. The Servicer is duly qualified to do
business as a foreign corporation in good standing and has obtained all
necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business
(including the servicing of the Receivables as required by this
Agreement) requires or shall require such qualification;
(c) Power and Authority. The Servicer has the power and
authority to execute and deliver this Agreement and its Basic Documents
and to carry out its terms and their terms, respectively, and the
execution, delivery and performance of this Agreement and the
Servicer's Basic Documents have been duly authorized by the Servicer by
all necessary corporate action;
(d) Binding Obligation. This Agreement and the Basic Documents
to which 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
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governmental instrumentality having jurisdiction over the Servicer or
any of its properties;
(f) No Proceedings. There are no proceedings or investigations
pending or, to the Servicer's knowledge, threatened against the
Servicer, before any court, regulatory body, administrative agency or
other tribunal or governmental instrumentality having jurisdiction over
the Servicer or its properties (A) asserting the invalidity of this
Agreement or any of the Basic Documents, (B) seeking to prevent the
issuance of the Securities or the consummation of any of the
transactions contemplated by this Agreement or any of the Basic
Documents, or (C) seeking any determination or ruling that might
materially and adversely affect the performance by the Servicer of its
obligations under, or the validity or enforceability of, this
Agreement, the Securities or any of the Basic Documents or (D) relating
to the Servicer and which might adversely affect the federal or state
income, excise, franchise or similar tax attributes of the Securities;
(g) No Consents. No consent, approval, authorization or order
of or declaration or filing with any governmental authority is required
for the issuance or sale of the Securities or the consummation of the
other transactions contemplated by this Agreement, except such as have
been duly made or obtained.
(h) Taxes. The Servicer has filed on a timely basis all tax
returns required to be filed by it and paid all taxes, to the extent
that such taxes have become due.
(i) Chief Executive Office. The Servicer hereby represents and
warrants to the Trustee that the Servicer's principal place of business
and chief executive office is, and for the four months preceding the
date of this Agreement has been, located at: ▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
SECTION 9.2. Liability of Servicer; Indemnities.
(a) The Servicer (in its capacity as such) shall be liable hereunder
only to the extent of the obligations in this Agreement specifically undertaken
by the Servicer and the representations made by the Servicer.
(i) The Servicer shall defend, indemnify and hold harmless the
Trust, the Trustee, the Owner Trustee, the Standby Servicer, the Note Insurer,
and the Securityholders from and against any and all costs, expenses, losses,
damages, claims and liabilities, arising out of or resulting from the use,
ownership
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or operation by the Servicer or any Affiliate thereof of any Financed Vehicle;
(ii) The Servicer shall indemnify, defend and hold harmless
the Trust, the Trustee, the Owner Trustee, the Standby Servicer, the Note
Insurer, and the Securityholders from and against any taxes that may at any time
be asserted against any of such parties with respect to the transactions
contemplated in this Agreement, including, without limitation, any sales, gross
receipts, general corporation, tangible personal property, privilege or license
taxes (but not including any federal or other income taxes, including franchise
taxes asserted with respect to, and as of the date of, the sale of the
Receivables and the Other Conveyed Property to the Trust or the issuance and
original sale of the Securities) and costs and expenses in defending against the
same;
(iii) The Servicer shall indemnify, defend and hold harmless
the Trust, the Trustee, the Owner Trustee, the Standby Servicer, the Note
Insurer, their respective officers, directors, agents and employees and the
Securityholders from and against any and all costs, expenses, losses, claims,
damages, and liabilities to the extent that such cost, expense, loss, claim,
damage, or liability arose out of, or was imposed upon the Trust, the Trustee,
the Standby Servicer, the Note Insurer or the Securityholders through the
negligence, willful misfeasance or bad faith of the Servicer in the performance
of its duties under this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement.
(iv) The Servicer shall indemnify, defend, and hold harmless
the Trustee, the Owner Trustee, the Standby Servicer and the Collateral Agent
from and against all costs, expenses, losses, claims, damages, and liabilities
arising out of or incurred in connection with the acceptance or performance of
the trusts and duties herein contained, if any, except to the extent that such
cost, expense, loss, claim, damage or liability: (A) shall be due to the willful
misfeasance, bad faith, or negligence (except for errors in judgment) of the
Trustee, the Owner Trustee, the Standby Servicer or Collateral Agent, as
applicable or (B) relates to any tax other than the taxes with respect to which
the Servicer shall be required to indemnify the Trustee, the Standby Servicer or
the Collateral Agent.
(b) Notwithstanding the foregoing, the Servicer shall not be obligated
to defend, indemnify, and hold harmless any Securityholders for any losses,
claims, damages or liabilities incurred by any Securityholders arising out of
claims, complaints, actions and allegations relating to Section 406 of ERISA or
Section 4975 of the Code as a result of the purchase or holding of a Security by
such Securityholder with the assets of a
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plan subject to such provisions of ERISA or the Code or the servicing,
management and operation of the Trust.
(c) For purposes of this Section 9.2, in the event of the termination
of the rights and obligations of the Servicer (or any successor thereto pursuant
to Section 9.3) as Servicer pursuant to Section 10.1, or a resignation by such
Servicer pursuant to this Agreement, such Servicer shall be deemed to be the
Servicer pending appointment of a successor Servicer pursuant to Section 10.2.
The provisions of this Section 9.2(c) shall in no way affect the survival
pursuant to Section 9.2(d) of the indemnification by the Servicer provided by
Section 9.2(a).
(d) Indemnification under this Section 9.2 shall survive the
termination of this Agreement and any resignation or removal of CPS as Servicer
and shall include reasonable fees and expenses of counsel and expenses of
litigation. If the Servicer shall have made any indemnity payments pursuant to
this Section and the recipient thereafter collects any of such amounts from
others, the recipient shall promptly repay such amounts to the Servicer, without
interest.
SECTION 9.3. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer or Standby Servicer.
(a) CPS shall not merge or consolidate with any other person, convey,
transfer or lease substantially all its assets as an entirety to another Person,
or permit any other Person to become the successor to CPS's business unless,
after the merger, consolidation, conveyance, transfer, lease or succession, the
successor or surviving entity shall be capable of fulfilling the duties of CPS
contained in this Agreement and shall be acceptable to the Controlling Party,
and, if an Insurer Default shall have occurred and be continuing, shall be an
Eligible Servicer. Any corporation (i) into which CPS may be merged or
consolidated, (ii) resulting from any merger or consolidation to which CPS shall
be a party, (iii) which acquires by conveyance, transfer, or lease substantially
all of the assets of CPS, or (iv) succeeding to the business of CPS, in any of
the foregoing cases shall execute an agreement of assumption to perform every
obligation of CPS under this Agreement and, whether or not such assumption
agreement is executed, shall be the successor to CPS under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties to this Agreement, anything in this Agreement to the contrary
notwithstanding; provided, however, that nothing contained herein shall be
deemed to release CPS from any obligation. CPS shall provide notice of any
merger, consolidation or succession pursuant to this Section to the Owner
Trustee, the Trustee, the Securityholders, the Note Insurer and each Rating
Agency. Notwithstanding the foregoing, CPS shall not merge or consolidate
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with any other Person or permit any other Person to become a successor to CPS's
business, unless (x) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Section 9.1 shall have been breached
(for purposes hereof, such representations and warranties shall speak as of the
date of the consummation of such transaction) and no event that, after notice or
lapse of time, or both, would become an Insurance Agreement Event of Default
shall have occurred and be continuing, (y) CPS shall have delivered to the Owner
Trustee, the Trustee, the Rating Agencies and the Note Insurer an Officer's
Certificate and an Opinion of Counsel each stating that such consolidation,
merger or succession and such agreement of assumption comply with this Section
and that all conditions precedent, if any, provided for in this Agreement
relating to such transaction have been complied with, and (z) CPS shall have
delivered to the Owner Trustee, the Trustee, the Rating Agencies and the Note
Insurer an Opinion of Counsel, stating in the opinion of such counsel, either
(A) all financing statements and continuation statements and amendments thereto
have been executed and filed that are necessary to preserve and protect the
interest of the Trust in the Receivables and the Other Conveyed Property and
reciting the details of the filings or (B) no such action shall be necessary to
preserve and protect such interest.
