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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) September 26, 1996
CONSUMER PORTFOLIO SERVICES, INC.
(Exact Name of Registrant as Specified in its Charter)
California
(State or Other Jurisdiction of Incorporation)
333-09343 33-0459135
(Commission File Number) (I.R.S. Employer Identification No.)
2 Ada, Suite 100, Irvine, California 92718
(Address of Principal Executive Offices) (Zip Code)
(714) 753-6800
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
The Registrant is filing final forms of the exhibits listed in Item 7(c)
below.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit
No. Document Description
--- --------------------
1.1 Underwriting Agreement
4.1 Pooling and Servicing Agreement
10.1 Purchase Agreement
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONSUMER PORTFOLIO SERVICES, INC.,
as Originator of the Trust (Registrant)
Dated: September 30, 1996 By: /s/ Charles E. Bradley, Jr.
----------------------------
Charles E. Bradley, Jr.
President
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INDEX TO EXHIBITS
Sequential
Exhibit No. Document Description Page No.
----------- -------------------- --------
1.1 Underwriting Agreement
4.1 Pooling and Servicing Agreement
10.1 Receivables Purchase Agreement
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Exhibit 1.1
Underwriting Agreement
EXHIBIT 1.1
CPS AUTO GRANTOR TRUST 1996-2
$87,522,834.56 6.70% Class A Pass-Through Certificates
UNDERWRITING AGREEMENT
September 20, 1996
Alex. Brown & Sons Incorporated
135 East Baltimore Street
MS 8-8-3
Baltimore, Maryland 21202
Black Diamond Securities, LLC
230 Park Avenue, Suite 635
New York, New York 10169
Ladies and Gentlemen:
CPS Receivables Corp., a California corporation (the "Company") and
wholly-owned subsidiary of Consumer Portfolio Services, Inc., a California
corporation ("CPS"), proposes to issue and sell to you in your capacities as the
Underwriters (the "Underwriters"), $87,522,834.56 aggregate principal amount of
CPS Auto Grantor Trust 1996-2 6.30% Asset-Backed Certificates, Class A (the
"Certificates"). The Certificates will be issued by CPS Auto Grantor Trust
1996-2 (the "Trust") pursuant to the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") dated as of September 1, 1996 among the
Company, CPS, as servicer (in such capacity, the "Servicer") and Norwest Bank
Minnesota, National Association, as trustee (the "Trustee"). Pursuant to the
Pooling and Servicing Agreement, the Trust will also issue $4,606,464.98
aggregate principal amount of CPS Auto Grantor Trust 1996-2 11.30% Asset-Backed
Certificates, Class B (the "Class B Certificates") which are not being offered
pursuant to the Registration Statement (as defined below) and are not the
subject of this Agreement. The Class A Certificates will evidence, in the
aggregate, beneficial ownership of an undivided 95% interest in the Trust (other
than interest received by the Trust in excess of the Class A Pass-Through Rate).
The Class B Certificates will evidence, in the aggregate, beneficial ownership
of an undivided 5% interest in the Trust (other than interest received by the
Trust in excess of the Class B Pass- Through Rate). The assets of the Trust will
include, among other things, a pool of retail installment sale contracts and all
rights and obligations thereunder (collectively, the
"Receivables"), with respect to Rule of 78's Receivables, all payments due
thereunder after September 18, 1996 (the "Cutoff Date"), with respect to Simple
Interest Receivables, all payments received thereunder after the Cutoff Date,
security interests in the new and used automobiles, light trucks, vans and
minivans securing the Receivables, certain bank accounts and the proceeds
thereof, the Policy (for the benefit of the Class A Certificateholders only) and
the right of CPS to receive certain insurance proceeds and certain other
property, all as more specifically described in the Pooling and Servicing
Agreement.
The Class A Certificates will be issued in an aggregate principal amount of
$87,522,834.56 which is equal to 95% of the aggregate principal balance of the
Receivables as of the Cutoff Date. The Class A Certificates will bear interest
at an annual rate equal to 6.70% (the "Class A Pass-Through Rate") in accordance
with the provisions of the Pooling and Servicing Agreement. The Class B
Certificates will be issued in an aggregate principal amount of $4,606,464.98
which is equal to 5% of the aggregate principal balance of the Receivables as of
the Cutoff Date. The Class B Certificates will bear interest at an annual rate
equal to 11.30% (the "Class B Pass-Through Rate") in accordance with the
provisions of the Pooling and Servicing Agreement.
To the extent not otherwise defined herein, capitalized terms used herein
shall have the meanings assigned to such terms in the Pooling and Servicing
Agreement.
As the Underwriters, each of you have advised the Company that (a) you are
authorized to enter into this Agreement and (b) each of you is willing, acting
severally and not jointly, to purchase the aggregate principal amount of the
Certificates set forth opposite your respective names in Schedule I hereto.
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company, with respect to the Company, and CPS, with respect to CPS, and
both the Company and CPS in all other instances, each represents and warrants
to, and agrees with each Underwriter, as of the date hereof and as of the
Issuance, that:
(a) CPS has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (File No. 333-09343),
including a Base Prospectus, for registration of the offering and sale of the
Certificates under the Securities Act of 1933, as amended (the "1933 Act"), and
the
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rules and regulations (the "1933 Act Regulations") of the Commission thereunder
which conforms with the requirements of the 1933 Act and the 1933 Act
Regulations. CPS has complied with the conditions for the use of a Registration
Statement on Form S-3. CPS may have filed with the Commission one or more
amendments to such Registration Statement, and may have used a Preliminary Final
Prospectus, each of which has been previously furnished to each of the
Underwriters. The offering of the Certificates is a Delayed Offering and,
although the Base Prospectus may not include all the information with respect to
the Certificates and the offering thereof required by the 1933 Act and the 1933
Act Regulations to be included in the Final Prospectus, the Base Prospectus
includes all such information required by the 1933 Act and the 1933 Act
Regulations to be included therein as of the Effective Date. The Company will
hereafter file with the Commission pursuant to Rules 415 and 424(b), a final
supplement to the Base Prospectus relating to the Certificates and the offering
thereof. As filed, such final supplement shall include all required information
with respect to the Certificates and, except to the extent the Underwriters
shall agree in writing to any modification thereof, shall be in all substantive
respects in the form furnished to each of the Underwriters prior to the
Execution Time or, to the extent not completed at the Execution Time, shall be
in such form with only such specific additional information and other changes
(beyond that contained in the Base Prospectus and any Preliminary Final
Prospectus) as the Company has advised each of the Underwriters, prior to the
Execution Time, will be included or made therein.
(b) On the Effective Date, the Registration Statement did or will, and when
the Final Prospectus is first filed (if required) in accordance with Rule 424(b)
and on the Closing Date (as defined below), the Final Prospectus (as
supplemented and amended as of the Closing Date) will, comply in all material
respects with the applicable requirements of the 1933 Act, the 1933 Act
Regulations, the Securities Exchange Act of 1934, as amended (the "1934 Act"),
and the rules and regulations thereunder (the "1934 Act Regulations"); on the
Effective Date, the Registration Statement did not or will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date, the Final Prospectus, if not filed
pursuant to Rule 424(b), did not or will not, and on the date of any filing
pursuant to Rule 424(b) and on the Closing Date, the Final Prospectus (as
supplemented and amended in the case of the Closing Date) will not, include any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading; provided, however, that
each of CPS and the Company makes no representations or warranties as to the
information contained in or omitted from the Registration
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Statement or the Final Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of any Underwriter specifically for inclusion in the
Registration Statement or the Final Prospectus (or any supplement or amendment
thereto) or the information regarding the Certificate Insurer set forth under
the heading "THE CERTIFICATE INSURER" in or incorporated by reference in the
Preliminary Final Prospectus and the Final Prospectus.
(c) The terms which follow, when used in this Agreement, shall have the
meanings indicated.
"Base Prospectus" shall mean the prospectus referred to in Section
1(a) hereof contained in the Registration Statement at the Effective Date.
"Delayed Offering" shall mean the offering of the Certificates
pursuant to Rule 415 which does not commence promptly after the effective
date of the Registration Statement, with the result that only information
required pursuant to Rule 415 need be included in such Registration
Statement at the effective date thereof with respect to the Certificates.
"Effective Date" shall mean each date that the Registration Statement
and any post-effective amendment(s) thereto became or become effective and
each date after the date hereof on which a document incorporated by
reference in the Registration Statement is filed by the Company.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"Final Prospectus" shall mean the prospectus supplement relating to
the Certificates that is first filed pursuant to Rule 424(b) under the 1933
Act after the Execution Time, together with the Base Prospectus.
"Preliminary Final Prospectus" shall mean any preliminary prospectus
supplement to the Base Prospectus which describes the Certificates and the
offering thereof and is used prior to filing of the Final Prospectus.
"Prospectus" shall mean, collectively, the Base Prospectus, any
Preliminary Final Prospectus and the Final Prospectus.
"Registration Statement" shall mean (i) the Registration Statement
referred to in Section 1(a) hereof, including all documents incorporated
therein by reference,
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exhibits, financial statements and notes thereto and related schedules and
other statistical and financial data and information included therein, as
amended at the Execution Time (or, if not effective at the Execution Time,
in the form in which it shall become effective); (ii) in the event any
post-effective amendment thereto becomes effective prior to the Closing
Date, such Registration Statement as so amended; and (iii) in the event any
Rule 462(b) Registration Statement becomes effective prior to the Closing
Date, such Registration Statement as so modified by the Rule 462(b)
Registration Statement, from and after the effectiveness thereof. Such term
shall include any Rule 430A Information deemed to be included therein at
the Effective Date as provided by Rule 430A.
"Rule "415", "Rule 424", "Rule "430A" and "Regulation S-K" refer to
such rules or regulation under the 1933 Act.
"Rule 430A Information" means information with respect to the
Certificates and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" means a Registration Statement
filed pursuant to Rule 462(b) under the 1933 Act relating to the offering
covered by the Registration Statement (File No. 333-09343).
Any reference herein to the Registration Statement, the Base Prospectus,
any Preliminary Final Prospectus or the Final Prospectus shall be deemed to
refer to and include the documents incorporated by reference therein pursuant to
Item 12 of Form S-3 which were filed under the 1934 Act on or before the
Effective Date of the Registration Statement or the issue date of the Base
Prospectus, any Preliminary Final Prospectus or the Final Prospectus, as the
case may be; and any reference herein to the terms "amend", "amendment" or
"supplement" with respect to the Registration Statement, the Base Prospectus,
any Preliminary Final Prospectus or the Final Prospectus shall be deemed to
refer to and include the filing of any document under the 1934 Act after the
Effective Date of the Registration Statement or the issue date of the Base
Prospectus, any Preliminary Final Prospectus or the Final Prospectus, as the
case may be, deemed to be incorporated therein by reference.
(d) Each of the Company and CPS is a corporation duly organized, validly
existing and in good standing under the laws of the State of California and is
duly qualified to transact business as a foreign corporation in each
jurisdiction in which it is required to be so qualified and in which the failure
to so
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qualify, taken in the aggregate, would have a material adverse effect on it.
(e) Since the respective dates as of which information is given in the
Registration Statement and the Final Prospectus, there has not been any material
adverse change, or any development which could reasonably be expected to result
in a material adverse change, in or affecting the financial position,
shareholders' equity or results of operations of the Company or CPS or the
Company's or CPS's ability to perform its obligations under this Agreement or
the Pooling and Servicing Agreement or any of the other Basic Documents (as
defined below), other than as set forth or incorporated by reference in the
Registration Statement or as set forth in the Final Prospectus.
(f) Except for the registration of the Certificates under the 1933 Act and
such consents, approvals, authorizations, registrations or qualifications as may
be required under the 1934 Act and applicable State securities or Blue Sky laws
in connection with the purchase and distribution of the Certificates by the
Underwriters or the filing requirements of Rule 430A or Rule 424(b) under the
1933 Act, no consent, approval, authorization or order of or declaration or
filing with any governmental authority is required for the issuance or sale of
the Certificates or the consummation of the other transactions contemplated by
this Agreement or the Pooling and Servicing Agreement or any of the other Basic
Documents, except such as have been duly made or obtained or as will be duly
made or obtained on or before the Closing Date.
(g) The Commission has not issued an order preventing or suspending the use
of any Prospectus relating to the proposed offering of the Certificates, nor
instituted proceedings for that purpose. The Registration Statement contains,
and the Final Prospectus together with any amendments or supplements thereto
will contain, all statements which are required to be stated therein by, and
will conform to, the requirements of the 1933 Act and the 1933 Act Regulations.
(h) The documents (other than the financial statements of the Certificate
Insurer, as to which no representation is made by CPS or the Company) which are
incorporated by reference in the Registration Statement and the Final Prospectus
or from which information is so incorporated by reference, as of the dates they
were filed with the Commission, complied in all material respects with the
requirements of the 1933 Act, the 1933 Act Regulations, the 1934 Act and the
1934 Act Regulations, as applicable, and any documents so filed and incorporated
by reference subsequent to the Effective Date shall, when they are filed with
the Commission, conform in all material respects with the requirements of the
1934 Act and the 1934 Act Regulations.
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(i) Each of the Company and CPS confirms as of the date hereof that it is
in compliance with all provisions of Section 1 of Laws of Florida, Chapter
92-198, An Act Relating to Disclosure of doing Business with Cuba, and each of
the Company and CPS further agrees that if it commences engaging in business
with the government of Cuba or with any person or affiliate located in Cuba
after the date the Registration Statement becomes or has become effective with
the Commission or with the Florida Department of Banking and Finance (the
"Department"), whichever date is later, or if the information included in the
Final Prospectus, if any, concerning either the Company's or CPS's business with
Cuba or with any person or affiliate located in Cuba changes in any material
way, each of the Company and CPS, as the case may be, will provide the
Department notice of such business or change, as appropriate, in a form
acceptable to the Department.
(j) All representations and warranties of the Company and CPS contained in
each of the Basic Documents, including this Agreement, will be true and correct
in all material respects as of the Closing Date and are hereby incorporated by
reference as if each such representation and warranty were specifically made
herein.
(k) Each of the Company and CPS has full power and authority (corporate and
other) to enter into and perform its obligations under this Agreement, the
Pooling and Servicing Agreement, the Purchase Agreement, the Insurance
Agreement, the Indemnification Agreement, the Spread Account Agreement, the
Lock-Box Agreement and the Servicing Assumption Agreement (collectively, the
"Basic Documents"), and to consummate the transactions contemplated hereby and
thereby.
(l) On or before the Closing Date, the direction by the Company to the
Trustee to authenticate the Certificates will have been duly authorized by the
Company, the Certificates will have been duly executed and delivered by the
Company and, when authenticated by the Trustee in accordance with the Pooling
and Servicing Agreement and delivered and paid for pursuant to this Agreement,
will be duly issued and entitled to the benefits and security afforded by the
Pooling and Servicing Agreement, subject as to the enforcement of remedies (x)
to applicable bankruptcy insolvency, reorganization, moratorium, and other
similar laws affecting creditors' rights generally and (y) to general principles
of equity (regardless of whether the enforcement of such remedies is considered
in a proceeding in equity or at law).
(m) This Agreement and each Basic Document to which the Company or CPS is a
party has been duly authorized, executed and delivered by each of the Company
and CPS and constitutes a valid and binding agreement of each of the Company and
CPS, enforceable
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against the Company and CPS in accordance with its terms, subject as to the
enforcement of remedies (x) to applicable bankruptcy, insolvency,
reorganization, moratorium, and other similar laws affecting creditors' rights
generally, (y) to general principles of equity (regardless of whether the
enforcement of such remedies is considered in a proceeding in equity or at law)
and (z) with respect to rights of indemnity under this Agreement, to limitations
of public policy under applicable securities laws.
(n) Neither the Company nor CPS is in breach or violation of its Articles
of Incorporation or By-Laws or in default in the performance or observance of
any credit or security agreement or other agreement or instrument to which it is
a party or by which it or its properties may be bound, or in violation of any
applicable law, statute, regulation, order or ordinance of any governmental body
having jurisdiction over it, which breach or violation would have a material
adverse effect on the ability of the Company or CPS to perform its obligations
under any of the Basic Documents or the Certificates.
(o) The issuance and delivery of the Certificates, the consummation of any
other of the transactions contemplated herein or in the Pooling and Servicing
Agreement or in any of the other Basic Documents or the fulfillment of the terms
of this Agreement or the Pooling and Servicing Agreement or any of the other
Basic Documents, subject to the registration of the Certificates under the 1933
Act and such consents, approvals, authorizations, registrations or
qualifications as may be required under the 1934 Act and applicable State
securities or Blue Sky laws in connection with the purchase and distribution of
the Certificates by the Underwriters or the filing requirements of Rule 430A or
Rule 424(b) under the 1933 Act, do not and will not conflict with or violate any
term or provision of the Articles of Incorporation or By-Laws of the Company or
CPS, any statute, order or regulation applicable to the Company or CPS of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over the Company or CPS and do not and will not conflict with,
result in a breach or violation or the acceleration of or constitute a default
under or result in the creation or imposition of any lien, charge or encumbrance
upon any of the property or assets of the Company or CPS (other than in favor of
the Trustee or as otherwise permitted under the Pooling and Servicing Agreement)
pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or CPS is a party or by
which the Company or CPS may be bound or to which any of the property or assets
of the Company or CPS may be subject except for conflicts, violations, breaches,
accelerations and defaults which would not, individually or in the aggregate, be
materially adverse to the Company or CPS or materially adverse to the
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transactions contemplated by this Agreement or the Basic Documents.
(p) Any taxes, fees and other governmental charges due on or prior to the
Closing Date (including, without limitation, sales taxes) in connection with the
execution, delivery and issuance of this Agreement, the Pooling and Servicing
Agreement, the other Basic Documents and the Certificates have been or will have
been paid at or prior to the Closing Date.
(q) The Receivables are chattel paper as defined in the Uniform Commercial
Code as in effect in the State of California.
(r) Under generally accepted accounting principles, CPS will report its
transfer of the Receivables to the Company pursuant to the Purchase Agreement as
a sale of the Receivables and the Company will report its transfer of the
Receivables to the Trustee pursuant to the Pooling and Servicing Agreement as a
sale of the Receivables. Each of CPS and the Company has been advised by KPMG
Peat Marwick, Certified Public Accountants, that the transfers pursuant to the
Purchase Agreement will be so classified under generally accepted accounting
principles in accordance with Statement No. 77 of the Financial Accounting
Standards Board (December 1983) and, on and after January 1, 1997, with
Statement No. 125 of the Financial Accounting Standards Board (June 1996).
(s) Pursuant to the Purchase Agreement, CPS is transferring to the Company
ownership of the Receivables, the security interests in the Financed Vehicles
securing the Receivables, certain other property related to the Receivables and
the proceeds of each of the foregoing (collectively, the "Trust Assets"), and,
immediately prior to the transfer thereof to the Trust, the Company will be the
sole owner of all right, title and interest in, and has good and marketable
title to, the Receivables and the other Trust Assets. The assignment of the
Receivables and the other Trust Assets, including all the proceeds thereof, to
the Trust pursuant to the Pooling and Servicing Agreement, vests in the Trust
all interests which are purported to be conveyed thereby, free and clear of any
liens, security interests or encumbrances.
(t) Immediately prior to the transfer of the Receivables to the Trust, the
Company's interest in the Receivables and the proceeds thereof shall have been
perfected, UCC-1 financing statements (the "Financing Statements") shall have
been filed in the office of the Secretary of State of the State of California
and there shall be no unreleased statements affecting the Receivables filed in
such office other than the Financing Statements. If a court concludes that the
transfer of the Receivables from the Company to the Trust is a sale, then the
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interest of the Trust in the Receivables, the other Trust Assets and the
proceeds thereof, will be perfected by virtue of the Financing Statements having
been filed in the office of the Secretary of State of the State of California.
If a court concludes that such transfer is not a sale, the Pooling and Servicing
Agreement and the transactions contemplated thereby constitute a grant by the
Company to the Trust of a valid security interest in the Receivables, the other
Trust Assets and the proceeds thereof, which security interest will be perfected
by virtue of the Financing Statements having been filed in the office of the
Secretary of State of the State of California. No filing or other action, other
than the filing of the Financing Statements in the office of the Secretary of
State of the State of California referred to above and the execution and
delivery of the Pooling and Servicing Agreement, is necessary to perfect the
interest or the security interest of the Trust in the Receivables and the
proceeds thereof against third parties.
(u) The Pooling and Servicing Agreement is not required to be qualified
under the Trust Indenture Act.
(v) None of the Company, CPS or the Trust is required to be registered as
an "investment company" under the Investment Company Act.
2. PURCHASE, SALE AND DELIVERY OF THE CERTIFICATES.
Subject to the terms and conditions and in reliance upon the
representations, warranties and covenants herein set forth, the Company agrees
to sell to each Underwriter, and each Underwriter agrees, severally and not
jointly, to purchase from the Company the initial principal amount of the
Certificates set forth opposite such Underwriter's name in Schedule I hereto, at
the purchase price set forth opposite such Underwriter's name in Schedule I,
which purchase price is equal to 99.59909% of such initial principal amount.
The Company will deliver against payment of the purchase price the
Certificates in the form of one or more permanent global Certificates in
definitive form (the "Global Certificates") deposited with the Trustee as
custodian for The Depository Trust Company ("DTC") and registered in the name of
Cede & Co., as nominee for DTC. Interests in any Global Certificates will be
held only in book-entry form through DTC except in the limited circumstances
described in the Final Prospectus. Payment for the Certificates will be made by
the Underwriters by wire transfer of same day funds to an account previously
designated to the Underwriters by the Company at the offices of Mayer, Brown &
Platt, 1675 Broadway, New York, New York 10019, at 9:30 a.m. (New York time) on
September 26, 1996, or at such other time as is mutually agreed (such time being
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herein referred to as the "Closing Date") against delivery of the Global
Certificates representing all of the Certificates. The Global Certificates will
be made available for checking at the above office of Mayer, Brown & Platt at
least 24 hours prior to the Closing Date.
As used herein, "business day" means a day on which the New York Stock
Exchange is open for trading and on which banks in New York, California and
Minnesota are open for business and are not permitted by law or executive order
to be closed.
3. OFFERING BY THE UNDERWRITERS.
The Company is advised by the Underwriters that they propose to make a
public offering of the Certificates, as set forth in the Final Prospectus, from
time to time as and when the Underwriters deem advisable after the Registration
Statement becomes effective.
4. COVENANTS OF THE COMPANY.
The Company covenants and agrees with the several Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement, if not effective at the Execution Time, and any amendment thereto, to
become effective as soon as reasonably practicable thereafter or, if the
procedure in Rule 430A is followed, prepare and timely file with the Commission
under Rule 424(b) a Final Prospectus containing information previously omitted
at the time of effectiveness of the Registration Statement in reliance upon Rule
430A. Prior to the termination of the offering of the Certificates, the Company
will not file any amendment of the Registration Statement or amendments or
supplement (including the Final Prospectus or any Preliminary Final Prospectus)
to the Base Prospectus or any Rule 462(b) Registration Statement unless the
Company has furnished to each of the Underwriters a copy for its review prior to
filing and will not file any such proposed amendment or supplement to which any
of the Underwriters reasonably objects and which is not in compliance with the
1933 Act Regulations. The Company will promptly advise the Underwriters (i) when
the Registration Statement, if not effective at the Execution Time, and any
amendment thereto, shall have become effective; (ii) when the Final Prospectus,
and any supplement thereto, shall have been filed with the Commission pursuant
to Rule 424(b); (iii) when, prior to termination of the offering of the
Certificates, any amendment to the Registration Statement shall have been filed
or become effective; (iv) of any request by the Commission for any amendment of
the Registration Statement or supplement to the Final Prospectus or for any
other additional information; (v) of
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the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the institution of any proceeding for that purpose
and (vi) of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Certificates for sale in any jurisdiction
or the initiation of any proceeding for such purpose. The Company will use its
best efforts to prevent the issuance of any such stop order or the suspension of
any such qualification and, if issued or suspended, to obtain as soon as
possible the withdrawal thereof.
(b) Prior to the filing thereof with the Commission, the Company will
submit to each of the Underwriters, for its approval after reasonable notice
thereof, such approval not to be unreasonably withheld or delayed, a copy of any
post-effective amendment to the Registration Statement, any Rule 462(b)
Registration Statement proposed to be filed or a copy of any document proposed
to be filed under the 1934 Act before the termination of the offering of the
Certificates by the Underwriters if such document would be deemed to be
incorporated by reference into the Registration Statement or Final Prospectus.
(c) The Company will deliver to, or upon the order of, the Underwriters,
from time to time, as many copies of any Preliminary Final Prospectus as the
Underwriters may reasonably request. The Company will deliver to, or upon the
order of, the Underwriters during the period when delivery of a Final Prospectus
is required under the 1933 Act, as many copies of the Final Prospectus, or as
thereafter amended or supplemented, as the Underwriters may reasonably request.
The Company will deliver to the Underwriters at or before the Closing Date, two
signed copies of the Registration Statement and all amendments thereto including
all exhibits filed therewith, and will deliver to the Underwriters such number
of copies of the Registration Statement (including such number of copies of the
exhibits filed therewith that may reasonably be requested), including documents
filed under the 1934 Act and deemed to be incorporated by reference therein, and
of all amendments thereto, as the Underwriters may from time to time reasonably
request.
(d) The Company will, and will cause the Trust to, comply with the 1933
Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations, so as
to permit the completion of the distribution of the Certificates as contemplated
in this Agreement and the Final Prospectus. If during the period in which a
prospectus is required by law to be delivered by an Underwriter or dealer in
connection with the sale of any Class A Certificates, any event shall occur as a
result of which, in the judgment of the Company or in the reasonable opinion of
the Underwriters, it becomes necessary to amend or supplement the Final
Prospectus in order to make the statements therein, in the
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light of the circumstances existing at the time the Final Prospectus is
delivered to a purchaser, not misleading, or, if it is necessary at any time to
amend or supplement the Final Prospectus to comply with any law or to file under
the 1934 Act any document which would be deemed to be incorporated by reference
in the Registration Statement to comply with the 1933 Act or the 1934 Act, the
Company will promptly notify each of the Underwriters and will promptly either
(i) prepare and file, or cause to be prepared and filed, with the Commission an
appropriate amendment to the Registration Statement or supplement to the Final
Prospectus or (ii) prepare and file, or cause to be prepared and filed, with the
Commission (at the expense of the Company) an appropriate filing under the 1934
Act which shall be incorporated by reference in the Final Prospectus so that the
Final Prospectus as so amended or supplemented will not, in the light of the
circumstances when it is so delivered, be misleading, or so that the Final
Prospectus will comply with applicable law.
(e) The Company will cooperate with the Underwriters in endeavoring to
qualify the Certificates for sale under the laws of such jurisdictions as the
Underwriters may designate and will maintain such qualifications in effect so
long as required for the distribution of the Certificates, except that the
Company will not be obligated to qualify the Certificates in any jurisdiction in
which such qualification would require the Company to qualify to do business as
a foreign corporation, file a general or unlimited consent to service of process
or subject itself to taxation in any such jurisdiction to which it is not
subject and will arrange for the determination of the legality of the
Certificates for purchase by institutional investors. The Company will, from
time to time, prepare and file such statements, reports, and other documents as
are or may be required to continue such qualifications in effect for so long a
period as the Underwriters may reasonably request for distribution of the
Certificates.
(f) The Company shall not invest, or otherwise use the proceeds received by
the Company from its sale of the Certificates in such a manner as would require
the Company, CPS or the Trust to register as an investment company under the
1940 Act.
(g) Until the retirement of the Certificates, or until such time as the
Underwriters shall cease to maintain a secondary market in the Certificates,
whichever occurs first, the Company will deliver to each Underwriter the annual
statements of compliance and the annual independent certified public
accountant's reports furnished to the Trustee pursuant to the Pooling and
Servicing Agreement, as soon as such statements and reports are furnished to the
Trustee.
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(h) The Company or CPS shall, from the date hereof through and including
the Closing Date, furnish, or cause to be furnished, or make available, or cause
to be made available, to each Underwriter or its counsel such additional
documents and information regarding each of them and their respective affairs as
each Underwriter may from time to time reasonably request and which the Company
or CPS possess or can acquire without unreasonable effort or expense, including
any and all documentation requested in connection with such Underwriter's due
diligence efforts regarding information in the Registration Statement and the
Final Prospectus and in order to evidence the accuracy or completeness of any of
the conditions contained in this Agreement; and all actions taken by the Company
or CPS to authorize the sale of the Certificates shall be reasonably
satisfactory in form and substance to each Underwriter.
(i) The Company will cause the Trust to make generally available to Class A
Certificateholders as soon as practicable, but no later than sixteen months
after the Effective Date, an earnings statement of the Trust covering a period
of at least twelve consecutive months beginning after such Effective Date and
satisfying the provisions of Section 11(a) of the Act (including Rule 158
promulgated thereunder).
(j) So long as any of the Class A Certificates are outstanding, the Company
will furnish to the Underwriters copies of all reports or other communications
(financial or otherwise) furnished or made available to Class A
Certificateholders, and deliver to the Underwriters during such period, (i) as
soon as they are available, copies of any reports and financial statements filed
by or on behalf of the Trust or the Company with the Commission pursuant to the
Securities Exchange Act of 1934, as amended, and (ii) such additional
information concerning the business and financial condition of the Company as
the Underwriter may from time to time reasonably request.
(k) On or before the Closing Date, the Company and CPS shall cause the
respective computer records of the Company and CPS relating to the Receivables
to be marked to show the Trustee's absolute ownership of the Receivables, and
from and after the Closing Date neither the Company nor CPS shall take any
action inconsistent with the Trustee's ownership of such Receivables, other than
as expressly permitted by the Pooling and Servicing Agreement.
(l) To the extent, if any, that the ratings provided with respect to the
Certificates by either of the Rating Agencies is conditional upon the furnishing
of documents or the taking of any other actions by the Company or CPS, CPS
shall, or shall cause the Company to, furnish such documents and take any such
other actions.
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(m) On the Closing Date, the Company and CPS shall cause the Certificate
Insurer to issue the Policy to the Trustee for the benefit of the holders of the
Certificates in form and substance satisfactory to each Underwriter.
5. [RESERVED]
6. COSTS AND EXPENSES.
The Company and CPS will pay upon receipt of a written request therefor all
costs, expenses and fees incident to the performance of the obligations of the
Company under this Agreement and will, jointly and severally, reimburse the
Underwriters for all reasonable out-of-pocket expenses, including reasonable
fees and disbursements of counsel, reasonably incurred in connection with
investigating, marketing and proposing to market the Certificates or in
contemplation of performing the Underwriters' obligations hereunder and
including, without limiting the generality of the foregoing, the following: (i)
accounting fees of the Company; (ii) the fees and disbursements of counsel for
the Company; (iii) the cost of printing and delivering to, or as requested by,
the Underwriters copies of the Registration Statement, Preliminary Final
Prospectuses, the Final Prospectus, this Agreement, the listing application in
respect of the Certificates, the Blue Sky Survey, if any, and any supplements or
amendments thereto; (iv) the filing fees of the Commission; (v) any fees charged
by the Rating Agencies for rating the Certificates; and (vi) the fees and
expenses of the Trustee, including the fees and disbursements of counsel for the
Trustee, in connection with the Certificates, the Pooling and Servicing
Agreement and the other Basic Documents to which the Trustee is a party and the
expenses, including the fees and disbursements of counsel for the Underwriters,
incurred in connection with the qualification of the Certificates under State
securities or Blue Sky laws. If this Agreement shall not be consummated because
the conditions in Section 7 hereof are not satisfied, or because this Agreement
is terminated by each of the Underwriters pursuant to Section 12 hereof (other
than on the basis of a default by the Underwriters pursuant to Section 10
hereof), or by reason of any failure, refusal or inability on the part of the
Company or CPS to perform any undertaking or satisfy any condition of this
Agreement or to comply with any of the terms hereof on its part to be performed,
unless such failure to satisfy said condition or to comply with said terms be
due to the default or omission of any Underwriter, then the Company and CPS,
jointly and severally, shall reimburse the Underwriters for reasonable
out-of-pocket expenses, including reasonable fees and disbursements of counsel,
reasonably incurred in connection with investigating, marketing and proposing to
market the Certificates or in contemplation of performing their obligations
hereunder upon receipt of a written request therefor; but the Company shall
-15-
not in any event be liable to any of the Underwriters for damages on account of
loss of anticipated profits from the sale by them of the Certificates. Except to
the extent expressly set forth in this Section 6, the Underwriters shall each be
responsible for their own costs and expenses, including the fees and expenses of
their counsel.
7. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase and pay for the
Certificates on the Closing Date are subject to the accuracy in all material
respects as of the Closing Date of the representations and warranties of the
Company contained herein, to the performance by the Company of its covenants and
obligations hereunder and to the following additional conditions precedent:
(a) If the Registration Statement has not become effective prior to the
Execution Time, unless the Underwriters agree in writing to a later time, the
Registration Statement will become effective not later than (i) 5:30 p.m. New
York City time on the date of determination of the public offering price of the
Certificates, if such determination occurred at or prior to 3:00 p.m. New York
City time on such date or (ii) 12:00 noon New York City time on the business day
following the day on which the public offering price of the Certificates was
determined, if such determination occurred after 3:00 p.m. New York City time on
such date; if filing of the Final Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b), the Final Prospectus, and any such supplement,
shall have been filed within the applicable time period prescribed for such
filing by Rule 424(b), and any request of the Commission for additional
information (to be included in the Registration Statement or otherwise) shall
have been disclosed to the Underwriters and complied with to their reasonable
satisfaction. No stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued and no
proceedings for that purpose shall have been taken or, to the knowledge of the
Company, shall be contemplated by the Commission and no injunction, restraining
order, or order of any nature by a Federal or state court of competent
jurisdiction shall have been issued as of the Closing Date which would prevent
the issuance of the Certificates.
(b) On or prior to the date of this Agreement and on or prior to the
Closing Date, each Underwriter shall have received a letter or letters, dated as
of September 19, 1996, and as of the Closing Date, respectively, of KPMG Peat
Marwick, Certified Public Accountants, substantially in the form of the drafts
to which each of the Underwriters has previously agreed and
-16-
otherwise in form and substance satisfactory to each Underwriter and its
counsel.
(c) Subsequent to the execution and delivery of this Agreement, there shall
not have occurred (i) any change, or any development involving a prospective
change, in or affecting particularly the business or properties of the Company,
CPS or any Affiliate of the Company or CPS which, in the judgment of each
Underwriter, materially impairs the investment quality of the Certificates or
the ability of CPS to act as Servicer or (ii) any downgrading in the rating of
any debt securities or preferred stock of the Company, CPS or any Affiliate
thereof by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Securities Act), or any public
announcement that any such organization has under surveillance or review its
rating of any debt securities or preferred stock of the Company, CPS or any
Affiliate thereof (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading of such
rating); (iii) any suspension or limitation of trading in securities generally
on the New York Stock Exchange, or any setting of minimum prices for trading on
such exchange, or any suspension of trading of any securities of the Company or
CPS or any Affiliate of the Company or CPS on any exchange or in the
over-the-counter market; (iv) any banking moratorium declared by Federal, New
York or California authorities; or (v) any outbreak or escalation of major
hostilities in which the United States is involved, any declaration of war by
Congress or any other substantial national or international calamity, emergency
or change in financial markets if, in the judgment of each Underwriter, the
effect of any such outbreak, escalation, declaration, calamity, emergency or
change makes it impractical or inadvisable to proceed with completion of the
private placement of the Certificates.
(d) The Company and CPS shall have furnished each Underwriter with such
number of conformed copies of such opinions, certificates, letters and documents
as it may reasonably request.
(e) On the Closing Date, each of the Basic Documents and the Certificates
shall have been duly authorized, executed and delivered by the parties thereto,
shall be in full force and effect and no default shall exist thereunder, and the
Trustee shall have received a fully executed copy thereof or, with respect to
the Certificates, a conformed copy thereof. The Basic Documents and the
Certificates shall be substantially in the forms heretofore provided to each
Underwriter.
-17-
(f) Each Underwriter shall have received a certificate of the Trustee, as
to the due authorization, execution and delivery of the Pooling and Servicing
Agreement by the Trustee.
(g) Each Underwriter shall have received evidence satisfactory to such
Underwriter that the Certificates have been rated "Aaa" by Moody's and "AAA" by
Standard & Poor's.
(h) Each Underwriter shall have received from Mayer, Brown & Platt, special
counsel for CPS and the Company, opinions dated the Closing Date, addressed to
such Underwriter, in a form satisfactory to such Underwriter.
(i) Each Underwriter shall have received from Mayer, Brown & Platt, special
Federal tax counsel for the Company, an opinion dated the Closing Date,
addressed to such Underwriter, with respect to the status of the Trust for
federal income tax purposes.
(j) Each Underwriter shall have received from Mayer, Brown & Platt, an
opinion dated the Closing Date, addressed to such Underwriter, with respect to
the validity of the Certificates and such other related matters as such
Underwriter shall require and the Company or CPS shall have furnished or caused
to be furnished to such counsel such documents as they may reasonably request
for the purpose of enabling them to pass upon such matters.
(k) Each Underwriter shall have received from counsel to the Trustee, the
Standby Servicer and the Collateral Agent (which counsel shall be reasonably
acceptable to such Underwriter), an opinion addressed to such Underwriter dated
the Closing Date, in form and substance satisfactory to such Underwriter and its
counsel, Mayer, Brown & Platt.