(b) Any corporation (i) into which the Standby Servicer may be merged
or consolidated, (ii) resulting from any merger or consolidation to which the
Standby Servicer shall be a party, (iii) which acquires by conveyance, transfer
or lease substantially all of the assets of the Standby Servicer, or (iv)
succeeding to the business of the Standby Servicer, in any of the foregoing
cases shall execute an agreement of assumption to perform every obligation of
the Standby Servicer under this Agreement and, whether or not such assumption
agreement is executed, shall be the successor to the Standby Servicer under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties to this Agreement, anything in this Agreement to the
contrary notwithstanding; provided, however, that nothing contained herein shall
be deemed to release the Standby Servicer from any obligation.
SECTION 9.4. Limitation on Liability of Servicer, Standby Servicer and
Others.
Neither the Servicer, the Standby Servicer nor any of the directors or
officers or employees or agents of the Servicer or Standby Servicer shall be
under any liability to the Trust or the Securityholders, except as provided in
this Agreement, for any action taken or for refraining from the taking of any
action pursuant to this Agreement; provided, however, that this provision shall
not protect the Servicer, the Standby Servicer or
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any such person against any liability that would otherwise be imposed by reason
of a breach of this Agreement or willful misfeasance, bad faith or negligence in
the performance of duties. CPS, the Standby Servicer and any director, officer,
employee or agent of CPS or the Standby Servicer may rely in good faith on the
written advice of counsel or on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising under this
Agreement.
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 Party as determined pursuant to Section 13.15 and (unless an
Insurance Agreement Event of Default shall have occurred and be continuing or
Norwest Bank Minnesota, National Association shall then be the Servicer) the
Holders of Class B Notes evidencing more than 50% of the outstanding principal
balance of the Class B Notes; provided, however, that no such delegation or
sub-contracting of duties by the Servicer shall relieve the Servicer of its
responsibility with respect to such duties; and provided further, that the
consent of the Holders of the requisite percentage of the outstanding principal
balance of the Class B Notes shall not be unreasonably withheld or delayed and
shall be deemed to have been given unless, on or before the Objection Date (as
defined below), the Trustee shall have received Objection Notices (as defined
below) from Holders of Class B Notes representing more than 50% of the
outstanding principal balance of the Class B Notes. Upon written request of the
Servicer, the Trustee shall deliver to each Class B Noteholder of record as of
the most recent Record Date a notice (a "Delegation Notice") prepared by the
Servicer (i) specifying the duties the Servicer proposes to delegate, (ii)
identifying the sub-contractor to whom it proposes to delegate such duties and
(iii) informing such Class B Noteholder that if it wishes to object to the
proposed delegation of duties, it must deliver a written notice of objection
(specifying in reasonable detail the reasons for its objection; such notice of
objection an "Objection Notice") on or before the date specified in such
Delegation Notice (the "Objection Date"), which Objection Date shall be a date
which is not more than 10 Business Days after the date the Servicer delivers
such Delegation Notice to the Trustee.
SECTION 9.6. Servicer and Standby Servicer Not to Resign. Subject to
the provisions of Section 9.3, neither the Servicer nor the Standby Servicer
shall resign from the obligations and duties imposed on it by this Agreement as
Servicer or Standby Servicer except upon a determination that by reason of a
change in legal requirements the performance of its duties under this Agreement
would cause it to be in violation of such legal requirements in a manner which
would have a material adverse effect on the Servicer or the Standby Servicer, as
the case may
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be, and the Note Insurer (so long as an Insurer Default shall not have occurred
and be continuing) or a Security Majority (if an Insurer Default shall have
occurred and be continuing) does not elect to waive the obligations of the
Servicer or the Standby Servicer, as the case may be, to perform the duties
which render it legally unable to act or to delegate those duties to another
Person. Any such determination permitting the resignation of the Servicer or
Standby Servicer shall be evidenced by an Opinion of Counsel to such effect
delivered and acceptable to the Trustee, the Owner Trustee and the Note Insurer
(unless an Insurer Default shall have occurred and be continuing). No
resignation of the Servicer shall become effective until, so long as no Insurer
Default shall have occurred and be continuing, the Standby Servicer or an entity
acceptable to the Note Insurer shall have assumed the responsibilities and
obligations of the Servicer or, if an Insurer Default shall have occurred and be
continuing, the Standby Servicer or a successor Servicer that is an Eligible
Servicer shall have assumed the responsibilities and obligations of the Standby
Servicer. No resignation of the Standby Servicer shall become effective until,
so long as no Insurer Default shall have occurred and be continuing, an entity
acceptable to the Security Insurer shall have assumed the responsibilities and
obligations of the Standby Servicer or, if an Insurer Default shall have
occurred and be continuing a Person that is an Eligible Servicer shall have
assumed the responsibilities and obligations of the Standby Servicer; provided,
however, that in the event a successor Standby Servicer is not appointed within
60 days after the Standby Servicer has given notice of its resignation and has
provided the Opinion of Counsel required by this Section 9.6, the Standby
Servicer may petition a court for its removal.
ARTICLE X
DEFAULT
SECTION 10.1. Servicer Termination Event. For purposes of this
Agreement, each of the following shall constitute a "Servicer Termination
Event":
(a) Any failure by the Servicer to deliver to the Trustee for
distribution to Securityholders any proceeds or payment required to be so
delivered under the terms of this Agreement that continues unremedied for a
period of two Business Days (one Business Day with respect to payment of
Purchase Amounts) after written notice is received by the Servicer from the
Trustee or the Note Insurer (unless an Insurer Default shall have occurred and
be continuing) or after discovery of such failure by a Responsible officer of
the Servicer;
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(b) Failure by the Servicer to deliver to the Trustee and the Note
Insurer (so long as an Insurer Default shall not have occurred and be
continuing), the Servicer's Certificate within five days after the date on which
such Servicer's Certificate is required to be delivered, or failure on the part
of the Servicer to observe its covenants and agreements set forth in Section
9.3(a);
(c) Failure on the part of the Servicer duly to observe or perform any
other covenants or agreements of the Servicer set forth in this Agreement, which
failure (i) materially and adversely affects the rights of Securityholders
(determined without regard to the availability of funds under the Policy), or of
the Note Insurer (unless an Insurer Default shall have occurred and be
continuing), and (ii) continues unremedied for a period of 30 days after the
date on which written notice of such failure, requiring the same to be remedied,
shall have been given (1) to the Servicer by the Trustee or the Note Insurer or
(2) to the Servicer and to the Trustee and the Note Insurer by the Holders of
Class A Notes evidencing not less than 25% of the outstanding principal balance
of the Class A Notes or, after the Class A Notes have been paid in full and all
outstanding Reimbursement Obligations and other amounts due to the Note Insurer
have been paid in full, by the Holders of Class B Notes evidencing not less than
25% of the outstanding principal balance of the Class B Notes;
(d) The entry of a decree or order by a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
conservator, receiver, or liquidator for the Servicer or the Seller (or, so long
as CPS is Servicer, any of the Servicer's Affiliates) in any bankruptcy,
insolvency, readjustment of debt, marshaling of assets and liabilities, or
similar proceedings, or for the winding up or liquidation of its affairs, and
the continuance of any such decree or order unstayed and in effect for a period
of 60 consecutive days; or
(e) The consent by the Servicer or the Seller (or, so long as CPS is
Servicer, any of the Servicer's Affiliates) to the appointment of a conservator,
trustee, receiver or liquidator in any bankruptcy, insolvency, readjustment of
debt, marshalling of assets and liabilities, or similar proceedings of or
relating to the Servicer or the Seller (or, so long as CPS is Servicer, any of
the Servicer's Affiliates) of or relating to substantially all of its property;
or the Servicer or the Seller (or, so long as CPS is Servicer, any of the
Servicer's Affiliates) or the Seller shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or
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(f) Any representation, warranty or statement of the Servicer made in
this Agreement or any certificate, report or other writing delivered pursuant
hereto shall prove to be incorrect in any material respect as of the time when
the same shall have been made, and the incorrectness of such representation,
warranty or statement has a material adverse effect on the Trust or the
Securityholders and, within 30 days after written notice thereof shall have been
given (1) to the Servicer by the Trustee or the Note Insurer or (2) to the
Servicer and to the Trustee and the Note Insurer by the Holders of Class A Notes
evidencing not less than 25% of the outstanding principal balance of the Class A
Notes or, after the Class A Notes have been paid in full and all outstanding
Reimbursement Obligations and other amounts due to the Note Insurer have been
paid in full, by the Holders of Class B Notes evidencing not less than 25% of
the outstanding principal balance of the Class B Notes, the circumstances or
condition in respect of which such representation, warranty or statement was
incorrect shall not have been eliminated or otherwise cured; or
(g) So long as an Insurer Default shall not have occurred and be
continuing, the Note Insurer shall not have delivered a Servicer Extension
Notice pursuant to Section 4.14; or
(h) So long as an Insurer Default shall not have occurred and be
continuing, an Insurance Agreement Event of Default or under any other Insurance
and Indemnity Agreement relating to any Series an Event of Default thereunder
shall have occurred; or
(i) A claim is made under the Note Policy.
SECTION 10.2. Consequences of a Servicer Termination Event. If a
Servicer Termination Event shall occur and be continuing, the Note Insurer (or,
if an Insurer Default shall have occurred and be continuing either the Trustee
or holders of Notes evidencing not less than 25% of the outstanding principal
amount of the Notes, or, if the Notes have been paid in full, holders of
Certificates evidencing not less than 25% of the outstanding principal amount of
the Certificates (to the extent it has knowledge thereof), by notice given in
writing to the Servicer (and to the Trustee if given by the Note Insurer or the
Securityholders) or by non-extension of the term of the Servicer as referred to
in Section 4.14 may terminate all of the rights and obligations of the Servicer
under this Agreement. The Servicer shall be entitled to its pro rata share of
the Servicing Fee for the number of days in the Collection Period prior to the
effective date of its termination. On or after the receipt by the Servicer of
such written notice or upon termination of the term of the Servicer, all
authority, power, obligations and responsibilities of the Servicer under this
Agreement, whether with respect to the Notes, the Certificates or the Other
Conveyed
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Property or otherwise, automatically shall pass to, be vested in and become
obligations and responsibilities of the Standby Servicer (or such other
successor Servicer appointed by the Controlling Party under Section 10.3);
provided, however, that the successor Servicer shall have no liability with
respect to any obligation which was required to be performed by the terminated
Servicer prior to the date that the successor Servicer becomes the Servicer or
any claim of a third party based on any alleged action or inaction of the
terminated Servicer. The successor Servicer is authorized and empowered by this
Agreement to execute and deliver, on behalf of the terminated Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement of the Receivables and the other Conveyed Property and related
documents to show the Trust as lienholder or secured party on the related Lien
Certificates, or otherwise. The terminated Servicer agrees to cooperate with the
successor Servicer in effecting the termination of the responsibilities and
rights of the terminated Servicer under this Agreement, including, without
limitation, the transfer to the successor Servicer for administration by it of
all cash amounts that shall at the time be held by the terminated Servicer for
deposit, or have been deposited by the terminated Servicer, in the Collection
Account or thereafter received with respect to the Receivables and the delivery
to the successor Servicer of all Receivable Files and a computer tape in
readable form as of the most recent Business Day containing all information
necessary to enable the successor Servicer or a successor Servicer to service
the Receivables and the Other Conveyed Property. All reasonable costs and
expenses (including attorneys' fees) incurred in connection with transferring
the Receivable Files to the successor Servicer and amending this Agreement to
reflect such succession as Servicer pursuant to this Section 10.1 shall be paid
by the predecessor Servicer upon presentation of reasonable documentation of
such costs and expenses. In addition, any successor Servicer shall be entitled
to payment from the immediate predecessor Servicer for reasonable transition
expenses incurred in connection with acting as successor Servicer, and to the
extent not so paid, such payment shall be made pursuant to Section 5.7(b)
hereof. Upon receipt of notice of the occurrence of Servicer Termination Event,
the Trustee shall give notice thereof to the Rating Agencies. If requested by
the Controlling Party, the successor Servicer shall terminate the Lockbox
Agreement and direct the Obligors to make all payments under the Receivables
directly to the successor Servicer (in which event the successor Servicer shall
process such payments in accordance with Section 4.2(e)), or to a lockbox
established by the successor Servicer at the direction of the Controlling Party,
at the successor Servicer's expense. The terminated Servicer shall grant the
Trustee, the successor
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Servicer and the Controlling Party reasonable access to the terminated
Servicer's premises at the terminated Servicer's expense.
SECTION 10.3. Appointment of Successor.
(a) On and after the time the Servicer receives a notice of termination
pursuant to Section 10.2, upon non-extension of the servicing term as referred
to in Section 4.14, or upon the resignation of the Servicer pursuant to Section
9.6, the predecessor Servicer shall continue to perform its functions as
Servicer under this Agreement, in the case of termination, only until the date
specified in such termination notice or, if no such date is specified in a
notice of termination, until receipt of such notice and, in the case of
expiration and non-renewal of the term of the Servicer upon the expiration of
such term, and, in the case of resignation, until the later of (x) the date 45
days from the delivery to the Trustee of written notice of such resignation (or
written confirmation of such notice) in accordance with the terms of this
Agreement and (y) the date upon which the predecessor Servicer shall become
unable to act as Servicer, as specified in the notice of resignation and
accompanying Opinion of Counsel. In the event of termination of the Servicer,
Norwest Bank Minnesota, National Association, as Standby Servicer, shall assume
the obligations of Servicer hereunder on the date specified in such written
notice (the "Assumption Date") pursuant to the Servicing Assumption Agreement
or, in the event that the Note Insurer shall have determined that a Person other
than the Standby Servicer shall be the successor Servicer in accordance with
Section 10.2, on the date of the execution of a written assumption agreement by
such Person to serve as successor Servicer. Notwithstanding the Standby
Servicer's assumption of, and its agreement to perform and observe, all duties,
responsibilities and obligations of CPS as Servicer under this Agreement arising
on and after the Assumption Date, the Standby Servicer shall not be deemed to
have assumed or to become liable for, or otherwise have any liability for, any
duties, responsibilities, obligations or liabilities of CPS or any predecessor
Servicer arising on or before the Assumption Date, whether provided for by the
terms of this Agreement, arising by operation of law or otherwise, including,
without limitation, any liability for, any duties, responsibilities, obligations
or liabilities of CPS or any predecessor Servicer arising on or before the
Assumption Date under Section 4.7 or 9.2 of this Agreement, regardless of when
the liability, duty, responsibility or obligation of CPS or any predecessor
Servicer therefore arose, whether provided by the terms of this Agreement,
arising by operation of law or otherwise. Notwithstanding the above, if the
Standby Servicer shall be legally unable or unwilling to act as Servicer, and an
Insurer Default shall have occurred and be continuing, the Standby Servicer, the
Trustee or
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a Security Majority may petition a court of competent jurisdiction to appoint
any Eligible Servicer as the successor to the Servicer. Pending appointment
pursuant to the preceding sentence, the Standby Servicer shall act as successor
Servicer unless it is legally unable to do so, in which event the outgoing
Servicer shall continue to act as Servicer until a successor has been appointed
and accepted such appointment. Subject to Section 9.6, no provision of this
Agreement shall be construed as relieving the Standby Servicer of its obligation
to succeed as successor Servicer upon the termination of the Servicer pursuant
to Section 10.2, the resignation of the Servicer pursuant to Section 9.6 or the
non-extension of the servicing term of the Servicer, as referred to in Section
4.14. If upon the termination of the Servicer pursuant to Section 10.2 or the
resignation of the Servicer pursuant to Section 9.6, the Controlling Party
appoints a successor Servicer other than the Standby Servicer, the Standby
Servicer shall not be relieved of its duties as Standby Servicer hereunder.
(b) Any successor Servicer shall be entitled to such compensation
(whether payable out of the Collection Account or otherwise) as the Servicer
would have been entitled to under this Agreement if the Servicer had not
resigned or been terminated hereunder.
SECTION 10.4. Notification to Noteholders and Certificateholders. Upon
any termination of, or appointment of a successor to, the Servicer, the Trustee
shall give prompt written notice thereof to each Securityholder, the Owner
Trustee and to the Rating Agencies.
SECTION 10.5. Waiver of Past Defaults. Subject to the approval of the
Note Insurer, the Holders of Class A Notes evidencing more than 50% of the
outstanding principal balance of the Class A Notes or, after the Class A Notes
have been paid in full, the Holders of Class B Notes evidencing more than 50% of
the outstanding principal balance of the Class B Notes or, after the Class B
Notes have been paid in full, the Holders of Certificates evidencing more than
50% of the outstanding principal balance of the Certificates, may on behalf of
all the Noteholders and Certificateholders, waive any default be the Servicer in
the performance of its obligations under this Agreement and the consequences
thereof (except a default in making any required deposits to or payments from
any of the Trust Accounts in accordance with the terms of this Agreement. Upon
any such waiver of a past default, such default shall cease to exist, and any
Servicer Termination Event arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereto.