(l) Each Underwriter shall have received from counsel to the Certificate
Insurer, which counsel shall be reasonably acceptable to such Underwriter, an
opinion addressed to such Underwriter, dated the Closing Date, in form and
substance satisfactory to such Underwriter and its counsel, Mayer, Brown &
Platt.
(m) At the Closing Date, each Underwriter shall have received any and all
opinions of counsel to the Company and CPS supplied to the Rating Agencies and
the Certificate Insurer relating to, among other things, the interest of the
Trustee in the Receivables and the other Trust Assets and the proceeds thereof
and certain monies due or to become due with respect thereto, certain bankruptcy
issues and certain matters with respect to the Certificates. Any such opinions
shall be addressed to each Underwriter or shall indicate that such Underwriter
may rely on such opinions as though they were
-18-
addressed to such Underwriter, and shall be dated the Closing Date.
(n) At the Closing Date, the Company and CPS shall have furnished to each
Underwriter a certificate, dated the Closing Date, of the President or any Vice
President of the Company or CPS, as the case may be, in which each such officer
shall state that: (i) the representations and warranties of the Company or CPS,
as applicable, in this Agreement are true and correct on and as of the Closing
Date; (ii) the Company or CPS, as applicable, has complied with all agreements
and satisfied all conditions on its part required to be performed or satisfied
hereunder and under each of the other Basic Documents at or prior to the Closing
Date; (iii) the representations and warranties of the Company or CPS, as
applicable, in each of the Basic Documents are true and correct as of the dates
specified therein; (iv) the Registration Statement has become effective under
the 1933 Act and no stop order suspending the effectiveness of the Registration
Statement has been issued, and no proceedings for such purpose have been taken
or are, to his or her knowledge, contemplated by the Commission; (v) he or she
has carefully examined the Registration Statement and the Final Prospectus and,
in his or her opinion, as of the Effective Date of the Registration Statement,
the statements contained in the Registration Statement were true and correct,
and as of the Closing Date the Registration Statement and the Final Prospectus
do not contain any untrue statement of a material fact or omit to state a
material fact with respect to the Company or CPS necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and since the Effective Date of the Registration Statement, no
event has occurred with respect to the Company or CPS which should have been set
forth in a supplement to or an amendment of the Final Prospectus which has not
been so set forth in such supplement or amendment; and (vi) subsequent to the
respective dates as of which conformation is given in the Registration Statement
and the Final Prospectus, there has been no material adverse change, or any
development with respect to the Company or CPS which could reasonably be
expected to result in a material adverse change, in or affecting particularly
the business or properties of the Trust, the Company or CPS except as
contemplated by the Final Prospectus or as described in such certificate.
(o) Each Underwriter shall have received evidence satisfactory to such
Underwriter that the Certificate Insurer shall have issued the Policy to the
Trustee for the benefit of the Certificateholders in form and substance
satisfactory to such Underwriter.
(p) Each Underwriter shall have received evidence satisfactory to it that,
on or before the Closing Date, the
-19-
Financing Statements have been filed in the office of the Secretary of State of
California reflecting the assignment of the interest of CPS in the Receivables
and the other Trust Assets and the proceeds thereof to the Company, and the
transfer of the interest of the Company in the Receivables and the other Trust
Assets and the proceeds thereof to the Trustee.
(q) All proceedings in connection with the transactions contemplated by
this Agreement, the Pooling and Servicing Agreement and each of the other Basic
Documents and all documents incident hereto or thereto shall be satisfactory in
form and substance to each Underwriter.
(r) The Company shall have furnished to the Underwriters such further
certificates and documents confirming the representations and warranties,
covenants and conditions contained herein and related matters as the
Underwriters may reasonably have requested.
The opinions and certificates mentioned in this Agreement shall be deemed
to be in compliance with the provisions hereof only if they are in all material
respects reasonably satisfactory to the Underwriters and to Mayer, Brown &
Platt, counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 7 shall
not have been fulfilled when and as required by this Agreement to be fulfilled,
the obligations of the Underwriters hereunder may be terminated by the
Underwriters by notifying the Company of such termination in writing or by
telegram at or prior to the Closing Date. In such event, the Company and the
Underwriters shall not be under any obligation to each other (except to the
extent provided in Sections 6 and 9 hereof).
8. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company to sell and deliver the portion of the
Certificates required to be delivered as and when specified in this Agreement
are subject to the condition that, at the Closing Date, no stop order suspending
the effectiveness of the Registration Statement shall have been issued and in
effect or proceedings therefor initiated or threatened.
9. INDEMNIFICATION.
(a) The Company and CPS, jointly and severally, agree to indemnify and hold
harmless each Underwriter, its directors, officers, employees and agents and
each person, if any, who controls any Underwriter within the meaning of the 1933
Act or the 1934 Act, against any losses, claims, damages or liabilities
-20-
to which such Underwriter or any such other person may become subject under the
1933 Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Base Prospectus, any Preliminary
Final Prospectus, the Final Prospectus or any amendment or supplement thereto
(other than information contained therein under the heading "the Certificate
Insurer" and information incorporated by reference therein), or (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made; and will reimburse each
Underwriter and each such person within 30 days of presentation for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage or liability, action or
proceeding or in responding to a subpoena or governmental inquiry related to the
offering of the Certificates, whether or not such Underwriter or such person is
a party to any action or proceeding, upon receipt of a written request therefor;
provided, however, that neither the Company nor CPS will be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement, or omission or
alleged omission made in the Registration Statement, the Base Prospectus, any
Preliminary Final Prospectus, the Final Prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with written information
furnished to the Company or CPS, as the case may be, by, through or on behalf of
the Underwriters specifically for use in the preparation thereof. This indemnity
agreement will be in addition to any liability which the Company or CPS may
otherwise have. The indemnity agreement of the Company and CPS in this Agreement
is subject to the condition that, insofar as it relates to any untrue statement,
alleged untrue statement, omission or alleged omission made in the Registration
Statement, the Base Prospectus, any Preliminary Final Prospectus or in the Final
Prospectus, or any amendment or supplement thereto, such indemnity agreement
shall not inure to the benefit of any Underwriter if such Underwriter failed to
send or give a copy of the Final Prospectus (as amended or supplemented, if the
Company or CPS, as the case may be, shall have furnished any amendment or
supplement thereto to such Underwriter, which corrected such untrue statement or
omission that is the basis of the loss, liability, claim, damage or expense for
which indemnification is sought) to the person asserting any such loss,
liability, claim, damage or expense at such time as the Final Prospectus, as so
amended or supplemented, was required under the 1933 Act to be delivered to such
person.
-21-
(b) (i) Each Underwriter, severally and not jointly, will indemnify and
hold harmless each of the Company and CPS, each of their directors, officers,
employees and agents and each person, if any, who controls the Company within
the meaning of the 1933 Act or the 1934 Act, to the same extent as the foregoing
indemnity from each of the Company and CPS to any Underwriter, its directors,
officers, employees and agents and each person who controls any such
Underwriter, but only with respect to untrue statements or omissions or alleged
untrue statements or omissions made in the Registration Statement, the Base
Prospectus, any Preliminary Final Prospectus, the Final Prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity with written
information furnished to the Company or CPS, as the case may be, by, through or
on behalf of such Underwriter specifically for use in the preparation of the
Registration Statement, the Base Prospectus, any Preliminary Final Prospectus,
the Final Prospectus or any amendment or supplement thereto. This indemnity
agreement will be in addition to any liability which such Underwriter may
otherwise have.
(ii) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, CPS, the other Underwriter, the respective
officers, directors, employees and agents of any such party, and each
person who controls the Company, CPS or such other Underwriter within the
meaning of the 1933 Act or the 1934 Act against any losses, claims, damages
or liabilities to which such person may become subject under the 1933 Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) arise out of or are based upon
(a) any untrue statement or alleged untrue statement of any material fact
contained in the Computational Materials (as defined below) provided by
such indemnifying Underwriter or (b) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances in which they were made, not misleading (except, in each
case, to the extent that such untrue statement or alleged untrue statement
or omission or alleged omission results from the failure of the Company
Provided Information to be accurate in all material respects); and will
reimburse each such party within 30 days of written request therefor for
any legal or other expenses reasonably incurred by such person in
connection with investigating or defending any such loss, claim, damage or
liability, action or proceeding or in responding to a subpoena or
governmental inquiry related thereto, whether or not such person is a party
to any action or proceeding. The obligations of each Underwriter under this
subsection (ii) shall be in addition to any other liability which such
Underwriter may otherwise have. For purposes hereof, the term
"Computational
-22-
Materials" means information provided by an Underwriter to a prospective
purchaser of Certificates, which information is not part of the Prospectus.
For purposes hereof, the term "Company Provided Information" means the
information contained in the table on page S-23 of the Preliminary Final
Prospectus dated September 13, 1996 as to the weighted average APR of the
Receivables, the weighted average remaining term of the Receivables and the
aggregate principal balance of the Receivables as of the Preliminary Cutoff
Date.
(iii) Each Underwriter shall, no later than the date on which the
Prospectus is required to be filed pursuant to Rule 424, provide to CPS for
filing with the Commission on Form 8-K a copy of any Computational
Materials delivered by such Underwriter to any prospective purchaser of
Certificates.
(c) In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be sought
pursuant to this Section 9, such person (the "indemnified party") shall promptly
notify the person against whom such indemnity may be sought (the "indemnifying
party") in writing. The failure to give such notice shall not relieve the
indemnifying party or parties from any liability which it or they may have to
the indemnified party for contribution or otherwise than on account of the
provisions of Section 9(a) or (b), except and only to the extent such omission
so to notify shall have materially prejudiced the indemnifying party under
Section 9(a) or (b). In case any such proceeding shall be brought against any
indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party and shall pay as incurred the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own counsel
at its own expense. Notwithstanding the foregoing, the indemnifying party shall
pay as incurred (or within 30 days of presentation) the fees and expenses of the
counsel retained by the indemnified party in the event (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of
such counsel, (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them or (iii) the
indemnifying party shall have failed to assume the defense and employ counsel
acceptable to the indemnified party within a
-23-
reasonable period of time after notice of commencement of the action. It is
understood that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm for all such
indemnified parties. Such firm shall be designated in writing by the
underwriters in the case of parties indemnified pursuant to Section 9(a) and by
the Company in the case of parties indemnified pursuant to Section 9(b). The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. In addition, the indemnifying party will not,
without the prior written consent of the indemnified party (which consent shall
not be unreasonably withheld or delayed), settle or compromise or consent to the
entry of any judgment in any pending or threatened claim, action or proceeding
of which indemnification may be sought hereunder (whether or not any indemnified
party is an actual or potential party to such claim, action or proceeding)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action
or proceeding.
(d) If the indemnification provided for in this Section 9 is unavailable to
or insufficient to hold harmless an indemnified party under Section 9(a) or (b)
above in respect of any losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) referred to therein, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) in such proportion as is appropriate to reflect
the relative benefits received by the Company and CPS on the one hand and the
Underwriters on the other from the offering of the Certificates. If, however,
the allocation provided by the immediately preceding sentence is not permitted
by applicable law then each indemnifying party shall contribute to such amount
paid or payable by such indemnified party in such proportion as is appropriate
to reflect not only such relative benefits but also the relative fault of the
Company or CPS on the one hand and the Underwriters on the other in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions or proceedings in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the
-24-
Underwriters (in each case as set forth in the table on the cover page of the
Final Prospectus). As between the Underwriters, the relative benefits received
by Alex. Brown & Sons Incorporated, on the one hand, and Black Diamond
Securities, LLC, on the other, shall be deemed to be in the same proportion as
the respective portions of the total underwriting discounts and commissions
received by each of them. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, CPS and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 9(d) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 9(d). The amount paid
or payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to above in
this Section 9(d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim, subject to the limitations set forth
above. Notwithstanding the provisions of this Section 9(d), (i) no Underwriter
shall be required to contribute any amount in excess of the underwriting
discounts and commissions applicable to the Certificates purchased by such
Underwriter and (ii) no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this Section 9(d) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(e) In any proceeding relating to the Registration Statement, the Base
Prospectus, any Preliminary Final Prospectus, the Final Prospectus, or any
supplement or amendment thereto, each party against whom contribution may be
sought under this Section 9 hereby consents to the jurisdiction of any court
having jurisdiction over any other contributing party, agrees that process
issuing from such court may be served upon him or it by any other contributing
party and consents to the service of such process and agrees that any other
contributing party may join him or it as an additional defendant in any such
proceeding in which such other contributing party is a party.
-25-
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 9 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 9 and the
representations and warranties of each of the Company and CPS set forth in this
Agreement shall remain operative and in full force and effect, regardless of (i)
any investigation made by or on behalf of any Underwriter, the Company or CPS,
their respective directors, officers, employees or agents or any persons
controlling any Underwriter or the Company, (ii) acceptance of any Certificates
and payment thereof or hereunder, and (iii) any termination of this Agreement. A
successor to any Underwriter, the Company or CPS, their respective directors,
officers, employees or agents, or any person controlling any Underwriter, the
Company or CPS, shall be entitled to the benefits of the indemnity, contribution
and reimbursement agreements contained in this Section 9.
10. DEFAULT BY THE UNDERWRITERS.
If on the Closing Date, Black Diamond Securities, LLC shall fail to
purchase and pay for all or any portion of the Certificates which such
Underwriter has agreed to purchase and pay for on such date (otherwise than by
reason of any default on the part of the Company or CPS), then Alex Brown & Sons
Incorporated shall use reasonable efforts to procure within 36 hours thereafter
one or more additional Underwriters to purchase from the Company such amounts as
may be agreed upon and upon the terms set forth herein, the Certificates which
the defaulting Underwriter failed to purchase. If during such 36 hours the
non-defaulting Underwriter shall not have procured one or more additional
Underwriters to purchase the Certificates agreed to be purchased by the
defaulting Underwriter, then (a) if the aggregate amount of Certificates with
respect to which such default shall occur does not exceed 10% of the
Certificates covered hereby, the non-defaulting Underwriter shall be obligated
to purchase the Certificates which such defaulting Underwriter failed to
purchase, or (b) if the aggregate number of shares of Certificates with respect
to which such default shall occur exceeds 10% of the Certificates covered
hereby, the Company or the non-defaulting Underwriter will have the right, by
written notice given within the next 36-hour period to the parties to this
Agreement, to terminate this Agreement without liability on the part of the
non-defaulting Underwriter or of the Company except to the extent provided in
Section 9 hereof. In the event of a default by Black Diamond Securities, LLC, as
set forth in this Section 10, the Closing Date may be postponed for such period,
not exceeding seven days, as the non-defaulting Underwriter may determine in
order that the required changes in
-26-
the Registration Statement or in the Final Prospectus or in any other documents
or arrangements may be effected. For purposes of this Agreement, the term
"Underwriter" includes any person substituted for a defaulting Underwriter. Any
action taken under this Section 10 shall not relieve Black Diamond Securities,
LLC from liability in respect of any default of such Underwriter under this
Agreement.
11. NOTICES.
All communications hereunder shall be in writing and, except as otherwise
provided herein, will be mailed, delivered, telecopied or telegraphed and
confirmed as follows:
if to the Underwriters, to each of the following addresses:
Alex. Brown & Sons Incorporated
135 East Baltimore Street
MS 8-8-3
Baltimore, Maryland 21202
Attention: General Counsel
Fax: (410) 783-3028
and
Black Diamond Securities, L.L.C.
230 Park Avenue
New York, New York 10169
Attention: Jeffrey W. Kramer
Fax: (212) 953-6063;
if to the Company, at the following address:
CPS Receivables Corp.
2 Ada
Irvine, California 92718
Attention: Charles Bradley, Jr.
Facsimile No.: (714) 753-6805;
or, if sent to CPS at the following address:
Consumer Portfolio Services, Inc.
2 Ada
Irvine, California 92718
Attention: Charles Bradley, Jr.
Facsimile No.: (714) 753-6805
-27-
12. TERMINATION.
This Agreement may be terminated by the Underwriters by notice by each of
the Underwriters to the Company as follows:
(a) at any time prior to the Closing Date, if any of the following has
occurred: (i) since the respective dates as of which information is given in the
Registration Statement and the Final Prospectus, any material adverse change or
any development involving a prospective material adverse change in the business,
properties, results of operations, financial condition or business prospects of
the Company and the Significant Subsidiary taken as a whole, whether or not
arising in the ordinary course of business, (ii) any outbreak or escalation of
hostilities or declaration of war or national emergency or other national or
international calamity or crisis or change in economic or political conditions
if the effect of such outbreak, escalation, declaration, emergency, calamity,
crisis or change on the financial markets of the United States would, in each of
the Underwriters' reasonable judgment, make it impracticable to market the
Certificates or to enforce contracts for the sale of the Certificates, (iii) any
suspension of trading in securities generally on the New York Stock Exchange or
the American Stock Exchange or limitation on prices (other than limitations on
hours or numbers of days of trading) for securities on either such Exchange,
(iv) the enactment, publication, decree or other promulgation of any statute,
regulation, rule or order of any court or other governmental authority which in
each of the Underwriters' reasonable opinion materially and adversely affects or
may materially and adversely affect the business or operations of the Company,
(v) declaration of a banking moratorium by United States or New York State
authorities, (vi) any downgrading or the giving of notice of any intended or
potential downgrading in the rating of the Company's debt securities by any
"nationally recognized statistical rating organization" (as defined for purposes
of Rule 436(g) under the 1934 Act) ; (vii) the suspension of trading of the
Common Stock by the Commission on the New York Stock Exchange or (viii) the
taking of any action by any governmental body or agency in respect of its
monetary or fiscal affairs which in each of the Underwriters' reasonable opinion
has a material adverse effect on the securities markets in the United States; or
(b) as provided in Sections 7 and 10 of this Agreement.
13. SUCCESSORS.
This Agreement has been and is made solely for the benefit of the
Underwriters, CPS and the Company and their respective successors, executors,
administrators, heirs and assigns, and the respective affiliates, officers,
directors, employees, agents and
-28-
controlling persons referred to herein, and no other person will have any right
or obligation hereunder. No purchaser of any of the Certificates from any
Underwriter shall be deemed a successor or assign merely because of such
purchase.
14. INFORMATION PROVIDED BY UNDERWRITERS.
The Company and the Underwriters acknowledge and agree that the only
information furnished or to be furnished by any Underwriter to the Company for
inclusion in the Registration Statement, the Base Prospectus, any Preliminary
Final Prospectus or the Final Prospectus, or any amendments or supplements
thereto, consists of the information set forth in the last paragraph on the
front cover page concerning the terms of the offering by the Underwriters
(insofar as such information relates to the Underwriters), legends required by
Item 502(d) of Regulation S-K under the 1933 Act and the information under the
caption "Methods of Distribution" in the Registration Statement and under the
caption "Underwriting" in the Final Prospectus.
15. MISCELLANEOUS.
The reimbursement, indemnification and contribution agreements contained in
this Agreement and the representations, warranties and covenants in this
Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of any
Underwriter or the Company, their respective directors, officers, employees or
agents or any controlling person of any Underwriter or the Company indemnified
herein and (c) delivery of and payment for the Certificates under this
Agreement.
Each Underwriter agrees that, prior to the date which is one year and one
day after the payment in full of all securities issued by the Company or by a
trust for which the Company was the depositor, which securities were rated by
any nationally recognized statistical rating organization, it will not institute
against, or join any other person in instituting against, the Company any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or other proceedings under any Federal or state bankruptcy or similar law.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York without regard to the conflict of laws provisions
thereof. With respect to any claim arising out of this Agreement (i) each party
irrevocably submits to the exclusive jurisdiction of the courts of the State
-29-
of New York and the United States District Court for the Southern District of
New York, and (ii) each party irrevocably waives (1) any objection which it may
have at any time to the laying of venue of any suit, action or proceeding
arising out of or relating hereto brought in any such court, (2) any claim that
any such suit, action or proceeding brought in any such court has been brought
in any inconvenient forum and (3) the right to object, with respect to such
claim, suit, action or proceeding brought in any such court, that such court
does not have jurisdiction over such party. To the extent permitted by
applicable law, each Underwriter, the Company and CPS irrevocably waive all
right of trial by jury in any action, proceeding or counterclaim arising out of
or in connection with this Agreement or any matter arising hereunder.
This Agreement supersedes all prior agreements and understandings relating
to the subject matter hereof.
Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against whom enforcement of the change, waiver, discharge or
termination is sought.
The headings in this Agreement are for purposes of reference only and shall
not limit or otherwise affect the meaning hereof.
Any provision of this Agreement which is prohibited, unenforceable or not
authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition, unenforceability or non-authorization without
invalidating the remaining provisions hereof or affecting the validity,
enforceability or legality of such provision in any other jurisdiction.
[Rest of page intentionally left blank.]
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If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
CPS RECEIVABLES CORP.
By:__________________________________
Name:
Title:
CONSUMER PORTFOLIO SERVICES, INC.
By:__________________________________
Name:
Title:
The foregoing Underwriting Agreement is
hereby confirmed and accepted as of the
date first above written:
ALEX. BROWN & SONS INCORPORATED
By:_________________________________
Name: Francis J. Jamison, Jr.
Title: Managing Director
BLACK DIAMOND SECURITIES, LLC
By:_________________________________
Name: James E. Walker, III
Title: Principal
SCHEDULE I
Schedule of Underwriters
------------------------
Initial
Principal Amount
of the Class A
Certificates to
Underwriter be Purchased Purchase Price
----------- ------------ --------------
Alex. Brown & Sons $87,422,834.56 $87,072,347.67
Incorporated
Black Diamond Securities, $ 100,000.00 $ 99,599.09
LLC -------------- --------------
Total $87,522,834.56 $87,171,946.76
============== ==============
Exhibit 4.1
Pooling and Servicing Agreement
EXHIBIT 4.1
CPS Receivables Corp.
Seller
and
Consumer Portfolio Services, Inc.
Servicer
and
Norwest Bank Minnesota, National Association
Trustee and Standby Servicer
POOLING AND SERVICING AGREEMENT
Dated as of September 1, 1996
$92,129,299.54
CPS Auto Grantor Trust 1996-2
$87,522,834.56, 6.70% Class A Certificates
$4,606,464.98, 11.30% Class B Certificates
TABLE OF CONTENTS
Section Page
- ------- ----
ARTICLE I
Definitions
1.1. Definitions...................................................... 1
1.2. Usage of Terms................................................... 19
1.3. Section References............................................... 19
1.4. Limitation on Trust Fund Activities.............................. 19
1.5. Calculations..................................................... 20
1.6. Action by or Consent of Certificateholders....................... 20
1.7. Material Adverse Effect.......................................... 20
ARTICLE II
The Trust and Trust Property
2.1. Creation of Trust................................................ 20
2.2. Conveyance of Receivables........................................ 20
2.3. Transfer Intended as Sale; Precautionary Security
Interest...................................................... 22
2.4. Acceptance by Trustee............................................ 22
2.5. Representations and Warranties of Seller......................... 22
2.6. Repurchase Upon Breach........................................... 28
2.7. Delivery of Receivable Files..................................... 30
2.8. Acceptance of Receivable Files by Trustee........................ 30
2.9. Access to Receivable Files....................................... 31
ARTICLE III
Administration and Servicing of Receivables
3.1. Duties of Servicer............................................... 33
3.2. Collection and Allocation of Receivable Payments................. 33
3.3. Realization Upon Receivables..................................... 34
3.4. Physical Damage Insurance; Other Insurance....................... 35
3.5. Maintenance of Security Interests in Financed Vehicles........... 36
3.6. Additional Covenants of Servicer................................. 37
3.7. Purchase of Receivables Upon Breach.............................. 37
3.8. Servicing Fee.................................................... 37
3.9. Servicer's Certificate........................................... 38
3.10. Annual Statement as to Compliance: Notice of Default............. 38
3.11. Annual Independent Certified Public Accountant's
Report........................................................ 39
3.12. Reserved......................................................... 40
3.13. Servicer Expenses................................................ 40
Section Page
- ------- ----
3.14. Retention and Termination of Servicer.............................40
3.15. Access to Certain Documentation and Information
Regarding Receivables..........................................41
3.16. Verification of Servicer's Certificate............................41
3.17. Fidelity Bond.....................................................42
3.18. Delegation of Duties..............................................42
ARTICLE IV
Distributions, Spread Account;
Statements to Certificateholders
4.1. Accounts; Post-Office Box.........................................43
4.2. Collections.......................................................45
4.3. Application of Collections........................................45
4.4. Payaheads.........................................................46
4.5. Additional Deposits...............................................46
4.6. Distributions; Policy Claims......................................46
4.7. Withdrawals from Spread Account...................................50
4.8. Statements to Certificateholders; Tax Returns.....................51
4.9. Policy Payments; Subrogation......................................53
4.10. Reliance on Information from the Servicer.........................54
4.11. Optional Deposits by the Certificate Insurer......................54
ARTICLE V
Reserved.
ARTICLE VI
The Certificates
6.1. The Certificates................................................. 55
6.2A. Appointment of Paying Agent...................................... 55
6.2B. Authenticating Agent............................................. 56
6.2. Authentication of Certificates................................... 57
6.3. Registration of Transfer and Exchange of Certificates............ 57
6.4. Mutilated, Destroyed, Lost or Stolen Certificates................ 61
6.5. Persons Deemed Owners............................................ 61
6.6. Access to List of Certificateholders' Names and
Addresses...................................................... 62
6.7. Maintenance of Office or Agency.................................. 62
6.8. Book-Entry Certificates.......................................... 62
6.9. Notices to Clearing Agency....................................... 63
6.10. Definitive Certificates.......................................... 63
-ii-
Section Page
- ------- ----
ARTICLE VII
The Seller
7.1. Representations of Seller........................................ 64
7.2. Liability of Seller; Indemnities................................. 66
7.3. Merger or Consolidation of, or Assumption of the
Obligations of, Seller........................................ 67
7.4. Limitation on Liability of Seller and Others..................... 67
7.5. Seller May Own Certificates...................................... 68
ARTICLE VIII
The Servicer
8.1. Representations of Servicer...................................... 68
8.2. Indemnities of Servicer.......................................... 70
8.3. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer or Standby Servicer.................. 71
8.4. Limitation on Liability of Servicer and Others................... 72
8.5. Servicer and Standby Servicer Not to Resign...................... 73
ARTICLE IX
Default
9.1. Events of Default................................................ 74
9.2. Appointment of Successor......................................... 76
9.3. Reserved......................................................... 78
9.4. Notification to Certificateholders............................... 78
9.5. Direction of Insolvency Proceedings by Certificate
Insurer....................................................... 78
9.6. Action Upon Certain Failures of the Servicer..................... 79
ARTICLE X
The Trustee
10.1. Duties of Trustee................................................ 80
10.2. Trustee's Certificate............................................ 82
10.3. Reserved......................................................... 83
10.4. Certain Matters Affecting Trustee................................ 83
10.5. Trustee Not Liable for Certificates or Receivables............... 84
10.6. Trustee May Own Certificates..................................... 86
10.7. Indemnity of Trustee............................................. 86
10.8. Eligibility Requirements for Trustee............................. 86
10.9. Resignation or Removal of Trustee................................ 87
10.10. Successor Trustee................................................ 87
-iii-
Section Page
- ------- ----
10.11. Merger or Consolidation of Trustee............................... 88
10.12. Co-Trustee; Separate Trustee..................................... 88
10.13. Representations and Warranties of Trustee........................ 90
10.14. No Bankruptcy Petition........................................... 90
10.15. Trustee May Enforce Claims Without Possession of
Certificates.................................................. 91
10.16. Rights of Certificate Insurer to Direct Trustee; Class
B Certificateholder's Right of First Refusal.................. 91
ARTICLE XI
Termination
11.1. Termination of the Trust......................................... 92
11.2. Optional Purchase of All Receivables............................. 93
ARTICLE XII
Miscellaneous Provisions
12.1. Amendment........................................................ 94
12.2. Protection of Title to Trust..................................... 95
12.3. Limitation on Rights of Certificateholders....................... 98
12.4. Governing Law.................................................... 99
12.5. Notices.......................................................... 99
12.6. Severability of Provisions.......................................100
12.7. Assignment.......................................................100
12.8. Certificates Nonassessable and Fully Paid........................100
12.9. Nonpetition Covenant.............................................101
12.10. Third Party Beneficiaries........................................101
12.11. Financial Security as Controlling Party..........................101
12.12. Agent for Service................................................102
-iv-
EXHIBITS
Exhibit A Form of Class A Certificate
Exhibit B Form of Class B Certificate
Exhibit C-1 Form of Trustee's Certificate
Exhibit C-2 Form of Trustee's Certificate
Exhibit D Form of Monthly Certificateholder Statement
Exhibit E-1 Form of Trust Receipt
Exhibit E-2 Form of Servicing Officer's Certificate
Exhibit F Form of Transferee Certificate
Exhibit G Form of Depository Agreement
SCHEDULES
Schedule A Schedule of Receivables
Schedule B Location of Receivables
-v-
POOLING AND SERVICING AGREEMENT dated as of September 1, 1996 (the
"Agreement") among CPS Receivables Corp., a California corporation, as seller
(the "Seller"), Consumer Portfolio Services, Inc., a California corporation
("CPS"), as servicer (the "Servicer"), and Norwest Bank Minnesota, National
Association, a national banking association, as trustee and standby servicer
(the "Trustee" and "Standby Servicer", respectively).
In consideration of the premises and of the mutual agreements herein
contained, and other good and valuable consideration, the receipt of which is
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE I
Definitions
SECTION 1.1. Definitions. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, whenever capitalized
shall have the following meanings:
"Affiliate" of any Person means any Person who directly or indirectly
controls, is controlled by, or is under direct or indirect common control with
such Person. For purposes of this definition of "Affiliate", the term "control"
(including the terms "controlling", "controlled by" and "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause a direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
"Agreement" means this Pooling and Servicing Agreement, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms hereof.
"Amount Financed" with respect to a Receivable means the aggregate amount
originally advanced under the Receivable toward the purchase price of the
Financed Vehicle and any related costs.
"Annual Percentage Rate" or "APR" of a Receivable means the annual rate of
finance charges stated in the Receivable.
"Authenticating Agent" has the meaning assigned to such term in Section
6.2B.
"Book-Entry Certificates" means beneficial interests in the Class A
Certificates, ownership and transfers of which shall be evidenced or made
through book entries by a Clearing Agency; provided that after the occurrence of
a condition whereupon book-
entry registration and transfer are no longer permitted and Definitive
Certificates are issued to the Certificate Owners, such Definitive Certificates
shall replace Book-Entry Certificates.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in the City of New York, the State in which the
Corporate Trust Office is located, the State in which the executive offices of
the Servicer are located or the State in which the principal place of business
of the Certificate Insurer is located shall be authorized or obligated by law,
executive order, or governmental decree to be closed.
"Casualty" means, with respect to a Financed Vehicle, the total loss or
destruction of such Financed Vehicle.
"Certificate" means any one of the certificates executed by the Trustee on
behalf of the Trust and authenticated by the Trustee in substantially the form
set forth in Exhibit A or Exhibit B hereto.
"Certificate Account" means the account designated as such, established and
maintained pursuant to Section 4.1.
"Certificate Balance" as of any day, means the sum of the Class A
Certificate Balance on such day and the Class B Certificate Balance on such day.
"Certificate Insurer" means Financial Security Assurance Inc., a stock
insurance company organized and created under the laws of the State of New York,
or its successors in interest.
"Certificate Insurer Optional Deposit" means, with respect to any
Determination Date and the related Distribution Date, any amount delivered by
the Certificate Insurer to the Trustee in accordance with Section 4.11.
"Certificate Owner" means, with respect to a Book-Entry Certificate, the
Person who is the beneficial owner thereof as reflected on the books of the
Clearing Agency, or on the books of a Person maintaining an account with such
Clearing Agency (directly or as an indirect participant), in accordance with the
rules of such Clearing Agency.
"Certificate Register" and "Certificate Registrar" mean, respectively, the
register maintained and the Certificate Registrar appointed pursuant to Section
6.3.
"Certificateholder" or "Holder" means the Person in whose name a
Certificate shall be registered in the Certificate Register, except that so long
as any Certificates are
-2-
outstanding, solely for the purposes of giving any consent, waiver, request or
demand pursuant to this Agreement, the interest evidenced by any Certificate
registered in the name of the Seller or the Servicer, or any Affiliate of either
of them, shall not be taken into account in determining whether the requisite
percentage necessary to effect any such consent, waiver, request or demand shall
have been obtained.
"Certificates" means the Class A Certificates and the Class B Certificates.
"Class A Certificate" means any one of the 6.70% Class A Certificates,
executed by the Trustee on behalf of the Trust and authenticated by the Trustee
in substantially the form set forth in Exhibit A hereto.
"Class A Certificate Balance" shall equal, initially, the Class A
Percentage of the Original Pool Balance and, thereafter, shall equal the initial
Class A Certificate Balance, reduced by all amounts previously distributed to
Class A Certificateholders and allocable to principal.
"Class A Certificateholder" means the Person in whose name a Class A
Certificate shall be registered in the Certificate Register.
"Class A Distributable Amount" means, for any Distribution Date, an amount
equal to the sum of the Class A Principal Distributable Amount for such
Distribution Date and the Class A Interest Distributable Amount for such
Distribution Date.
"Class A Guaranteed Distribution Amount" means, with respect to each
Distribution Date, the sum of the Class A Interest Distributable Amount for such
Distribution Date and the Class A Principal Distributable Amount for such
Distribution Date, in each case in accordance with the original terms of the
Class A Certificates when issued and without regard to any amendment or
modification of the Certificates or the Agreement which has not been consented
to by the Certificate Insurer; provided, however, the Class A Guaranteed
Distribution Amount shall not include, nor shall coverage be provided under the
Policy in respect of, any taxes, withholding or other charge imposed with
respect to any Class A Certificateholder by any governmental authority.
"Class A Interest Carryover Shortfall" means, as of the close of any
Distribution Date on which an Insurer Default is continuing, the excess of the
Class A Interest Distributable Amount for such Distribution Date and any
outstanding Class A Interest Carryover Shortfall from the preceding Distribution
Date plus interest on such outstanding Class A Interest Carryover Shortfall, to
the extent permitted by law, at the Class A Pass-
-3-
Through Rate from such preceding Distribution Date through the current
Distribution Date (calculated on the basis of a 360-day year consisting of
twelve 30-day months), over the amount of interest that the Holders of the Class
A Certificates actually received on such current Distribution Date.
"Class A Interest Distributable Amount" means, for any Distribution Date,
an amount equal to thirty (30) days of interest at the Class A Pass-Through Rate
on the Class A Certificate Balance as of the close of business on the last day
of the related Collection Period (calculated on the basis of a 360-day year
consisting of twelve 30-day months); provided, however, that on the first
Distribution Date, the Class A Interest Distributable Amount will equal interest
at the Class A Pass-Through Rate on the Class A Certificate Balance from and
including the Closing Date through and including October 14, 1996.
"Class A Pass-Through Rate" means 6.70% per annum.
"Class A Percentage" shall be ninety-five percent (95%).
"Class A Pool Factor" means, as of a Distribution Date, a seven-digit
decimal figure equal to the Class A Certificate Balance as of the close of
business on such Distribution Date divided by the initial Class A Certificate
Balance. The Class A Pool Factor will be 1.0000000 as of the Closing Date;
thereafter, the Class A Pool Factor will decline to reflect reductions in the
Class A Certificate Balance.
"Class A Principal Carryover Shortfall" means, as of the close of any
Distribution Date on which an Insurer Default is continuing, the excess of the
Class A Principal Distributable Amount and any outstanding Class A Principal
Carryover Shortfall from the preceding Distribution Date, over the amount of
principal that the Holders of the Class A Certificates actually received on such
current Distribution Date.
"Class A Principal Distributable Amount" means, with respect to any
Distribution Date other than the Final Scheduled Distribution Date, the sum of
(a) the Class A Percentage of the sum of the following amounts: (i) the
principal portion of all Scheduled Payments (including amounts transferred from
the Payahead Account to the Certificate Account to be applied to the principal
portion of Scheduled Payments but excluding any other amounts deposited into the
Payahead Account) received during the preceding Collection Period on Rule of
78's Receivables and all payments of principal received on Simple Interest
Receivables during such Collection Period; (ii) the principal portion of all
prepayments in full received during the preceding Collection Period (including
prepayments in full resulting from collections
-4-
with respect to a Receivable received during the preceding Collection Period
plus the transfer of the Payahead Balance with respect to such Receivable to the
Certificate Account pursuant to Section 4.6(a)(ii)) (without duplication of
amounts included in clause (i) above and clause (iv) below); (iii) the portion
of the Purchase Amount allocable to principal of each Receivable that became a
Purchased Receivable as of the last day of the preceding Collection Period and,
at the option of the Certificate Insurer, the Principal Balance of each
Receivable that was required to be but was not so purchased or repurchased
(without duplication of amounts referred to in clauses (i) and (ii) above); (iv)
the Principal Balance of each Receivable that first became a Liquidated
Receivable during the preceding Collection Period (without duplication of the
amounts included in clauses (i) and (ii) above); and (v) the aggregate amount of
Cram Down Losses with respect to the Receivables that have occurred during the
preceding Collection Period; plus (b) the portion of the Certificate Insurer
Optional Deposit pursuant to Section 4.11(ii), if any, allocable to principal
for such Distribution Date. In addition, on the Final Scheduled Distribution
Date, the Class A Principal Distributable Amount will equal the Class A
Certificate Balance as of the Final Scheduled Distribution Date.