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SECTION 10.6. Action Upon Certain Failures of the Servicer. In the
event that the Trustee shall have knowledge of any failure of the Servicer
specified in Section 10.1 which would give rise to a right of termination under
such Section upon the Servicer's failure to remedy the same after notice, the
Trustee shall give notice thereof to the Servicer and the Note Insurer. For all
purposes of this Agreement (including, without limitation, Section 6.2(b) and
this Section 10.6), the Trustee shall not be deemed to have knowledge of any
failure of the Servicer as specified in Section 10.1 unless notified thereof in
writing by the Servicer, the Note Insurer or by a 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.
ARTICLE XI
TERMINATION
SECTION 11.1. Optional Purchase of All Receivables.
(a) (i) On the last day of any Collection Period as of which the Pool
Balance shall be less than or equal to 15% of the Original Pool Balance, the
Servicer and the Seller each shall have the option to sell in a public auction
the Owner Trust Estate, other than the Trust Accounts (with the consent of the
Note Insurer, given or withheld in the Note Insurer's sole discretion, if such
sale would result in a claim on the Note Policy or would result in any amount
owing to the Note Insurer under the Insurance Agreement remaining unpaid);
provided, however, that the amount to be paid for such purchase (as set forth in
the following sentence) shall be sufficient to pay the full amount of principal,
premium, if any, and interest then due and payable on the Notes. The Servicer or
the Seller, as the case may be, shall direct the purchaser in any such auction
to deposit pursuant to Section 5.6 in the Collection Account an amount at least
equal to the aggregate Purchase Amount for the Receivables (including Liquidated
Receivables), plus the appraised value of any other property held by the Trust,
such value to be determined by an appraiser mutually agreed upon by the
Servicer, the Note Insurer and the Trustee, and such purchaser shall succeed to
all interests in and to the Trust.
(ii) On the last day of any Collection Period as of which the
Pool Balance shall be less than or equal to 10% of the Original Pool Balance,
the Servicer and the Seller each shall have the option to purchase the Owner
Trust Estate, other than the Trust Accounts (with the consent of the Note
Insurer if such purchase would result in a claim on the Note Policy or would
result in any amount owing to the Note Insurer under the
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Insurance Agreement remaining unpaid); provided, however, that the amount to be
paid for such purchase (as set forth in the following sentence) shall be
sufficient to pay the full amount of principal, premium, if any, and interest
then due and payable on the Securities. To exercise such option, the Servicer or
the Seller, as the case may be, shall deposit pursuant to Section 5.6 in the
Collection Account an amount equal to the aggregate Purchase Amount for the
Receivables (including Liquidated Receivables), plus the appraised value of any
other property held by the Trust, such value to be determined by an appraiser
mutually agreed upon by the Servicer, the Note Insurer and the Trustee, and
shall succeed to all interests in and to the Trust.
(b) Upon any sale of the assets of the Trust pursuant to Section 9.2 of
the Trust Agreement, the Servicer shall instruct the Trustee to deposit the
proceeds from such sale after all payments and reserves therefrom (including the
expenses of such sale) have been made (the "Insolvency Proceeds") in the
Collection Account.
(c) Notice of any termination of the Trust shall be given by the
Servicer, which notice shall include, among other things, the items specified in
Section 9.1(c) of the Trust Agreement, to the Owner Trustee, the Trustee, the
Note Insurer and the Rating Agencies as soon as practicable after the Servicer
has received notice thereof.
(d) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder and
the Owner Trustee will succeed to the rights of, and assume the obligations of,
the Trustee to this Agreement.
ARTICLE XII
ADMINISTRATIVE DUTIES OF THE SERVICER
SECTION 12.1. Administrative Duties.
(a) Duties with Respect to the Indenture. The Servicer shall perform
all its duties and the duties of the Issuer under the Indenture. In addition,
the Servicer shall consult with the Owner Trustee as the Servicer deems
appropriate regarding the duties of the Issuer under the Indenture. The Servicer
shall monitor the performance of the Issuer and shall advise the Owner Trustee
when action is necessary to comply with the Issuer's duties under the Indenture.
The Servicer shall prepare for execution by the Issuer or shall cause the
preparation by other appropriate Persons of all such documents, reports,
filings,
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instruments, certificates and opinions as it shall be the duty of the Issuer to
prepare, file or deliver pursuant to the Indenture. In furtherance of the
foregoing, the Servicer shall take all necessary action that is the duty of the
Issuer to take pursuant to the Indenture, including, without limitation,
pursuant to Sections 2.7, 3.5, 3.6, 3.7, 3.9, 3.10, 3.17, 5.1, 5.4, 7.3, 8.3,
9.2, 9.3, 11.1 and 11.15 of the Indenture.
(b) Duties with Respect to the Issuer.
(i) In addition to the duties of the Servicer set forth in
this Agreement or any of the Basic Documents, the Servicer shall perform such
calculations and shall prepare for execution by the Issuer or the Owner Trustee
or shall cause the preparation by other appropriate Persons of all such
documents, reports, filings, instruments, certificates and opinions as it shall
be the duty of the Issuer or the Owner Trustee to prepare, file or deliver
pursuant to this Agreement or any of the Basic Documents or under state and
federal tax and securities laws, and at the request of the Owner Trustee shall
take all appropriate action that it is the duty of the Issuer to take pursuant
to this Agreement or any of the Basic Documents, including, without limitation,
pursuant to Sections 2.6 and 2.11 of the Trust Agreement. In accordance with the
directions of the Issuer or the Owner Trustee, the Servicer shall administer,
perform or supervise the performance of such other activities in connection with
the Collateral (including the Basic Documents) as are not covered by any of the
foregoing provisions and as are expressly requested by the Issuer or the Owner
Trustee and are reasonably within the capability of the Servicer.
(ii) Notwithstanding anything in this Agreement or any of the
Basic Documents to the contrary, the servicer shall be responsible for promptly
notifying the Owner Trustee and the Trustee in the event that any withholding
tax is imposed on the Issuer's payments (or allocations of income) to an owner
(as defined in the Trust Agreement) as contemplated this Agreement. Any such
notice shall be in writing and specify the amount of any withholding tax
required to be withheld by the Owner Trustee or the Trustee pursuant to such
provision.
(iii) Notwithstanding anything in this Agreement or the Basic
Documents to the contrary, the Servicer shall be responsible for performance of
the duties of the Issuer or the Seller set forth in Section 5.1 of the Trust
Agreement with respect to, among other things, accounting and reports to owners
(as defined in the Trust Agreement); provided, however, that once prepared by
the Servicer the Owner Trustee shall retain responsibility for the distribution
of the Schedule K-1s necessary to enable each Certificateholder to prepare its
federal and state income tax returns.
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(iv) The Servicer shall perform the duties of the Servicer
specified in Section 10.2 of the Trust Agreement required to be performed in
connection with the resignation or removal of the Owner Trustee, and any other
duties expressly required to be performed by the Servicer under this Agreement
or any of the Basic Documents.
(v) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Servicer may enter into transactions with
or otherwise deal with any of its Affiliates; provided, however, that the terms
of any such transactions or dealings shall be in accordance with any directions
received from the Issuer and shall be, in the Servicer's opinion, no less
favorable to the Issuer in any material respect.
(c) Tax Matters. The Servicer shall prepare and file, on behalf of the
Seller, all tax returns, tax elections, financial statements and such annual or
other reports of the Issuer as are necessary for preparation of tax reports as
provided in Article V of the Trust Agreement, including without limitation forms
1099 and 1066. All tax returns will be signed by the Seller.
(d) Non-Ministerial Matters. With respect to matters that in the
reasonable judgment of the Servicer are non-ministerial, the Servicer shall not
take any action pursuant to this Article XII unless within a reasonable time
before the taking of such action, the Servicer shall have notified the Owner
Trustee and the Trustee of the proposed action and the Owner Trustee and, with
respect to items (i), (ii), (iii) and (iv) below, the Trustee shall not have
withheld consent or provided an alternative direction. For the purpose of the
preceding sentence, "non-ministerial matters" shall include:
(i) the amendment of or any supplement to the Indenture;
(ii) the initiation of any claim or lawsuit by the Issuer and
the compromise of any action, claim or lawsuit brought by or against
the Issuer (other than in connection with the collection of the
Receivables);
(iii) the amendment, change or modification of this Agreement
or any of the Basic Documents;
(iv) the appointment of successor Note Registrars, successor
Paying Agents and successor Trustees pursuant to the Indenture or the
appointment of Successor Servicers or the consent to the assignment by
the Note Registrar, Paying Agent or Trustee of its obligations under
the Indenture; and
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(v) the removal of the Trustee.
(e) Exceptions. Notwithstanding anything to the contrary in this
Agreement except as expressly provided herein or in the other Basic Documents,
the Servicer, in its capacity hereunder, shall not be obligated to, and shall
not, (1) make any payments to the Noteholders or Certificateholders under the
Basic Documents, (2) sell the Indenture Trust Property pursuant to Section 5.5
of the Indenture, (3) take any other action that the Issuer directs the Servicer
not to take on its behalf or (4) in connection with its duties hereunder assume
any indemnification obligation of any other Person.
(f) Limitation of Standby Servicer's Obligations. The Standby Servicer
or any successor Servicer shall not be responsible for any obligations or duties
of the servicer under Section 12.1.
SECTION 12.2. Records. The Servicer shall maintain appropriate books of
account and records relating to services performed under this Agreement, which
books of account and records shall be accessible for inspection by the Issuer at
any time during normal business hours.
SECTION 12.3. Additional Information to be Furnished to the Issuer. The
Servicer shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.1. Amendment.
(a) This Agreement may be amended from time to time by the parties
hereto, with the consent of the Trustee (which consent may not be unreasonably
withheld), with the prior written consent of the Note Insurer (so long as no
Insurer Default has occurred and is continuing) but without the consent of any
of the Noteholders or the Certificateholders, to cure any ambiguity, to correct
or supplement any provisions in this Agreement, to comply with any changes in
the Code, or to make any other provisions with respect to matters or questions
arising under this Agreement which shall not be inconsistent with the provisions
of this Agreement or the Insurance Agreement; provided, however, that such
action shall not, as evidenced by an Opinion of Counsel delivered to the Owner
Trustee and the Trustee, adversely affect in any material respect the interests
of any Noteholder or Certificateholder; provided further that if an Insurer
Default
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has occurred and is continuing, such action shall not materially adversely
affect the interests of the Note Insurer.
This Agreement may also be amended from time to time by the parties
hereto, with the consent of the Note Insurer, the consent of the Trustee, the
consent of the Holders of Class A Notes evidencing not less than a majority of
the outstanding principal amount of the Class A Notes, the consent of the
Holders of Class B Notes evidencing not less than a majority of the outstanding
principal amount of the Class B Notes and the consent of the Holders (as defined
in the Trust Agreement) of Certificates evidencing not less than a majority of
the Certificate Balance for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders or the Certificateholders;
provided, however, that no such amendment shall (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Receivables or distributions that shall be required to be made for
the benefit of the Noteholders or the Certificateholders or (b) reduce the
aforesaid percentage of the outstanding principal amount of each Class of Notes
or the Certificates, the Holders of which are required to consent to any such
amendment, without the consent of the Holders of all the outstanding Notes and
the Holders (as defined in the Trust Agreement) of all the outstanding
Certificates, of each Class affected thereby; provided further, that if an
Insurer Default has occurred and is continuing, such action shall not materially
adversely affect the interest of the Note Insurer.
Promptly after the execution of any such amendment or consent, the
Trustee shall furnish written notification of the substance of such amendment or
consent to each Securityholder and the Rating Agencies.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents (and any
other consents of Noteholders or Certificateholders provided for in this
Agreement) and of evidencing the authorization of any action by Noteholders or
Certificateholders shall be subject to such reasonable requirements as the
Trustee or the Owner Trustee, as applicable, may prescribe.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee and the Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or permitted
by this Agreement and the Opinion of Counsel referred to in Section 13.2(i)(1)
has been
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delivered. The Owner Trustee, the Standby Servicer and the Trustee may, but
shall not be obligated to, enter into any such amendment which affects the
Issuer's, the Owner Trustee's, the Standby Servicer's or the Trustee's, as
applicable, own rights, duties or immunities under this Agreement or otherwise.
(b) Notwithstanding anything to the contrary contained in Section
13.1(a) above, the provisions of the Agreement relating to (i) the Spread
Account Supplement, the Spread Account, the Specified Spread Account Requisite
Amount, a Trigger Event or any component definition of a Trigger Event and (ii)
any additional sources of funds which may be added to the Spread Account or uses
of funds on deposit in the Spread Account may be amended in any respect by the
Seller, the Servicer, the Note Insurer and the Collateral Agent (the consent of
which shall not be withheld or delayed with respect to any amendment that does
not adversely affect the Collateral Agent) without the consent of, or notice to,
the Noteholders or the Certificateholders.
SECTION 13.2. Protection of Title to Trust.
(a) The Seller or Servicer or both shall execute and file such
financing statements and cause to be executed and filed such continuation
statements, all in such manner and in such places as may be required by law
fully to preserve, maintain and protect the interest of the Issuer and the
interests of the Trustee in the Receivables and in the proceeds thereof. The
Seller shall deliver (or cause to be delivered) to the Note Insurer, the Owner
Trustee and the Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing.
(b) Neither the Seller nor the Servicer shall change its name, identity
or corporate structure in any manner that would, could or might make any
financing statement or continuation statement filed in accordance with paragraph
(a) above seriously misleading within the meaning of section 9-402(7) of the
UCC, unless it shall have given the Note Insurer, the Owner Trustee and the
Trustee at least five days' prior written notice thereof and shall have promptly
filed appropriate amendments to all previously filed financing statements or
continuation statements. Promptly upon such filing, the Seller or the Servicer,
as the case may be, shall deliver an Opinion of Counsel in form and substance
reasonably satisfactory to the Note Insurer, stating either (A) all financing
statements and continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Trust and the
Trustee in the Receivables, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given, or (B)
no such action shall be necessary to preserve and protect such interest.
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(c) Each of the Seller and the Servicer shall have an obligation to
give the Note Insurer, the Owner Trustee and the Trustee at least 60 days' prior
written notice of any relocation of its principal executive office if, a; a
result of such relocation, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall promptly file any such
amendment. The Servicer shall at all times maintain each office from which it
shall service Receivables, and its principal executive office, within the United
States of America.
(d) The servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection Account
in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables to the Issuer,
the Servicer's master computer records (including any backup archives) that
refer to a Receivable shall indicate clearly the interest of the Trust in such
Receivable and that such Receivable is owned by the Trust. Indication of the
Trust's interest in a Receivable shall be deleted from or modified on the
Servicer's computer systems when, and only when, the related Receivable shall
have been paid in full or repurchased.
(f) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender or other transferee, the
Servicer shall give to such prospective purchaser, lender or other transferee
computer tapes, records or printouts (including any restored from backup
archives) that, if they shall refer in any manner whatsoever to any Receivable,
shall indicate clearly that such Receivable has been sold and is owned by the
Trust.
(g) The Servicer shall permit the Trustee, the Standby Servicer and the
Note Insurer and its agents at any time during normal business hours to inspect,
audit, and make copies of and abstracts from the Servicer's records regarding
any Receivable.
(h) Upon request, the Servicer shall furnish to the Note Insurer, the
Owner Trustee or to the Trustee, within five Business Days, a list of all
Receivables (by contract number and name of Obligor) then held as part of the
Trust, together with a
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reconciliation of such list to the Schedule of Receivables and to each of the
Servicer's Certificates furnished before such request indicating removal of
Receivables from the Trust.