"Class B Certificate" means any one of the 11.30% Class B Certificates,
executed by the Trustee on behalf of the Trust and authenticated by the Trustee
in substantially the form set forth in Exhibit B hereto.
"Class B Certificate Balance" shall equal, initially, the Class B
Percentage of the Original Pool Balance and, thereafter, shall equal the initial
Class B Certificate Balance, reduced by all amounts previously distributed to
Class B Certificateholders and allocable to principal.
"Class B Certificateholder" means the Person in whose name a Class B
Certificate shall be registered in the Certificate Register.
"Class B Deficiency" shall have the meaning specified in Section 4.7(c).
"Class B Distributable Amount" means, for any Distribution Date, the sum of
the Class B Principal Distributable Amount and the Class B Interest
Distributable Amount.
"Class B Interest Distributable Amount" means, for any Distribution Date,
an amount equal to thirty (30) days of interest at the Class B Pass-Through Rate
on the Class B Certificate Balance as of the close of business on the last day
of the related Collection Period (calculated on the basis of a 360-day year
consisting of twelve 30-day months); provided,
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however, that on the first Distribution Date, the Class B Interest Distributable
Amount will equal interest at the Class B Pass-Through Rate on the Class B
Certificate Balance from and including the Closing Date through and including
October 14, 1996.
"Class B Interest Carryover Shortfall" means, as of the close of any
Distribution Date, the excess of the Class B Interest Distributable Amount for
such Distribution Date and any outstanding Class B Interest Carryover Shortfall
from the preceding Distribution Date, plus interest on such outstanding Class B
Interest Carryover Shortfall, to the extent permitted by law, at the Class B
Pass-Through Rate from such preceding Distribution Date through the current
Distribution Date (calculated on the basis of a 360-day year consisting of
twelve 30-day months), over the amount of interest that the Holders of the Class
B Certificates actually received pursuant to Section 4.6(c)(vi) on such current
Distribution Date.
"Class B Pass-Through Rate" means 11.30% per annum.
"Class B Percentage" shall be five percent (5%).
"Class B Pool Factor" means, as of a Distribution Date, a seven-digit
decimal figure equal to the Class B Certificate Balance as of the close of
business on such Distribution Date divided by the initial Class B Certificate
Balance. The Class B Pool Factor will be 1.0000000 as of the Closing Date;
thereafter, the Class B Pool Factor will decline to reflect reductions in the
Class B Certificate Balance.
"Class B Principal Carryover Shortfall" means, as of the close of any
Distribution Date, the excess of the Class B Principal Distributable Amount and
any outstanding Class B Principal Carryover Shortfall from the preceding
Distribution Date, over the amount of principal that the Holders of the Class B
Certificates actually received.
"Class B Principal Distributable Amount" means, with respect to any
Distribution Date, the Class B Percentage of the sum of the following amounts:
(i) the principal portion of all Scheduled Payments received during the
preceding Collection Period on Rule of 78's Receivables and all payments of
principal received on Simple Interest Receivables during such Collection Period
(including amounts transferred from the Payahead Account to the Certificate
Account to be applied to the principal portion of Scheduled Payments but
excluding any other amounts deposited into the Payahead Account); (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
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Collection Period plus the transfer of the Payahead Balance with respect to such
Receivable to the Certificate Account pursuant to Section 4.6(a)(ii)) (without
duplication of amounts included in clause (i) above and clause (iv) below);
(iii) the portion of the Purchase Amount allocable to principal of each
Receivable that became a Purchased Receivable as of the last day of the
preceding Collection Period and, at the option of the Certificate Insurer, the
Principal Balance of each Receivable that was required to be but was not so
purchased or repurchased (without duplication of amounts referred to in clauses
(i) and (ii) above); (iv) the Principal Balance of each Receivable that first
became a Liquidated Receivable during the preceding Collection Period (without
duplication of the amounts included in clause (i) and (ii) above); and (v) the
aggregate amount of Cram Down Losses with respect to the Receivables that have
occurred during the preceding Collection Period. In addition, on the Final
Scheduled Distribution Date, the Class B Principal Distributable Amount will
equal the Class B Certificate Balance as of the Final Scheduled Distribution
Date.
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended, or
any successor provision thereto. The initial Clearing Agency shall be The
Depository Trust Company ("DTC").
"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
"Closing Date" means September 26, 1996.
"Code" shall have the meaning specified in Section 2.6.
"Collateral Agent" means, the Collateral Agent named in the Spread Account
Agreement, and any successor thereto pursuant to the terms of the Spread Account
Agreement.
"Collection Account" means the account designated as such, established and
maintained pursuant to Section 4.1.
"Collection Period" means each calendar month during the term of this
Agreement or, in the case of the initial Collection Period, the period from and
excluding the Cutoff Date to and including the last day of the month in which
the Cutoff Date occurred. Any amount stated "as of the close of business on the
last day of a Collection Period" shall give effect to the following calculations
as determined as of the end of the day on such last day: (1) all applications of
collections, (2) all
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current and previous Payaheads, (3) all applications of Payahead Balances and
(4) all distributions.
"Compensating Interest" means, with respect to all Simple Interest
Receivables for which the Scheduled Payment for any Collection Period is
received prior to the date on which such Scheduled Payment is due or for which
any prepayment is otherwise received, an amount equal to the aggregate of the
positive differences, if any, with respect to each such Simple Interest
Receivable between (x) the sum of (a) 30 days' interest at an interest rate
equal to the weighted average of the Class A Pass- Through Rate and the Class B
Pass-Through Rate (weighted by relative Class A Certificate Balance and Class B
Certificate Balance) on the Principal Balance of each such Simple Interest
Receivable as of the first day of the related Collection Period and (b) the
product of (i) one twelfth of the sum of (A) the Servicing Rate and (B) the per
annum rate at which the Premium is calculated pursuant to the Premium Side
Letter and (ii) the Principal Balance of such Simple Interest Receivable as of
the first day of the related Collection Period and (y) the product of (i) the
interest actually paid by the related Obligor with respect to such Simple
Interest Receivable with respect to such Collection Period and (ii) a fraction,
the numerator of which is the sum of (a) such weighted average of the Class A
Pass-Through Rate and the Class B Pass-Through Rate referred to in (x)(a) above,
(b) the Servicing Rate and (c) the per annum rate at which the Premium is
calculated pursuant to the Premium Side Letter, and the denominator of which is
the APR of such Simple Interest Receivable.
"Confidential Information" means, in relation to any Person, any written
information delivered or made available by or on behalf of CPS or the 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.
"Corporate Trust Office" means the office of the Trustee at which its
corporate trust business shall be administered, which office at the date of this
Agreement is located at Sixth Street and Marquette Avenue, Minneapolis,
Minnesota 55479-0070.
"CPS" means Consumer Portfolio Services, Inc., a California corporation and
its successors.
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"Cram Down Loss" means, with respect to a Receivable, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the amount owed on a Receivable or otherwise modifying or restructuring
Scheduled Payments to be made on a Receivable, an amount equal to such reduction
in Principal Balance of such Receivable or the reduction in the net present
value (using as the discount rate the lower of the contract rate or the rate of
interest specified by the court in such order) of the Scheduled Payments as so
modified or restructured. A "Cram Down Loss" shall be deemed to have occurred on
the date such order is entered.
"Cutoff Date" means September 18, 1996.
"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 specified in Section
4.7(a).
"Deficiency Claim Date" means, with respect to any Distribution Date, the
fourth Business Day preceding such Distribution Date.
"Deficiency Notice" shall have the meaning specified in Section 4.7(a).
"Definitive Certificates" shall have the meaning specified in Section 6.8.
"Depository Agreement" means the agreement among the Seller, the Trustee
and the Clearing Agency in the form attached hereto as Exhibit G.
"Determination Date" means the earlier of (i) the seventh Business Day of
each calendar month and (ii) the fifth Business Day preceding the related
Distribution Date.
"Distribution Date" means, for each Collection Period, the 15th day of the
following month, or if the 15th day is not a Business Day, the next following
Business Day, commencing October 15, 1996.
"Eligible Account" means (i) a segregated trust account that is maintained
with a depository institution acceptable to the Certificate 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
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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 Ratings Group and "P-1" by Moody's Investors Service, Inc. and
(so long as an Insurer Default shall not have occurred and be continuing)
acceptable to the Certificate Insurer.
"Eligible Investments" mean book-entry securities, negotiable instruments
or securities represented by instruments in bearer or registered form which
evidence:
(a) direct obligations of, and obligations fully guaranteed as to the
full and timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of the
United States of America or any State thereof (or any domestic branch of a
foreign bank) and subject to supervision and examination by Federal or
State banking or depository institution authorities; provided, however,
that at the time of the investment or contractual commitment to invest
therein, the commercial paper or other short-term unsecured debt
obligations (other than such obligations the rating of which is based on
the credit of a Person other than such depository institution or trust
company) thereof shall be rated "A-1+" by Standard & Poor's and "P-1" by
Moody's;
(c) commercial paper that, at the time of the investment or
contractual commitment to invest therein, is rated "A-1+" by Standard &
Poor's and "P-1" by Moody's;
(d) bankers' acceptances issued by any depository institution or trust
company referred to in clause (b) above;
(e) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed as to the full and timely payment
by, the United States of America or any agency or instrumentality thereof
the obligations of which are backed by the full faith and credit of the
United States of America, in either case entered into with (i) a depository
institution or trust company (acting as principal) described in clause (b)
or (ii) a depository institution or trust company whose commercial paper or
other short term unsecured debt obligations are rated "A-1+" by Standard &
Poor's and "P-1" by Moody's and long term unsecured debt obligations are
rated "AAA" by Standard & Poor's and "Aaa" by Moody's;
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(f) with the prior written consent of the Certificate Insurer, money
market mutual funds registered under the Investment Company Act of 1940, as
amended, having a rating, at the time of such investment, from each of the
Rating Agencies in the highest investment category granted thereby; and
(g) any other investment as may be acceptable to the Certificate
Insurer, as evidenced by a writing to that effect, as may from time to time
be confirmed in writing to the Trustee by the Certificate Insurer.
Any Eligible Investments may be purchased by or through the Trustee or any
of its Affiliates.
"ERISA" shall have the meaning specified in Section 2.6.
"Event of Default" means an event specified in Section 9.1.
"Final Scheduled Distribution Date" shall be the February 2002 Distribution
Date.
"Financed Vehicle" means a new or used automobile, light truck, van or
minivan, together with all accessions thereto, securing an Obligor's
indebtedness under a Receivable.
"Insolvency Proceeding" shall have the meaning specified in Section 9.5(b).
"Insurance Agreement" means the Insurance and Indemnity Agreement among
CPS, the Seller, and the Certificate Insurer, dated as of September 1, 1996, 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.
"Insurer Default" shall mean any one of the following events shall have
occurred and be continuing:
(i) the Certificate Insurer fails to make a payment required under the
Policy in accordance with its terms;
(ii) the Certificate Insurer (A) files any petition or commences any
case or proceeding under any provision or chapter of the United States
Bankruptcy Code, the New York Department of Insurance Code or similar
Federal or State law relating to insolvency, bankruptcy, rehabilitation,
liquidation or reorganization, (B) makes a general assignment for the
benefit of its creditors or (C) has an
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order for relief entered against it under the United States Bankruptcy Code
or any other similar Federal or State law relating to insolvency,
bankruptcy, rehabilitation, liquidation or reorganization which is final
and nonappealable; or
(iii) a court of competent jurisdiction, the New York Department of
Insurance or other competent regulatory authority enters a final and
nonappealable order, judgment or decree (A) appointing a custodian,
trustee, agent or receiver for the Certificate Insurer or for all or any
material portion of its property or (B) authorizing the taking of
possession by a custodian, trustee, agent or receiver of the Certificate
Insurer (or the taking of possession of all or any material portion of the
property of the Certificate Insurer).
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens, mechanics' liens, and any liens
that may attach to a Financed Vehicle by operation of law.
"Liquidated Receivable" means any Receivable (i) which has been liquidated
by the Servicer through the sale of the Financed Vehicle or (ii) for which the
related Financed Vehicle has been repossessed and 90 days have elapsed since the
date of such repossession or (iii) as to which an Obligor has failed to make
more than 90% of a Scheduled Payment of more than ten dollars for 120 or more
days as of the end of a Collection Period or (iv) with respect to which proceeds
have been received which, in the Servicer's judgment, constitute the final
amounts recoverable in respect of such Receivable.
"Liquidation Proceeds" means, with respect to a Liquidated Receivable, the
monies collected from whatever source during the Collection Period in which such
Receivable became a Liquidated Receivable, net of the reasonable costs of
liquidation, including reasonable expenses of the Servicer in connection with
such liquidation, plus any amounts required by law to be remitted to the
Obligor.
"Lock-Box Account" means the segregated account designated as such,
established and maintained pursuant to Section 4.1.
"Lock-Box Agreement" means the Tri-Party Remittance Processing Agreement,
dated the Closing Date, among the Servicer, the Lock-Box Processor and the
Trustee, as such agreement may be amended, modified or otherwise supplemented
from time to time in accordance with its terms or the terms hereof, unless such
Agreement shall be terminated in accordance with its terms or the terms hereof,
in which event "Lock-Box Agreement" shall mean such
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other agreement, in form and substance acceptable to the Certificate Insurer,
among the Servicer, the Lock-Box Processor and the Trustee.
"Lock-Box Bank" means, as of any date, a depository institution named by
the Servicer and acceptable to the Certificate Insurer at which the Lock-Box
Account is established and maintained as of such date.
"Lock-Box Processor" means initially Cash Flex, L.P. and its successors or
any replacement Lock-Box Processor acceptable to the Certificate Insurer under
the Lock-Box Agreement.
"Moody's" means Moody's Investors Service, Inc., and any successors
thereof.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
related Financed Vehicle or any other Person who owes or may be liable for
payments under such Receivable.
"Officer's Certificate" means a certificate signed by the chairman of the
board, the president, any vice chairman of the board, any vice president, the
treasurer, the controller or any assistant treasurer or any assistant controller
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 Servicer, which counsel shall be acceptable to
the Trustee and the Certificate Insurer and which opinion shall be acceptable to
the Trustee and the Certificate Insurer in form and substance.
"Optional Purchase Percentage" means 10%.
"Original Class A Principal Balance" means the product of the Class A
Percentage and the Original Pool Balance.
"Original Class B Principal Balance" means the product of the Class B
Percentage and the Original Pool Balance.
"Original Pool Balance" means $92,129,299.54.
"Payahead" on a Rule of 78's Receivable means the amount, as of the close
of business on the last day of a Collection Period, determined in accordance
with Section 4.3 with respect to such Rule of 78's Receivable.
"Payahead Account" means the account designated as such, established and
maintained pursuant to Section 4.1. The Payahead Account shall be held by the
Trustee but shall be primarily for
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the benefit of the Obligors of Rule of 78's Receivables and shall not be part of
the Trust.
"Payahead Balance" on a Rule of 78's Receivable means the sum, as of the
close of business on the last day of a Collection Period, of all Payaheads made
by or on behalf of the Obligor with respect to such Rule of 78's Receivable, as
reduced by applications of previous Payaheads with respect to such Rule of 78's
Receivable, pursuant to Sections 4.3 and 4.4.
"Paying Agent" has the meaning assigned to such term in Section 6.2A.
"Person" means any individual, corporation, limited liability company,
estate, partnership, joint venture, association, joint stock company, trust,
unincorporated organization, or government or any agency or political
subdivision thereof.
"Policy" means the Financial Guaranty Insurance Policy No. 50509-N issued
by the Certificate Insurer for the benefit of the Holders of the Class A
Certificates issued hereunder, including any endorsements thereto.
"Policy Claim Amount" with respect to a Distribution Date, means the sum
of: (I) the lesser of (i) the amount required to be distributed pursuant to
Section 4.6(c)(v), and (ii) the excess of the sum of the amounts required to be
distributed pursuant to Section 4.6(c)(i) through (v) over the sum of the Total
Distribution Amount and the amount distributed (or available to be distributed)
in respect of the Deficiency Claim Amount, plus (II) the lesser of (i) the
amount required to be distributed pursuant to Section 4.6(c)(vii), and (ii) the
excess of the sum of the amounts required to be distributed pursuant to Section
4.6(c)(i) through (vii) over the sum of the Total Distribution Amount and the
amount distributed (or available to be distributed) in respect of the Deficiency
Claim Amount.
"Policy Payments Account" means the segregated trust account created by the
Servicer under Section 4.1.
"Pool Balance" as of the close of business on the last day of a Collection
Period means the aggregate Principal Balance of the Receivables (excluding
Liquidated and Purchased Receivables).
"Post-Office Box" means the separate post-office box in the name of the
Trustee for the benefit of the Certificateholders and the Certificate Insurer,
established and maintained pursuant to Section 4.1.
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"Preference Claim" shall have the meaning specified in Section 9.5(b).
"Premium" has the meaning specified in the Premium Side Letter.
"Premium Side Letter" means the letter agreement among the Seller, the
Trustee and the Certificate Insurer referring to payment of the Premium.
"Principal Balance" of a Receivable, as of the close of business on the
last day of a Collection Period means the Amount Financed minus the sum of the
following amounts without duplication: (i) in the case of a Rule of 78's
Receivable, that portion of all Scheduled Payments actually received on or prior
to such day allocable to principal using the actuarial or constant yield method;
(ii) in the case of a Simple Interest Receivable, that portion of all Scheduled
Payments actually received on or prior to such day allocable to principal using
the Simple Interest Method; (iii) any payment of the Purchase Amount with
respect to the Receivable allocable to principal; (iv) any Cram Down Loss in
respect of such Receivable; and (v) any prepayment in full or any partial
prepayment applied to reduce the Principal Balance of the Receivable.
"Purchase Agreement" means the Purchase Agreement dated as of September 1,
1996, by and between the Seller and CPS, as such agreement may be amended,
modified or otherwise supplemented from time to time in accordance with the
terms thereof, relating to the purchase of the Receivables by the Seller from
CPS.
"Purchase Amount" means, with respect to a Receivable, the amount, as of
the close of business on the last day of a Collection Period, required to prepay
in full such Receivable under the terms thereof including interest thereon to
the end of the month of purchase.
"Purchased Receivable" means a Receivable purchased as of the close of
business on the last day of a Collection Period by the Servicer pursuant to
Section 3.7 or by CPS pursuant to Section 2.6 or Section 2.8.
"Rating Agency" means Standard & Poor's and Moody's and any successors
thereof. If such organization or successor is no longer in existence, "Rating
Agency" shall be such nationally recognized statistical rating organization or
other comparable Person designated by the Certificate Insurer, notice of which
designation shall be given to the Trustee and the Servicer.
"Receivable" means each retail installment sale contract for a Financed
Vehicle which shall appear on Schedule A to this
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Agreement (which Schedule A may be in the form of microfiche) and all rights and
obligations thereunder except for Receivables that shall have become Purchased
Receivables.
"Receivable Files" means the documents specified in Section 2.7.
"Record Date" means the tenth day of the calendar month in which a
Distribution Date occurs.
"Recoveries" means, with respect to a Liquidated Receivable, the monies
collected from whatever source, during any Collection Period following the
Collection Period in which such Receivable became a Liquidated Receivable, net
of the reasonable costs of liquidation plus any amounts required by law to be
remitted to the Obligor.
"Reimbursement Obligations" means, with respect to each Distribution Date,
any amounts due to the Certificate Insurer under the terms hereof or under the
Insurance Agreement and with respect to which the Certificate Insurer has not
been previously paid.
"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.
"Scheduled Payment" means, for any Collection Period for any Receivable,
the amount indicated in such Receivable as required to be paid by the Obligor in
such Collection Period (without giving effect to deferments of payments pursuant
to Section 3.2 or any rescheduling of payments in any insolvency or similar
proceedings).
"Seller" means CPS Receivables Corp., as the seller of the Receivables
under this Agreement, and each of its successors pursuant to Section 7.3.
"Servicer" means CPS as the servicer of the Receivables which were
purchased by the Seller, and each successor to CPS (in the same capacity)
pursuant to Section 8.3(a) or 9.2.
"Servicer's Certificate" means a certificate completed and executed by a
Servicing Officer pursuant to Section 3.9, substantially in the form of Exhibit
E-2.
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"Servicing Assumption Agreement" means the Servicing Assumption Agreement,
dated as of September 1, 1996, among CPS, the Standby Servicer and the Trustee,
as the same may be amended, supplemented or otherwise modified from time to time
in accordance with the terms thereof.
"Servicing Fee" means the fee payable to the Servicer for services rendered
during the respective Collection Period, determined pursuant to Section 3.8.
"Servicing Officer" means any Person whose name appears on a list of
Servicing Officers delivered to the Trustee and the Certificate Insurer, as the
same may be amended from time to time.
"Servicing Rate" shall be 2.12% per annum, payable monthly, provided,
however, that if the Standby Servicer becomes the successor Servicer, the
"Servicing Rate" shall be equal to a percentage per annum determined pursuant to
the Servicing Assumption Agreement not to exceed 3.00% per annum.
"Simple Interest Method" means the method of allocating a fixed level
payment between principal and interest, pursuant to which the portion of such
payment that is allocated to interest is equal to the product of the APR
multiplied by the unpaid balance multiplied by the period of time (expressed as
a fraction of a year, based on the actual number of days in the calendar month
and the actual number of days in the calendar year) elapsed since the preceding
payment of interest was made and the remainder of such payment is allocable to
principal.
"Simple Interest Receivable" means any Receivable under which the portion
of a payment allocable to interest and the portion allocable to principal is
determined in accordance with the Simple Interest Method.
"Spread Account" means, with respect to the Trust and similar trusts to be
established by the Seller, the Spread Account established and maintained
pursuant to the Spread Account Agreement. The Spread Account shall be held by
the Collateral Agent and shall in no event be deemed part of the Trust.
"Spread Account Agreement" means the Master Spread Account Agreement among
the Seller, the Certificate Insurer, the Collateral Agent and the Trustee, as
amended and restated as of September 1, 1996, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.
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"Standard & Poor's" means Standard & Poor's Ratings Services, a division of
McGraw-Hill, Inc., and any successors thereof.
"Standby Fee" means the fee payable to the Standby Servicer so long as CPS
is the Servicer calculated in the same manner, on the same basis and for the
same period as the Servicing Fee is calculated pursuant to Section 3.8 based on
a rate of 0.08% per annum rather than the Servicing Rate.
"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 shall have been appointed Standby
Servicer pursuant to Section 9.2(c).
"State" means any State of the United States of America, or the District of
Columbia.
"Total Distribution Amount" shall mean, for each Distribution Date, the sum
of the following amounts with respect to the preceding Collection Period: (i)
all collections on Receivables (including amounts transferred from the Payahead
Account to the Certificate Account pursuant to Section 4.6(a)(ii) but excluding
amounts deposited into the Payahead Account); (ii) Liquidation Proceeds received
during the Collection Period with respect to Receivables that became Liquidated
Receivables during the Collection Period in accordance with the Servicer's
customary servicing procedures; (iii) proceeds from Recoveries with respect to
Liquidated Receivables; (iv) the Purchase Amount of each Receivable that became
a Purchased Receivable as of the last day of the Collection Period, and (v) the
amount of any Certificate Insurer Optional Deposit into the Collection Account
pursuant to Section 4.11(iii) with respect to such Distribution Date, and any
earnings on investments of funds in the Collection Account and the Payahead
Account pursuant to Section 4.1(a).
"Trust" means the trust created by this Agreement, the estate of which
shall consist of the Trust Assets.
"Trust Assets" means that property set forth in items (i) through (viii) in
Section 2.2 and the Policy for the benefit of the Class A Certificateholders.
"Trustee" means the Person acting as Trustee under this Agreement, its
successor in interest, and any successor trustee pursuant to Section 10.11.
"Trustee Fee" means the monthly fee payable on each Distribution Date to
the Trustee for services rendered during the preceding Collection Period in an
amount equal to the product of
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(i) one-twelfth of 0.015% and (ii) the Pool Balance of the last day of the
second preceding Collection Period, distributed in accordance with Section
4.6(c); provided, however, that with respect to the initial Distribution Date,
such monthly fee shall be an amount equal to the product of (i) one-twelfth of
0.015% and (ii) the Pool Balance as of the close of the Cutoff Date.
"Trustee Officer" means any vice president, any assistant vice president,
any assistant secretary, any assistant treasurer, any trust officer, or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Trustee's Certificate" means a certificate completed and executed for the
Trustee by a Trustee Officer pursuant to Section 10.2, substantially in the form
of, in the case of an assignment to CPS, Exhibit C-1 and in the case of an
assignment to the Servicer, Exhibit C-2.
"UCC" means the Uniform Commercial Code as in effect in the respective
jurisdiction.
SECTION 1.2. Usage of Terms. With respect to all terms in this Agreement,
the singular includes the plural and the plural the singular; words importing
any gender include the other genders; references to "writing" include printing,
typing, lithography, and other means of reproducing words in a visible form;
references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the term "including"
means "including without limitation."
SECTION 1.3. Section References. All section references shall be to
Sections in this Agreement.
SECTION 1.4. Limitation on Trust Fund Activities. Notwithstanding any other
provision in this Agreement to the contrary, the Trustee shall have no power to
vary the investment of the Certificateholders within the meaning of Treasury
Department Regulation ss. 301.7701-4(c) or to engage in business unless the
Trustee and the Certificate Insurer shall have received an Opinion of Counsel
that such activity shall not cause the Trust to be an association taxable as a
corporation for federal income tax purposes.
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SECTION 1.5. Calculations. All calculations of the amount of interest
accrued on the Certificates and all calculations of the amount of the Servicing
Fee and the Trustee Fee shall be made on the basis of a 360-day year consisting
of twelve 30-day months. All references to the Principal Balance of a Receivable
as of the last day of a Collection Period shall refer to the close of business
on such day.
SECTION 1.6. Action by or Consent of Certificateholders. Whenever any
provision of this Agreement refers to action to be taken, or consented to, by
Certificateholders, such provision shall be deemed to refer to
Certificateholders of record as of the Record Date immediately preceding the
date on which such action is to be taken, or consent given, by
Certificateholders. Solely for the purposes of any action to be taken, or
consented to, by Certificateholders, any Certificate registered in the name of
the Seller, CPS or any Affiliate thereof shall be deemed not to be outstanding
and shall not be taken into account in determining whether the requisite
interest necessary to effect any such action or consent has been obtained;
provided, however, that, solely for the purpose of determining whether the
Trustee is entitled to rely upon any such action or consent, only Certificates
which the Trustee knows to be so owned shall be so disregarded.
SECTION 1.7. Material Adverse Effect. Whenever a determination is to be
made under this Agreement as to whether a given event, action, course of conduct
or set of facts or circumstances could or would have a material adverse effect
on the Trust or the Certificateholders (or any similar or analogous
determination), such determination shall be made without taking into account the
insurance provided by the Policy.
ARTICLE II
The Trust and Trust Property
SECTION 2.1. Creation of Trust. Upon the execution of this Agreement by the
parties hereto, there is hereby created the CPS Auto Grantor Trust 1996-2.
SECTION 2.2. Conveyance of Receivables. In consideration of the Trustee's
delivery of Certificates in an aggregate principal amount equal to the Original
Pool Balance to or upon the written order of the Seller, the Seller does hereby
sell, transfer, assign, set over and otherwise convey to the Trustee, in trust
for the benefit of the Certificateholders, without recourse, except as provided
in Sections 2.5, 2.6 and 2.8 (subject to the obligations herein):
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(i) all right, title and interest of the Seller in and to the
Receivables listed in Schedule A hereto and, with respect to Rule of 78's
Receivables, all monies due or to become due thereon after the Cutoff Date
(including Scheduled Payments due after the Cutoff Date (including
principal prepayments relating to such Scheduled Payments) but received by
the Seller or CPS on or before the Cutoff Date) and, with respect to Simple
Interest Receivables, all monies received thereunder after the Cutoff Date
and all Liquidation Proceeds and Recoveries received with respect to such
Receivables;
(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 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
Purchase Agreement, including a direct right to cause CPS to purchase
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,
refunds of unearned premiums with respect to credit life and credit
accident and health insurance policies or certificates covering an Obligor
or Financed Vehicle or his or her obligations with respect to a Financed
Vehicle and any recourse to Dealers for any of the foregoing;
(vi) the Receivable File related to each Receivable;
(vii) all amounts and property from time to time held in or credited
to the Collection Account, the Lock-Box Account, the Policy Payments
Account or the Certificate Account; and
(viii) the proceeds of any and all of the foregoing.
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In addition, the Seller shall cause the Policy to be issued to and
delivered to the Trust for the benefit of the Certificateholders.
SECTION 2.3. Transfer Intended as Sale; Precautionary Security Interest.
The conveyance to the Trust of the property set forth in Section 2.2 above is
intended as a sale free and clear of all Liens, and it is intended that the
property of the Trust shall not be part of the 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, however, that notwithstanding the intent of CPS,
the Seller and the Trustee, the transfer under this Agreement is held not to be
a sale, this Agreement shall constitute a grant of a security interest in the
property described in Section 2.2 above, for the benefit of the
Certificateholders and the Certificate Insurer as their interests may appear
herein.
SECTION 2.4. Acceptance by Trustee. The Trustee does hereby accept all
consideration conveyed by the Seller pursuant to Section 2.2, and declares that
the Trustee shall hold such consideration upon the trusts herein set forth for
the benefit of all present and future Certificateholders, subject to the terms
and provisions of this Agreement.
SECTION 2.5. Representations and Warranties of Seller. The Seller makes the
following representations and warranties as to the Receivables to the
Certificate Insurer and to the Trustee, on which the Certificate Insurer relies
in executing and delivering the Policy, and on which the Trustee on behalf of
itself and the Certificateholders relies in accepting the items specified in
Section 2.2 in trust and executing and authenticating the Certificates. Such
representations and warranties speak as of the Closing Date, but shall survive
the sale, transfer, and assignment of the Receivables to the Trustee.
(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 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 in the Financed
Vehicle, which security interest has been assigned by CPS to the Seller,
which in 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,
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(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 15.00%,
(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 84.35% of the aggregate Principal Balance of the
Receivables, constituting 87.83% 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 29.28% of the
aggregate Principal Balance of the Receivables as of the Cutoff Date were
originated in the State of California; approximately 50.46% of the
aggregate Principal Balance of the Receivables as of the Cutoff Date were
originated under the CPS alpha program; approximately 16.04% of the
aggregate Principal Balance of the Receivables as of the Cutoff Date were
originated under the CPS delta program; the remaining 33.26% of the
Receivables were originated under the CPS standard program; approximately
0.24% of the aggregate Principal Balance of the Receivables as of the
Cutoff Date were acquired by CPS from another party; no Receivable shall
have a payment that is more than 30 days overdue as of the Cutoff Date;
45.18% of the Receivables are Rule of 78's Receivables and 54.82% of the
Receivables are Simple Interest Receivables; each Receivable shall have a
final scheduled payment due no later than October 20, 2001; each Receivable
has an original term to maturity of at least 18 months and not more than 60
months and a remaining term to maturity of not less than 11 months nor
greater than 60 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 Certificateholders 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,
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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 Magnuson-Moss 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) Binding Obligation. Each Receivable represents the genuine,
legal, valid and binding payment obligation in writing of the Obligor,
enforceable by the holder thereof in accordance with its terms.
(v) 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.
(vi) 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).
(vii) 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.
(viii) No Waiver. No provision of a Receivable has been waived.
(ix) 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.
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(x) No Defenses. As of the Closing Date, 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.
(xi) 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.
(xii) 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.
(xiii) 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 that each Receivable requires the Obligor to obtain and
maintain such insurance naming CPS 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 as policyholder
(creditor) under each such insurance policy and certificate of insurance
and (C) as to each Receivable that finances the cost of an extended service
contract, the respective Financed Vehicle which secures the Receivable is
covered by an extended service contract.
(xiv) 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
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sold, transferred, assigned, or pledged by the Seller to any Person other
than the Trustee. 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 Trustee for the benefit of the
Certificateholders and the Certificate 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.
(xv) 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 Certificates 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.
(xvi) All Filings Made. All filings (including, without limitation,
UCC filings) necessary in any jurisdiction to give the Trustee a first
priority perfected ownership interest in the Receivables have been made.
(xvii) 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.
(xviii) Chattel Paper. Each Receivable constitutes "chattel paper"
under the UCC.
(xix) Title Documents. (A) If the Receivable was originated in a State
in which notation of security interest on the title document of the related
Financed Vehicle is required or permitted to perfect such security
interest, the title document of the related Financed Vehicle for such
Receivable shows, or if a new or replacement title document is being
applied for with respect to such Financed Vehicle the title document (or,
with respect to Receivables originated in the State of Michigan, all other
evidence of ownership with respect to such Financed Vehicle) will be
received within 180 days and will show, CPS 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
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under the UCC is required to perfect a security interest in motor vehicles,
such filings or recordings have been duly made and show CPS named as the
original secured party under the related Receivable, and in either case,
the Trustee has the same rights as such secured party has or would have (if
such secured party were still the owner of the Receivable) against all
parties claiming an interest in such Financed Vehicle. With respect to each
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 as first lienholder has been applied for.
(xx) 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.
(xxi) Tax Liens. As of the Cutoff Date, there is no lien against the
related Financed Vehicle for delinquent taxes.
(xxii) Characteristics of Obligors. As of the date of each Obligor's
application for the loan from which the related Receivable arises, such
Obligor (a) did not have any material past due credit obligations or any
personal or real property repossessed or wages garnished within one year
prior to the date of such application, unless such amounts have been repaid
or discharged through bankruptcy, (b) was not the subject of any Federal,
State or other bankruptcy, insolvency or similar proceeding pending on the
date of application that is not discharged, (c) had not been the subject of
more than one Federal, State or other bankruptcy, insolvency or similar
proceeding, and (d) was domiciled in the United States.
(xxiii) Origination Date. Each Receivable has an origination date on
or after February 18, 1995.
(xxiv) Maturity of Receivables. Each Receivable has an original term
to maturity of not less than 18 months and not more than 60 months; the
weighted average original term to maturity of the Receivables is 55.54
months as of the Cutoff Date; the remaining term to maturity of each
Receivable was
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60 months or less as of the Cutoff Date; the weighted average remaining
term to maturity of the Receivables was 54.20 months as of the Cutoff Date.
(xxv) Scheduled Payments. Each Receivable had an original principal
balance of not less than $2,808 nor more than $28,982 has an outstanding
principal balance as of the Cutoff Date of not less than $2,492 nor more
than $27,970 and has a first Scheduled Payment due on or prior to October
31, 1996.
(xxvi) Origination of Receivables. Based on the billing address of the
Obligors and the Principal Balances as of the Cutoff Date, approximately
27.32% of the Receivables were originated in California, approximately
9.64% of the Receivables were originated in Pennsylvania, approximately
9.00% of the Receivables were originated in Florida, approximately 6.81% of
the Receivables were originated in Texas and the remaining 47.23% of the
Receivables were originated in other States.
(xxvii) 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.
(xxviii) Location of Receivable Files. A complete Receivable File with
respect to each Receivable has been or prior to the Closing Date will be
delivered to the Trustee at the location listed in Schedule B.
(xxix) Casualty. No Financed Vehicle has suffered a Casualty.
(xxx) Principal Balance/Number of Contracts. As of the Cutoff Date,
the total aggregate principal balance of the Receivables was
$92,129,299.54. The Receivables are evidenced by 7,346 Contracts.
(xxxi) 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 2.6. Repurchase Upon Breach. The Seller, the Servicer, the
Certificate Insurer or the Trustee, as the case may
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be, shall inform the other parties to this Agreement and the Certificate Insurer
promptly, in writing, upon the discovery of any breach of the Seller's
representations and warranties made pursuant to Section 2.5 (without regard to
any limitation 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 Certificate Insurer or receipt by the
Trustee and the Certificate Insurer of notice from the Seller or the Servicer of
such breach, CPS shall repurchase any Receivable if 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
Trust is materially and adversely affected by such breach, unless the breach
shall have been cured by 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 4.5. For purposes of this Section, the Purchase Amount of a Receivable
which is not consistent with the warranty pursuant to Section 2.5(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 Trustee,
the Trust, the Certificateholders or the Certificate Insurer with respect to a
breach of representations and warranties pursuant to Section 2.5 shall be to
enforce CPS's obligation to purchase such Receivables pursuant to the Purchase
Agreement; provided, however, that CPS shall indemnify the Trustee, the Standby
Servicer, the Collateral Agent, the Certificate Insurer, the Trust and the
Certificateholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third party claims
arising out of the events or facts giving rise to such breach. 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. 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 Certificate by a Holder constitutes a violation of the
prohibited transaction rules of the Employee Retirement Income Security Act of
1974, as amended
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("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 2.5 if not otherwise such a breach.
SECTION 2.7. Delivery of Receivable Files. On or prior to the Closing Date,
the Seller shall transfer and deliver to the Trustee at the offices specified in
Schedule B to this Agreement with respect to each Receivable the following:
(i) The fully executed original of the Receivable (together with any
agreements modifying the Receivable, including without limitation, any
extension agreements).
(ii) The original certificate of title in the name of CPS or such
documents that CPS shall keep on file, in accordance with its customary
procedures, evidencing the security interest of CPS in the Financed Vehicle
or, if not yet received, a copy of the application therefor showing CPS as
secured party.
The Servicer shall hold all other documents with respect to the Receivables as
custodian for the Trust.
SECTION 2.8. 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 Certificateholders. The Trustee agrees to review each
file delivered to it no later than 45 days after the Closing Date to determine
whether such Receivable Files contain the documents referred to in Section
2.7(i) and (ii). If the Trustee has found or finds that a file for a Receivable
has not been received, or that a file is unrelated to the Receivables identified
in Schedule A to this Agreement or that any of the documents referred to in
Section 2.7(i) or (ii) are not contained in a Receivable File, the Trustee shall
inform CPS, the Seller, the Standby Servicer and the Certificate Insurer
promptly, in writing, of the failure to receive a file with respect to such
Receivable (or of the failure of any of the aforementioned documents to be
included in the Receivable File) or shall return to CPS as the Seller's designee
any file unrelated to a Receivable identified in Schedule A to this Agreement
(it being
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understood that the Trustee's obligation to review the contents of any
Receivable File shall be limited as set forth in the preceding sentence). Unless
such defect with respect to such Receivable File shall have been cured by the
last day of the second Collection Period following discovery thereof by the
Trustee, CPS shall repurchase any such Receivable as of such last day. In
consideration of the purchase of the Receivable, CPS shall remit the Purchase
Amount, in the manner specified in Section 4.5. The sole remedy of the Trustee,
the Trust, or the Certificateholders with respect to a breach pursuant to this
Section 2.8 shall be to require CPS to purchase the Receivables pursuant to this
Section 2.8. Upon receipt of the Purchase Amount and written instructions from
the Servicer, the Trustee shall release to CPS or its designee the related
Receivables File and shall execute and deliver all reasonable instruments of
transfer or assignment, without recourse, as are prepared by CPS and delivered
to the Trustee and are necessary to vest in CPS or such designee title to the
Receivable. The Trustee shall make a list of Receivables for which an
application for a certificate of title but not an original certificate of title
or, with respect to Receivables originated in the State of Michigan, a "Form
RD108" stamped by the Department of Motor Vehicles, is included in the
Receivable File as of the date of its review of the Receivable Files and deliver
a copy of such list to the Servicer and the Certificate Insurer. On the date
which is 180 days following the Closing Date or the next succeeding Business
Day, the Trustee shall inform CPS and the other parties to this Agreement and
the Certificate Insurer of any Receivable for which the related Receivable File
on such date does not include an original certificate of title or, with respect
to Financed Vehicles in the State of Michigan, for which the related Receivable
File on such date does not include a "Form RD108" stamped by the Department of
Motor Vehicles, and CPS shall repurchase any such Receivable as of the last day
of the current Collection Period.
SECTION 2.9. Access to Receivable Files. The Trustee shall permit the
Servicer, any Certificateholder and the Certificate Insurer access to the
Receivable Files at all reasonable times during the Trustee's normal business
hours; provided, however, that the Trustee shall provide such access to any
Certificateholder only (i) in such cases where the Trustee is required by
applicable statutes or regulations (whether applicable to the Trustee, the
Servicer or to such Certificateholder) to permit such Certificateholder to
review the Receivable Files or (ii) if an Insurer Default shall have occurred
and be continuing. In addition, the Trustee shall provide such access to any
Certificateholder at all reasonable times during the Trustee's normal business
hours if an Event of Default shall have occurred and be continuing. In each
case, such access shall be afforded without charge but only upon
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reasonable request. Each Certificateholder shall be deemed to have agreed by its
acceptance of a Certificate to use its best efforts to hold in confidence all
Confidential Information in accordance with its then customary procedures;
provided that nothing herein shall prevent any Certificateholder from delivering
copies of any financial statements and other documents whether or not
constituting Confidential Information, and disclosing other information, whether
or not Confidential Information, to (i) its directors, officers, employees,
agents and professional consultants, (ii) any other institutional investor that
holds Certificates, (iii) any prospective institutional investor transferee in
connection with the contemplated transfer of a Certificate or any part thereof
or participation therein who is subject to confidentiality arrangements at least
substantially similar hereto, (iv) any governmental authority, (v) the National
Association of Insurance Commissioners or any similar organization, (vi) any
nationally recognized rating agency in connection with the rating of the Class A
Certificates by such agency or (vii) any other Person to which such delivery or
disclosure may be necessary or appropriate (a) in compliance with any applicable
law, rule, regulation or order, (b) in response to any subpoena or other legal
process, (c) in connection with any litigation to which such Certificateholder
is a party, or (d) in order to protect or enforce such Person's investment in
any Certificate. The Trustee shall, within two Business Days of the request of
the Servicer or the Certificate Insurer, execute such documents and instruments
as are prepared by the Servicer or the Certificate Insurer and delivered to the
Trustee, as the Servicer or the Certificate Insurer deems necessary to permit
the Servicer, in accordance with its customary servicing procedures, to enforce
the Receivable on behalf of the Trust and any related insurance policies
covering the Obligor, the Receivable or Financed Vehicle so long as such
execution in the Trustee's sole discretion does not conflict with this Agreement
and will not cause it undue risk or liability. The Trustee shall not be
obligated to release any document from any Receivable File unless it receives a
trust receipt signed by a Servicing Officer in the form of Exhibit E-1 hereto
(the "Trust Receipt"). Such Trust Receipt shall obligate the Servicer to return
such document(s) to the Trustee when the need therefor no longer exists unless
the Receivable shall be liquidated, in which case, upon receipt of a certificate
of a Servicing Officer substantially in the form of Exhibit E-2 hereto to the
effect that all amounts required to be deposited in the Collection Account with
respect to such Receivable have been so deposited, the Trust Receipt shall be
released by the Trustee to the Servicer.
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ARTICLE III
Administration and Servicing of Receivables
SECTION 3.1. Duties of Servicer. The Servicer, as agent for the Trust, the
Certificateholders and the Certificate Insurer (to the extent provided herein)
shall manage, service, administer and make collections on the Receivables with
reasonable care, using that degree of skill and attention customary and usual
for institutions which service motor vehicle retail installment contracts
similar to the Receivables and, to the extent more exacting, that the Servicer
exercises with respect to all comparable automotive receivables that it services
for itself or others. The Servicer's duties shall include collection and posting
of all payments, responding to inquiries of Obligors on such Receivables,
investigating delinquencies, sending payment statements to Obligors, reporting
tax information to Obligors, accounting for collections, furnishing monthly and
annual statements to the Trustee and the Certificate Insurer with respect to
distributions. Without limiting the generality of the foregoing, and subject to
the servicing standards set forth in this Agreement, the Servicer is authorized
and empowered by the Trustee to execute and deliver, on behalf of itself, the
Trust, the Certificateholders or any of them, any and all instruments of
satisfaction or cancellation, or partial or full release or discharge, and all
other comparable instruments, with respect to such Receivables or to the
Financed Vehicles securing such Receivables and/or the certificates of title or,
with respect to Financed Vehicles in the State of Michigan, other evidence of
ownership with respect to such Financed Vehicles. If the Servicer shall commence
a legal proceeding to enforce a Receivable, the Trustee shall thereupon be
deemed to have automatically assigned, solely for the purpose of collection,
such Receivable to the Servicer. If in any enforcement suit or legal proceeding
it shall be held that the Servicer may not enforce a Receivable on the ground
that it shall not be a real party in interest or a holder entitled to enforce
such Receivable, the Trustee shall, at the Servicer's expense and direction,
take steps to enforce such Receivable, including bringing suit in its name or
the name of the Certificateholders. The Servicer shall prepare and furnish and
the Trustee shall execute, any powers of attorney and other documents reasonably
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder.
SECTION 3.2. Collection and Allocation of Receivable Payments. Consistent
with the standards, policies and procedures required by this Agreement, the
Servicer shall make reasonable efforts to collect all payments called for under
the terms and provisions of the Receivables as and when the same shall become
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due and shall follow such collection procedures as it follows with respect to
all comparable automotive receivables that it services for itself or others;
provided, however, that the Servicer shall notify each Obligor to make all
payments with respect to the Receivables to the Post-Office Box. The Servicer
will provide each Obligor with a monthly statement in order to notify such
Obligors to make payments directly to the Post-Office Box. The Servicer shall
allocate collections between principal and interest in accordance with the
customary servicing procedures it follows with respect to all comparable
automotive receivables that it services for itself or others and in accordance
with the terms of this Agreement. Except as provided below, the Servicer, for so
long as CPS is the Servicer, may grant extensions on a Receivable; provided,
however, that the Servicer may not grant more than one extension per calendar
year with respect to a Receivable or grant an extension with respect to a
Receivable for more than one calendar month or grant more than three extensions
in the aggregate with respect to a Receivable without the prior written consent
of the Certificate Insurer and provided, further, that if the Servicer extends
the date for final payment by the Obligor of any Receivable beyond the last day
of the penultimate Collection Period preceding the Final Scheduled Distribution
Date, it shall promptly purchase the Receivable from the Trust in accordance
with the terms of Section 3.7 hereof (and for purposes thereof, the Receivable
shall be deemed to be materially and adversely affected by such breach). If the
Servicer is not CPS, the Servicer may not make any extension on a Receivable
without the prior written consent of the Certificate Insurer. The Servicer may
in its discretion waive any late payment charge or any other fees that may be
collected in the ordinary course of servicing a Receivable. Notwithstanding
anything to the contrary contained herein, the Servicer shall not agree (i) to
any alteration of the interest rate on any Receivable or of the amount of any
Scheduled Payment on Receivables, and (ii) shall not agree to any modification
that would result in a "deemed exchange" of a receivable under Section 1001 of
the Internal Revenue Code of 1986, as amended, or would constitute reinvestment
adversely affecting the status of the Trust as not an association taxable as a
corporation for Federal income tax purposes.
SECTION 3.3. Realization Upon Receivables. On behalf of the Trust, the
Certificateholders and the Certificate Insurer, the Servicer shall use its best
efforts, consistent with the servicing procedures set forth herein, to repossess
or otherwise convert the ownership of the Financed Vehicle securing any
Receivable as to which the Servicer shall have determined eventual payment in
full is unlikely. The Servicer shall commence efforts to repossess or otherwise
convert the ownership of a Financed Vehicle on or prior to the date that an
Obligor has failed to make more than 90% of a Scheduled Payment thereon in
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excess of $10 for 120 days or more; provided, however, that the Servicer may
elect not to commence such efforts within such time period if in its good faith
judgment it determines either that it would be impracticable to do so or that
the proceeds ultimately recoverable with respect to such Receivable would be
increased by forbearance. The Servicer shall follow such customary and usual
practices and procedures as it shall deem necessary or advisable in its
servicing of automotive receivables, consistent with the standards of care set
forth in Section 3.2, which may include reasonable efforts to realize upon any
recourse to Dealers and selling the Financed Vehicle at public or private sale.
The foregoing shall be subject to the provision that, in any case in which the
Financed Vehicle shall have suffered damage, the Servicer shall not expend funds
in connection with the repair or the repossession of such Financed Vehicle
unless it shall determine in its 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 3.4. Physical Damage Insurance; Other Insurance. (a) The Servicer,
in accordance with the servicing procedures and standards set forth herein,
shall require that (i) each Obligor shall have obtained insurance covering the
Financed Vehicle, as of the date of the execution of the Receivable, insuring
against loss and damage due to fire, theft, transportation, collision and other
risks generally covered by comprehensive and collision coverage and each
Receivable requires the Obligor to maintain such physical loss and damage
insurance naming CPS 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 as policyholder (creditor) and (iii) as to each
Receivable that finances the cost of an extended service contract, the
respective Financed Vehicle which secures the Receivable is covered by an
extended service contract.
(b) To the extent applicable, the Servicer shall not take any action which
would result in noncoverage under any of the insurance policies referred to in
Section 3.4(a) which, but for the actions of the Servicer, would have been
covered thereunder. The Servicer, on behalf of the Trustee, shall take such
reasonable action as shall be necessary to permit recovery under any of the
foregoing insurance policies. Any amounts collected by the Servicer under any of
the foregoing insurance policies shall be deposited in the Collection Account
pursuant to Section 4.2. The Servicer shall cause to be maintained in respect of
each Financed Vehicle the insurance or insurance reserves referred to in Section
3.4(a)(i) above.
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SECTION 3.5. Maintenance of Security Interests in Financed Vehicles. (a)
Consistent with the policies and procedures required by this Agreement, the
Servicer shall take such steps as are necessary to maintain perfection of the
security interest created by each Receivable in the related Financed Vehicle
including but not limited to obtaining the execution by the Obligors and the
recording, registering, filing, re-recording, re-registering and refiling of all
security agreements, financing statements and continuation statements or
instruments as are necessary to maintain the security interest granted by
Obligors under the respective Receivables. The Trustee hereby authorizes the
Servicer to take such steps as are necessary to re-perfect or continue the
perfection of such security interest on behalf of the Trust in the event of the
relocation of a Financed Vehicle or for any other reason.
(b) Upon the occurrence of an Insurance Agreement Event of Default, the
Certificate 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 an
Event of Default, the Trustee and the Servicer shall take or cause to be taken
such action as may, in the opinion of counsel to the Trustee, which opinion
shall not be an expense of the Trustee, be necessary to perfect or reperfect the
security interests in the Financed Vehicles securing the Receivables in the name
of the Trustee on behalf of the Trust by amending the title documents of such
Financed Vehicles or by such other reasonable means as may, in the opinion of
counsel to the Certificate Insurer or the Trustee (as applicable), which opinion
shall not be an expense of the Trustee, be necessary or prudent. The Servicer
hereby agrees to pay all expenses related to such perfection or reperfection and
to take all action necessary therefor. In addition, prior to the occurrence of
an Insurance Agreement Event of Default, the Certificate Insurer may (unless an
Insurer Default shall have occurred and be continuing) instruct the Trustee and
the Servicer to take or cause to be taken such action as may, in the opinion of
counsel to the Certificate Insurer, be necessary to perfect or reperfect the
security interest in the Financed Vehicles securing the Receivables in the name
of the Trustee on behalf of the Trust, including by amending the title documents
of such Financed Vehicles or by such other reasonable means as may, in the
opinion of counsel to the Certificate Insurer, be necessary or prudent;
provided, however, that if the Certificate Insurer requests (unless an Insurer
Default shall have occurred and be continuing) that the title documents be
amended prior to the occurrence of an Insurance Agreement Event of Default, the
out-of-pocket expenses of the Servicer or the Trustee in connection with such
action shall be reimbursed to the Servicer or the Trustee, as applicable, by the
Certificate Insurer.
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SECTION 3.6. Additional Covenants of Servicer. The Servicer shall not
release the Financed Vehicle securing each Receivable from the security interest
granted by such Receivable in whole or in part except in the event of payment in
full by the Obligor thereunder or repossession, nor shall the Servicer impair
the rights of the Certificateholders in such Receivables, nor shall the Servicer
amend a Receivable, except that extensions may be granted in accordance with
Section 3.2.
SECTION 3.7. Purchase of Receivables Upon Breach. The Servicer or the
Trustee shall inform the other party and the Certificate Insurer promptly, in
writing, upon the discovery of any breach of Section 3.2, 3.4, 3.5 or 3.6;
provided, however, that the failure to give such notice shall not affect any
obligation of the Servicer hereunder. Unless the breach shall have been cured by
the last day of the second Collection Period following such discovery (or, at
the Servicer's election, the last day of the first following Collection Period),
the Servicer shall purchase any Receivable materially and adversely affected by
such breach. In consideration of the purchase of such Receivable, the Servicer
shall remit the Purchase Amount in the manner specified in Section 4.5. The sole
remedy of the Trustee, the Trust, the Certificate Insurer or the
Certificateholders with respect to a breach of Section 3.2, 3.4, 3.5 or 3.6
shall be to require the Servicer to repurchase Receivables pursuant to this
Section 3.7; provided, however, that the Servicer shall indemnify the Trustee,
the Standby Servicer, the Collateral Agent, the Certificate Insurer, the Trust
and the Certificateholders against all costs, expenses, losses, damages, claims
and liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third party claims
arising out of the events or facts giving rise to such breach. If it is
determined that the management, administration and servicing of the Receivables
and operation of the Trust pursuant to this Agreement constitutes a violation of
the prohibited transaction rules of ERISA or the Code to which no statutory
exception or administrative exemption applies, such violation shall not be
treated as a breach of Section 3.2, 3.4, 3.5 or 3.6 if not otherwise such a
breach.
SECTION 3.8. Servicing Fee. (a) The Servicing Fee for the initial
Distribution Date shall equal the product of (i) one twelfth of the Servicing
Rate, (ii) the Pool Balance as of the close of business on the Cutoff Date and
(iii) a fraction, the numerator of which is the number of days from and
including the Closing Date to and including the last day of the initial
Collection Period and the denominator of which is 30. Thereafter, the Servicing
Fee for a Distribution Date shall equal the product of (x) one twelfth of the
Servicing Rate and (y) the Pool Balance as of the last day of the second
preceding Collection Period. The Servicing Fee shall also include all late
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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.
(b) On or prior to each Distribution Date, CPS shall deposit into the
Collection Account, out of its own funds without any right of reimbursement
therefor, an amount (the "Adjusted Compensating Interest") equal to the positive
difference, if any, between (i) Compensating Interest for the prior Collection
Period and (ii) the amount on deposit in the Spread Account.
SECTION 3.9. Servicer's Certificate. By 10:00 a.m., Minneapolis time, on
each Determination Date, the Servicer shall deliver to the Trustee, the
Certificate Insurer, the Rating Agencies and the Seller a Servicer's Certificate
containing all information necessary to make the distributions pursuant to
Section 4.6 (including, if required, withdrawals from or deposits to the
Payahead Account and withdrawals from the Spread Account) for the Collection
Period preceding the date of such Servicer's Certificate and all information
necessary for the Trustee to send statements to Certificateholders and the
Certificate Insurer pursuant to Section 4.8. Receivables to be purchased by the
Servicer or to be purchased by CPS shall be identified by the Servicer by
account number with respect to such Receivable (as specified in Schedule A).
SECTION 3.10. Annual Statement as to Compliance: Notice of Default. (a) The
Servicer shall deliver to the Trustee and the Certificate Insurer, on or before
July 31 of each year beginning July 31, 1997, 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, 1997) and of its
performance under this Agreement has been made under such officer's supervision
and (ii) to the best of such officer's knowledge, based on such review, the
Servicer has fulfilled all its obligations under this Agreement throughout such
year (or, in the case of the first such certificate, such shorter period), or,
if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof. The Trustee shall send a copy of such certificate and the report
referred to in Section 3.11 to the Rating Agencies. The Trustee shall forward a
copy of such certificate as well as the report referred to in Section 3.11 to
each Certificateholder.
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(b) The Servicer shall deliver to the Trustee, the Certificate Insurer and
the Rating Agencies, promptly after having obtained knowledge thereof, but in no
event later than 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 an Event of Default under Section 9.1.
The Seller shall deliver to the Trustee, the Certificate Insurer and the
Rating Agencies, promptly after having obtained knowledge thereof, but in no
event later than 5 Business Days thereafter, written notice in an Officer's
Certificate of any event which with the giving of notice or lapse of time, or
both, would become an Event of Default under clause (ii) of Section 9.1.
The Trustee shall deliver to each Certificateholder a copy of each notice
delivered to it by the Servicer or the Seller pursuant to this Section 3.10(b).
SECTION 3.11. Annual Independent Certified Public Accountant's Report. The
Servicer shall cause a firm of nationally recognized independent certified
public accountants, who may also render other services to the Servicer or to the
Seller, to deliver to the Trustee, the Certificateholders and the Certificate
Insurer on or before July 31 of each year beginning July 31, 1997, a report
dated as of March 31 of such year and reviewing the Servicer's activities during
the preceding 12-month period (or, in the case of the first such report, the
period from the Cutoff Date to March 31, 1997), addressed to the Board of
Directors of the Servicer and to the Trustee and the Certificate Insurer, to the
effect that such firm has examined the financial statements of the Servicer and
issued its report therefor and that such examination (1) was made in accordance
with generally accepted auditing standards, and accordingly included such tests
of the accounting records and such other auditing procedures as such firm
considered necessary in the circumstances; (2) included tests relating to auto
loans serviced for others in accordance with the requirements of the Uniform
Single Audit Program for Mortgage Bankers (the "Program"), to the extent the
procedures in the Program are applicable to the servicing obligations set forth
in this Agreement; (3) included an examination of the delinquency and loss
statistics relating to the Servicer's portfolio of automobile and light truck
installment sales contracts; and (4) except as described in the report,
disclosed no exceptions or errors in the records relating to automobile and
light truck loans serviced for others that, in the firm's opinion, paragraph
four of the Program requires such firm to report. The accountant's report shall
further state that (1) a review in accordance with agreed upon procedures was
made of three randomly selected Servicer Certificates; (2) except as disclosed
in the
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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.
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 3.12. Reserved.
SECTION 3.13. Servicer Expenses. The Servicer shall be required to pay all
expenses incurred by it in connection with its activities hereunder, including
fees and disbursements of independent accountants, taxes imposed on the
Servicer, and expenses incurred in connection with distributions and reports to
Certificateholders.
SECTION 3.14. 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, 1996, which term shall
be automatically extended by the Certificate Insurer for successive terms of
ninety (90) days each as specified in a writing delivered by the Certificate
Insurer 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 Certificate Insurer may extend the Servicer
in its sole discretion (or, at the discretion of the Certificate 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 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 Certificate
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. At such time as the Class A Certificates have been
paid in full and all outstanding Reimbursement Obligations and other amounts
owed to the Certificate Insurer have been paid in full, the term of the
Servicer's appointment hereunder shall be deemed to have been extended until the
termination of the Trust (unless such appointment is terminated sooner in
accordance with the terms of this Agreement).
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SECTION 3.15. Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to representatives of the Trustee, the
Certificateholders and the Certificate Insurer reasonable access to
documentation and computer systems and information regarding the Receivables.
The Servicer shall provide such access to any Certificateholder only (i) in such
cases where the Servicer is required by applicable statutes or regulations
(whether applicable to the Servicer or to such Certificateholder) to permit such
Certificateholder to review such materials and (ii) if an Insurer Default shall
have occurred and be continuing. In each case, such access shall be afforded
without charge but only upon reasonable request and during normal business
hours. Nothing in this Section 3.15 shall derogate from the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors, and the failure of the Servicer to provide access as
provided in this Section 3.15 as a result of such obligation shall not
constitute a breach of this Section 3.15.
SECTION 3.16. Verification of Servicer's Certificate. (a) On or before the
fifth calendar day of each month, the Servicer will deliver to the Trustee and
the Standby Servicer a computer diskette (or other electronic transmission) in a
format acceptable to the Trustee and the Standby Servicer containing information
with respect to the Receivables as of the close of business on the last day of
the preceding Collection Period which information is necessary for preparation
of the Servicer's Certificate. The Standby Servicer shall use such computer
diskette (or other electronic transmission) to verify certain information
specified in Section 3.16(b) contained in the Servicer's Certificate delivered
by the Servicer, and the Standby Servicer shall notify the Servicer and the
Certificate Insurer of any discrepancies on or before the second Business Day
following the Determination Date. In the event that the Standby Servicer reports
any discrepancies, the Servicer and the Standby Servicer shall attempt to
reconcile such discrepancies prior to the second Business Day prior to the
related Distribution Date, but in the absence of a reconciliation, the
Servicer's Certificate shall control for the purpose of calculations and
distributions with respect to the related Distribution Date. In the event that
the Standby Servicer and the Servicer are unable to reconcile discrepancies with
respect to a Servicer's Certificate by the related Distribution Date, the
Servicer shall cause a firm of independent certified public accountants, at the
Servicer's expense, to audit the Servicer's Certificate and, prior to the fifth
calendar day of the following month, reconcile the discrepancies. The effect, if
any, of such reconciliation shall be reflected in the Servicer's Certificate for
such next succeeding Determination Date. Other than the duties specifically set
forth in this Agreement, the Standby Servicer shall have no obligations
hereunder, including, without
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limitation, to supervise, verify, monitor or administer the performance of the
Servicer. The Standby Servicer shall have no liability for any actions taken or
omitted by the Servicer. The duties and obligations of the Standby Servicer
shall be determined solely by the express provisions of this Agreement and no
implied covenants or obligations shall be read into this Agreement against the
Standby Servicer.
(b) The Standby Servicer shall review each Servicer's Certificate delivered
pursuant to Section 3.16(a) and shall:
(i) confirm that such Servicer's Certificate is complete on its face;
(ii) load the computer diskette (which shall be in a format acceptable
to the Standby Servicer) received from the Servicer pursuant to Section
3.16(a) hereof, confirm that such computer diskette is in a readable form
and calculate and confirm the Principal Balance of each Receivable for the
most recent Distribution Date;
(iii) confirm that the Total Distribution Amount, the Class A
Distributable Amount, the Class A Principal Distributable Amount, the Class
A Interest Distributable Amount, the Class B Distributable Amount, the
Class B Interest Distributable Amount, the Class B Principal Distributable
Amount, the Standby Fee, the Servicing Fee, the Trustee Fee, the amount on
deposit in the Spread Account, and the Premium in the Servicer's
Certificate are accurate based solely on the recalculation of the
Servicer's Certificate; and
(iv) confirm the calculation of the performance tests set forth in the
Spread Account Agreement.
SECTION 3.17. Fidelity Bond. The Servicer shall maintain a fidelity bond in
such form and amount as is customary for entities acting as custodian of funds
and documents in respect of consumer contracts on behalf of institutional
investors.
SECTION 3.18. Delegation of Duties. The Servicer may at any time delegate
duties under this Agreement to sub-contractors who are in the business of
servicing automotive receivables with the prior written consent of the
controlling party as determined pursuant to Section 12.11 and (unless an
Insurance Agreement Event of Default shall have occurred and be continuing or
Norwest Bank Minnesota, National Association shall then be the Servicer) the
Holders of Class B Certificates evidencing at least 51% of the Class B
Certificate Balance; provided, however, that no such delegation or
sub-contracting of duties by the Servicer shall relieve the Servicer of its
responsibility with respect to such
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duties; and provided further, that the consent of the Holders of the requisite
percentage of the Class B Certificate Balance shall not be unreasonably withheld
or delayed and shall be deemed to have been given unless, on or before the
Objection Date, the Trustee shall have received Objection Notices from Holders
of Class B Certificates representing more than 49% of the Class B Certificate
Balance. Upon written request of the Servicer, the Trustee shall deliver to each
Class B Certificateholder of record as of the most recent Record Date a notice
(a "Delegation Notice") prepared by the Servicer (i) specifying the duties the
Servicer proposes to delegate, (ii) identifying the subcontractor to whom it
proposes to delegate such duties and (iii) informing such Class B
Certificateholder that if it wishes to object to the proposed delegation of
duties, it must deliver a written notice of objection (specifying in reasonable
detail the reasons for its objection; such notice of objection an "Objection
Notice") on or before the date specified in such Delegation Notice (the
"Objection Date"), which Objection Date shall be a date which is not more than
10 Business Days after the date the Servicer delivers such Delegation Notice to
the Trustee.
ARTICLE IV
Distributions, Spread Account;
Statements to Certificateholders
SECTION 4.1. Accounts; Post-Office Box. (a) The Trustee shall establish the
Lock-Box Account in the name of the Trustee for the benefit of the
Certificateholders and the Certificate Insurer, provided that pursuant to the
Lock-Box Agreement, the Lock-Box Processor and no other Person, save the
Trustee, has authority to direct disposition of funds on deposit in the Lock-
Box Account consistent with the provisions of this Agreement and the Lock-Box
Agreement. The Trustee shall have no liability or responsibility with respect to
the Lock-Box Processor's directions or activities as set forth in the preceding
sentence. The Lock-Box Account shall be established pursuant to and maintained
in accordance with the Lock-Box Agreement and shall be a demand deposit account
initially established and maintained with Bank of America, or at the request of
the Certificate Insurer (unless an Insurer Default shall have occurred and be
continuing) an Eligible Account satisfying clause (i) of the definition thereof;
provided, however, that the Trustee shall give the Servicer prior written notice
of any change made at the request of the Certificate Insurer in the location of
the Lock- Box Account. The Trustee shall establish and maintain the Post- Office
Box at a United States Post Office Branch in the name of the Trustee for the
benefit of the Certificateholders and the Certificate Insurer.
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In the event the Servicer shall for any reason no longer be acting as such,
the Standby Servicer or a successor Servicer shall thereupon assume all of the
rights and obligations of the outgoing Servicer under the Lock-Box Agreement. In
such event, the successor Servicer shall be deemed to have assumed all of the
outgoing Servicer's interest therein and to have replaced the outgoing Servicer
as a party to the Lock-Box Agreement to the same extent as if such Lock-Box
Agreement had been assigned to the successor Servicer, except that the outgoing
Servicer shall not thereby be relieved of any liability or obligations on the
part of the outgoing Servicer to the Lock-Box Bank under such Lock-Box
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 Lock-Box Agreement and an accounting of
amounts collected and held by the Lock-Box Bank and otherwise use its best
efforts to effect the orderly and efficient transfer of any Lock-Box Agreement
to the successor Servicer. In the event that the Certificate Insurer (so long as
an Insurer Default shall not have occurred and be continuing) or Holders of
Certificates evidencing more than 50% of the Class A Certificate Balance (if an
Insurer Default shall have occurred and be continuing) shall elect to change the
identity of the Lock-Box Bank, the Servicer, at its expense, shall cause the
Lock-Box Bank to deliver, at the direction of the Certificate Insurer (so long
as an Insurer Default shall not have occurred and be continuing) or Holders of
Certificates evidencing more than 50% of the Class A Certificate Balance (if an
Insurer Default shall have occurred and be continuing) to the Trustee or a
successor Lock-Box Bank, all documents and records relating to the Receivables
and all amounts held (or thereafter received) by the Lock-Box Bank (together
with an accounting of such amounts) and shall otherwise use its best efforts to
effect the orderly and efficient transfer of the lock-box arrangements.
In addition, the Trustee shall establish, with itself, the Collection
Account, the Policy Payments Account, and the Certificate Account in the name of
the Trustee for the benefit of the Certificateholders and the Certificate
Insurer. In addition, the Trustee shall establish with itself the Payahead
Account in the name of the Trustee for the benefit of Obligors of Rule of 78's
Receivables who make payments thereon in excess of Scheduled Payments and
applicable late fees and for the benefit, to the extent of earnings on
investments of funds in the Payahead Account, of the Certificateholders. The
Payahead Account shall not be included in the Trust. The Collection Account, the
Policy Payments Account, the Certificate Account and the Payahead Account shall
be Eligible Accounts initially established with the Trustee; provided, however,
if any of such accounts shall cease to be an Eligible Account, the Servicer,
with the consent of the Certificate Insurer, within 5 Business Days shall, cause
such
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accounts to be moved to an institution so that such account meets the definition
of Eligible Account. The Servicer shall promptly notify the Rating Agencies of
any change in the location of any of the aforementioned accounts.
All amounts held in the Collection Account and the Payahead Account shall
be invested by the Trustee at the written direction of the Servicer in Eligible
Investments in the name of the Trustee as trustee of the Trust and shall mature
no later than one Business Day immediately preceding the Distribution Date next
succeeding the date of such investment. Such written direction shall certify
that any such investment is authorized by this Section. No investment may be
sold prior to its maturity. Amounts in the Policy Payments Account and the
Certificate Account shall not be invested. The amount of earnings on investments
of funds in the Collection and Payahead Accounts during the Collection Period
related to each Distribution Date shall be deposited into the Certificate
Account, on each Distribution Date, and shall be available for distribution
pursuant to Section 4.6(c).
(b) The Trustee shall on or prior to each Distribution Date (and prior to
the transfer from the Collection Account to the Certificate Account described in
Section 4.6(a)) transfer from the Collection Account to the Payahead Account all
Payaheads as described in Section 4.3 received by the Servicer during the
Collection Period.
SECTION 4.2. Collections. On each Business Day, pursuant to the Lock-Box
Agreement, the Lock-Box Processor will transfer any payments from Obligors
received in the Post-Office Box to the Lock-Box Account. Within two Business
Days of receipt of funds into the Lock-Box Account, the Servicer shall cause the
Lock-Box Bank to transfer funds from the Lock-Box Account to the Collection
Account. In addition, the Servicer shall remit all payments by or on behalf of
the Obligors received by the Servicer with respect to the Receivables (other
than Purchased Receivables), and all Liquidation Proceeds no later than the
Business Day following receipt directly (without deposit into any intervening
account) into the Lock-Box Account or the Collection Account.
SECTION 4.3. Application of Collections. All collections for each
Collection Period shall be applied by the Servicer as follows:
With respect to each Receivable (other than a Purchased Receivable),
payments by or on behalf of the Obligor shall be applied, 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
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Receivable and, in the case of a Simple Interest Receivable, to interest and
principal in accordance with the Simple Interest Method. With respect to any
Rule of 78's Receivable, any remaining excess shall be added to the Payahead
Balance, and shall be applied to prepay the Rule of 78's Receivable, but only if
the sum of such excess and the previous Payahead Balance shall be sufficient to
prepay the Rule of 78's Receivable in full. Otherwise, any such remaining excess
payments with respect to a Rule of 78's Receivable shall constitute a Payahead,
and shall increase the Payahead Balance.
SECTION 4.4. Payaheads. As of the close of business on the last day of each
Collection Period, if the payments by or on behalf of the Obligor on a Rule of
78's Receivable (other than a Purchased Receivable) shall be less than the
Scheduled Payment and accrued late fees with respect to such Receivable, the
Payahead Balance of an Obligor shall be applied by the Servicer to the extent of
the shortfall and such Payahead Balance shall be reduced accordingly.
SECTION 4.5. Additional Deposits. The Servicer or CPS, as the case may be,
shall deposit or cause to be deposited in the Collection Account the aggregate
Purchase Amount with respect to Purchased Receivables and the Servicer shall
deposit therein all amounts to be paid under Section 3.8(b) or 11.2. All such
deposits shall be made, in immediately available funds, on the Business Day
preceding the Determination Date. On or before the third Business Day preceding
each Distribution Date, the Trustee shall remit to the Collection Account any
amounts delivered to the Trustee by the Collateral Agent pursuant to Section
4.7.
SECTION 4.6. Distributions; Policy Claims. (a) On each Distribution Date,
the Trustee shall cause to be made the following transfers and distributions
based solely on the amounts set forth in the Servicer's Certificate for the
related Distribution Date:
(i) From the Collection Account to the Certificate Account, in
immediately available funds, those funds that were deposited in the
Collection Account, plus earnings on investments of funds in the Collection
Account pursuant to Section 4.1(a), for the Collection Period related to
such Distribution Date.
(ii) From the Payahead Account, to the Certificate Account, in
immediately available funds, the aggregate previous Payaheads to be applied
to Scheduled Payments on Rule of 78's Receivables or prepayments for the
related Collection Period pursuant to Sections 4.3 and 4.4, plus earnings
on investments of funds in the Payahead Account,
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for the related Collection Period, pursuant to Section 4.1(a).
(b) Prior to each Distribution Date, the Servicer shall on the related
Determination Date calculate the Total Distribution Amount, the Class A
Distributable Amount, the Class A Interest Distributable Amount, the Class A
Principal Distributable Amount, the Class B Interest Distributable Amount and
the Class B Principal Distributable Amount, and, based on the Total Distribution
Amount, and the other distributions to be made on such Distribution Date,
determine the amount distributable to the Certificateholders of each class.