(i) The Servicer shall deliver to the Note Insurer, the Owner Trustee
and the Trustee:
(i) promptly after the execution and delivery of the Agreement
and, if required pursuant to Section 13.1, of each amendment, an
Opinion of Counsel stating that, in the opinion of such counsel, in
form and substance reasonably satisfactory to the Note Insurer, either
(A) all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the
interest of the Trust and the Trustee in the Receivables, and reciting
the details of such filings or referring to prior Opinions of Counsel
in which such details are given, or (B) no such action shall be
necessary to preserve and protect such interest; and
(ii) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Cutoff Date, an Opinion of Counsel, dated as of a date during
such 90-day period, stating that, in the opinion of such counsel,
either (A) all financing statements and continuation statements have
been executed and filed that are necessary fully to preserve and
protect the interest of the Trust and the Trustee in the Receivables,
and reciting the details of such filings or referring to prior Opinions
of Counsel in which such details are given, or (B) no such action shall
be necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (i) or (ii) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
SECTION 13.3. Notices. All demands, notices and communications upon or
to the Seller, the Servicer, the Owner Trustee, the Trustee or the Rating
Agencies under this Agreement shall be in writing, personally delivered, or
mailed by certified mail, return receipt requested, and shall be deemed to have
been duly given upon receipt (a) in the case of the Seller to CPS Receivables
Funding Corp., 2 Ada, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (b) in the case of the Servicer
to Consumer Portfolio Services, Inc., 2 Ada, Irvine, California, Attention:
Chief Financial officer, (c) in the case of the Issuer or the Owner Trustee, at
the Corporate Trust Office of the Owner Trustee, (d) in the case of the Trustee
or the Collateral Agent, at the Corporate Trust Office, (e) in the case of the
Note Insurer, to ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Attention: Senior
Vice President,
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Surveillance (Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇); (f) in the case of Moody's, to ▇▇▇▇▇'▇
Investors Service, Inc., ABS Monitoring Department, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇; and (g) in the case of Standard & Poor's, to Standard & Poor's
Ratings Group, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Asset Backed Surveillance Department. Any notice required or permitted to be
mailed to a Noteholder or Certificateholder shall be given by first class mail,
postage prepaid, at the address of such Holder as shown in the Certificate
Register or Note Register, as applicable. Any notice so mailed within the time
prescribed in the Agreement shall be conclusively presumed to have been duly
given, whether or not the Certificateholder or Noteholder shall receive such
notice.
SECTION 13.4. Assignment. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
permitted assigns. Notwithstanding anything to the contrary contained herein,
except as provided ln Sections 8.4 and 9.3 and as provided in the provisions of
this Agreement concerning the resignation of the Servicer, this Agreement may
not be assigned by the Seller or the Servicer without the prior written consent
of the Owner Trustee, the Trustee, the Standby Servicer, the Trustee and the
Note Insurer (or if an Insurer Default shall have occurred and be continuing the
Holders of Notes evidencing not less than 66% of the principal amount of the
outstanding Notes and the Holders of Certificates, the aggregate Certificate
Balance of which is not less than 66%.
SECTION 13.5. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the parties hereto and for the benefit
of the Owner Trustee and the Certificateholders (including the Seller), the
Trustee and the Noteholders, as third-party beneficiaries. The Insurer and its
successors and assigns shall be a third-party beneficiary to the provisions of
this Agreement, and shall be entitled to rely upon and directly enforce such
provisions of this Agreement so long as no Insurer Default shall have occurred
and be continuing. Except as expressly stated otherwise, any right of the Note
Insurer to direct, appoint, consent to, approve of, or take any action under
this Agreement, shall be a right exercised by the Note Insurer in its sole and
absolute discretion. The Insurer may disclaim any of its rights and powers under
this Agreement (but not its duties and obligations under the Note Policy) upon
delivery of a written notice to the Owner Trustee. Nothing in this Agreement,
whether express or implied, shall be construed to give to any other Person any
legal or equitable right, remedy or claim in the Owner Trust Estate or under or
in respect of this Agreement or any covenants, conditions or provisions
contained herein.
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SECTION 13.6. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 13.7. Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 13.8. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 13.9. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 13.10. Assignment to Trustee. The Seller hereby acknowledges
and consents to any mortgage, pledge, assignment and grant of a security
interest by the Issuer to the Trustee pursuant to the Indenture for the benefit
of the Noteholders of ail right, title and interest of the Issuer in, to and
under the Receivables and/or the assignment of any or all of the Issuer's rights
and obligations hereunder to the Trustee.
SECTION 13.11. Nonpetition Covenants.
(a) Notwithstanding any prior termination of this Agreement, the
Servicer and the Seller shall not, prior to the date which is one year and one
day after the termination of this Agreement with respect to the Issuer,
acquiesce, petition or otherwise invoke or cause the Issuer to invoke the
process of any court or government authority for the purpose of commencing or
sustaining a case against the Issuer under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Issuer or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Issuer.
(b) Notwithstanding any prior termination of this Agreement, the
Servicer shall not, prior to the date that is one year and one day after the
termination of this Agreement with
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respect to the Seller, acquiesce to, petition or otherwise invoke or cause the
Seller to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Seller under any federal
or state bankruptcy, insolvency or similar law, appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator, or other similar
official of the Seller or any substantial part of its property, or ordering the
winding up or liquidation of the affairs of the Seller.
SECTION 13.12. Limitation of Liability of Owner Trustee and Trustee.
(a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by Bankers Trust (Delaware) not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Bankers Trust (Delaware) in its individual capacity or,
except as expressly provided in the Trust Agreement, as Owner Trustee have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Issuer hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto, as to all of which recourse shall be had
solely to the assets of the Issuer. For all purposes of this Agreement, in the
performance of its duties or obligations hereunder or in the performance of any
duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been executed and delivered by Norwest Bank Minnesota, National
Association, not in its individual capacity but solely as Trustee and Standby
Servicer and in no event shall Norwest Bank Minnesota, National Association,
have any liability for the representations, warranties, covenants, agreements or
other obligations of the Issuer hereunder or in any of the certificates, notices
or agreements delivered pursuant hereto, as to all of which recourse shall be
had solely to the assets of the Issuer.
(c) In no event shall Norwest Bank Minnesota, National Association, in
any of its capacities hereunder, be deemed to have assumed any duties of the
Owner Trustee under the Delaware Business Trust Statute, common law, or the
Trust Agreement.
SECTION 13.13. Independence of the Servicer. For all purposes of this
Agreement, the Servicer shall be an independent contractor and shall not be
subject to the supervision of the Issuer, the Trustee and Standby Servicer or
the Owner Trustee with respect to the manner in which it accomplishes the
-102-
performance of its obligations hereunder. Unless expressly authorized by this
Agreement, the Servicer shall have no authority to act for or represent the
Issuer or the Owner Trustee in any way and shall not otherwise be deemed an
agent of the Issuer or the Owner Trustee.
SECTION 13.14. No Joint Venture. Nothing contained in this Agreement
(i) shall constitute the Servicer and either of the Issuer or the Owner Trustee
as members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
SECTION 13.15. Insurer as Controlling Party. Each Noteholder by
purchase of the Notes held by it acknowledges that the Trustee, as partial
consideration of the issuance of the Note Policy, has agreed that the Note
Insurer shall have certain rights hereunder for so long as no Insurer Default
shall have occurred and be continuing. So long as an Insurer Default has
occurred and is continuing, any provision giving the Note Insurer the right to
direct, appoint or consent to, approve of, or take any action under this
Agreement shall be inoperative during the period of such Insurer Default and
such right shall instead vest in the Trustee acting at the direction of the
holders of Class A Notes evidencing, unless otherwise specified, more than 50%
of the principal balance of the Class A Notes. From and after such time as the
Class A Notes have been paid in full and all outstanding amounts due to the Note
Insurer have been paid in full, any provision giving the Note Insurer or the
Class A Noteholders the right to direct, appoint or consent to, approve of, or
take any action under this Agreement shall be inoperative and such right shall
instead vest in the Trustee acting at the direction of the Holders of Class B
Notes evidencing, unless otherwise specified, more than 50% of the principal
balance of the Class B Notes. From and after such time as the Class A Notes and
Class B Notes have been paid in full, any provision giving the Note Insurer or
the Class A Noteholders the right to direct, appoint or consent to, approve of,
or take any action under this Agreement shall be inoperative and such right
shall instead vest in the Trustee acting at the direction of the holders of
Certificates evidencing more than 50% of the principal balance of the
Certificates, unless otherwise specified. The Insurer may disclaim any of its
rights and powers under this Agreement (but not its duties and obligations under
the Policy) upon delivery of a written notice to the Trustee. The Insurer may
give or withhold any consent hereunder in its sole and absolute discretion.
-103-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective duly authorized officers as of
the day and the year first above written.
CPS AUTO RECEIVABLES
TRUST 1997-3
by
BANKERS TRUST (DELAWARE),
not in its individual
capacity, but solely as Owner
Trustee on behalf of the Trust
By ___________________________
Name:
Title:
CPS RECEIVABLES CORP., as Seller
By ___________________________
Name:
Title:
CONSUMER PORTFOLIO SERVICES, INC.,
as Servicer
By ___________________________
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
not in its individual
capacity, but solely as
Standby Servicer and Trustee,
By ___________________________
Name:
Title:
-104-
SCHEDULE A
SCHEDULE OF RECEIVABLES
EXHIBIT A
SUBSEQUENT TRANSFER AGREEMENT
TRANSFER No. __ of Subsequent Receivables pursuant to a Sale and
Servicing Agreement, dated as of August 1, 1997, among THE CPS AUTO RECEIVABLES
TRUST 1997-3, a Delaware business trust (the "Issuer"), CPS RECEIVABLES CORP., a
California corporation (the "Seller"), CONSUMER PORTFOLIO SERVICES, INC. a
California corporation (the "Servicer"), and NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, a national banking association (the "Trustee").