(c) On each Distribution Date, the Trustee (based on the information
contained in the Servicer's Certificate delivered on the related Determination
Date pursuant to Section 3.9) shall, subject to subsection (d) hereof, make the
following distributions in the following order of priority:
(i) to the Servicer, from the Total Distribution Amount, any amount
deposited into the Collection Account pursuant to Section 4.7(a), and any
amount deposited into the Collection Account pursuant to Section 4.11(i) in
respect of Servicing Fees, the Servicing Fee and all unpaid Servicing Fees
from prior Collection Periods; provided, however, that as long as CPS is
the Servicer and Norwest Bank Minnesota, National Association, is the
Standby Servicer, the Trustee shall first pay to the Standby Servicer out
of the Servicing Fee otherwise payable to CPS an amount equal to the
Standby Fee;
(ii) in the event the Standby Servicer or any other Person becomes the
successor Servicer, to the Standby Servicer or such other successor
Servicer, from the Total Distribution Amount (as such Total Distribution
Amount has been reduced by payments pursuant to clause (i) above) and any
amount deposited into the Collection Account pursuant to Section 4.7(a), to
the extent not previously paid by the predecessor Servicer pursuant to
Section 9.2, reasonable transition expenses (up to a maximum of $50,000)
incurred in acting as successor Servicer;
(iii) to the Trustee, from the Total Distribution Amount (as such
Total Distribution Amount has been reduced by payments pursuant to clauses
(i) and (ii) above), any amount deposited into the Collection Account
pursuant to Section 4.7(a), and any amount deposited into the Collection
Account pursuant to Section 4.11(i) in respect of Trustee Fees and
reasonable out-of-pocket expenses of the Trustee, the Trustee Fee and all
reasonable out-of-pocket expenses (including counsel fees and expenses) and
all unpaid Trustee
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Fees and all unpaid reasonable out-of-pocket expenses (including counsel
fees and expenses) from prior Collection Periods; provided, however, that
unless an Event of Default shall have occurred and be continuing, expenses
payable to the Trustee pursuant to this clause (iii) and expenses payable
to the Collateral Agent pursuant to clause (iv) below, shall be limited to
$50,000 per annum;
(iv) to the Collateral Agent, from the Total Distribution Amount (as
such Total Distribution Amount has been reduced by payments pursuant to
clauses (i) through (iii) above), any amount deposited into the Collection
Account pursuant to Section 4.7(a), and any amount deposited into the
Collection Account pursuant to Section 4.11(i) in respect of fees and
expenses of the Collateral Agent, all fees and expenses payable to the
Collateral Agent with respect to such Distribution Date pursuant to the
Spread Account Agreement;
(v) to the Class A Certificateholders, from the Total Distribution
Amount (as such Total Distribution Amount has been reduced by payments
pursuant to clauses (i) through (iv) above) and any amount deposited into
the Collection Account pursuant to Section 4.7(a) and 4.11(iii), an amount
equal to the sum of the Class A Interest Distributable Amount and any Class
A Interest Carryover Shortfall as of the close of the preceding
Distribution Date;
(vi) to the Class B Certificateholders, from the Total Distribution
Amount (as such Total Distribution Amount has been reduced by payments
pursuant to clauses (i) through (v) above) and any amount deposited into
the Collection Account pursuant to Section 4.7(c), an amount equal to the
sum of the Class B Interest Distributable Amount and any Class B Interest
Carryover Shortfall as of the close of the preceding Distribution Date;
(vii) to the Class A Certificateholders, from the Total Distribution
Amount (as such Total Distribution Amount has been reduced by payments
pursuant to clauses (i) through (vi) above), any amount deposited into the
Collection Account pursuant to Section 4.7(a), and any amount deposited
into the Collection Account pursuant to Section 4.11(ii) or (iii), an
amount equal to the sum of the Class A Principal Distributable Amount and
any Class A Principal Carryover Shortfall as of the close of the preceding
Distribution Date with respect to each Distribution Date;
(viii) to the Certificate Insurer, from the Total Distribution Amount
(as such Total Distribution Amount has been reduced by payments made
pursuant to clauses (i)
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through (vii) above), and any amount deposited into the Collection Account
pursuant to Section 4.7(a), an amount equal to the Reimbursement
Obligations;
(ix) to the Class B Certificateholders, from the Total Distribution
Amount (as such Total Distribution Amount has been reduced by payments
pursuant to clauses (i) through (viii) above) and any amount deposited into
the Collection Account pursuant to Section 4.7(c), an amount equal to the
sum of the Class B Principal Distributable Amount and any Class B Principal
Carryover Shortfall as of the close of the preceding Distribution Date; and
(x) to the Collateral Agent, for deposit into the Spread Account, the
remaining Total Distribution Amount, if any.
(d) The rights of the Class B Certificateholders to receive distributions
in respect of the Class B Certificates pursuant to Section 4.6(c)(vi) on a
Distribution Date shall be and hereby are subordinated to the payment of the
amounts distributable pursuant to Sections 4.6(c)(i) through (v). The rights of
the Class B Certificateholders to receive distributions in respect of the Class
B Certificates pursuant to Section 4.6(c)(ix) on a Distribution Date shall be
and hereby are subordinated to the payment of the amounts distributable pursuant
to Sections 4.6(c)(i) through (viii). At such time as the Class A Certificates
are paid in full and the Certificate Insurer has received payment in full for
all outstanding Reimbursement Obligations and any other amounts owed to the
Certificate Insurer, the Class B Certificateholders shall be entitled to
exercise all rights granted to the Class A Certificateholders under this
Agreement to the extent that the exercise of such rights does not conflict with
the provisions of the Spread Account Agreement.
(e) (i) In the event that the Trustee has delivered a Deficiency Notice
with respect to any Determination Date pursuant to Section 4.7(a), the Trustee
shall determine on the third Business Day (the "Draw Date") preceding the
related Distribution Date the Policy Claim Amount, if any, for such Distribution
Date. Amounts paid by the Certificate Insurer pursuant to a claim submitted
under this Section 4.6(e)(i) shall be deposited by the Trustee into the Policy
Payments Account and thereafter into the Certificate Account for payment to
Class A Certificateholders in respect of the Class A Guaranteed Distribution
Amount on the related Distribution Date.
(ii) Any notice delivered by the Trustee to the Certificate Insurer
pursuant to subsection 4.6(e)(i) shall specify the Policy Claim Amount claimed
under the Policy and
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shall constitute a "Notice of Claim" under the Policy. In accordance with the
provisions of the Policy, the Certificate Insurer is required to pay to the
Trustee the Policy Claim Amount properly claimed thereunder by 12:00 noon, New
York City time, on the later of (1) the third Business Day following receipt on
a Business Day of the Notice of Claim, and (2) the applicable Distribution Date.
Notwithstanding the provisions of Section 4.6(c), any payment made by the
Certificate Insurer under the Policy shall be applied solely to the payment of
the Class A Certificates and for no other purpose.
(iii) The Trustee shall (i) receive as attorney-in-fact of each Class
A Certificateholder any Policy Claim Amount from the Certificate Insurer
and (ii) deposit the same in the Certificate Account for disbursement to
the Class A Certificateholders as set forth in clauses (v) and (vii) of
subsection 4.6(c). Any and all Policy Claim Amounts disbursed by the
Trustee from claims made under the Policy shall not be considered payment
by the Trustee or from the Spread Account with respect to such Class A
Certificates, and shall not discharge the obligations of the Trust with
respect thereto.
(iv) The Trustee shall be entitled to enforce on behalf of the Class A
Certificateholders the obligations of the Certificate Insurer under the
Policy. Notwithstanding any other provision of this Agreement, the Class A
Certificateholders are not entitled to institute proceedings directly
against the Certificate Insurer.
(f) Subject to Section 11.1 respecting the final payment upon retirement of
each Certificate, the Servicer shall on each Distribution Date instruct the
Trustee to distribute to each Certificateholder of record on the preceding
Record Date either by wire transfer, in immediately available funds to the
account of such Holder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder shall have provided to the Trustee
appropriate instructions prior to the Record Date for such Distribution Date and
such Holder's Certificates in the aggregate evidence an original principal
balance of at least $1,000,000, or, if not, by check mailed to such
Certificateholder at the address of such Holder appearing in the Certificate
Register, the amounts to be distributed to such Certificateholder pursuant to
such Holder's Certificates.
SECTION 4.7. Withdrawals from Spread Account. (a) In the event that the
Servicer's Certificate with respect to any Determination Date shall state that
the Total Distribution Amount with respect to such Determination Date is
insufficient (taking into account the application of the Total Distribution
Amount to the payment required to be made on the related Distribution Date
pursuant to Section 4.6(c)(vi)) to make the payments required to
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be made on the related Distribution Date pursuant to Section 4.6(c)(i), (ii),
(iii), (iv), (v), (vii) or (viii) (such deficiency being a "Deficiency Claim
Amount"), then on the fourth Business Day immediately preceding the related
Distribution Date, the Trustee shall deliver to the Collateral Agent, the
Certificate Insurer, and the Servicer, by hand delivery, telex or facsimile
transmission, a written notice (a "Deficiency Notice") specifying the Deficiency
Claim Amount for such Distribution Date. Such Deficiency Notice shall direct the
Collateral Agent to remit such Deficiency Claim Amount (to the extent of the
funds available to be distributed pursuant to the Spread Account Agreement) to
the Trustee for deposit in the Collection Account and distribution pursuant to
Sections 4.6(c)(i), (ii), (iii), (iv), (v), (vii) or (viii), as applicable.
(b) Any Deficiency Notice shall be delivered by 10:00 a.m., New York City
time, on the fourth Business Day preceding such Distribution Date. The amounts
distributed by the Collateral Agent to the Trustee pursuant to a Deficiency
Notice shall be deposited by the Trustee into the Collection Account pursuant to
Section 4.5.
(c) In the event that the Servicer's Certificate with respect to any
Determination Date shall state that the Total Distribution Amount with respect
to such Determination Date is insufficient to make the payments required to be
made on the related Distribution Date pursuant to Section 4.6(c)(vi) or (ix)
(such deficiency being a "Class B Deficiency"), then on the fourth Business Day
immediately preceding the related Distribution Date, the Trustee shall deliver
to the Collateral Agent and the Servicer, by hand delivery, telex or facsimile
transmission, a written notice specifying the amount of the Class B Deficiency
for such Distribution Date. Such notice shall direct the Collateral Agent to
remit to the Trustee an amount equal to such Class B Deficiency (but only to the
extent that, pursuant to the Spread Account Agreement, funds are required to be
released from the Spread Account to the Seller on the related Distribution Date)
for deposit into the Collection Account and distribution pursuant to Section
4.6(c)(vi) and/or Section 4.6(c)(ix), 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.
SECTION 4.8. Statements to Certificateholders; Tax Returns. (a) With each
distribution from the Certificate Account to the Certificateholders made on a
Distribution Date, the Servicer shall provide to the Certificate Insurer and to
the Trustee for the Trustee to forward to each Certificateholder of record a
statement (prepared by the Servicer) substantially in the form of Exhibit D
hereto setting forth at least the following information as to the Certificates
to the extent applicable:
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(i) the amount of such distribution allocable to principal of the
Class A Certificates and the Class B Certificates, respectively;
(ii) the amount of such distribution allocable to interest on the
Class A Certificates and the Class B Certificates, respectively;
(iii) the Pool Balance, the Class A Pool Factor and the Class B Pool
Factor as of the close of business on the last day of the preceding
Collection Period;
(iv) the Class A Certificate Balance and the Class B Certificate
Balance as of the close of business on the last day of the preceding
Collection Period, after giving effect to payments allocated to principal
reported under (i) above;
(v) the amount of the Servicing Fee (inclusive of the Standby Fee paid
to the Standby Servicer) paid to the Servicer with respect to the related
Collection Period, the Class A Percentage of the Servicing Fee (inclusive
of the Standby Fee), the Class B Percentage of the Servicing Fee (inclusive
of the Standby Fee) and the amount of any unpaid Servicing Fees (inclusive
of the Standby Fee) and the change in such amount from that of the prior
Distribution Date;
(vi) the amount of the Class A Interest Carryover Shortfall, if
applicable, on such Distribution Date and the Class A Principal Carryover
Shortfall, if applicable, on such Distribution Date, and the change in such
amounts from the prior Distribution Date;
(vii) the amount of the Class B Interest Carryover Shortfall, if
applicable, on such Distribution Date and the amount of the Class B
Principal Carryover Shortfall, if applicable, on such Distribution Date,
and the change in such amounts from the prior Distribution Date;
(viii) the amount paid, if any, to Class A Certificateholders from
funds received under the Policy for such Distribution Date;
(ix) the amount distributable to the Certificate Insurer on such
Distribution Date;
(x) the aggregate amount in the Payahead Account and the Spread
Account and the change in such amount from the preceding Distribution Date;
(xi) the number of Receivables and the aggregate gross amount
scheduled to be paid thereon, including unearned
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finance and other charges, for which the related Obligors are delinquent in
making scheduled payments between 31 and 59 days and 60 days or more;
(xii) the number and the aggregate Purchase Amount of Receivables that
became Purchased Receivables during the related Collection Period and
summary information as to losses and delinquencies with respect to the
Receivables; and
(xiii) the cumulative amount of Liquidated Receivables net, of
Recoveries, since the Cutoff Date to the last day of the related Collection
Period.
Each amount set forth pursuant to subclauses (i), (ii), (v), (vi) and (vii)
above shall be expressed as a dollar amount per $1,000 of original principal
balance of a Certificate.
(b) Within thirty days after the end of each calendar year, the Trustee
shall, provided it has received the necessary information from the Servicer,
furnish to each Person who at any time during such calendar year was a
Certificateholder of record and received any payment thereon (a) a report
(prepared by the Servicer) as to the aggregate of amounts reported pursuant to
(i), (ii) and (v) of this Section 4.8 for such calendar year or applicable
portion thereof during which such Person was a Certificateholder, and (b) such
information as may be reasonably requested by the Certificateholders or required
by the Internal Revenue Code and regulations thereunder, to enable such Holders
to prepare their Federal and State income tax returns. The obligation of the
Trustee set forth in this paragraph shall be deemed to have been satisfied to
the extent that substantially comparable information shall be provided by the
Servicer pursuant to any requirements of the Code.
(c) The Servicer, at its own expense, shall cause a firm of nationally
recognized accountants to prepare any tax returns required to be filed by the
Trust, and the Trustee shall execute and file such returns if requested to do so
by the Servicer. The Trustee upon request, will furnish the Servicer with all
such information known to the Trustee as may be reasonably required in
connection with the preparation of all tax returns of the Trust.
SECTION 4.9. Policy Payments; Subrogation. (a) The Trustee shall keep a
complete and accurate record of the amount of insurance payments made in
reduction of the Class A Certificate Balance and in payment of the Class A
Interest Distributable Amount and Class A Principal Distributable Amount
pursuant to the Policy. The Certificate Insurer shall have the right to inspect
such records at reasonable times upon one Business Day's prior notice to the
Trustee.
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(b) Subject to and conditioned upon payment of any interest or principal
with respect to the Class A Certificates by or on behalf of the Certificate
Insurer, the Trustee on behalf of the Class A Certificateholders shall assign,
and the Class A Certificateholders, by reason of their acquisition and holding
of the Class A Certificates, are hereby deemed to have assigned to the
Certificate Insurer all rights to the payment of the Class A Interest
Distributable Amount and Class A Principal Distributable Amount which are then
due for payment to the extent of all payments made by the Certificate Insurer.
The Certificate Insurer (for so long as no Insurer Default shall have occurred
and be continuing) may exercise any option, vote, right, power or the like with
respect to the Class A Certificates to the extent it has made a principal
payment pursuant to the Policy. The Trustee and the Class A Certificateholders,
by reason of their acquisition and holding of the Class A Certificates, agree
that the Certificate Insurer shall be subrogated to all of the rights to payment
of the Class A Certificateholders or in relation thereto to the extent that any
payment of principal or interest was made to such Class A Certificateholders
with payments made under the Policy by the Certificate Insurer in accordance
with the provisions hereof.
SECTION 4.10. Reliance on Information from the Servicer. Notwithstanding
anything to the contrary contained in this Agreement, all distributions from any
of the accounts described in this Article IV and any transfer of amounts between
such accounts shall be made by the Trustee in reliance on information provided
to the Trustee by the Servicer in writing, whether by way of a Servicer's
Certificate or otherwise.
SECTION 4.11. Optional Deposits by the Certificate Insurer. The Certificate
Insurer shall at any time, and from time to time, with respect to a Distribution
Date, have the option (but shall not be required, except as provided in Section
4.6(e)) to deliver amounts to the Trustee for deposit into the Collection
Account for any of the following purposes: (i) to provide funds in respect of
the payment of fees or expenses of any provider of services to the Trust with
respect to such Distribution Date, (ii) to distribute as a component of the
Class A Principal Distributable Amount to the extent that the Class A
Certificate Balance as of the Determination Date preceding such Distribution
Date exceeds the Class A Percentage of the Pool Balance as of such Determination
Date, or (iii) to include such amount as part of the Total Distribution Amount
for such Distribution Date to the extent that without such amount a draw would
be required to be made on the Policy.
If the Certificate Insurer waives the satisfaction of any of the events
that might trigger an event of default under the Insurance Agreement and so
notifies the Trustee in writing
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pursuant to Section 5.02(d) of the Insurance Agreement, the Trustee shall notify
Moody's of such waiver.
ARTICLE V
Reserved.
ARTICLE VI
The Certificates
SECTION 6.1. The Certificates. The Class A Certificates shall be issued in
minimum denominations of $1,000 and integral multiples thereof and the Class B
Certificates shall be issued in minimum denominations of $250,000 and integral
multiples of $1,000 in excess thereof. The Certificates shall be executed by the
Trustee on behalf of the Trust by manual or facsimile signature of a Trustee
Officer under the Trustee's seal imprinted thereon. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures shall have been affixed, authorized to sign on behalf of the Trustee,
shall be valid and binding obligations of the Trust, notwithstanding that such
individuals or any of them shall have ceased to be so authorized prior to the
authentication and delivery of such Certificates or did not hold such offices at
the date of such Certificates.
SECTION 6.2A. Appointment of Paying Agent. The Trustee may act as or
appoint one or more paying agents (each, a "Paying Agent"). The Paying Agent
shall make distributions to Certificateholders from amounts delivered by the
Trustee to the Paying Agent from amounts on deposit in the Certificate Account
pursuant to Article IV. Either the Trustee or the Certificate Insurer may remove
the Paying Agent if such Person determines in its sole discretion that the
Paying Agent shall have failed to perform its obligations under this Agreement
in any material respect. The Paying Agent shall initially be the Trustee. A
co-paying agent may be chosen by the Trustee. Any co-paying agent or any
successor Paying Agent shall be permitted to resign as Paying Agent, co-paying
agent or successor Paying Agent, as the case may be, upon 30 days' written
notice to the Trustee, the Seller and the Certificate Insurer. In the event that
the Trustee, any co-paying agent or any successor Paying Agent shall no longer
be the Paying Agent, co-paying agent or successor Paying Agent, as the case may
be, the Trustee, with the Certificate Insurer's reasonable consent, shall
appoint a successor to act as Paying Agent or co-paying agent. The Trustee shall
cause each Paying Agent and each successor Paying Agent or any additional Paying
Agent appointed by the Trustee (other than
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the Trustee, which hereby agrees) to execute and deliver to the Trustee an
instrument in which such Paying Agent, successor Paying Agent or additional
Paying Agent shall agree with the Trustee that, as Paying Agent, such Paying
Agent, successor Paying Agent or additional Paying Agent will hold all sums, if
any, held by it for payment to the Certificateholders in trust for the benefit
of the Certificateholders entitled thereto in an Eligible Account (which may be
maintained with such Paying Agent) until such sums shall be paid to such
Certificateholders and shall promptly notify the Trustee of any default in
making such payment. The Paying Agent shall return all unclaimed funds to the
Trustee and upon removal of a Paying Agent shall also return all funds in its
possession to the Trustee. The provisions of Sections 10.4 and 10.5 shall apply
to each Paying Agent in its role as Paying Agent. The fees of any Paying Agent
or co-paying agent shall be paid by the Trustee. Each Paying Agent and co-paying
agent must be acceptable to the Seller.
SECTION 6.2B. Authenticating Agent. (a) The Trustee may appoint one or more
authenticating agents with respect to the Certificates which shall be authorized
to act on behalf of the Trustee in authenticating the Certificates in connection
with the issuance, delivery, registration of transfer, exchange or repayment of
the Certificates (the "Authenticating Agent"). Whenever reference is made in
this Agreement to the authentication of Certificates by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication by an Authenticating Agent and a certificate of
authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent must be acceptable to the Seller and the Certificate
Insurer. The Trustee is hereby appointed as the initial Authenticating Agent.
(b) Any institution succeeding to the corporate agency business of an
Authenticating Agent shall continue to be an Authenticating Agent without the
execution or filing of any paper or any further act on the part of the Trustee
or such Authenticating Agent.
(c) Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the Seller. The Trustee may at any
time terminate the agency of an Authenticating Agent by giving notice of
termination to such Authenticating Agent and to the Seller. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time an
Authenticating Agent shall cease to be acceptable to the Trustee or the Seller
or the Certificate Insurer, the Trustee may appoint a successor Authenticating
Agent. Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its
predecessor hereunder with like effect as if originally named as
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an Authenticating Agent. No successor Authenticating Agent shall be appointed
unless acceptable to the Trustee, the Seller and the Certificate Insurer.
(d) The Trustee agrees to pay to each Authenticating Agent from its own
funds from time to time reasonable compensation for its services under this
Section 6.2B.
(e) The provisions of Sections 10.4 and 10.5 shall be applicable to any
Authenticating Agent.
(f) Pursuant to an appointment made under this Section 6.2B, the
Certificates may have endorsed thereon, in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication in substantially the
following form:
This is one of the Certificates described in the Pooling and Servicing
Agreement.
[_____________________________________ ]
as Authenticating Agent for the Trustee,
By______________________________________
Authorized Signatory
SECTION 6.2. Authentication of Certificates. The Trustee shall cause the
Certificates to be executed on behalf of the Trust, authenticated, and delivered
to or upon the written order of the Seller, signed by its chairman of the board,
its president, or any vice president, without further corporate action by the
Seller, in authorized denominations, pursuant to this Agreement. No Certificate
shall entitle its Holder to any benefit under this Agreement, or shall be valid
for any purpose, unless there shall appear on such Certificate a certificate of
authentication substantially in the form set forth in Exhibit A or Exhibit B
hereto or in Section 6.2B, as the case may be, executed by the Trustee by manual
signature; such authentication shall constitute conclusive evidence that such
Certificate shall have been duly authenticated and delivered hereunder. All
Certificates issued on the Closing Date shall be dated the Closing Date. All
Certificates issued upon transfer or exchange thereafter shall be dated the date
of their authentication.
SECTION 6.3. Registration of Transfer and Exchange of Certificates. (a) The
Certificate Registrar shall keep or cause to be kept, at the office or agency
maintained pursuant to
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Section 6.7, a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Trustee shall provide for the registration
of Certificates and of transfers and exchanges of Certificates as herein
provided. The Trustee shall be the initial Certificate Registrar.
(b) No transfer of a Class B Certificate shall be made unless (i) the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and any applicable State securities laws are complied with,
(ii) such transfer is exempt from the registration requirements under said
Securities Act and laws or (iii) such transfer is made to a Person who the
transferor reasonably believes is a "qualified institutional buyer" (as defined
in Rule 144A of the Securities Act) that is purchasing such Class B Certificate
for its own account or the account of a qualified institutional buyer to whom
notice is given that the transfer is being made in reliance on said Rule 144A.
In the event that a transfer is to be made in reliance upon clause (ii) above,
the Class B Certificateholder desiring to effect such transfer and such Class B
Certificateholder's prospective transferee must each (x) certify in writing to
the Trustee the facts surrounding such transfer and (y) provide the Trustee with
a written opinion of counsel in form and substance satisfactory to the Seller
and the Trustee that such transfer may be made pursuant to an exemption from the
Securities Act or laws, which Opinion of Counsel shall not be an expense of the
Seller or the Trustee. In the event that a transfer is to be made in reliance
upon clause (iii) above, the prospective transferee shall have furnished to the
Trustee and the Seller a Transferee Certificate, signed by such transferee, in
the form of Exhibit F. Neither the Seller nor the Trustee is under any
obligation to register the Class B Certificates under said Securities Act or any
other securities law. The Certificate Registrar may request and shall receive in
connection with any transfer signature guarantees satisfactory to it in its sole
discretion.
In no event shall a Class B Certificate be transferred to an employee
benefit plan, trust annuity or account subject to ERISA or a plan described in
Section 4975(e)(1) of the Code (any such plan, trust or account including any
Keogh (HR-10) plans, individual retirement accounts or annuities and other
employee benefit plans subject to Section 406 of ERISA or Section 4975 of the
Code being referred to in this Section 6.3 as an "Employee Plan"), a trustee of
any Employee Plan, or an entity, account or other pooled investment fund the
underlying assets of which include or are deemed to include Employee Plan assets
by reason of an Employee Plan's investment in the entity, account or other
pooled investment fund. The foregoing restriction on sale or transfer to an
employee benefit plan shall not apply to prevent the initial issuance or sale or
subsequent transfer of the Class B Certificates to an insurance company,
insurance service, or
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insurance organization qualified to do business in a State that purchases Class
B Certificates with funds held in one or more of its general accounts which is
eligible for the exemptive relief afforded under Section III of Prohibited
Transaction Class Exemption 95-60. The Seller, the Servicer, the Trustee, the
Certificate Insurer and the Standby Servicer shall not be responsible for
confirming or otherwise investigating whether a proposed purchaser is an
employee benefit plan, trust or account subject to ERISA, or described in
Section 4975(e)(1) of the Code.
(c) Each Holder of Class B Certificates, by virtue of the acquisition and
holding thereof, will be deemed to have represented and agreed as follows:
(i) It is a qualified institutional buyer as defined in Rule 144A or
an institutional accredited investor as defined in Regulation D promulgated
under the Securities Act and is acquiring the Class B Certificates for its
own institutional account or for the account of a qualified institutional
buyer or an institutional accredited investor.
(ii) It understands that the Class B Certificates have been offered in
a transaction not involving any public offering within the meaning of the
Securities Act, and that, if in the future it decides to resell, pledge or
otherwise transfer any Class B Certificates, such Class B Certificates may
be resold, pledged or transferred only (a) to a person whom the seller
reasonably believes is a qualified institutional buyer (as defined in Rule
144A under the Securities Act) that purchases for its own account or for
the account of a qualified institutional buyer to whom notice is given that
the resale, pledge or transfer is being made in reliance on Rule 144A, (b)
pursuant to an effective registration statement under the Securities Act or
(c) in reliance on another exemption under the Securities Act.
(iii) It understands that the Class B Certificates will bear a legend
substantially to the following effect:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES THAT THIS SECURITY MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING
MADE IN
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RELIANCE ON RULE 144A, AND SUBJECT TO THE RECEIPT BY THE TRUSTEE AND
THE SELLER OF A CERTIFICATION OF THE TRANSFEREE, (2) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (3) IN
RELIANCE ON ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND SUBJECT TO THE RECEIPT BY THE TRUSTEE OF A
CERTIFICATION OF THE TRANSFEREE (SATISFACTORY TO THE TRUSTEE) AND AN
OPINION OF COUNSEL (SATISFACTORY TO THE TRUSTEE AND THE SELLER) TO THE
EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, IN
EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES AND IN COMPLIANCE WITH THE TRANSFER
REQUIREMENTS SET FORTH IN SECTION 6.3 OF THE AGREEMENT.
IN NO EVENT SHALL A CLASS B CERTIFICATE BE TRANSFERRED TO AN
EMPLOYEE BENEFIT PLAN, TRUST ANNUITY OR ACCOUNT SUBJECT TO ERISA OR A
PLAN DESCRIBED IN SECTION 4975(E)(1) OF THE CODE, (ANY SUCH PLAN,
TRUST OR ACCOUNT BEING REFERRED TO AS AN "EMPLOYEE PLAN"), A TRUSTEE
OF ANY EMPLOYEE PLAN, OR AN ENTITY, ACCOUNT OR OTHER POOLED INVESTMENT
FUND THE UNDERLYING ASSETS OF WHICH INCLUDE OR ARE DEEMED TO INCLUDE
EMPLOYEE PLAN ASSETS BY REASON OF AN EMPLOYEE PLAN'S INVESTMENT IN THE
ENTITY, ACCOUNT OR OTHER POOLED INVESTMENT FUND. INCLUDED WITHIN THE
DEFINITION OF "EMPLOYEE PLANS" ARE, WITHOUT LIMITATION, KEOGH (HR-10)
PLANS, IRA'S (INDIVIDUAL RETIREMENT ACCOUNTS OR ANNUITIES) AND OTHER
EMPLOYEE BENEFIT PLANS, SUBJECT TO SECTION 406 OF ERISA OR SECTION
4975 OF THE CODE. THE FOREGOING RESTRICTION ON SALE OR TRANSFER TO AN
EMPLOYEE BENEFIT PLAN SHALL NOT APPLY TO PREVENT THE INITIAL ISSUANCE
OR SALE OR SUBSEQUENT TRANSFER OF THE CLASS B CERTIFICATES TO AN
INSURANCE COMPANY, INSURANCE SERVICE, OR INSURANCE ORGANIZATION THAT
IS QUALIFIED TO DO BUSINESS IN A STATE IF SUCH INSURANCE COMPANY
PURCHASES CLASS B CERTIFICATES WITH FUNDS HELD IN ONE OR MORE OF ITS
GENERAL ACCOUNTS WHICH IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AFFORDED
UNDER SECTION III OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60.
(iv) If the Holder of a Class B Certificate is an insurance company,
insurance service or insurance organization qualified to do business in a
State, it represents that the source of funds from which its investment is
to be made is either (i) a general account of an insurance company which is
eligible for the exemptive relief afforded under Section III of Prohibited
Transaction Class Exemption 95-60 or (ii) an account which does not include
plan assets of any plan subject to Title I of ERISA or Section 4975 of the
Code.
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(d) Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office, the Trustee shall execute, authenticate and the Trustee
shall deliver, in the name of the designated transferee or transferees, one or
more new Certificates in authorized denominations of a like aggregate amount
dated the date of authentication. At the option of a Holder, Certificates may be
exchanged for other Certificates in authorized denominations of a like aggregate
amount upon surrender of the Certificates to be exchanged at the Corporate Trust
Office.
Every Certificate presented or surrendered for registration of transfer or
exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by the
Holder or his attorney duly authorized in writing. Each Certificate surrendered
for registration of transfer and exchange shall be canceled and subsequently
disposed of by the Trustee in accordance with its customary procedures.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
SECTION 6.4. Mutilated, Destroyed, Lost or Stolen Certificates. If (a) any
mutilated Certificate shall be surrendered to the Certificate Registrar, or if
the Certificate Registrar shall receive evidence to its satisfaction of the
destruction, loss, or theft of any Certificate and (b) there shall be delivered
to the Certificate Registrar, the Trustee and the Certificate Insurer such
security or indemnity as may be required by them to save each of them harmless,
then in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, the Trustee on behalf of the Trust shall execute,
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor and
denomination. In connection with the issuance of any new Certificate under this
Section 6.4, the Trustee and the Certificate Registrar may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicate Certificate issued pursuant to
this Section 6.4 shall constitute conclusive evidence of ownership in the Trust,
as if originally issued, whether or not the lost, stolen, or destroyed
Certificate shall be found at any time.
SECTION 6.5. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Trustee or the Certificate
Registrar may treat the Person in
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whose name any Certificate shall be registered as the owner of such Certificate
for the purpose of receiving distributions pursuant to Section 4.6 and for all
other purposes whatsoever, and neither the Trustee nor the Certificate Registrar
shall be bound by any notice to the contrary.
SECTION 6.6. Access to List of Certificateholders' Names and Addresses. The
Trustee shall furnish or cause to be furnished to the Servicer or the
Certificate Insurer, at the expense of the Trust, within 15 days after receipt
by the Trustee of a request therefor from the Servicer or the Certificate
Insurer, as the case may be, in writing, a list of the names and addresses of
the Certificateholders as of the most recent Record Date. If three or more Class
A Certificateholders, or one or more Holders of Class A Certificates evidencing
not less than 25% of the Class A Certificate Balance apply in writing to the
Trustee, and such application states that the applicants desire to communicate
with other Certificateholders with respect to their rights under this Agreement
or under the Certificates and such application shall be accompanied by a copy of
the communication that such applicants propose to transmit, then the Trustee
shall, within five Business Days after the receipt for such application, afford
such applicants access during normal business hours to the current list of
Certificateholders. Each Holder, by receiving and holding a Certificate, shall
be deemed to have agreed to hold none of the Servicer, the Certificate Insurer
or the Trustee accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
SECTION 6.7. Maintenance of Office or Agency. The Trustee shall maintain in
Minneapolis, Minnesota, an office or offices or agency or agencies where
Certificates may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Trustee in respect of the Certificates
and this Agreement may be served. The Trustee initially designates its office
located at Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479-0070,
as its office for such purposes. The Trustee shall give prompt written notice to
the Servicer and to Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
SECTION 6.8. Book-Entry Certificates. The Class A Certificates, upon
original issuance, will be issued in the form of typewritten Certificates
representing the Book-Entry Certificates, to be delivered to The Depository
Trust Company, the initial Clearing Agency, by, or on behalf of, the Seller. The
Class A Certificates delivered to The Depository Trust Company shall initially
be registered on the Certificate Register in the name of CEDE & Co., the nominee
of the initial Clearing Agency, and no Certificate Owner will receive a
definitive
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certificate representing such Certificate Owner's interest in the Class A
Certificates, except as provided in Section 6.10. Unless and until definitive,
fully registered Class A Certificates (the "Definitive Certificates") have been
issued to Certificate Owners pursuant to Section 6.10:
(i) the provisions of this Section 6.8 shall be in full force and
effect;
(ii) the Seller, the Servicer, the Certificate Registrar, and the
Trustee may deal with the Clearing Agency for all purposes (including the
making of distributions on the Class A Certificates) as the authorized
representative of the Certificate Owners;
(iii) to the extent that the provisions of this Section 6.8 conflict
with any other provisions of this Agreement, the provisions of this Section
6.8 shall control;
(iv) the rights of Certificate Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law and
agreements between such Certificate Owners and the Clearing Agency and/or
the Clearing Agency Participants. Pursuant to the Depository Agreement,
unless and until Definitive Certificates are issued pursuant to Section
6.10, the initial Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit distributions of
principal and interest on the Class A Certificates to such Clearing Agency
Participants; and
(v) whenever this Agreement requires or permits actions to be taken
based upon instructions or directions of Holders of Certificates evidencing
a specified percentage of the Class A Principal Balance, the Clearing
Agency shall be deemed to represent such percentage only to the extent that
it has received instructions to such effect from Certificate Owners and/or
Clearing Agency Participants owning or representing, respectively, such
required percentage of the beneficial interest in Class A Certificates and
has delivered such instructions to the Trustee.
SECTION 6.9. Notices to Clearing Agency. Whenever notice or other
communication to the Class A Certificateholders is required under this
Agreement, unless and until Definitive Certificates shall have been issued to
Certificate Owners pursuant to Section 6.10, the Trustee and the Servicer shall
give all such notices and communications specified herein to be given to Holders
of the Class A Certificates to the Clearing Agency.
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SECTION 6.10. Definitive Certificates. If (i) (A) the Seller advises the
Trustee in writing that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities under the Depository Agreement and (B)
the Trustee or the Seller is unable to locate a qualified successor, (ii) the
Seller at its option, advises the Trustee in writing that it elects to terminate
the book-entry system through the Clearing Agency, or (iii) after the occurrence
of an Event of Default, the Clearing Agency at the direction of Certificate
Owners representing beneficial interests aggregating not less than 51% of the
Class A Certificate Balance, advises the Trustee in writing that the
continuation of a book-entry system through the Clearing Agency is no longer in
the best interests of the Certificate Owners, than the Trustee shall notify the
Clearing Agency and request that the Clearing Agency notify all Certificate
Owners of the occurrence of any such event and of the availability of Definitive
Certificates to Certificate Owners requesting the same. Upon surrender to the
Trustee of the Class A Certificates by the Clearing Agency, accompanied by
registration instructions from the Clearing Agency for registration, the Trustee
shall issue the Definitive Certificates and deliver such Definitive Certificates
in accordance with the instructions of the Clearing Agency. Neither the Seller,
the Certificate Registrar nor the Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates, the Trustee shall recognize the Holders of the Definitive
Certificates as Certificateholders hereunder. The Trustee shall not be liable if
the Trustee or the Seller is unable to locate a qualified successor Clearing
Agency.
ARTICLE VII
The Seller
SECTION 7.1. Representations of Seller. The Seller makes the following
representations to the Certificate Insurer and the Trustee, on which the
Certificate Insurer relied in executing and delivering the Policy and on which
the Trustee on behalf of itself and the Certificateholders relied in accepting
the Receivables in trust and executing and authenticating the Certificates. The
representations speak as of the execution and delivery of this Agreement and
shall survive the sale of the Receivables to the Trustee.
(i) Organization and Good Standing. The 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 execute, deliver and
perform its
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obligations under this Agreement and to own its properties and to conduct
its business as such properties shall be currently owned and such business
is presently conducted, and had at all relevant times, and shall have,
power, authority, and legal right to acquire and own the Receivables.
(ii) 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.
(iii) Power and Authority. The Seller has the power and authority to
execute and deliver this Agreement and to carry out its terms; the Seller
has full power and authority to sell and assign the property sold and
assigned to and deposited with the Trustee as part of the Trust and has
duly authorized such sale and assignment to the Trustee by all necessary
corporate action; and the execution, delivery, and performance of this
Agreement has been duly authorized by the Seller by all necessary corporate
action.
(iv) Valid Sale; Binding Obligation. This Agreement effects a valid
sale, transfer and assignment of the Receivables and the other property
conveyed to the Trust pursuant to Section 2.2, enforceable against
creditors of and purchasers from the Seller; and this Agreement shall
constitute a legal, valid and binding obligation of the Seller enforceable
in accordance with its terms.
(v) No Violation. The execution, delivery and performance by the
Seller of this Agreement and the consummation of the transactions
contemplated hereby and the fulfillment of the terms hereof do not conflict
with, result in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default under, the
articles of incorporation or by-laws of the 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 any of its properties are subject;
nor result in the creation or imposition of any lien upon any of its
properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust, or other instrument (other than this Agreement);
nor violate any law, order, rule, or regulation applicable to the Seller of
any court or of any Federal or State regulatory body, administrative
agency, or other governmental instrumentality having jurisdiction over the
Seller or its properties.
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(vi) No Proceedings. There are no proceedings or investigations
pending, or to the Seller's best knowledge, threatened, before any court,
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Seller or its properties: (A)
asserting the invalidity of this Agreement or the Certificates, (B) seeking
to prevent the issuance of the Certificates or the consummation of any of
the transactions contemplated by this Agreement, (C) seeking any
determination or ruling that might materially and adversely affect the
performance by the Seller of its obligations under, or the validity or
enforceability of, this Agreement or the Certificates, or (D) relating to
the Seller and which might adversely affect the Federal or State income,
excise, franchise or similar tax attributes of the Certificates.
(vii) No Consents. No consent, approval, authorization or order of or
declaration or filing with any governmental authority is required for the
issuance or sale of the Certificates or the consummation of the other
transactions contemplated by this Agreement, except such as have been duly
made or obtained.
(viii) 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.
(ix) The Seller hereby represents and warrants to the Trustee that the
Seller's principal place of business and chief executive office is, and for
the four months preceding the date of this Agreement has been, located at:
2 Ada, Suite 100, Irvine, California.
SECTION 7.2. 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 and the representations made by
the Seller in this Agreement. The Seller shall indemnify, defend, and hold
harmless the Trustee and the Standby Servicer from and against any loss,
liability or expense incurred by reason of (a) the 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 or (b) the Seller's violation of Federal or State securities laws in
connection with the sale of the Certificates.
Indemnification under this Section 7.2 shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
Seller shall have made any indemnity payments to the Trustee or the Standby
Servicer pursuant to this Section and the Trustee or the Standby Servicer
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thereafter shall collect any of such amounts from others, the Trustee or the
Standby Servicer shall repay such amounts to the Seller, without interest.
SECTION 7.3. 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) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Section 2.5 shall
have been breached and no Event of Default, and no event that, after notice or
lapse of time, or both, would become an Event of Default shall have happened and
be continuing, (ii) the Seller shall have delivered to the Certificate Insurer
and the Trustee an Officer's Certificate and an Opinion of Counsel each stating
that such consolidation, merger, or succession and such agreement or assumption
comply with this Section 7.3 and that all conditions precedent, if any, provided
for in this Agreement relating to such transaction have been complied with,
(iii) the Seller shall have delivered to the Certificate Insurer and the Trustee
an Opinion of Counsel either (A) stating that, in the opinion of such counsel,
all financing statements and continuation statements and amendments thereto have
been executed and filed that are necessary fully to preserve and protect the
interest of the Trustee in the Receivables, and reciting the details of such
filings, or (B) stating that, in the opinion of such counsel, no such action
shall be necessary to preserve and protect such interest and (iv) immediately
after giving effect to such transaction, no Insurance Agreement Event of Default
and no event that, after notice or lapse of time, or both, would become an
Insurance Agreement Event of Default shall have happened and be continuing. The
Seller shall provide notice of any merger, consolidation or succession pursuant
to this Section 7.3 to each Rating Agency and shall have received confirmation
from each Rating Agency that the then current rating of the Class A Certificates
or the Class B Certificates will not be downgraded as a result of such merger,
consolidation or succession. Notwithstanding anything herein to the contrary,
the execution of the foregoing agreement of assumption and compliance with
clause (i), (ii), (iii) or (iv) above shall be conditions to the consummation of
the transactions referred to in clause (a), (b) or (c) above.
SECTION 7.4. Limitation on Liability of Seller and Others. The Seller and
any director or officer or employee or agent of
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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 hereunder. 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 7.5. Seller May Own Certificates. The Seller and any Person
controlling, controlled by, or under common control with the Seller may in its
individual or any other capacity become the owner or pledgee of Certificates
with the same rights as it would have if it were not the Seller or an affiliate
thereof, except as otherwise provided in the definition of "Certificateholder"
specified in Section 1.1 and in Section 1.6. Certificates so owned by or pledged
to the Seller or such controlling or commonly controlled Person shall have an
equal and proportionate benefit under the provisions of this Agreement, without
preference, priority, or distinction as among all of the Certificates except as
otherwise provided herein or by the definition of Certificateholder.
ARTICLE VIII
The Servicer
SECTION 8.1. Representations of Servicer. The Servicer makes the following
representations to the Certificate Insurer and the Trustee, on which the
Certificate Insurer relies in executing and delivering the Policy, and on which
the Trustee on behalf of itself and the Certificateholders relies in accepting
the Receivables in trust and executing and authenticating the Certificates. The
representations speak as of the execution and delivery of this Agreement and
shall survive the sale of the Receivables to the Trustee.
(i) Organization and Good Standing. The Servicer has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of California, with power and authority to own its
properties and to conduct its business as such properties shall be
currently owned and such business is presently conducted, and had at all
relevant times, and shall have, power, authority, and legal right to
acquire, own, and service the Receivables.
(ii) Due Qualification. The Servicer is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease
of property or the conduct of its business (including
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the servicing of the Receivables as required by this Agreement) shall
require such qualifications.
(iii) Power and Authority. The Servicer has the power and authority to
execute and deliver this Agreement and to carry out its terms; and the
execution, delivery, and performance of this Agreement has been duly
authorized by the Servicer by all necessary corporate action.
(iv) Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of the Servicer enforceable in accordance with its
terms.
(v) No Violation. The execution, delivery and performance by the
Servicer of this Agreement and the consummation of the transactions
contemplated hereby and the fulfillment of the terms hereof do not conflict
with, result in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default under, the
articles of incorporation or by-laws of the Servicer, or any indenture,
agreement, mortgage, deed of trust, or other instrument to which the
Servicer is a party or by which it is bound or any of its properties are
subject; nor result in the creation or imposition of any lien upon any of
its properties pursuant to the terms of any indenture, agreement, mortgage,
deed of trust, or other instrument (other than this Agreement); nor violate
any law, order, rule, or regulation applicable to the Servicer of any court
or of any Federal or State regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over the Servicer or its
properties.
(vi) No Proceedings. There are no proceedings or investigations
pending, or to the Servicer's best knowledge, threatened, before any court,
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Servicer or its properties:
(A) asserting the invalidity of this Agreement or the Certificates, (B)
seeking to prevent the issuance of the Certificates or the consummation of
any of the transactions contemplated by this Agreement, (C) seeking any
determination or ruling that might materially and adversely affect the
performance by the Servicer of its obligations under, or the validity or
enforceability of, this Agreement or the Certificates, or (D) relating to
the Servicer and which might adversely affect the Federal or State income,
excise, franchise or similar tax attributes of the Certificates.
(vii) No Consents. No consent, approval, authorization or order of or
declaration or filing with any
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governmental authority is required for the issuance or sale of the
Certificates or the consummation of the other transactions contemplated by
this Agreement, except such as have been duly made or obtained.
(viii) Taxes. The Servicer has filed on a timely basis all tax returns
required to be filed by it and paid all taxes, to the extent that such
taxes have become due.
(ix) Chief Executive Office. The Servicer hereby represents and
warrants to the Trustee that the Servicer's principal place of business and
chief executive office is, and for the four months preceding the date of
this Agreement has been, located at: 2 Ada, Suite 100, Irvine, California.
SECTION 8.2. Indemnities of Servicer. (a) The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement and the representations made by
the Servicer herein.
(i) The Servicer shall defend, indemnify, and hold harmless the
Trustee, the Standby Servicer, the Collateral Agent, the Trust, the
Certificate Insurer, the Certificateholders and the Seller, from and
against any and all costs, expenses, losses, damages, claims, and
liabilities, arising out of or resulting from the use, ownership, or
operation by the Servicer or any affiliate thereof of a Financed Vehicle.
(ii) The Servicer shall indemnify, defend and hold harmless the
Trustee, the Standby Servicer, the Collateral Agent, the Trust, the
Certificate Insurer and the Seller from and against any taxes that may at
any time be asserted against the Trustee, the Standby Servicer, the
Collateral Agent, the Trust, the Certificate Insurer or the Seller, with
respect to the transactions contemplated herein including, without
limitation, any sales, gross receipts, general corporation, tangible
personal property, privilege, or license taxes and costs and expenses in
defending against the same.
(iii) The Servicer shall indemnify, defend, and hold harmless the
Trustee, the Standby Servicer, the Collateral Agent, the Seller, the
Certificate Insurer, the Trust and the Certificateholders from and against
any and all costs, expenses, losses, claims, damages, and liabilities to
the extent that such cost, expense, loss, claim, damage, or liability arose
out of, or was imposed upon the Trustee, the Standby Servicer, the
Collateral Agent, the Seller, the Trust or the Certificateholders through,
the negligence, willful misfeasance, or bad faith of the Servicer in the
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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 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 Standby Servicer or Collateral Agent, as applicable; (b)
relates to any tax other than the taxes with respect to which the Servicer
shall be required to indemnify the Trustee, the Standby Servicer or the
Collateral Agent; or (c) shall arise from the Trustee's breach of any of
its representations or warranties set forth in Section 10.13.
(v) Notwithstanding the foregoing, the Servicer shall not be obligated
to defend, indemnify, and hold harmless any Certificateholder for any
losses, claims, damages or liabilities incurred by any Certificateholders
arising out of claims, complaints, actions and allegations relating to
Section 406 of ERISA or Section 4975 of the Code as a result of the
purchase or holding of a Certificate by such Certificateholder with the
assets of a plan subject to such provisions of ERISA or the Code or the
servicing, management and operation of the Trust.
(b) For purposes of this Section, in the event of the termination of the
rights and obligations of a Servicer (or any successor thereto pursuant to
Section 8.3) as Servicer pursuant to Section 9.1, 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 9.2.
The provisions of this Section 8.2(b) shall in no way affect the survival
pursuant to Section 8.2(c) of the indemnification by the Servicer provided by
Section 8.2(a).
(c) Indemnification under this Section 8.2 shall survive the termination of
this Agreement and any resignation or removal of CPS as Servicer and shall
include reasonable fees and expenses of counsel and expenses of litigation. If
the Servicer shall have made any indemnity payments pursuant to this Section and
the recipient thereafter collects any of such amounts from others, the recipient
shall promptly repay such amounts to the Servicer, without interest.
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SECTION 8.3. Merger or Consolidation of, or Assumption of the Obligations
of, Servicer or Standby Servicer. (a) Any Person (a) into which the Servicer may
be merged or consolidated, (b) which may result from any merger or consolidation
to which the Servicer shall be a party, or (c) which may succeed to the
properties and assets of the Servicer substantially as a whole, shall execute an
agreement of assumption to perform every obligation of the Servicer hereunder,
and whether or not such assumption agreement is executed, shall be the successor
to the Servicer under this Agreement without further act on the part of any of
the parties to this Agreement; provided, however, that (i) immediately after
giving effect to such transaction, no Event of Default, and no event which,
after notice or lapse of time, or both, would become an Event of Default shall
have happened and be continuing, (ii) the Servicer shall have delivered to the
Trustee and the Certificate Insurer an Officer's Certificate and an Opinion of
Counsel each stating that such consolidation, merger or succession and such
agreement of assumption comply with this Section 8.3 and that all conditions
precedent provided for in this Agreement relating to such transaction have been
complied with, (iii) the Servicer shall have delivered to the Trustee and the
Certificate Insurer an Opinion of Counsel either (A) stating that, in the
opinion of such counsel, all financing statements and continuation statements
and amendments thereto have been executed and filed that are necessary fully to
preserve and protect the interest of the Trustee in the Receivables and reciting
the details of such filings, or (B) stating that, in the opinion of such
counsel, no such action shall be necessary to preserve and protect such interest
and (iv) nothing herein shall be deemed to release the Servicer from any
obligation. Notwithstanding anything herein to the contrary, the execution of
the foregoing agreement of assumption and compliance with clauses (i), (ii) or
(iii) above shall be conditions to the consummation of the transactions referred
to in clause (a), (b) or (c) above.
(b) Any Person (a) into which the Standby Servicer may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Standby Servicer shall be a party, or (c) which may succeed to the properties
and assets of the Standby Servicer substantially as a whole, shall execute an
agreement of assumption to perform every obligation of the Servicer hereunder,
and whether or not such assumption agreement is executed, shall be the successor
to the Standby Servicer under this Agreement without further act on the part of
any of the parties to this Agreement; provided, however, that nothing herein
shall be deemed to release the Standby Servicer from any obligation.
SECTION 8.4. Limitation on Liability of Servicer and Others. Neither the
Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be under any liability to the Trust or the Certificateholders,
except as
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provided under this Agreement, for any action taken or for refraining from the
taking of any action pursuant to this Agreement; provided, however, that this
provision shall not protect the Servicer or any such Person against any
liability that would otherwise be imposed by reason of a breach of this
Agreement or willful misfeasance, bad faith, or negligence in the performance of
duties or by reason of reckless disregard of obligations and duties under this
Agreement. The Servicer and any director or officer or employee or agent of the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising under this
Agreement.
Except as provided in this Agreement, the Servicer shall not be under any
obligation to appear in, prosecute, or defend any legal action that shall not be
incidental to its duties to service the Receivables in accordance with this
Agreement, and that in its opinion may involve it in any expense or liability.
SECTION 8.5. Servicer and Standby Servicer Not to Resign. Subject to the
provisions of Section 8.3, neither the Servicer nor the Standby Servicer may
resign from the obligations and duties hereby imposed on it as Servicer or
Standby Servicer, as the case may be, under this Agreement except upon
determination that by reason of a change in legal requirements the performance
of its duties under this Agreement would cause it to be in violation of such
legal requirements in a manner which would result in a material adverse effect
on the Servicer or the Standby Servicer, as the case may be, and the Certificate
Insurer does not elect to waive the obligations of the Servicer or the Standby
Servicer, as the case may be, to perform the duties which render it legally
unable to act or does not elect to delegate those duties to another Person.
Notice of any such determination permitting the resignation of the Servicer or
the Standby Servicer, as the case may be, shall be communicated to the Trustee
and the Certificate Insurer at the earliest practicable time (and, if such
communication is not in writing, shall be confirmed in writing at the earliest
practicable time) and any such determination shall be evidenced by an Opinion of
Counsel to such effect delivered to and satisfactory to the Trustee and the
Certificate Insurer concurrently with or promptly after such notice. No such
resignation of the Servicer shall become effective until a successor servicer
shall have assumed the responsibilities and obligations of CPS in accordance
with Section 9.2 and the Servicing Assumption Agreement, if applicable. No such
resignation of the Standby Servicer shall become effective until an entity
acceptable to the Certificate Insurer shall have assumed the responsibilities
and obligations of the Standby Servicer; provided, however, that if no such
entity shall have assumed such responsibilities and obligations of the Standby
Servicer within 60 days of the resignation of the
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Standby Servicer, the Standby Servicer may petition a court of competent
jurisdiction for the appointment of a successor to the Standby Servicer.
ARTICLE IX
Default
SECTION 9.1. Events of Default. If any one of the following events ("Events
of Default") shall occur and be continuing:
(i) Any failure by the Servicer to deliver to the Trustee for
distribution to Certificateholders any proceeds or payment required to be
so delivered under the terms of the Certificates and this Agreement that
shall continue unremedied for a period of two Business Days (or, in the
case of a payment or deposit to be made no later than a Distribution Date,
the failure to make such payment or deposit by such Distribution Date); or
the certificate required by Section 3.9, the statement required by Section
3.10, or the report required by Section 3.11 shall not have been delivered
within five (5) days after the date such certificates or statements or
reports, as the case may be, are required to be delivered; or
(ii) Failure on the part of the Servicer, or the Seller, as the case
may be, duly to observe or to perform in any material respect any other
covenants or agreements of the Servicer or the Seller (as the case may be)
set forth in the Certificates or in this Agreement, which failure shall
continue unremedied for a period of 30 days after the date on which written
notice of such failure requiring the same to be remedied, shall have been
given (1) to the Servicer or the Seller (as the case may be), by the
Certificate Insurer or the Trustee, or (2) to the Servicer or the Seller,
(as the case may be), and to the Trustee and the Certificate Insurer by the
Holders of Class A Certificates evidencing not less than 25% of the Class A
Certificate Balance or, after the Class A Certificates have been paid in
full and all outstanding Reimbursement Obligations and other amounts due to
the Certificate Insurer have been paid in full, by the Holders of Class B
Certificates evidencing not less than 25% of the Class B Certificate
Balance; or
(iii) The entry of a decree or order by a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a conservator, receiver, or liquidator for the Servicer or
the Seller (or, so long as CPS is Servicer, any of the Servicer's
Affiliates) in any
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bankruptcy, insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings, or for the winding up or liquidation
of its affairs, and the continuance of any such decree or order unstayed
and in effect for a period of 60 consecutive days; or
(iv) The consent by 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) shall admit in
writing its inability to pay its debts generally as they become due, file a
petition to take advantage of any applicable insolvency or reorganization
statute, make an assignment for the benefit of its creditors, or
voluntarily suspend payment of its obligations; or
(v) The occurrence of an Insurance Agreement Event of Default;
then, and in each and every case, so long as an Event of Default shall not have
been remedied, provided (i) no Insurer Default shall have occurred and be
continuing, the Certificate Insurer in its sole and absolute discretion, or (ii)
if an Insurer Default shall have occurred and be continuing, then either the
Trustee or the Holders of Class A Certificates evidencing not less than 25% of
the Class A Certificate Balance or (iii) if the Class A Certificates have been
paid in full and either (A) all outstanding Reimbursement Obligations and other
amounts due to the Certificate Insurer have been paid in full or (B) an Insurer
Default shall have occurred and be continuing, then either the Trustee or the
Holders of Class B Certificates evidencing not less than 25% of the Class B
Certificate Balance, by notice then given in writing to the Servicer (and to the
Trustee if given by the Certificate Insurer or by the Certificateholders) may
terminate all of the rights and obligations of the Servicer under this
Agreement. The Servicer shall be entitled to its pro rata share of the Servicing
Fee for the number of days in the Collection Period prior to the effective date
of its termination. On or after the receipt by the Servicer of such written
notice, all authority and power of the Servicer under this Agreement, whether
with respect to the Certificates or the Receivables or otherwise, shall, without
further action, pass to and be vested in (i) the Standby Servicer or (ii) such
successor Servicer as may be appointed under Section 9.2; provided, however,
that the successor Servicer shall have no liability with respect to any
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obligation which was required to be performed by the predecessor Servicer prior
to the date the successor Servicer becomes the Servicer or any claim of a third
party (including a Certificateholder) based on any alleged action or inaction of
the predecessor Servicer as Servicer; and, without limitation, the Trustee is
hereby authorized and empowered to execute and deliver, on behalf of the
predecessor Servicer, as attorney-in-fact or otherwise, any and all documents
and other instruments, and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
whether to complete the transfer and endorsement of the Receivables and related
documents, or otherwise. The predecessor Servicer shall cooperate with the
successor Servicer and the Trustee in effecting the termination of the
responsibilities and rights of the predecessor Servicer under this Agreement,
including the transfer to the successor Servicer for administration by it of all
cash amounts that shall at the time be held or should have been held by the
predecessor Servicer for deposit, or shall thereafter be received with respect
to a Receivable and the delivery to the successor Servicer of all files and
records concerning the Receivables and a computer tape in readable form
containing all information necessary to enable the successor Servicer to service
the Receivables and the other property of the Trust. All reasonable costs and
expenses (including attorneys' fees) incurred in connection with transferring
the Receivable Files to the successor Servicer and amending this Agreement to
reflect such succession as Servicer pursuant to this Section 9.1 shall be paid
by the predecessor Servicer upon presentation of reasonable documentation of
such costs and expenses. In addition, any successor Servicer shall be entitled
to payment from the immediate predecessor Servicer for reasonable transition
expenses incurred in connection with acting as successor Servicer, and to the
extent not so paid, such payment shall be made pursuant to Section 4.6(c)
hereof. Upon receipt of notice of the occurrence of an Event of Default, the
Trustee shall give notice thereof to the Rating Agencies. The predecessor
Servicer shall grant the Trustee, the Standby Servicer and the Certificate
Insurer reasonable access to the predecessor Servicer's premises at the
predecessor Servicer's expense. If requested by the Certificate Insurer, the
Standby Servicer or successor Servicer shall terminate any arrangements relating
to (i) the Lock-Box Account with the Lock-Box Bank, (ii) the Post-Office Box or
(iii) the Lock-Box Agreement, and direct the Obligors to make all payments under
the Receivables directly to the Servicer at the predecessor Servicer's expense
(in which event the successor Servicer shall process such payments directly, or,
through a Lock-Box Account with a Lock-Box Bank at the direction of the
Certificate Insurer).
SECTION 9.2. Appointment of Successor. (a) Upon the Servicer's receipt of
notice of termination pursuant to
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Section 9.1, the Servicer's resignation in accordance with the terms of this
Agreement or expiration or non-renewal of the term of the Servicer hereunder in
accordance with Section 3.14, the predecessor Servicer shall continue to perform
its functions as Servicer under this Agreement, in the case of termination, only
until the date specified in such termination notice or, if no such date is
specified in a notice of termination, until receipt of such notice and, in the
case of expiration and non-renewal of the term of the Servicer upon the
expiration of such term, and, in the case of resignation, until the later of (x)
the date 45 days from the delivery to the Trustee of written notice of such
resignation (or written confirmation of such notice) in accordance with the
terms of this Agreement and (y) the date upon which the predecessor Servicer
shall become unable to act as Servicer, as specified in the notice of
resignation and accompanying Opinion of Counsel. In the event of termination of
the Servicer, Norwest Bank Minnesota, National Association, as Standby Servicer,
shall assume the obligations of Servicer hereunder on the date specified in such
written notice (the "Assumption Date") pursuant to the Servicing Assumption
Agreement or, in the event that the Certificate Insurer shall have determined
that a Person other than the Standby Servicer shall be the successor Servicer in
accordance with Section 9.2(c), 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 3.7,
4.4 or 8.2 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. In addition, if the Standby Servicer shall be legally unable to act
as Servicer and an Insurer Default shall have occurred and be continuing, the
Standby Servicer, the Trustee or Class A Certificateholders holding Class A
Certificates evidencing not less than 51% of the Class A Certificate Balance
(or, if the Class A Certificates have been paid in full, Class B
Certificateholders holding Class B Certificates evidencing not less than 51% of
the Class B Certificate Balance) may petition a court of competent jurisdiction
to appoint any successor to the Servicer. Pending appointment pursuant to the
preceding
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sentence, the Standby Servicer shall act as successor Servicer unless it is
legally unable to do so, in which event the predecessor Servicer shall continue
to act as Servicer until a successor has been appointed and accepted such
appointment. In the event that a successor Servicer has not been appointed at
the time when the predecessor Servicer has ceased to act as Servicer in
accordance with this Section 9.2, then the Certificate Insurer, in accordance
with Section 9.2(c) shall appoint, or petition a court of competent jurisdiction
to appoint a successor to the Servicer under this Agreement.
(b) Upon appointment, the successor Servicer shall be the successor in all
respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties, and liabilities arising thereafter relating thereto
placed on the predecessor Servicer, and shall be entitled to the Servicing Fee
and all of the rights granted to the predecessor Servicer, by the terms and
provisions of this Agreement.
(c) Subject to Section 12.11, the Certificate Insurer may exercise at any
time its right to appoint as Standby Servicer or as successor Servicer a Person
other than the Person serving as Standby Servicer at the time, and shall have no
liability to the Trustee, CPS, the Seller, the Person then serving as Standby
Servicer, any Certificateholder or any other Person if it does so. Subject to
Section 8.5, no provision of this Agreement shall be construed as relieving the
Standby Servicer of its obligation to succeed as successor Servicer upon the
termination of the Servicer pursuant to Section 9.1 or resignation of the
Servicer pursuant to Section 8.5. If upon any such resignation or termination,
the Certificate Insurer appoints a successor Servicer other than the Standby
Servicer, the Standby Servicer shall not be relieved of its duties as Standby
Servicer hereunder.
SECTION 9.3. Reserved.
SECTION 9.4. Notification to Certificateholders. Upon any termination of,
or appointment of a successor to, the Servicer pursuant to this Article IX, the
Trustee shall give prompt written notice thereof to Certificateholders at their
respective addresses appearing in the Certificate Register and to each of the
Rating Agencies.
SECTION 9.5. Direction of Insolvency Proceedings by Certificate Insurer.
(a) In the event that the Trustee has received a certified copy of an order of
the appropriate court that any Class A Guaranteed Distribution Amount paid on a
Class A Certificate has been avoided in whole or in part as a preference payment
under applicable bankruptcy law, the Trustee shall so notify the Certificate
Insurer, shall comply with the provisions
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of the Policy to obtain payment by the Certificate Insurer of such avoided Class
A Guaranteed Distribution Amount payment, and shall, at the time it provides
notice to the Certificate Insurer, notify Holders of the Class A Certificates by
mail that, in the event that any Class A Certificateholder's payment is so
recoverable, such Class A Certificateholder will be entitled to payment pursuant
to the terms of the Policy. Pursuant to the terms of the Policy, the Certificate
Insurer will make such payment on behalf of the Class A Certificateholder to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy named in
the Order (as defined in the Policy) and not to the Trustee or any Class A
Certificateholder directly (unless a Class A Certificateholder has previously
paid such payment to the receiver, conservator, debtor-in-possession or trustee
in bankruptcy, in which case the Certificate Insurer will make such payment to
the Trustee for distribution to such Class A Certificateholder upon proof of
such payment reasonably satisfactory to the Certificate Insurer).
(b) Upon knowledge of any of the following events, the Trustee shall
promptly notify the Certificate Insurer of (i) the commencement of any of the
events or proceedings described in Section 9.1(iii) or (iv) in respect of the
Seller or the Servicer or any such event or proceedings applicable to an Obligor
under a Receivable (any such event or proceedings, an "Insolvency Proceeding")
and (ii) the making of any claim in connection with any Insolvency Proceeding
seeking the avoidance as a preferential transfer (a "Preference Claim") with
regard to any payment of principal of, or interest on a Class A Certificate.
Each Class A Certificateholder, by its purchase of Class A Certificates, and the
Trustee hereby agree that, the Certificate Insurer may, provided an Insurer
Default has not occurred, at any time during the continuation of an Insolvency
Proceeding direct all matters relating to such Insolvency Proceeding, including,
without limitation, (i) all matters relating to any Preference Claim, (ii) the
direction of any appeal of any order relating to any Preference Claim and (iii)
the posting of any surety, supersedeas or performance bond pending any such
appeal at the expense of the Certificate Insurer, but subject to reimbursement
as provided in the Insurance Agreement. In addition, and without limitation of
the foregoing, as set forth in Section 4.9, the Certificate Insurer shall be
subrogated to, and each Class A Certificateholder and the Trustee hereby
delegate and assign, to the fullest extent permitted by law, the rights of the
Trustee and each Class A Certificateholder in the conduct of any proceeding with
respect to a Preference Claim, including, without limitation, all rights of any
party to an adversary proceeding action with respect to any court order issued
in connection with any such Preference Claim.
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SECTION 9.6. Action Upon Certain Failures of the Servicer. In the event
that the Trustee shall have knowledge of any failure of the Servicer specified
in Section 9.1 which would give rise to a right of termination under such
Section upon the Servicer's failure to remedy the same after notice, the Trustee
shall give notice thereof to the Servicer and the Certificate Insurer. For all
purposes of this Agreement, the Trustee shall not be deemed to have knowledge of
any failure of the Servicer as specified in Section 9.1 unless notified thereof
in writing by the Servicer, the Certificate Insurer or by a Certificateholder.
The Trustee shall be under no duty or obligation to investigate or inquire as to
any potential failure of the Servicer specified in Section 9.1.
ARTICLE X
The Trustee
SECTION 10.1. Duties of Trustee. The Trustee, both prior to the occurrence
of an Event of Default and after an Event of Default shall have been cured or
waived, shall undertake to perform such duties and only such duties as are
specifically set forth in this Agreement. If an Event of Default shall have
occurred and shall not have been cured or waived, the Trustee shall exercise
such of the rights and powers vested in it by this Agreement and shall use the
same degree of care and skill in their exercise, as a prudent man would exercise
or use under the circumstances in the conduct of his own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that shall be specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.
The Trustee shall take and maintain custody of the Receivable Files (except
as otherwise provided herein) and the Schedule of Receivables included as an
exhibit to this Agreement and shall retain copies of all Servicer's Certificates
prepared hereunder.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act,
or its own bad faith; provided, however, that:
(i) Prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred, the
duties and obligations of the
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Trustee shall be determined solely by the express provisions of this
Agreement, the Trustee shall not be liable except for the performance of
such duties and obligations as shall be specifically set forth in this
Agreement, no implied covenants or obligations shall be read into this
Agreement against the Trustee and, in the absence of bad faith on the part
of the Trustee, the Trustee may conclusively rely on the truth of the
statements and the correctness of the opinions expressed in any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Agreement;
(ii) The Trustee shall not be liable for an error of judgment made in
good faith by a Trustee Officer, unless it shall be proved that the Trustee
shall have been negligent in ascertaining the pertinent facts;
(iii) The Trustee shall not be liable with respect to any action
taken, suffered, or omitted to be taken in good faith in accordance with
this Agreement or at the direction of the Certificate Insurer or, after an
Insurer Default, the Holders of Class A Certificates evidencing not less
than 25% of the Class A Certificate Balance or, after the Class A
Certificates have been paid in full and either (A) all outstanding
Reimbursement Obligations and other amounts due to the Certificate Insurer
have been paid in full or (B) an Insurer Default shall have occurred and be
continuing, the Holders of Class B Certificates evidencing not less than
25% of the Class B Certificate Balance, relating to the time, method, and
place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred upon the Trustee, under this
Agreement;
(iv) The Trustee shall not be charged with knowledge of any Event of
Default, unless a Trustee Officer assigned to the Trustee's Corporate Trust
Office receives written notice of such Event of Default from the Servicer
or the Seller, as the case may be, the Certificate Insurer or, after an
Insurer Default, the Holders of Class A Certificates evidencing not less
than 25% of the Class A Certificate Balance or, after the Class A
Certificates have been paid in full and either (A) all outstanding
Reimbursement Obligations and other amounts due to the Certificate Insurer
have been paid in full or (B) an Insurer Default shall have occurred and be
continuing, the Holders of Class B Certificates evidencing not less than
25% of the Class B Certificate Balance (such notice shall constitute actual
knowledge of an Event of Default by the Trustee); and
(v) The Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and
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reasonably believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Agreement.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there shall be
reasonable grounds for believing that the repayment of such funds or adequate
indemnity against such risk or liability shall not be reasonably assured to it,
and none of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Servicer under this Agreement except during
such time, if any, as the Trustee, in its capacity as Standby Servicer, shall be
the successor to, and be vested with the rights, duties, powers, and privileges
of, the Servicer in accordance with the terms of this Agreement.
Except for actions expressly authorized by this Agreement, the Trustee
shall take no action reasonably likely to impair the security interests created
or existing under any Receivable or Financed Vehicle or to impair the value of
any Receivable or Financed Vehicle.
All information obtained by the Trustee regarding the Obligors and the
Receivables, whether upon the exercise of its rights under this Agreement or
otherwise, shall be maintained by the Trustee in confidence and shall not be
disclosed to any other Person, unless such disclosure is required by this
Agreement or any applicable law or regulation.
SECTION 10.2. Trustee's Certificate. On or as soon as practicable after
each Distribution Date on which Receivables shall be assigned to CPS or the
Servicer, as applicable, pursuant to this Agreement, based on amounts deposited
to the Collection Account, notices received pursuant to this Agreement and the
information contained in the Servicer's Certificate for the related Collection
Period, identifying the Receivables purchased by CPS pursuant to Section 2.6 or
2.8 or purchased by the Servicer pursuant to Section 3.7 or 11.2, the Trustee
shall execute a Trustee's Certificate (in the form of Exhibit C-1 or C-2, as
applicable), and shall deliver such Trustee's Certificate, accompanied by a copy
of the Servicer's Certificate for such Collection Period to CPS or the Servicer,
as the case may be. The Trustee's Certificate submitted with respect to such
Distribution Date shall operate, as of such Distribution Date, as an assignment,
without recourse, representation, or warranty, to CPS or the Servicer, as the
case may be, of all the Trustee's right, title, and interest in and to such
repurchased Receivable,
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and all security and documents relating thereto, such assignment being an
assignment outright and not for security.
SECTION 10.3. Reserved.
SECTION 10.4. Certain Matters Affecting Trustee. Except as otherwise
provided in Section 10.1:
(i) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate,
Servicer's Certificate, certificate of auditors, or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond, or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties.
(ii) The Trustee may consult with counsel, and any Opinion of Counsel
shall be full and complete authorization and protection in respect of any
action taken or suffered or omitted by it under this Agreement in good
faith and in accordance with such Opinion of Counsel.
(iii) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct,
or defend any litigation under this Agreement or in relation to this
Agreement, at the request, order or direction of any of the
Certificateholders or the Certificate Insurer pursuant to the provisions of
this Agreement, unless such Certificateholders or the Certificate Insurer
shall have offered to the Trustee reasonable security or indemnity against
the costs, expenses, and liabilities that may be incurred therein or
thereby; nothing contained in this Agreement, however, shall relieve the
Trustee of the obligations, upon the occurrence of an Event of Default
(that shall not have been cured or waived), to exercise such of the rights
and powers vested in it by this Agreement, and to use the same degree of
care and skill in their exercise as a prudent man would exercise or use
under the circumstances in the conduct of his own affairs.
(iv) Prior to the occurrence of an Event of Default and after the
curing or waiving of all Events of Default that may have occurred, the
Trustee shall not be bound to make any investigation into the facts of
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond, or other
paper or document (other than for its duties pursuant to Section 2.8),
unless requested in writing to do so by the Certificate Insurer or Holders
of Class A Certificates
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evidencing not less than 25% of the Class A Certificate Balance or, after
the Class A Certificates have been paid in full and either (A) all
outstanding Reimbursement Obligations and other amounts due to the
Certificate Insurer have been paid in full or (B) an Insurer Default shall
have occurred and be continuing, the Holders of Class B Certificates
evidencing not less that 25% of the Class B Certificate Balance; provided,
however, that if the payment within a reasonable time to the Trustee of the
costs, expenses, or liabilities likely to be incurred by it in the making
of such investigation shall be, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the
terms of this Agreement, the Trustee may require reasonable indemnity
against such cost, expense, or liability as a condition to so proceeding.
The reasonable expense of every such examination shall be paid by the
Person making such request or, if paid by the Trustee, shall be reimbursed
by the Person making such request upon demand. Nothing in this clause (iv)
shall affect the obligation of the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Obligors.
(v) The Trustee may execute any of the trusts or powers hereunder or
perform any duties under this Agreement either directly or by or through
agents or attorneys or a custodian. The Trustee shall not be responsible
for any misconduct or negligence of any such agent or custodian appointed
with due care by it hereunder or of the Servicer in its capacity as
Servicer or custodian.
(vi) Except as may be required by Sections 2.8 and 10.1, subsequent to
the sale of the Receivables by the Seller to the Trust, the Trustee shall
have no duty of independent inquiry, and the Trustee may rely upon the
representations and warranties and covenants of the Seller and the Servicer
contained in this Agreement with respect to the Receivables and the
Receivable Files.
(vii) The Trustee may rely, as to factual matters relating to the
Seller or the Servicer, on an Officer's Certificate of the Seller or
Servicer, respectively.
(viii) The Trustee shall not be required to take any action or refrain
from taking any action under this Agreement, or any related documents
referred to herein, nor shall any provision of this Agreement, or any such
related document be deemed to impose a duty on the Trustee to take action,
if the Trustee shall have been advised by counsel that such action is
contrary to (i) the terms of this Agreement, (ii) any such related document
or (iii) law.
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SECTION 10.5. Trustee Not Liable for Certificates or Receivables. The
recitals contained herein and in the Certificates (other than the certificate of
authentication on the Certificates) shall be taken as the statements of the
Seller or the Servicer, as the case may be, and the Trustee assumes no
responsibility for the correctness thereof. The Trustee shall make no
representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the certificate of authentication on the Certificates),
or of any Receivable or related document. The Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity, and
enforceability of any security interest in any Financed Vehicle or any
Receivable, or the perfection and priority of such a security interest or the
maintenance of any such perfection and priority, or for or with respect to the
efficacy of the Trust or its ability to generate the payments to be distributed
to Certificateholders under this Agreement, including, without limitation: the
existence, condition, location, and ownership of any Financed Vehicle; the
existence and enforceability of any physical damage insurance thereon; except as
required by Section 2.8, the existence, contents and completeness of any
Receivable or any Receivable File or any computer or other record thereof; the
validity of the assignment of any Receivable to the Trust or of any intervening
assignment; except as required by Section 2.8, the performance or enforcement of
any Receivable; the compliance by the Seller or the Servicer with any warranty
or representation made under this Agreement or in any related document and the
accuracy of any such warranty or representation prior to the Trustee's receipt
of notice or other discovery of any noncompliance therewith or any breach
thereof; any investment of monies by or at the direction of the Servicer or the
Certificate Insurer or any loss resulting therefrom (it being understood that
the Trustee shall remain responsible for any Trust Property that it may hold);
the acts or omissions of the Seller, the Servicer, or any Obligor; any action of
the Servicer taken in the name of the Trustee; or any action by the Trustee
taken at the instruction of the Servicer; provided, however, that the foregoing
shall not relieve the Trustee of its obligation to perform its duties under this
Agreement. Except with respect to a claim based on the failure of the Trustee to
perform its duties under this Agreement or based on the Trustee's negligence or
willful misconduct, no recourse shall be had for any claim based on any
provision of this Agreement, the Certificates, or any Receivable or assignment
thereof against the Trustee in its individual capacity, the Trustee shall not
have any personal obligation, liability, or duty whatsoever to any
Certificateholder or any other Person with respect to any such claim, and any
such claim shall be asserted solely against the Trust or any indemnitor who
shall furnish indemnity as provided in this Agreement. The Trustee shall not be
accountable for the use or application by the Seller of any of the Certificates
or of
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the proceeds of such Certificates, or for the use or application of any funds
paid to the Servicer in respect of the Receivables. The Seller hereby certifies
to the Trustee that the Rating Agencies rating the Class A Certificates are
Standard & Poor's and Moody's and the rating agency rating the Class B
Certificates is Standard & Poor's and that their addresses are as set forth in
Section 12.5. The Trustee may rely on the accuracy of such certification until
it receives from the Seller an Officer's Certificate superseding such
certification.