W I T N E S S E T H:
WHEREAS pursuant to the Sale and Servicing Agreement, the Seller wishes
to convey the Subsequent Receivables to the Issuer; and
WHEREAS, the Issuer is willing to accept such conveyance subject to the
terms and conditions hereof.
NOW, THEREFORE, the Issuer, the Seller, the Servicer and the Trustee
hereby agree as follows:
SECTION 1. Defined Terms. Capitalized terms used herein shall have the
meanings ascribed to them in the Sale and Servicing Agreement unless otherwise
defined herein.
"Subsequent Cutoff Date" shall mean, with respect to the Subsequent
Receivables conveyed hereby, [ ], 1997.
"Subsequent Transfer Date" shall mean, with respect to the Subsequent
Receivables conveyed hereby, [ ], 1997.
SECTION 2. Schedule of Receivables. Annexed hereto is a supplement to
Schedule A to the Sale and Servicing Agreement listing the Receivables that
constitute the Subsequent Receivables to be conveyed pursuant to this Agreement
on the Subsequent Transfer Date.
SECTION 3. Conveyance of Subsequent Receivables. In consideration of
the Issuer's delivery to or upon the order of the Seller of $____________, the
Seller does hereby sell, transfer, assign, set over and otherwise convey to the
Issuer, without recourse (except as expressly provided in the Sale and Servicing
Agreement), all right, title and interest of the Seller in and to:
A-1
(a) all right, title and interest of the Seller in and to the
Subsequent Receivables listed in Schedule A to this Subsequent Transfer
Agreement and, with respect to Subsequent Receivables which are Rule of
78's Receivables, all monies due or to become due thereon after the
Subsequent Cutoff Date (including Scheduled Payments due after the
Subsequent Cutoff Date (including principal prepayments relating to
such Scheduled Payments) but received by the Seller or CPS on or before
the Subsequent Cutoff Date) and, with respect to Subsequent Receivables
which are Simple Interest Receivables, all monies received thereunder
after the Subsequent Cutoff Date and all Liquidation Proceeds and
Recoveries received with respect to such Subsequent Receivables on or
after the Subsequent Cutoff Date;
(b) all right, title and interest of the Seller in and to the
security interests in the Financed Vehicles granted by Obligors
pursuant to the Subsequent Receivables and any other interest of the
Seller in such Financed Vehicles, including, without limitation, the
certificates of title or, with respect to such Financed Vehicles in the
State of Michigan, all other evidence of ownership with respect to such
Financed Vehicles;
(c) all right, title and interest of the Seller in and to any
proceeds from claims on any physical damage, credit life and credit
accident and health insurance policies or certificates relating to the
Financed Vehicles or the Obligors;
(d) all right, title and interest of the Seller in and to the
Subsequent Purchase Agreements, including a direct right to cause CPS
to purchase Receivables from the Trust under certain circumstances;
(e) all right, title and interest of the Seller in and to
refunds for the costs of extended service contracts with respect to
Financed Vehicles securing Subsequent Receivables, refunds of unearned
premiums with respect to credit life and credit accident and health
insurance policies or certificates covering an Obligor or Financed
Vehicle or his or her obligations with respect to a Financed Vehicle
and any recourse to Dealers for any of the foregoing;
(f) the Receivable File related to each Subsequent Receivable;
(g) the proceeds of any and all of the foregoing.
A-2
It is the intention of the Seller that the transfer and assignment
contemplated by this Agreement shall constitute a sale of the Subsequent
Receivables and Other Conveyed Property from the Seller to the Issuer and the
beneficial interest in and title to the Subsequent Receivables and the Other
Conveyed Property shall not be part of the Seller's estate in the event of the
filing of a bankruptcy petition by or against the Seller under any bankruptcy
law. In the event that, notwithstanding the intent of the Seller, the transfer
and assignment contemplated hereby is held not to be a sale, this Agreement
shall constitute a grant of a security interest in the property referred to in
this Section 3 for the benefit of the Securityholders and the Note Insurer.
SECTION 4. Representations and Warranties of the Seller. The Seller
hereby represents and warrants to the Issuer as of the date of this Agreement
and as of the Subsequent Transfer Date that:
(a) Organization and Good Standing. The Seller has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of California, with power and authority to
own its properties and to conduct its business as such properties are
currently owned and such business is currently conducted, and had at
all relevant times, and now has, power, authority and legal right to
acquire, own and sell the Subsequent Receivables and the Other Conveyed
Property transferred to the Trust.
(b) Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business shall
require such qualifications.
(c) Power and Authority. The Seller has the power and
authority to execute and deliver this Agreement and the Basic Documents
to which it is a party and to carry out its terms and their terms,
respectively; the Seller has full power and authority to sell and
assign the Subsequent Receivables and the Other Conveyed Property to be
sold and assigned to and deposited with the Trust by it and has duly
authorized such sale and assignment to the Trust by all necessary
corporate action; and the execution, delivery and performance of this
Agreement and the Basic Documents to which the Seller is a party have
been duly authorized by the Seller by all necessary corporate action.
(d) Valid Sale, Binding Obligations. This Agreement effects a
valid sale, transfer and assignment of the Subsequent Receivables and
the Other Conveyed Property,
A-3
enforceable against the Seller and creditors of and purchasers from the
Seller; and this Agreement and the Basic Documents to which the Seller
is a party, when duly executed and delivered, shall constitute legal,
valid and binding obligations of the Seller enforceable in accordance
with their respective terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting
the enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies, regardless of
whether such enforceability is considered in a proceeding in equity or
at law.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the Basic Documents and the
fulfillment of the terms of this Agreement and the Basic Documents
shall not conflict with, result in any breach of any of the terms and
provisions of or constitute (with or without notice, lapse of time or
both) a default under the certificate of incorporation or by-laws of
the Seller, or any indenture, agreement, mortgage, deed of trust or
other instrument to which the Seller is a party or by which it is
bound, or result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, other than the Basic
Documents, or violate any law, order, rule or regulation applicable to
the Seller of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Seller or any of its properties.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the Seller's knowledge, threatened against the Seller,
before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality having jurisdiction over the
Seller or its properties (A) asserting the invalidity of this
Agreement, the Securities or any of the Basic Documents, (B) seeking to
prevent the consummation of any of the transactions contemplated by
this Agreement or any of the Basic Documents, (C) seeking any
determination or ruling that might materially and adversely affect the
performance by the Seller of its obligations under, or the validity or
enforceability of, this Agreement or any of the Basic Documents, or (D)
relating to the Seller and which might adversely affect the federal or
state income, excise, franchise or similar tax attributes of the
Securities.
(g) No Consents. No consent, approval, authorization or order
of or declaration or filing with any governmental
A-4
authority is required for the issuance or sale of the Securities or the
consummation of the other transactions contemplated by this Agreement,
except such as have been duly made or obtained.
(h) Tax Returns. The Seller has filed on a timely basis all
tax returns required to be filed by it and paid all taxes, to the
extent that such taxes have become due.
(i) Chief Executive Office. The chief executive office of the
Seller is at 2 ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(j) Principal Balance. The aggregate Principal Balance of the
Subsequent Receivables listed on the supplement to Schedule A annexed
hereto and conveyed to the Issuer pursuant to this Agreement as of the
Subsequent Cutoff Date is $____________.
SECTION 5. Conditions Precedent. The obligation of the Issuer to
acquire the Receivables hereunder is subject to the satisfaction, on or prior to
the Subsequent Transfer Date, of the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Seller in Section 4 of this
Agreement and in Section 3.1 of the Sale and Servicing Agreement shall
be true and correct as of the date of this Agreement and as of the
Subsequent Transfer Date.
(b) Sale and Servicing Agreement Conditions. Each of the
conditions set forth in Section 2.2(b) of the Sale and Servicing
Agreement shall have been satisfied.
(c) Additional Information. The Seller shall have delivered to
the Issuer such information as was reasonably requested by the Issuer
to satisfy itself as to (i) the accuracy of the representations and
warranties set forth in Section 4 of this Agreement and in Section 3.1
of the Sale and Servicing Agreement and (ii) the satisfaction of the
conditions set forth in this Section 5.