SECTION 10.6. Trustee May Own Certificates. The Trustee in its individual
or any other capacity may become the owner or pledgee of Certificates and may
deal with the Seller and the Servicer in banking transactions with the same
rights as it would have if it were not Trustee.
SECTION 10.7. Indemnity of Trustee. The Servicer shall indemnify the
Trustee for, and hold it harmless against any loss, liability, or expense
incurred without willful misfeasance, negligence, or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
Trust, including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers or
duties under this Agreement. Additionally the Seller, pursuant to Section 7.2,
shall indemnify the Trustee with respect to certain matters, the Servicer,
pursuant to Section 8.2, shall indemnify the Trustee with respect to certain
matters, and Certificateholders, pursuant to Section 10.4 shall, upon the
circumstances therein set forth, indemnify the Trustee under certain
circumstances. The provisions of this Section 10.7 shall survive the termination
of this Agreement or any resignation or removal of CPS as Servicer.
SECTION 10.8. Eligibility Requirements for Trustee. The Trustee under this
Agreement shall at all times be organized and doing business under the laws of
the United States of America; authorized under such laws to exercise corporate
trust powers; having a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by Federal or State authorities; and
having a rating, both with respect to long-term and short-term unsecured
obligations, of not less than investment grade by the Rating Agencies. If such
corporation shall publish reports of condition at least annually, pursuant to
law or to the requirements of the aforesaid supervising or examining authority,
then for the purpose of this Section 10.8, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. In case at any time
the Trustee shall cease to be eligible in accordance with the provisions of this
Section 10.8, the Trustee shall resign
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immediately in the manner and with the effect specified in Section 10.9.
SECTION 10.9. Resignation or Removal of Trustee. The Trustee may at any
time resign and be discharged from the trusts hereby created by giving 30 days'
prior written notice thereof to the Servicer. Upon receiving such notice of
resignation, with the prior written consent of (a) the Certificate Insurer
(provided no Insurer Default has occurred which is continuing) and the Holders
of Class A Certificates evidencing not less than 51% of the Class A Certificate
Balance or (b) if the Class A Certificates have been paid in full and all
outstanding Reimbursement Obligations and other amounts owing to the Certificate
Insurer have been paid in full, with the prior written consent of the Holders of
Class B Certificates evidencing not less than 51% of the Class B Certificate
Balance, the Servicer shall promptly appoint a successor Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
resigning Trustee and one copy to the successor Trustee. If no successor Trustee
shall have been so appointed and have accepted appointment within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee. The
Trustee may be removed at any time by written demand of the Certificate Insurer
delivered to the Trustee and the Servicer; provided that, if an Insurer Default
has occurred which is continuing, such right of the Certificate Insurer shall be
inoperative during the period of such Insurer Default and shall instead vest in
the Trustee acting at the direction of the Holders of Class A Certificates
evidencing not less than 51% of the Class A Certificate Balance or, from and
after such time as the Class A Certificates have been paid in full and all
outstanding Reimbursement Obligations and other amounts due to the Certificate
Insurer have been paid in full, the Holders of Class B Certificates evidencing
not less than 51% of the Class B Certificate Balance, in each case, in
accordance with Section 12.11.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 10.8 and shall fail to resign after written request
therefor by the Servicer, or if at any time the Trustee shall be legally unable
to act, or shall be adjudged bankrupt or insolvent, or a receiver, conservator
or liquidator of the Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Servicer may remove the Trustee. If the Servicer shall remove the Trustee under
the authority of the immediately preceding sentence, the Servicer shall promptly
appoint a successor Trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to
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the Trustee so removed and one copy to the successor Trustee, and pay all fees
and expenses owed to the outgoing Trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 10.9 shall not become
effective until acceptance of appointment by the successor Trustee pursuant to
Section 10.10 and payment of all fees and expenses owed to the outgoing Trustee.
The Servicer shall provide notice of such resignation or removal of the Trustee
to each of the Rating Agencies.
SECTION 10.10. Successor Trustee. Any successor Trustee appointed pursuant
to Section 10.9 shall execute, acknowledge, and deliver to the Servicer, the
Certificate Insurer and to its predecessor Trustee an instrument accepting such
appointment under this Agreement, and thereupon the resignation or removal of
the predecessor Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become fully vested with all
the rights, powers, duties, and obligations of its predecessor under this
Agreement, with like effect as if originally named as Trustee. The predecessor
Trustee shall upon payment of its fees and expenses deliver to the successor
Trustee all documents and statements and monies held by it under this Agreement;
and the Servicer and the predecessor Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Trustee all such rights,
powers, duties, and obligations.
No successor Trustee shall accept appointment as provided in this Section
10.10 unless at the time of such acceptance such successor Trustee shall be
eligible pursuant to Section 10.8.
Upon acceptance of appointment by a successor Trustee pursuant to this
Section 10.10, the Servicer shall mail notice of the successor of such Trustee
under this Agreement to all Holders of Certificates at their addresses as shown
in the Certificate Register and to the Rating Agencies. If the Servicer shall
fail to mail such notice within 10 days after acceptance of appointment by the
successor Trustee, the successor Trustee shall cause such notice to be mailed at
the expense of the Servicer.
SECTION 10.11. Merger or Consolidation of Trustee. Any corporation into
which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be eligible pursuant to Section 10.8, without the execution or
filing of any instrument or any further act on
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the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided further that the Trustee shall mail notice of such
merger or consolidation to the Rating Agencies.
SECTION 10.12. Co-Trustee; Separate Trustee. Notwithstanding any other
provisions of this Agreement, at any time, for the purpose of meeting any legal
requirements of any jurisdiction in which any part of the Trust or any Financed
Vehicle may at the time be located, the Servicer, the Certificate Insurer
(provided an Insurer Default shall not have occurred and be continuing) and the
Trustee acting jointly shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Trustee to act as
co-trustee, jointly with the Trustee, or separate trustee or separate trustees,
of all or any part of the Trust, and to vest in such Person, in such capacity
and for the benefit of the Certificateholders, such title to the Trust, or any
part thereof, and, subject to the other provisions of this Section 10.12, such
powers, duties, obligations, rights, and trusts as the Servicer, the Certificate
Insurer and the Trustee may consider necessary or desirable. If the Servicer and
the Certificate Insurer shall not have joined in such appointment within 15 days
after the receipt by it of a request so to do, or in the case an Event of
Default shall have occurred and be continuing, the Trustee alone shall have the
power to make such appointment. No co-trustee or separate trustee under this
Agreement shall be required to meet the terms of eligibility as a successor
trustee pursuant to Section 10.8, except that the co-trustee or its parent shall
comply with the rating requirements set forth therein, and no notice of a
successor trustee pursuant to Section 10.10 and no notice to Certificateholders
of the appointment of any co-trustee or separate trustee shall be required
pursuant to Section 10.10.
Each separate trustee and co-trustee shall, to the extent permitted by law,
be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties, and obligations conferred or imposed
upon the Trustee shall be conferred upon and exercised or performed by the
Trustee and such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not authorized to
act separately without the Trustee joining in such act), except to the
extent that under any law of any jurisdiction in which any particular act
or acts are to be performed (whether as Trustee under this Agreement or, in
its capacity as Standby Servicer, as successor to the Servicer under this
Agreement), the Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties, and obligations
(including the holding of
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title to the Trust or any portion thereof in any such jurisdiction) shall
be exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Trustee;
(ii) No trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement;
and
(iii) Provided no Insurer Default shall have occurred and be
continuing, the Certificate Insurer may, and, in the event an Insurer
Default shall have occurred and be continuing, then, the Servicer and the
Trustee acting jointly may, at any time accept the resignation of or remove
any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the other then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article X. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Each
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer.
Any separate trustee or co-trustee may at any time appoint the Trustee, its
agent or attorney-in-fact with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of this Agreement on
its behalf and in its name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 10.13. Representations and Warranties of Trustee. The Trustee shall
make the following representations and warranties on which the Seller, the
Certificate Insurer and Certificateholders shall rely:
(i) The Trustee is a banking corporation duly organized, validly
existing, and in good standing under the laws of its place of
incorporation.
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(ii) The Trustee has full corporate power authority and legal right to
execute, deliver, and perform this Agreement and shall have taken all
necessary action to authorize the execution, delivery and performance by it
of this Agreement.
(iii) This Agreement shall have been duly executed and delivered by
the Trustee and this Agreement constitutes a legal, valid and binding
obligation of the Trustee enforceable in accordance with its terms, subject
to (x) applicable bankruptcy, insolvency, reorganization, moratorium, and
other similar laws affecting creditor's rights generally and (y) general
principles of equity.
SECTION 10.14. No Bankruptcy Petition. The Trustee covenants and agrees
that prior to the date which is one year and one day after the payment in full
of all securities issued by the Seller or by a trust for which the Seller was
the depositor it will not institute against, or join any other Person in
instituting against, the Seller or the Trust any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any Federal or State bankruptcy or similar law.
SECTION 10.15. Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as Trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Certificateholders in respect of which such judgment has
been obtained.
SECTION 10.16. Rights of Certificate Insurer to Direct Trustee. (a) The
Certificate Insurer, after giving written notice to the Trustee, shall have the
right to direct the time, method and place at or by which the Trustee conducts
any proceeding for any remedy available to the Trustee, or exercises any such
trust or power conferred upon the Trustee.
(b) Notwithstanding anything to the contrary contained in subsection (a)
above, the Trustee shall not exercise any remedy involving a sale of the
Receivables unless it shall have received instruction to do so by Holders of 66
2/3% of each of the Class A Certificate Balance and the Class B Certificate
Balance and, in addition, the Trustee shall have the right to decline to follow
any such direction of the Certificate Insurer if the Trustee, being advised by
counsel, determines that the action so directed
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may not lawfully be taken, or if the Trustee in good faith shall, by a
responsible officer of the Trustee, determine that the proceedings so directed
would be illegal or involve it in personal liability or be unduly prejudicial to
the rights of Certificateholders; provided, that nothing in this Agreement shall
impair the right of the Trustee to take any action deemed proper by the Trustee
and which is not inconsistent with such direction of the Certificate Insurer.
ARTICLE XI
Termination
SECTION 11.1. Termination of the Trust. The respective obligations and
responsibilities of the Seller, the Servicer, and the Trustee created hereby and
the Trust created by this Agreement shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to this
Agreement or the Policy (including all amounts required to reduce the Class A
Certificate Balance to zero and to pay in full any unpaid Class A Interest
Distributable Amount), satisfaction of all Reimbursement Obligations, and the
expiration of any preference period related thereto and the disposition of all
property held as part of the Trust; provided, however, that in no event shall
the trust created by this Agreement continue beyond the expiration of 21 years
from the death of the last survivor of the descendants of Joseph P. Kennedy, the
late ambassador of the United States of America to the Court of St. James,
living on the date of this Agreement. The Servicer shall promptly notify the
Trustee and the Certificate Insurer of any prospective termination pursuant to
this Section 11.1.
Notice of any termination, specifying the Distribution Date upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Trustee by letter to Certificateholders mailed not earlier than the 15th day and
not later than the 25th day of the month next preceding the specified
Distribution Date stating (A) the Distribution Date upon which final payment of
the Certificates shall be made upon presentation and surrender of the
Certificates at the office of the Trustee therein designated, (B) the amount of
any such final payment, and (C) if applicable, that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made only
upon presentation and surrender of the Certificates at the office of the Trustee
therein specified. The Trustee shall give such notice to the Certificate
Registrar (if other than the Trustee) at the time such notice is given to
Certificateholders. Upon presentation and surrender of the Certificates, the
Trustee shall cause to be distributed to
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Certificateholders amounts distributable on such Distribution Date pursuant to
Section 4.6. Notwithstanding the foregoing, if on the Distribution Date upon
which final payment of the Certificates is to be made, there are only six or
less initial Certificateholders of record, the amounts distributable to such
initial Certificateholders pursuant to Section 4.6 will be paid on the final
Distribution Date by wire transfer or check as set forth in Section 4.6(f), and
each such initial Certificateholder shall present and surrender its Certificates
at the office of the Trustee designated in the notice referred to above within
30 days after such Distribution Date.
In the event that all of the Certificateholders shall not surrender their
Certificates for cancellation within six months after the date specified in the
above-mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice all the Certificates shall not have been
surrendered for cancellation, the Trustee shall take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that shall remain
subject to this Agreement or, if none, from CPS. Any funds remaining in the
Trust after exhaustion of such remedies shall be distributed by the Trustee to
the American Red Cross.
SECTION 11.2. Optional Purchase of All Receivables. On the last day of any
Collection Period as of which the Pool Balance shall be less than or equal to
the Optional Purchase Percentage multiplied by the Original Pool Balance, the
Servicer shall have the option to purchase the corpus of the Trust (with the
consent of the Certificate Insurer, if such purchase would result in a claim on
the Policy or would result in any amount owing to the Certificate Insurer or to
the Holders of the Class A Certificates remaining unpaid); provided, however,
that the Servicer may not effect any such purchase unless the Trustee shall have
received an Opinion of Counsel to the effect that such purchase would not
constitute a fraudulent conveyance. To exercise such option the Servicer (or the
Certificate Insurer, if applicable) shall deposit pursuant to Section 4.5 in the
Collection Account an amount equal to the aggregate Purchase Amount for the
Receivables (including defaulted Receivables), plus the appraised value of any
other property held by the Trust, such value to be determined by an appraiser
mutually agreed upon by the Servicer, the Certificate Insurer and the Trustee,
and shall succeed to all interests in and to the Trust. For purposes of this
Section, the Purchase Amount shall not be less than the sum of the Class A
Certificate Balance and the Class B Certificate Balance.
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ARTICLE XII
Miscellaneous Provisions
SECTION 12.1. Amendment. This Agreement may be amended from time to time by
the Seller, the Servicer, and the Trustee with the consent of the Certificate
Insurer and with the consent (which consent of any Holder of a Certificate given
pursuant to this Section or pursuant to any other provision of this Agreement
shall be conclusive and binding on such Holder and on all future Holders of such
Certificate and of any Certificate issued upon the transfer thereof or in
exchange thereof or in lieu thereof whether or not notation of such consent is
made upon the Certificate) of the Holders of Class A Certificates evidencing not
less than 51% of the Class A Certificate Balance and the Holders of Class B
Certificates evidencing not less than 51% of the Class B Certificate Balance for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement, or of modifying in any manner the
rights of the Holders of Certificates; provided, however, that no such amendment
shall (a) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, or change the allocation or priority of, collections of payments
on Receivables or distributions that shall be required to be made on any
Certificate or change the Class A Pass-Through Rate or the Class B Pass-Through
Rate without the consent of each Certificateholder affected thereby, (b) reduce
the aforesaid percentage of the Class A Certificate Balance or Class B
Certificate Balance required to consent to any such amendment, without the
consent of the Holders of all Certificates of the applicable class then
outstanding, (c) result in a downgrade or withdrawal of the then current rating
of the Class A Certificates by either of the Rating Agencies without the consent
of all the Class A Certificateholders or (d) result in a downgrade or withdrawal
of the then current rating of the Class B Certificates by either of the Rating
Agencies without the consent of all the Class B Certificateholders.
Promptly after the execution of any such amendment or consent, the Trustee
shall furnish a copy of such amendment or consent to each Certificateholder and
each of the Rating Agencies.
Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by this Agreement and
the Opinion of Counsel referred to in Section 12.2(i)(1). The Trustee may, but
shall not be obligated to, enter into any such amendment which
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affects the Trustee's own rights, duties or immunities under this Agreement or
otherwise.
SECTION 12.2. 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 Certificateholders and the Trustee in the Receivables and the other Trust
Assets and in the proceeds thereof. The Seller or Servicer or both shall deliver
(or cause to be delivered) to the Trustee file-stamped copies of, or filing
receipts for, any document filed as provided above, as soon as available
following such filing.
(b) Neither the 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 ss. 9-402(7) of the UCC, unless it
shall have given the Trustee and the Certificate Insurer at least five days'
prior written notice thereof, shall have promptly filed appropriate amendments
to all previously filed financing statements or continuation statements and
shall have delivered an Opinion of Counsel (A) stating that, in the opinion of
such counsel, all amendments to all previously filed financing statements and
continuation statements have been executed and filed that are necessary fully to
preserve and protect the interest of the Trustee in the Receivables and the
other Trust Assets, and reciting the details of such filings, or (B) stating
that, in the opinion of such counsel, no such action shall be necessary to
preserve and protect such interest.
(c) Each of the Seller and the Servicer shall have an obligation to give
the Trustee and the Certificate Insurer at least 60 days' prior written notice
of any relocation of its principal executive office if, as a result of such
relocation, the applicable provisions of the UCC would require the filing of any
amendment of any previously filed financing or continuation statement or of any
new financing statement, shall promptly file any such amendment and shall
deliver an Opinion of Counsel (A) stating that, in the opinion of such counsel,
all amendments to all previously filed financing statements and continuation
statements have been executed and filed that are necessary fully to preserve and
protect the interest of the Trustee in the Receivables, and reciting the details
of such filings, or (B) stating that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interest. The Servicer
shall at all times maintain each office from which it shall service Receivables,
and its principal executive office, within the United States of America.
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(d) The Servicer shall maintain accounts and records as to each Receivable
accurately and in sufficient detail to permit (i) the reader thereof to know at
any time the status of such Receivable, including payments and recoveries made
and payments owing (and the nature of each) and (ii) reconciliation between
payments or recoveries on (or with respect to) each Receivable and the amounts
from time to time deposited in the Certificate Account and Payahead Account in
respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables to the Trustee,
the Servicer's master computer records (including any back-up archives) that
refer to a Receivable shall indicate clearly the interest of CPS Auto Grantor
Trust 1996-2 in such Receivable and that such Receivable is owned by the Trust.
Indication of the Trust's ownership of a Receivable shall be deleted from or
modified on the Servicer's computer systems when, and only when, such Receivable
shall have been paid in full or repurchased.
(f) If at any time the 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 back-up
archives) that, if they shall refer in any manner whatsoever to any Receivable,
shall indicate clearly that such Receivable has been sold to and is owned by the
Trust.
(g) The Servicer shall permit the Trustee, the Standby Servicer and the
Certificate Insurer and its agents at any time during normal business hours to
inspect, audit, and make copies of and abstracts from the Servicer's records
regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Trustee, the Standby
Servicer or to the Certificate Insurer, within five Business Days, a list of all
Receivables (by contract number and name of Obligor) then held as part of the
Trust, together with a reconciliation of such list to the Schedule of
Receivables and to each of the Servicer's Certificates furnished before such
request indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Trustee and the Certificate Insurer:
(1) promptly after the execution and delivery of this Agreement and of
each amendment hereto and after the execution and delivery of each
amendment to any financing
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statement, an Opinion of Counsel either (A) stating that, in the opinion of
such counsel, all financing statements and continuation statements have
been executed and filed that are necessary fully to preserve and protect
the interest of the Trustee in the Receivables, and reciting the details of
such filings or referring to prior Opinions of Counsel in which such
details are given, or (B) stating that, in the opinion of such counsel, no
such action shall be necessary to preserve and protect such interest; and
(2) within 90 days after the beginning of each calendar year beginning
with the first calendar year beginning more than three months after the
Cutoff Date, an Opinion of Counsel, dated as of a date during such 90-day
period either (A) stating that, in the opinion of such counsel, all
financing statements and continuation statements have been executed and
filed that are necessary fully to preserve and protect the interest of the
Trustee in the Receivables, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given or
(B) stating that, in the opinion of such counsel, no such action shall be
necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (i)(1) or (i)(2) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
(j) For the purpose of facilitating the execution of this Agreement and for
other purposes, this Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
all of which counterparts shall constitute but one and the same instrument.
(k) In the event any of the events described in Section 9.1(iii) or (iv)
shall have occurred, or in the event CPS shall have been removed or replaced as
Servicer for any reason, then CPS and/or the Servicer shall immediately cause
each Certificate of Title for a Financed Vehicle to be marked to reflect the
security interest of the Trustee in the Financed Vehicle, and CPS hereby
appoints the Trustee its attorney-in-fact to effect such marking, and the
Trustee hereby accepts such appointment. The appointment of the Trustee
hereunder shall not operate to relieve CPS and/or the Servicer of its
obligations to mark each Certificate of Title under this provision. CPS shall be
liable for all costs, fees and expenses incurred under this Section 12.2(k).
SECTION 12.3. Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not
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operate to terminate this Agreement or the Trust, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a partition or
winding up of the Trust, nor otherwise affect the rights, obligations and
liabilities of the parties to this Agreement or any of them.
No Certificateholder shall have any right to vote (except as specifically
provided herein including in Section 12.1) or in any manner otherwise control
the operation and management of the Trust, or the obligations of the parties to
this Agreement, nor shall anything in this Agreement set forth, or contained in
the terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an association;
nor shall any Certificateholder be under any liability to any third person by
reason of any action taken pursuant to any provision of this Agreement.
No Class A Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action, or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Trustee a written notice
of default and of the continuance thereof, and unless also the Holders of Class
A Certificates evidencing not less than 25% of the Class A Certificate Balance
shall have made written request upon the Trustee to institute such action, suit
or proceeding in its own name as Trustee under this Agreement and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses, and liabilities to be incurred therein or thereby and the
Trustee, for 30 days after its receipt of such notice, request, and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding and during such 30-day period no request or waiver inconsistent with
such written request has been given to the Trustee pursuant to this Section or
Section 9.5; no one or more Holders of Class A Certificates shall have any right
in any manner whatever by virtue or by availing itself or themselves of any
provisions of this Agreement to affect, disturb, or prejudice the rights of the
Holders of any other of the Class A Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right,
under this Agreement except in the manner provided in this Agreement and for the
equal, ratable, and common benefit of all Class A Certificateholders. For the
protection and enforcement of the provisions of this Section 12.3, each Class A
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity. Nothing in this Agreement shall be construed
as giving the Class A Certificateholders any direct right to make a claim on the
Policy.
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No Class B Certificateholder shall have any right by virtue or by availing
itself of any provisions of the Agreement to institute any suit, action,
proceeding in equity or at law upon or under or with respect to the Agreement,
unless it has the prior written consent of the Certificate Insurer and, if any
Class A Certificate shall remain outstanding, the prior written consent of the
Holders of Class A Certificates evidencing not less than 51% of the Class A
Certificate Balance; provided that, this sentence shall be inoperative from and
after such time as the Class A Certificates have been paid in full and all
outstanding Reimbursement Obligations and other amounts due to the Certificate
Insurer have been paid in full.
SECTION 12.4. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS,
AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
SECTION 12.5. Notices. All demands, notices, and communications upon or to
the Seller, the Servicer, the Trustee, the Certificate Insurer, Standard &
Poor's or Moody's under this Agreement shall be in writing, and delivered (a)
personally, (b) by certified mail, return receipt requested, (c) by Federal
Express or similar overnight courier service or (d) by telecopy, and shall be
deemed to have been duly given upon receipt (a) in the case of the Seller, to
the agent for service as specified in this Agreement, at the following address:
2 Ada, Suite 100, Irvine, California 92718 (Telecopy: 714-753-6805), or at such
other address as shall be designated by the Seller in a written notice to the
Trustee, (b) in the case of the Servicer, to Secretary, 2 Ada, Suite 100,
Irvine, California 92718 (Telecopy: 714-753-6805), (c) in the case of the
Trustee, at the Corporate Trust Office (Telecopy: (612) 667-9825), (d) in the
case of Standard & Poor's Ratings Group, at the following address: Standard &
Poor's Ratings Group, 26 Broadway, 15th Floor, New York, New York 10004,
Attention: Asset Backed Surveillance Department, (e) in the case of Moody's
Investors Service, Inc., at the following address: 99 Church Street, New York,
New York 10007, Attention: Structured Surveillance Department and (f) in the
case of Financial Security Assurance Inc., at the following address: 350 Park
Avenue, New York, New York 10022, Attention: Senior Vice President,
Surveillance. Any notice required or permitted to be mailed to a
Certificateholder shall be given by Federal Express or similar overnight courier
service, postage prepaid, at the address of such Holder as shown in the
Certificate Register. Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been duly given, whether or not
the Certificateholder shall receive such notice.
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The Trustee shall give prompt written notice to each of the Rating Agencies
and each Class A Certificateholder of (i) any amendments to the Insurance
Agreement or the Policy (upon receipt of written notice of any such amendments
from the Seller or the Servicer), (ii) any change in the identity of the Paying
Agent and (iii) any failure to make payment under the Policy.
SECTION 12.6. Severability of Provisions. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the
Certificates or the rights of the Holders thereof.
SECTION 12.7. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 7.3 and 8.3 and as provided in
the provisions of this Agreement concerning the resignation of the Servicer,
this Agreement may not be assigned by the Seller or the Servicer without the
prior written consent of the Certificate Insurer, the Trustee and the Holders of
Certificates evidencing not less than 51% of the Pool Balance, the Holders of
Class A Certificates evidencing not less than 51% of the Class A Certificate
Balance and the Holders of Class B Certificates evidencing not less than 51% of
the Class B Certificate Balance.
SECTION 12.8. Certificates Nonassessable and Fully Paid. Certificateholders
shall not be personally liable for obligations of the Trust. The interests
represented by the Certificates shall be nonassessable for any losses or
expenses of the Trust or for any reason whatsoever, and upon authentication
thereof by the Trustee pursuant to Section 6.2 or 6.3, Certificates shall be
deemed fully paid.
SECTION 12.9. Nonpetition Covenant. (a) None of the Seller, the Servicer,
the Trustee, the Standby Servicer or CPS shall petition or otherwise invoke the
process of any court or government authority for the purpose of commencing or
sustaining a case against the Trust or the Seller under any Federal or State
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Trust or the Seller or any substantial part of its property, or ordering the
winding up or liquidation of the affairs of the Trust or the Seller.
(b) The Servicer shall not, nor cause the Seller to, petition or otherwise
invoke the process of commencing or sustaining a case against the Seller under
any Federal or State
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bankruptcy, insolvency or similar law or 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 12.10. Third Party Beneficiaries. Except as otherwise specifically
provided herein with respect to Certificateholders, the parties to this
Agreement hereby manifest their intent that no third party other than the
Certificate Insurer and the Collateral Agent with respect to the indemnification
provisions set forth herein, shall be deemed a third party beneficiary of this
Agreement, and specifically that the Obligors are not third party beneficiaries
of this Agreement.
SECTION 12.11. Financial Security as Controlling Party. Each
Certificateholder by purchase of the Certificates held by it acknowledges that
the Trustee, as partial consideration of the issuance of the Policy, has agreed
that the Certificate Insurer shall have certain rights hereunder for so long as
no Insurer Default shall have occurred and be continuing. So long as an Insurer
Default has occurred and is continuing, any provision giving the Certificate
Insurer the right to direct, appoint or consent to, approve of, or take any
action under this Agreement shall be inoperative during the period of such
Insurer Default and such right shall instead vest in the Trustee acting at the
direction of the Holders of Class A Certificates evidencing, unless otherwise
specified, not less than 51% of the Class A Certificate Balance. From and after
such time as the Class A Certificates have been paid in full and all outstanding
Reimbursement Obligations and other amounts due to the Certificate Insurer have
been paid in full, any provision giving the Certificate Insurer or the Class A
Certificateholders the right to direct, appoint or consent to, approve of, or
take any action under this Agreement shall be inoperative and such right shall
instead vest in the Trustee acting at the direction of the Holders of Class B
Certificates evidencing, unless otherwise specified, not less than 51% of the
Class B Certificate Balance. The Certificate Insurer may disclaim any of its
rights and powers under this Agreement (but not its duties and obligations under
the Policy) upon delivery of a written notice to the Trustee. The Certificate
Insurer may give or withhold any consent hereunder in its sole and absolute
discretion.
SECTION 12.12. Agent for Service. The agent for service for the Seller
shall be the President, CPS Receivables Corp., 2 Ada, Suite 100, Irvine,
California 92718, (714) 753-6800. The Seller hereby designates CT Corporation
System, 1633 Broadway, New York, New York 10019, (212) 644-1666 as agent for
service of process in all matters pertaining to the Seller in New York.
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IN WITNESS WHEREOF, the Seller, the Servicer, the Trustee and the Standby
Servicer have caused this Pooling and Servicing Agreement to be duly executed by
their respective officers as of the day and year first above written.
CPS RECEIVABLES CORP.,
as Seller
By:_______________________________
Name:
Title:
CONSUMER PORTFOLIO SERVICES, INC.,
as Servicer
By:_______________________________
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee and
Standby Servicer
By:_______________________________
Name:
Title:
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Exhibit A to the
Pooling and Servicing
Agreement
FORM OF CLASS A CERTIFICATE
SEE REVERSE FOR
CERTAIN
DEFINITIONS
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, ANY TRANSFER, PLEDGE, OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
CPS AUTO GRANTOR TRUST 1996-2
6.70% ASSET BACKED CERTIFICATE,
CLASS A
evidencing a beneficial ownership interest in the Trust, as defined below, the
property of which includes a pool of retail installment sale contracts secured
by new and used automobiles, light trucks, vans and minivans and sold to the
Trust by CPS Receivables Corp.
(This Certificate does not represent an interest in or obligation of CPS
Receivables Corp., Consumer Portfolio Services, Inc., the Trustee or any of
their respective affiliates, except to the extent described below.)
NUMBER R-1 CUSIP No. 125924AN0
$87,522,834.56 Final Scheduled Distribution
Date: February 15, 2002
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a $87,522,834.56
dollar nonassessable, fully-paid, fractional undivided ownership interest in the
CPS Auto Grantor Trust 1996-2 (the "Trust") formed by Consumer Portfolio
Services, Inc. (the "Servicer"). The Trust was created pursuant to a Pooling and
Servicing Agreement dated as of September 1, 1996 (the
"Agreement") among the Seller, the Servicer, and Norwest Bank Minnesota,
National Association, as trustee (the "Trustee") and Standby Servicer, a summary
of certain of the pertinent provisions of which is set forth below. To the
extent not otherwise defined herein, the capitalized terms used herein have the
meanings assigned to them in the Agreement. This Certificate is one of the duly
authorized Certificates designated as "6.70% Asset Backed Certificates, Class A"
(herein called the "Class A Certificates"). Also issued under the Agreement are
Certificates designated as "11.30% Asset Backed Certificates, Class B" (the
"Class B Certificates"). The Class B Certificates and the Class A Certificates
are hereinafter collectively called the "Certificates". The aggregate beneficial
ownership interests in the Trust evidenced by all Class A Certificates is 95%.
This Class A Certificate is issued under and is subject to the terms,
provisions, and conditions of the Agreement, to which Agreement the Holder of
this Class A Certificate by virtue of the acceptance hereof assents and by which
such Holder is bound. The property of the Trust includes (i) a pool of retail
installment sale contracts for new and used automobiles, light trucks, vans and
minivans (the "Receivables"), with respect to Rule of 78's Receivables, all
monies due or to become due thereon after September 18, 1996, (the "Cutoff
Date") and, with respect to Simple Interest Receivables, all amounts received
with respect thereto after the Cutoff Date, security interests in the vehicles
financed thereby, proceeds from claims on certain insurance policies and certain
other rights under the Agreement, certain bank accounts and the proceeds
thereof, all right, title and interest of the Seller in and to the Purchase
Agreement, all right, title and interest of the Seller in and to certain
refunds, the Receivable File related to each Receivable and the proceeds of any
or all of the foregoing; and (ii) the Policy issued for the benefit of the Class
A Certificateholders by the Certificate Insurer.
Under the Agreement, there will be distributed on the 15th day of each
month or, if such 15th day is not a Business Day, the next Business Day (the
"Distribution Date"), commencing on October 15, 1996, to the person in whose
name this Class A Certificate is registered at the close of business on the
tenth day of the calendar month in which such Distribution Date occurs (the
"Record Date"), such Class A Certificateholder's percentage interest (determined
by dividing the denominations of this Class A Certificate by the aggregate
original denomination of all Class A Certificates) in the amounts distributed to
Class A Certificateholders pursuant to the Agreement.
The Policy is provided pursuant to the Insurance Agreement.
Distributions on this Class A Certificate will be made by the Trustee by
check or money order mailed to the Class A Certificateholder of record in the
Certificate Register without
-2-
the presentation or surrender of this Class A Certificate or the making of any
notation hereon except that with respect to Class A Certificates registered in
the name of Cede & Co., the nominee for the Clearing Agency, distributions will
be made in the form of immediately available funds. Except as otherwise provided
in the Agreement and notwithstanding the above, the final distribution on this
Class A Certificate will be made after due notice by the Trustee of the pendency
of such distribution and only upon presentation and surrender of this Class A
Certificate at the office or agency maintained for that purpose by the Trustee
in Minneapolis, Minnesota. The Record Date otherwise applicable to such
distribution shall not be applicable.
Reference is hereby made to the further provisions of this Class A
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been executed by
an authorized officer of the Trustee, by manual signature, this Class A
Certificate shall not entitle the Holder hereof to any benefit under the
Agreement or be valid for any purpose.
-3-
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class A Certificate to be duly executed.
CPS AUTO GRANTOR TRUST 1996-2
By: NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual capacity
but solely in its capacity as
Trustee
By: ______________________________
Authorized Signatory
Dated: September 26, 1996
This is one of the Class A Certificates referred to
in the within-mentioned Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual capacity but
solely in its capacity as Trustee
By: ___________________________
Authorized Signatory
-4-
[REVERSE OF CERTIFICATE]
The Certificates do not represent an obligation of, or an interest in, the
Seller, the Servicer, the Trustee or any affiliate of any of them. The
Certificates are limited in right of payment to certain collections and
recoveries respecting the Receivables and claims made under the Policy, all as
more specifically set forth in the Agreement. A copy of the Agreement may be
examined during normal business hours at the principal office of the Seller, and
at such other places, if any, designated by the Seller, by any Certificateholder
upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller and the rights of the Certificateholders under the Agreement at any time
by the Seller, the Servicer and the Trustee with the consent of the Certificate
Insurer and with the consent of the Holders of Certificates evidencing not less
than 54% of the Class A Certificate Balance and 51% of the Class B Certificate
Balance. Any such consent by the Holder of this Certificate shall be conclusive
and binding on such Holder and on all future Holders of this Certificate and of
any Certificate issued upon the transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
As provided in the Agreement and subject to certain limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee in its capacity as Certificate
Registrar, or by any successor Certificate Registrar, accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate interest in the Trust will be issued
to the designated transferee.
The Class A Certificates are issuable only as registered Certificates
without coupons in minimum denominations of $1,000 and integral multiples
thereof; however, one certificate may be issued in the residual amount. As
provided in the Agreement and subject to certain limitations set forth therein,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same aggregate denomination, as requested by the Holder
surrendering the same. No service charge will be made for any such registration
of transfer or exchange, but the Trustee may require payment of a sum sufficient
to cover any tax or governmental charges payable in connection therewith.
The Trustee, the Certificate Registrar, and any agent of the Trustee or the
Certificate Registrar may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Trustee, the
Certificate Registrar, nor any such agent shall be affected by any notice to the
contrary.
The obligations and responsibilities created by the Agreement and the Trust
created thereby shall terminate upon the payment to Certificateholders of all
amounts required to be paid to them pursuant to the Agreement, the payment of
all Reimbursement Obligations, and the expiration of any preference period with
respect thereto and the disposition of all property held as part of the Trust.
The Servicer of the Receivables may at its option purchase the corpus of the
Trust at a price specified in the Agreement, and such purchase of the
Receivables and other property of the Trust will effect early retirement of the
Certificates; however, such right of purchase is exercisable only as of the last
day of any Collection Period as of which the Pool Balance is less than or equal
to 10% of the original aggregate principal balance of the Receivables.
-2-
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- -------------------------------------------------------------------------------
(Please print or typewrite name and address, including postal zip code,
of assignee)
- -------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
__________________________________________ Attorney to transfer said Certificate
on the books of the Certificate Registrar, with full power of substitution in
the premises.
Dated:
__________________________________*
__________________________________*
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever.
Exhibit B to the
Pooling and Servicing
Agreement
FORM OF CLASS B CERTIFICATE
SEE REVERSE FOR
CERTAIN
DEFINITIONS
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
AGREES THAT THIS SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
(1) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER
THE SECURITIES ACT, TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A UNDER THE SECURITIES ACT, AND
SUBJECT TO THE RECEIPT BY THE TRUSTEE AND THE SELLER OF A CERTIFICATION OF THE
TRANSFEREE, (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR (3) IN RELIANCE ON ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND SUBJECT TO THE RECEIPT BY THE TRUSTEE OF
A CERTIFICATION OF THE TRANSFEREE (SATISFACTORY TO THE TRUSTEE) AND AN OPINION
OF COUNSEL (SATISFACTORY TO THE TRUSTEE AND THE SELLER) TO THE EFFECT THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND IN
COMPLIANCE WITH THE TRANSFER REQUIREMENTS SET FORTH IN SECTION 6.3 OF THE
AGREEMENT.