SECTION 6. Ratification of Agreement. As supplemented by this
Agreement, the Sale and Servicing Agreement is in all respects ratified and
confirmed and the Sale and Servicing Agreement as so supplemented by this
Agreement shall be read, taken and construed as one and the same instrument.
SECTION 7. Counterparts. This Agreement may be executed in two or more
counterparts (and by different parties in separate
A-5
counterparts), each of which shall be an original but all of which together
shall constitute one and the same instrument.
SECTION 8. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
A-6
IN WITNESS WHEREOF, the Issuer, the Seller and the Servicer have caused this
Agreement to be duly executed and delivered by their respective duly authorized
officers as of day and the year first above written.
CPS AUTO RECEIVABLES
TRUST 1997-3
by BANKERS TRUST (DELAWARE),
not in its individual
capacity, but solely as Owner
Trustee on behalf of the Trust
by ___________________________
Name:
Title:
CPS RECEIVABLES CORP., Seller
by ___________________________
Name:
Title:
CONSUMER PORTFOLIO SERVICES, INC.,
Servicer
by ___________________________
Name:
Title:
Acknowledged and Accepted:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual
capacity, but solely as
Trustee
by ___________________________
Name:
Title:
A-7
EXHIBIT B
SERVICER'S CERTIFICATE
EXHIBIT C
FORM OF TRUST RECEIPT
EXHIBIT D
FORM OF SERVICING OFFICER'S CERTIFICATE
EXHIBIT E
FORM OF MONTHLY SECURITYHOLDER STATEMENT
EXHIBIT F
FORM OF TRUSTEE'S CERTIFICATE
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions................................................1
SECTION 1.2. Other Definitional Provisions.............................28
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.1. Conveyance of Initial Receivables.........................29
SECTION 2.2. Conveyance of Subsequent Receivables......................31
SECTION 2.3. Further Encumbrance of Trust Property.....................34
ARTICLE III
THE RECEIVABLES
SECTION 3.1. Representations and Warranties of Seller..................35
SECTION 3.2. Repurchase upon Breach....................................42
SECTION 3.3. Custody of Receivables Files..............................43
SECTION 3.4. Acceptance of Receivable Files by Trustee.................44
SECTION 3.5. Access to Receivable Files................................45
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.1. Duties of the Servicer....................................46
SECTION 4.2. Collection of Receivable Payments;
Modifications of Receivables; Lockbox
Agreements.............................................47
SECTION 4.3. Realization Upon Receivables..............................49
SECTION 4.4. Insurance.................................................50
SECTION 4.5. Maintenance of Security Interests in
Vehicles...............................................50
SECTION 4.6. Additional Covenants of Servicer..........................51
SECTION 4.7. Purchase of Receivables Upon Breach of
Covenant...............................................52
SECTION 4.8. Servicing Fee.............................................52
SECTION 4.9. Servicer's Certificate....................................53
SECTION 4.10. Annual Statement as to Compliance, Notice
of Servicer Termination Event..........................53
SECTION 4.11. Annual Independent Accountants' Report....................54
SECTION 4.12. Access to Certain Documentation and
Information Regarding Receivables......................55
SECTION 4.13. Verification of Servicer's Certificate....................55
SECTION 4.14. Retention and Termination of Servicer.....................56
TABLE OF CONTENTS
(continued)
Page
SECTION 4.15. Fidelity Bond.............................................57
ARTICLE V
TRUST ACCOUNTS; DISTRIBUTIONS;
STATEMENTS TO SECURITYHOLDERS
SECTION 5.1. Establishment of Trust Accounts...........................57
SECTION 5.2. Interest Reserve Account..................................60
SECTION 5.3. Certain Reimbursements to the Servicer....................61
SECTION 5.4. Application of Collections................................61
SECTION 5.5. Withdrawals from Spread Account...........................61
SECTION 5.6. Additional Deposits.......................................63
SECTION 5.7. Distributions.............................................63
SECTION 5.8. Note Distribution Account.................................66
SECTION 5.9. [RESERVED]................................................69
SECTION 5.10. Pre-Funding Account.......................................69
SECTION 5.11. Statements to Securityholders.............................69
ARTICLE VI
THE NOTE POLICY
SECTION 6.1. Claims Under Note Policy..................................71
SECTION 6.2. Preference Claims.........................................72
SECTION 6.3. Surrender of Note Policy..................................73
ARTICLE VII
[Reserved]
ARTICLE VIII
THE SELLER
SECTION 8.1. Representations of Seller.................................74
(a) Organization and Good Standing.....................74
(b) Due Qualification..................................74
(c) Power and Authority................................74
(d) Valid Sale, Binding Obligations....................74
(e) No Violation.......................................75
(f) No Proceedings.....................................75
(g) No Consents........................................75
(h) Tax Returns........................................76
(i) Chief Executive Office.............................76
SECTION 8.2. [Reserved]................................................76
SECTION 8.3. Liability of Seller; Indemnities..........................76
TABLE OF CONTENTS
(continued)
Page
SECTION 8.4. Merger or Consolidation of, or Assumption
of the Obligations of, Seller..........................77
SECTION 8.5. Limitation on Liability of Seller and
Others.................................................78
SECTION 8.6. Seller May Own Certificates or Notes......................78
ARTICLE IX
THE SERVICER
SECTION 9.1. Representations of Servicer...............................78
(a) Organization and Good Standing.....................78
(b) Due Qualification..................................79
(c) Power and Authority................................79
(d) Binding Obligation.................................79
(e) No Violation.......................................79
(f) No Proceedings.....................................80
(g) No Consents........................................80
(h) Taxes..............................................80
(i) Chief Executive Office.............................80
SECTION 9.2. Liability of Servicer; Indemnities........................80
SECTION 9.3. Merger or Consolidation of, or Assumption
of the Obligations of, the Servicer or
Standby Servicer.......................................82
SECTION 9.4. Limitation on Liability of Servicer,
Standby Servicer and Others............................83
SECTION 9.5. Delegation of Duties......................................84
SECTION 9.6. Servicer and Standby Servicer Not to Resign...............84
ARTICLE X
DEFAULT
SECTION 10.1. Servicer Termination Event................................85
SECTION 10.2. Consequences of a Servicer Termination
Event..................................................87
SECTION 10.3. Appointment of Successor..................................89
SECTION 10.4. Notification to Noteholders and
Certificateholders.....................................90
SECTION 10.5. Waiver of Past Defaults...................................90
SECTION 10.6. Action Upon Certain Failures of the
Servicer...............................................91
TABLE OF CONTENTS
(continued)
Page
ARTICLE XI
TERMINATION
SECTION 11.1. Optional Purchase of All Receivables......................91
ARTICLE XII
ADMINISTRATIVE DUTIES OF THE SERVICER
SECTION 12.1. Administrative Duties.....................................92
(a) Duties with Respect to the Indenture...............92
(b) Duties with Respect to the Issuer..................93
(c) Tax Matters........................................94
(d) Non-Ministerial Matters............................94
(e) Exceptions.........................................95
(f) Limitation of Standby Servicer's
Obligations.....................................95
SECTION 12.2. Records...................................................95
SECTION 12.3. Additional Information to be Furnished to
the Issuer.............................................95
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.1. Amendment.................................................95
SECTION 13.2. Protection of Title to Trust..............................97
SECTION 13.3. Notices...................................................99
SECTION 13.4. Assignment...............................................100
SECTION 13.5. Limitations on Rights of Others..........................100
SECTION 13.6. Severability.............................................101
SECTION 13.7. Separate Counterparts....................................101
SECTION 13.8. Headings.................................................101
SECTION 13.9. Governing Law............................................101
SECTION 13.10. Assignment to Trustee....................................101
SECTION 13.11. Nonpetition Covenants....................................101
SECTION 13.12. Limitation of Liability of Owner Trustee
and Trustee...........................................102
SECTION 13.13. Independence of the Servicer.............................102
SECTION 13.14. No Joint Venture.........................................103
SECTION 13.15. Insurer as Controlling Party.............................103
TABLE OF CONTENTS
(continued)
Page
SCHEDULES
Schedule A - Schedule of Receivables
EXHIBITS
Exhibit A - Form of Subsequent Transfer Agreement
Exhibit B - Form of Servicer's Certificate
Exhibit C - Form of Trust Receipt
Exhibit D - Form of Servicing Officer's Certificate
Exhibit E - Form of Monthly Securityholder Statement
Exhibit F - Form of Trustee's Certificate