IN NO EVENT SHALL THIS SECURITY BE TRANSFERRED TO AN EMPLOYEE BENEFIT PLAN,
TRUST ANNUITY OR ACCOUNT SUBJECT TO ERISA OR A PLAN DESCRIBED IN SECTION
4975(E)(1) OF THE CODE (ANY SUCH PLAN, TRUST OR ACCOUNT BEING REFERRED TO AS AN
"EMPLOYEE PLAN"), A TRUSTEE OF ANY EMPLOYEE PLAN, OR AN ENTITY, ACCOUNT OR OTHER
POOLED INVESTMENT FUND THE UNDERLYING ASSETS OF WHICH INCLUDE OR ARE DEEMED TO
INCLUDE EMPLOYEE PLAN ASSETS BY REASON OF AN EMPLOYEE PLAN'S INVESTMENT IN THE
ENTITY, ACCOUNT OR OTHER POOLED INVESTMENT FUND. INCLUDED WITHIN THE DEFINITION
OF "EMPLOYEE PLANS" ARE, WITHOUT LIMITATION, KEOGH (HR-10) PLANS, IRA'S
(INDIVIDUAL RETIREMENT ACCOUNTS OR ANNUITIES) AND OTHER EMPLOYEE BENEFIT PLANS,
SUBJECT TO SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE. THE FOREGOING
RESTRICTION ON SALE OR TRANSFER TO AN EMPLOYEE BENEFIT PLAN SHALL NOT APPLY TO
PREVENT THE INITIAL ISSUANCE OR SALE OR SUBSEQUENT TRANSFER OF THIS SECURITY TO
AN INSURANCE COMPANY, INSURANCE SERVICE, OR INSURANCE ORGANIZATION THAT IS
QUALIFIED TO DO BUSINESS IN A STATE IF SUCH INSURANCE COMPANY, INSURANCE SERVICE
OR INSURANCE ORGANIZATION PURCHASES
THIS SECURITY WITH FUNDS HELD IN ONE OR MORE OF ITS GENERAL ACCOUNTS WHICH IS
ELIGIBLE FOR THE EXEMPTIVE RELIEF AFFORDED UNDER SECTION III OF PROHIBITED
TRANSACTION CLASS EXEMPTION 95-60.
-2-
CPS AUTO GRANTOR TRUST 1996-2
11.30% ASSET BACKED CERTIFICATE
CLASS B
evidencing a beneficial ownership interest in the Trust, as defined below, the
property of which includes a pool of retail installment sale contracts secured
by new and used automobiles, light trucks, vans and minivans and sold to the
Trust by CPS Receivables Corp.
(This Certificate does not represent an interest in or obligation of CPS
Receivables Corp, Consumer Portfolio Services, Inc., the Trustee or any of their
respective affiliates, except to the extent described below.)
NUMBER R-1 CUSIP No. 125924AP5
$4,606,464.98 Final Scheduled Distribution
Date: February 15, 2002
THIS CERTIFIES THAT BDC FINANCE, LLC is the registered owner of a
$4,606,464.98 dollar nonassessable, fully-paid, fractional undivided ownership
interest in the CPS Auto Grantor Trust 1996-2 (the "Trust") formed by Consumer
Portfolio Services, Inc. (the "Servicer"). The Trust was created pursuant to a
Pooling and Servicing Agreement dated as of September 1, 1996 (the "Agreement")
among the Seller, the Servicer and Norwest Bank Minnesota, National Association,
as trustee (the "Trustee") and Standby Servicer, a summary of certain of the
pertinent provisions of which is set forth below. To the extent not otherwise
defined herein, the capitalized terms used herein have the meanings assigned to
them in the Agreement. This Certificate is one of the duly authorized
Certificates designated as "11.30% Asset Backed Certificates, Class B" (herein
called the "Class B Certificates"). Also issued under the Agreement are
Certificates designated as "6.70% Asset Backed Certificates, Class A" (the
"Class A Certificates"). The Class B Certificates and the Class A Certificates
are hereinafter collectively called the "Certificates". The aggregate beneficial
ownership interests in the Trust evidenced by all Class B Certificates is 5%.
This Class B Certificate is issued under and is subject to the terms,
provisions, and conditions of the Agreement, to which Agreement the Holder of
this Class B Certificate by virtue of the acceptance hereof assents and by which
such Holder is bound. The property of the Trust includes a pool of retail
installment sale contracts for new and used automobiles, light trucks, vans and
minivans (the "Receivables"), with respect to Rule of 78's Receivables, all
monies due or to become due thereon after September 18, 1996 (the "Cutoff Date")
and, with respect to
-3-
Simple Interest Receivables, all amounts received with respect thereto after the
Cutoff Date, security interests in the vehicles financed thereby, proceeds from
claims on certain insurance policies and certain other rights under the
Agreement, certain bank accounts and the proceeds thereof, all right, title and
interest of the Seller in and to the Purchase Agreement, all right, title and
interest of the Seller in and to certain refunds, the Receivable File related to
each Receivable and the proceeds of any or all of the foregoing.
Under the Agreement, there will be distributed on the 15th day of each
month or, if such 15th day is not a Business Day, the next Business Day (the
"Distribution Date"), commencing on October 15, 1996, to the person in whose
name this Class B Certificate is registered at the close of business on the
tenth day of the calendar month in which such Distribution Date occurs (the
"Record Date"), such Class B Certificateholder's percentage interest (determined
by dividing the denominations of this Class B Certificate by the aggregate
original denomination of all Class B Certificates) in the amounts distributed to
Class B Certificateholders pursuant to the Agreement.
Distributions on this Class B Certificate will be made by the Trustee by
check or money order mailed to the Class B Certificateholder of record in the
Certificate Register without the presentation or surrender of this Class B
Certificate or the making of any notation hereon. Except as otherwise provided
in the Agreement and notwithstanding the above, the final distribution on this
Class B Certificate will be made after due notice by the Trustee of the pendency
of such distribution and only upon presentation and surrender of this Class B
Certificate at the office or agency maintained for that purpose by the Trustee
in Minneapolis, Minnesota. The Record Date otherwise applicable to such
distribution shall not be applicable.
Reference is hereby made to the further provisions of this Class B
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been executed by
an authorized officer of the Trustee, by manual signature, this Class B
Certificate shall not entitle the Holder hereof to any benefit under the
Agreement or be valid for any purpose.
-4-
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class B Certificate to be duly executed.
CPS AUTO GRANTOR TRUST 1996-2
By: NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual capacity
but solely in its capacity as
Trustee
By: ______________________________
Authorized Signatory
Dated: September 26, 1996
This is one of the Class B Certificates referred to
in the within-mentioned Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual capacity but
solely in its capacity as Trustee
By: ______________________________
Authorized Signatory
-5-
[REVERSE OF CERTIFICATE]
The Certificates do not represent an obligation of, or an interest in, the
Seller, the Servicer, the Trustee or any affiliate of any of them. The
Certificates are limited in right of payment to certain collections and
recoveries respecting the Receivables, all as more specifically set forth in the
Agreement. A copy of the Agreement may be examined during normal business hours
at the principal office of the Seller, and at such other places, if any,
designated by the Seller, by any Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller and the rights of the Certificateholders under the Agreement at any time
by the Seller, the Servicer and the Trustee with the consent of the Certificate
Insurer and with the consent of the Holders of Certificates evidencing not less
than 51% of the Class A Certificate Balance and 51% of the Class B Certificate
Balance. Any such consent by the Holder of this Certificate shall be conclusive
and binding on such Holder and on all future Holders of this Certificate and of
any Certificate issued upon the transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
As provided in the Agreement and subject to certain limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee in its capacity as Certificate
Registrar, or by any successor Certificate Registrar, accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate interest in the Trust will be issued
to the designated transferee.
The Class B Certificates are issuable only as registered Certificates
without coupons in minimum denominations of $250,000 and integral multiples of
$1,000 in excess thereof; however, one certificate may be issued in the residual
amount. As provided in the Agreement and subject to certain limitations set
forth therein, Certificates are exchangeable for new Certificates of authorized
denominations evidencing the same aggregate denomination, as requested by the
Holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Trustee may require payment of a
sum sufficient to cover any tax or governmental charges payable in connection
therewith.
The Trustee, the Certificate Registrar, and any agent of the Trustee or the
Certificate Registrar may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Trustee, the
Certificate Registrar, nor any such agent shall be affected by any notice to the
contrary.
The obligations and responsibilities created by the Agreement and the Trust
created thereby shall terminate upon the payment to Certificateholders of all
amounts required to be paid to them pursuant to the Agreement, the payment of
all Reimbursement Obligations, and the expiration of any preference period with
respect thereto and the disposition of all property held as part of the Trust.
The Servicer of the Receivables may at its option purchase the corpus of the
Trust at a price specified in the Agreement, and such purchase of the
Receivables and other property of the Trust will effect early retirement of the
Certificates; however, such right of purchase is exercisable only as of the last
day of any Collection Period as of which the Pool Balance is less than or equal
to 10% of the original aggregate principal balance of the Receivables.
-2-
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- -------------------------------------------------------------------------------
(Please print or typewrite name and address, including postal zip
code, of assignee)
- -------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby
irrevocably constituting and appointing
__________________________________________ Attorney to transfer said Certificate
on the books of the Certificate Registrar, with full power of substitution in
the premises.
Dated:
__________________________________*
__________________________________*
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever.
[Exhibit C-1 to
Pooling and Servicing
Agreement]
Trustee's Certificate
Pursuant to Section 10.2 of
the Pooling and Servicing Agreement
Norwest Bank Minnesota, National Association, as trustee (the "Trustee") of
the CPS Auto Grantor Trust 1996-2 created pursuant to the Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement"), dated as of September 1,
1996, among CPS Receivables Corp., as Seller, Consumer Portfolio Services, Inc.,
as Servicer, and Norwest Bank Minnesota, National Association, as Trustee and
Standby Servicer, does hereby sell, transfer, assign, and otherwise convey to
Consumer Portfolio Services, Inc., without recourse, representation, or
warranty, all of the Trustee's right, title, and interest in and to all of the
Receivables (as defined in the Pooling and Servicing Agreement) identified in
the attached Servicer's Certificate as "Purchased Receivables," which are to be
repurchased by Consumer Portfolio Services, Inc. pursuant to Section 2.6 or
Section 2.8 of the Pooling and Servicing Agreement and all security and
documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this __ day of ____, 19__.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By:------------------------------
Name:
Title:
[Exhibit C-2 to
Pooling and Servicing
Agreement]
Trustee's Certificate
Pursuant to Section 10.2 of
the Pooling and Servicing Agreement
Norwest Bank Minnesota, National Association, as trustee (the "Trustee") of
the CPS Auto Grantor Trust 1996-2 created pursuant to the Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement"), dated as of September 1,
1996, among CPS Receivables Corp., as Seller, Consumer Portfolio Services, Inc.,
as Servicer (the "Servicer"), and Norwest Bank Minnesota, National Association,
as Trustee and Standby Servicer, does hereby sell, transfer, assign, and
otherwise convey to the Servicer, without recourse, representation, or warranty,
all of the Trustee's right, title, and interest in and to all of the Receivables
(as defined in the Pooling and Servicing Agreement) identified in the attached
Servicer's Certificate as "Purchased Receivables," which are to be repurchased
by the Servicer pursuant to Section 3.7 or Section 11.2 of the Pooling and
Servicing Agreement and all security and documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this __ day of ____, 19__.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By:------------------------------
Name:
Title:
Exhibit D to
Pooling and Servicing
Agreement
Form of Monthly
Certificateholder Statement
[To be delivered by Servicer at Closing]
[Exhibit E-1 to
Pooling and Servicing
Agreement]
Trust Receipt
Pursuant to Section 2.9 of
the Pooling and Servicing Agreement
Consumer Portfolio Services, Inc., as Servicer (the "Servicer") of the CPS
Auto Grantor Trust 1996-2 created pursuant to the Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement"), dated as of September 1,
1996, among CPS Receivables Corp., as Seller, Consumer Portfolio Services, Inc.,
as Servicer, and Norwest Bank Minnesota, National Association, as Trustee and
Standby Servicer, does hereby acknowledge receipt of the documents relating to
Receivables, each of which documents and the Receivables they related to are
listed on the attached Schedule 1 hereto. The Servicer furthermore agrees to
return such documents to the Trustee in accordance with the terms of the Pooling
and Servicing Agreement.
IN WITNESS WHEREOF I have hereunto set my hand this __ day of ____, 19__.
CONSUMER PORTFOLIO SERVICES, INC.,
as Servicer
By:-------------------------------
Name:
Title:
Acknowledged By:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Trustee
By:------------------------------
Name:
Title:
Exhibit E-2 to
Pooling and Servicing
Agreement
Servicing Officer's Certificate
Pursuant to Section 3.9
of the Pooling and Servicing Agreement
The undersigned, ______________, hereby certifies that (s)he is a duly
elected and qualified officer of the Servicer, and hereby further certifies as
follows:
The Receivable described below has been fully liquidated and all amounts
required to be deposited in the Collection Account with respect to the
Receivable and the Obligor described below have been so deposited.
Servicer
Loan No.:
Obligor's Name:
Capitalized terms used herein which are not defined herein shall have the
meanings ascribed to them in the Pooling and Servicing Agreement dated as of
September 1, 1996 among Consumer Portfolio Services, Inc., as servicer, CPS
Receivables Corp., as seller, and Norwest Bank Minnesota, National Association,
as trustee and standby servicer.
IN WITNESS WHEREOF, I have hereunto set my hand on and as of this ___ day
of ______________, 19___.
-----------------------------
Name:
Title:
[Exhibit F to
Pooling and Servicing
Agreement]
Transferee Certificate
Pursuant to Section 6.3(b) of
the Pooling and Servicing Agreement
In connection with the transfer of $________________ aggregate principal
amount of CPS Auto Grantor Trust 1996-2 11.30% Asset Backed Certificates, Class
B (the "Transferred Certificates"), __________________________, the undersigned
transferee (the "Transferee"), pursuant to Section 6.3(b) of the Pooling and
Servicing Agreement, hereby notifies the Trustee and the Seller and certifies,
represents and warrants to each of them that it is a "qualified institutional
buyer" (as defined in Rule 144A promulgated under the Securities Act of 1933, as
amended), that it is purchasing such Transferred Certificates for its own
account or the account of a qualified institutional buyer to whom notice has
been given that the transfer is to be made in reliance of Rule 144A, and
acknowledges that it has received such information regarding the Trust and the
Transferred Certificates as it has requested and that it is aware that the
transferor is relying upon the foregoing certification to claim the exemption
from registration provided by Rule 144A and the Transferee represents and
warrants that it has delivered an executed copy of this certificate to the
Trustee and the Seller prior to the transfer of any Transferred Certificates
discussed herein.
In no event shall a Class B Certificate be transferred to an employee
benefit plan, trust annuity or account subject to ERISA or a plan described in
Section 4975(e)(1) of the Code, (any such plan, trust or account including any
Keogh (HR-10) plans, individual retirement accounts or annuities and other
employee benefit plans subject to Section 406 of ERISA or Section 4975 of the
Code being referred to herein as an "Employee Plan"), a trustee of any Employee
Plan, or an entity, account or other pooled investment fund the underlying
assets of which include or are deemed to include Employee Plan assets by reason
of an Employee Plan's investment in the entity, account or other pooled
investment fund. The foregoing restriction on sale or transfer to an employee
benefit plan shall not apply to prevent the initial issuance or sale of the
Class B Certificates to an insurance company, insurance service, or insurance
organization qualified to do business in a state that purchases Class B
Certificates (a) with funds held in one or more of its general accounts provided
that the requirements of Prohibited Transaction Class Exemption 95-60 will be
satisfied
with respect to each of the transactions relating to the purchase and holding of
Class B Certificates by such entity or (b) with funds held in a separate account
which does not include plan assets of any plan subject to Title I of ERISA or
Section 4975 of the Code. The Seller, Servicer, Trustee and Standby Servicer
shall not be responsible for confirming or otherwise investigating whether a
proposed transferee is an employee benefit plan, trust or account subject to
ERISA, or described in Section 4975(e)(1) of the Code.
Terms used herein and not otherwise defined have the meanings assigned to
them in the Pooling and Servicing Agreement dated as of September 1, 1996, among
CPS Receivables Corp., as seller (the "Seller"), Consumer Portfolio Services,
Inc., as servicer, and Norwest Bank Minnesota, National Association, as trustee
(the "Trustee").
[TRANSFEREE]
By:-------------------------------
Name:
Title:
SCHEDULE A
SCHEDULE OF RECEIVABLES
[Provided by Servicer at Closing]
SCHEDULE B
LOCATION OF RECEIVABLES FILES
Norwest Bank Minnesota, National Association
Sixth Street and Marquette Avenue
Norwest Center
Minneapolis, Minnesota 55479-0070
Exhibit 10.1
PURCHASE AGREEMENT dated as of this September 1, 1996, by and between
CONSUMER PORTFOLIO SERVICES, INC., a California corporation (the "Seller"),
having its principal executive office at 2 Ada, Suite 100, Irvine, California
92718, and CPS RECEIVABLES CORP., a California corporation (the "Purchaser"),
having its principal executive office at 2 Ada, Suite 100, Irvine, California
92718.
WHEREAS, in the regular course of its business, the Seller purchases and
services through its auto loan programs certain motor vehicle retail installment
sale contracts secured by new and used automobiles, light trucks, vans or
minivans acquired from motor vehicle dealers.
WHEREAS, the Seller and the Purchaser wish to set forth the terms pursuant
to which the Receivables (as hereinafter defined), are to be sold by the Seller
to the Purchaser, which Receivables will be transferred by the Purchaser,
pursuant to the Pooling and Servicing Agreement (as hereinafter defined) to CPS
Auto Grantor Trust 1996-2 to be created thereunder, which Trust will issue
certificates representing beneficial ownership interests in the Receivables and
the other property of the Trust (the "Class A Certificates" and the "Class B
Certificates", together, the "Certificates").
NOW, THEREFORE, in consideration of the foregoing, other good and valuable
consideration, and the mutual terms and covenants contained herein, the parties
hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Terms not defined in this Agreement shall have the meaning set forth in the
Pooling and Servicing Agreement. As used in this Agreement, the following terms
shall, unless the context otherwise requires, have the following meanings (such
meanings to be equally applicable to the singular and plural forms of the terms
defined):
"Agreement" means this Purchase Agreement, as this agreement may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms hereof.
"Assignment" means the document of assignment attached to this Agreement as
Exhibit A.
-1-
"Base Prospectus" means the Prospectus dated September 20, 1996 with
respect to CPS Auto Grantor Trusts.
"Closing Date" means September 26, 1996.
"Cutoff Date" means September 18, 1996.
"Distribution Date" means, for each Collection Period, the 15th day of the
following month or, if such 15th day is not a Business Day, the next succeeding
Business Day.
"Obligor(s)" means the purchaser or co-purchasers of a Financed Vehicle or
any other person who owes or may be liable for payments under a Receivable.
"Offering Documents" means the Prospectus Supplement and related Base
Prospectus and the Private Placement Memorandum.
"Pooling and Servicing Agreement" means the Pooling and Servicing Agreement
dated as of September 1, 1996, among CPS Receivables Corp., as seller, Consumer
Portfolio Services, Inc., as originator of the Receivables and servicer, and
Norwest Bank Minnesota, National Association, as trustee and standby servicer,
as such agreement may be amended, supplemented or otherwise modified from time
to time in accordance with the terms thereof.
"Private Placement Memorandum" means the Private Placement Memorandum,
dated September 20, 1996, relating to the private placement of the Class B
Certificates and any amendment or supplement thereto.
"Prospectus Supplement" means the Prospectus Supplement dated September 20,
1996, relating to the public offering of the Class A Certificates and any
amendment or supplement thereto.
"Purchaser" means CPS Receivables Corp., a California corporation, and its
successors and assigns.
"Receivable" means each retail installment sale contract for a Financed
Vehicle that appears on the Schedule of Receivables.
"Receivables Purchase Price" means $92,129,299.54.
"Repurchase Event" shall have the meaning specified in Section 6.2 hereof.
"Schedule of Receivables" means the list of Receivables annexed hereto as
Exhibit B.
"Seller" means Consumer Portfolio Services, Inc., a California corporation,
in its capacity as seller of the
-2-
Receivables and the other Transferred Property relating thereto, and its
successors and assigns.
"Servicer" means Consumer Portfolio Services, Inc., a California
corporation, in its capacity as Servicer of the Receivables, and its successors
and assigns.
"Transferred Property" shall have the meaning specified in Section 2.1(a)
hereof.
"Trust" means the CPS Auto Grantor Trust 1996-2 created by the Pooling and
Servicing Agreement.
"UCC" means the Uniform Commercial Code, as in effect from time to time in
the relevant jurisdictions.
"Underwriters" means, collectively, Black Diamond Securities, LLC and Alex.
Brown & Sons Incorporated.
"Underwriting Agreements" means (a) the Underwriting Agreement, dated
September 20, 1996 among the Underwriters, the Seller and the Purchaser relating
to the Class A Certificates and (b) the Certificate Purchase Agreement, dated
September 26, 1996 among the Underwriters, the Seller and the Purchaser relating
to the Class B Certificates.
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
2.1. Purchase and Sale of Receivables. On the Closing Date, subject to the
terms and conditions of this Agreement, the Seller agrees to sell to the
Purchaser, and the Purchaser agrees to purchase from the Seller, without
recourse (subject to the obligations in this Agreement and the Pooling and
Servicing Agreement), all of the Seller's right, title and interest in, to and
under the Receivables and the other Transferred Property relating thereto. The
conveyance to the Purchaser of the Receivables and other Transferred Property
relating thereto is intended as a sale free and clear of all liens and it is
intended that the Transferred Property and other property of the Purchaser 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.
(a) Transfer of Receivables. On the Closing Date and simultaneously
with the transactions to be consummated pursuant to the Pooling and Servicing
Agreement, the Seller shall sell, transfer, assign, grant, set over and
otherwise convey to the Purchaser, without recourse (subject to the obligations
herein
-3-
and in the Pooling and Servicing Agreement), (i) all right, title and interest
of the Seller in and to the Receivables listed in the Schedule of Receivables
and, with respect to Rule of 78's Receivables, all monies due or to become due
thereon after the Cutoff Date (including Scheduled Payments due after the Cutoff
Date (including principal prepayments relating to such Scheduled Payments) but
received by the Seller on or before the Cutoff Date) and, with respect to Simple
Interest Receivables, all monies received thereunder after the Cutoff Date and
all Liquidation Proceeds and Recoveries received with respect to such
Receivables; (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
Receivables and any other interest of the Seller in the Financed Vehicles,
including, without limitation, the certificates of title or, with respect to
Financed Vehicles in the State of Michigan, other evidence of ownership with
respect to 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 thereunder; (iv) all right, title and interest
of the Seller in and to refunds for the costs of extended service contracts with
respect to Financed Vehicles, 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; (v)
the Receivable File related to each Receivable; and (vi) the proceeds of any and
all of the foregoing (collectively, the "Transferred Property").
(b) Receivables Purchase Price. In consideration for the Receivables
and other Transferred Property described in Section 2.1(a), the Purchaser shall,
on the Closing Date, pay to the Seller the Receivables Purchase Price. An amount
equal to $88,904,774.06 of the Receivables Purchase Price shall be paid to the
Seller in cash. The remaining $3,224,525.48 of the Receivables Purchase Price
shall be deemed paid and returned to the Purchaser and be considered a
contribution to capital. The portion of the Receivables Purchase Price to be
paid in cash shall be by federal wire transfer (same day) funds.
2.2. The Closing. The sale and purchase of the Receivables shall take
place at a closing (the "Closing") at the offices of Mayer, Brown & Platt, 1675
Broadway, New York, New York 10019- 5820 on the Closing Date, simultaneously
with the closings under: (a) the Pooling and Servicing Agreement pursuant to
which (i) the Purchaser will assign all of its right, title and interest in and
to the Receivables and the other Transferred Property to the Trustee for the
benefit of the Certificateholders and (ii) the Trust will issue and deliver to
the Purchaser in exchange for the
-4-
Transferred Property and related transferred property the Certificates and (b)
the Underwriting Agreements pursuant to which the Purchaser shall sell the Class
A Certificates to the Underwriters and the Class B Certificates to one or more
investors.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Seller as of the date hereof and as of the
Closing Date:
(a) Organization and Good Standing. The Purchaser has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of California, with power and authority to own its properties
and to conduct its business as such properties shall be currently owned and such
business is presently conducted, and had at all relevant times, and shall have,
power, authority and legal right to acquire and own the Receivables.
(b) Due Qualification. The Purchaser 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 Purchaser has the power and authority to
execute and deliver this Agreement and to carry out its terms and the execution,
delivery and performance of this Agreement has been duly authorized by the
Purchaser by all necessary corporate action.
(d) Binding Obligation. This Agreement shall constitute a legal, valid
and binding obligation of the Purchaser enforceable in accordance with its
terms.
(e) No Violation. The execution, delivery and performance by the
Purchaser of this Agreement and the consummation of the transactions
contemplated hereby and the fulfillment of the terms hereof do not conflict
with, result in a breach of any of the terms and provisions of, nor constitute
(with or without notice or lapse of time) a default under, the articles of
incorporation or by-laws of the Purchaser, or any indenture, agreement,
mortgage, deed of trust, or other instrument to which the Purchaser is a party
or by which it is bound or to which any of its properties are subject; nor
result in the creation or imposition of any lien upon any of its
-5-
properties pursuant to the terms of any indenture, agreement, mortgage, deed of
trust, or other instrument (other than the Pooling and Servicing Agreement); nor
violate any law, order, rule or regulation applicable to the Purchaser of any
court or of any Federal or State regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Purchaser or its
properties.
(f) No Proceedings. There are no proceedings or investigations
pending, or to the Purchaser's best knowledge, threatened, before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Purchaser or its properties: (A) asserting the
invalidity of this Agreement or the Certificates; (B) seeking to prevent the
issuance of the Certificates or the consummation of any of the transactions
contemplated by this Agreement; (C) seeking any determination or ruling that
might materially and adversely affect the performance by the Purchaser of its
obligations under, or the validity or enforceability of, this Agreement or the
Certificates; or (D) relating to Purchaser and which might adversely affect the
Federal or State income, excise, franchise or similar tax attributes of the
Certificates.
(g) No Consents. No consent, approval, authorization or order of or
declaration or filing with any governmental authority is required to be obtained
by the Purchaser for the issuance or sale of the Certificates or the
consummation of the other transactions contemplated by this Agreement or the
Pooling and Servicing Agreement, except such as have been duly made or obtained.
3.2. Representations and Warranties of the Seller. (a) The Seller hereby
represents and warrants to the Purchaser as of the date hereof and as of the
Closing Date:
(i) 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 shall be currently owned and
such business is presently conducted and had at all relevant times, and
shall have, power, authority and legal right to acquire, own and service
the Receivables.
(ii) Due Qualification. The Seller is duly qualified to do business as
a foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease
of property or the conduct of its business (including the origination and
the servicing of the Receivables as
-6-
required by the Pooling and Servicing Agreement) shall require such
qualifications.
(iii) Power and Authority. The Seller has the power and authority to
execute and deliver this Agreement and to carry out its terms; the Seller
has full power and authority to sell and assign the property sold and
assigned to the Purchaser and has duly authorized such sale and assignment
to the Purchaser by all necessary corporate action; and the execution,
delivery and performance of this Agreement has been duly authorized by the
Seller by all necessary corporate action.
(iv) Valid Sale; Binding Obligation. This Agreement effects a valid
sale, transfer and assignment of the Receivables and the other Transferred
Property conveyed to the Purchaser pursuant to Section 2.1, enforceable
against creditors of and purchasers from the Seller; and this Agreement
shall constitute a legal, valid and binding obligation of the Seller
enforceable in accordance with its terms.
(v) No Violation. The execution, delivery and performance by the
Seller of this Agreement and the consummation of the transactions
contemplated hereby and the fulfillment of the terms hereof do not conflict
with, result in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default under, the
articles of incorporation, as amended, 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 to which any of its
properties are subject; nor result in the creation or imposition of any
lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust, or other instrument (other
than this Agreement and the Pooling and Servicing Agreement); nor 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 its
properties.
(vi) No Proceedings. There are no proceedings or investigations
pending, or to the Seller's best knowledge, threatened, before any court,
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Seller or its properties: (A)
asserting the invalidity of this Agreement or the Certificates; (B) seeking
to prevent the issuance of the Certificates or the consummation of any of
the transactions
-7-
contemplated by this Agreement; (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 the Certificates; or (D) relating to the Seller and which might
adversely affect the Federal or State income, excise, franchise or similar
tax attributes of the Certificates.
(vii) No Consents. No consent, approval, authorization or order of or
declaration or filing with any governmental authority is required for the
issuance or sale of the Certificates or the consummation of the other
transactions contemplated by this Agreement or the Pooling and Servicing
Agreement, except such as have been duly made or obtained.
(viii) Financial Condition. The Seller has a positive net worth and is
able to and does pay its liabilities as they mature. The Seller is not in
default under any obligation to pay money to any person except for matters
being disputed in good faith which do not involve an obligation of the
Seller on a promissory note. The Seller will not use the proceeds from the
transactions contemplated by this Agreement to give any preference to any
creditor or class of creditors, and this transaction will not leave the
Seller with remaining assets which are unreasonably small compared to its
ongoing operations.
(ix) Fraudulent Conveyance. The Seller is not selling the Receivables
to the Purchaser with any intent to hinder, delay or defraud any of its
creditors; the Seller will not be rendered insolvent as a result of the
sale of the Receivables to the Purchaser.
(b) The Seller makes the following representations and warranties as
to the Receivables and the other Transferred Property relating thereto on which
the Purchaser relies in accepting the Receivables and the other Transferred
Property relating thereto. Such representations and warranties speak as of the
execution and delivery of this Agreement, but shall survive the sale, transfer,
and assignment of the Receivables and the other Transferred Property relating
thereto to the Purchaser and the subsequent assignment and transfer pursuant to
the Pooling and Servicing Agreement:
(i) Origination Date. Each Receivable has an origination date on or
after February 18, 1995.
(ii) Principal Balance/Number of Contracts. As of the Cutoff Date, the
total aggregate principal balance of
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the Receivables was $92,129,299.54. The Receivables are evidenced by 7,346
Contracts.
(iii) Maturity of Receivables. Each Receivable has an original term to
maturity of not less than 18 months and not more than 60 months; the
weighted average original term to maturity of the Receivables is 55.54
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 54.20 months as
of the Cutoff Date.
(iv) 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 the Seller in connection with the sale of Financed Vehicles by
the Dealers, (2) has created a valid, subsisting, and enforceable first
priority security interest in favor of the Seller in the Financed Vehicle,
which security interest has been assigned by the Seller to the Purchaser,
which in turn has assigned such security interest to the Trustee pursuant
to the Pooling and Servicing Agreement, (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 15.00%, (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 84.35% of the aggregate Principal Balance of the
Receivables, constituting 87.83% 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 29.28% of the
aggregate Principal Balance of the Receivables as of the Cutoff Date were
originated in the State of California; approximately 50.46%
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of the aggregate Principal Balance of the Receivables as of the Cutoff Date
were originated under the CPS alpha program; approximately 16.04% of the
aggregate Principal Balance of the Receivables as of the Cutoff Date were
originated under the CPS delta program; the remaining 33.26% of the
Receivables were originated under the CPS standard program; approximately
0.24% of the Receivables were acquired by CPS from another party; no
Receivable shall have a payment that is more than 30 days overdue as of the
Cutoff Date; 45.18% of the Receivables are Rule of 78's Receivables and
54.82% of the Receivables are Simple Interest Receivables; each Receivable
shall have a final scheduled payment due no later than October 2, 2001;
each Receivable has an original term to maturity of at least 18 months and
not more than 60 months and a remaining term to maturity of not less than
11 months nor greater than 60 months; and each Receivable was originated on
or before the Cutoff Date.
(v) Scheduled Payments. Each Receivable had an original principal
balance of not less than $2,808 nor more than $28,982 and, has an
outstanding principal balance as of the Cutoff Date of not less than $2,492
and not more than $27,970 and has a first Scheduled Payment due on or prior
to October 31, 1996.
(vi) Characteristics of Obligors. As of the date of each Obligor's
application for the loan from which the related Receivable arises, each
Obligor on any Receivable (a) did not have any material past due credit
obligations or any personal or real property repossessed or wages garnished
within one year prior to the date of such application, unless such amounts
have been repaid or discharged through bankruptcy, (b) was not the subject
of any Federal, State or other bankruptcy, insolvency or similar proceeding
pending on the date of application that is not discharged, (c) had not been
the subject of more than one Federal, State or other bankruptcy, insolvency
or similar proceeding, and (d) was domiciled in the United States.
(vii) Origination of Receivables. Based on the billing address of the
Obligors and the Principal Balances as of the Cutoff Date, approximately
27.32% of the Receivables were originated in California, approximately
9.64% of the Receivables were originated in Pennsylvania, approximately
9.00% of the Receivables were originated in Florida, approximately 6.81% of
the Receivables were originated in Texas and the remaining 47.23% of the
Receivables were originated in all other States.
(viii) Post-Office Box. On or prior to the next billing period after
the Cutoff Date, the Seller will notify
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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.
(ix) Location of Receivable Files. A complete Receivable File with
respect to each Receivable has been or prior to the Closing Date will be
delivered to the Trustee at the location listed in Schedule B to the
Pooling and Servicing Agreement.
(x) Schedule of Receivables; Selection Procedures. The information
with respect to the Receivables set forth in the Schedule of Receivables 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
Certificateholders have been utilized in selecting the Receivables.
(xi) 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 Magnuson-Moss 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.
(xii) Binding Obligation. Each Receivable represents the genuine,
legal, valid and binding payment obligation in writing of the Obligor,
enforceable by the holder thereof in accordance with its terms.
(xiii) 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.
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(xiv) Security Interest in Financed Vehicle. Immediately prior to the
sale, assignment, and transfer thereof, each Receivable shall be secured by
a validly perfected first security interest in the Financed Vehicle in
favor of the Seller 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).
(xv) 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.
(xvi) No Waiver. No provision of a Receivable has been waived.
(xvii) 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.
(xviii) No Defenses. As of the Closing Date, 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.
(xix) 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.
(xx) 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
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no Financed Vehicle shall have been repossessed as of the Cutoff Date.
(xxi) 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 that each Receivable requires the Obligor to obtain and
maintain such insurance naming the Seller and its successors and assigns as
an additional insured, (B) each Receivable that finances the cost of
premiums for credit life and credit accident or health insurance is covered
by an insurance policy and certificate of insurance naming the Seller as
policyholder (creditor) under each such insurance policy and certificate of
insurance and (C) as to each Receivable that finances the cost of an
extended service contract, the respective Financed Vehicle which secures
the Receivable is covered by an extended service contract.
(xxii) 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 Purchaser and that the beneficial interest in and title
to such Receivables not be part of the debtor'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 Purchaser or any such
pledge has been released on or prior to the Closing Date. 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 Purchaser
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.
(xxiii) 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 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.
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(xxiv) All Filings Made. All filings (including, without limitation,
UCC filings) necessary in any jurisdiction to give the Purchaser a first
priority perfected ownership interest in the Receivables have been made.
(xxv) Receivable File; One Original. The Seller has delivered to the
Trustee a complete Receivable File with respect to each Receivable. There
is only one original executed copy of each Receivable.
(xxvi) Chattel Paper. Each Receivable constitutes "chattel paper"
under the UCC.
(xxvii) 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.
(xxviii) Tax Liens. As of the Cutoff Date, there is no lien against
the related Financed Vehicle for delinquent taxes.
(xxix) Title Documents. (A) If the Receivable was originated in a
State in which notation of security interest on the title document of the
related Financed Vehicle is required or permitted to perfect such security
interest, the title document 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 Financial Vehicle) will be received within 180 days and
will show, the Seller named as the original secured party under the related
Receivable as the holder of a first priority security interest in such
Financed Vehicle, and (B) if the Receivable was originated in a State in
which the filing of a financing statement under the UCC is required to
perfect a security interest in motor vehicles, such filings or recordings
have been duly made and show the Seller named as the original secured party
under the related Receivable, and in either case, the Trustee has the same
rights as such secured party has or would have (if such secured party were
still the owner of the Receivable) against all parties claiming an interest
in such Financed Vehicle. With respect
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to each Receivable for which the title document of the related Financed
Vehicle has not yet been returned from the Registrar of Titles, the
Seller has received written evidence from the related Dealer that such
title document showing the Seller as first lienholder has been applied
for.
(xxx) Casualty. No Financed Vehicle related to a Receivable has
suffered a Casualty.
(xxxi) Obligation to Dealers or Others. The Purchaser and its
assignees will assume no obligation to Dealers or other originators or
holders of the Receivables (including, but not limited to under dealer
reserves) as a result of the purchase of the Receivables.
(xxxii) 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.
(c) The representations and warranties contained in this Agreement
shall not be construed as a warranty or guaranty by the Seller as to the
future payments by any Obligor. The sale of the Receivables pursuant to
this Agreement shall be "without recourse" except for the representations,
warranties and covenants made by the Seller in this Agreement or the
Pooling and Servicing Agreement.
ARTICLE IV
CONDITIONS
4.1. Conditions to Obligation of the Purchaser. The obligation of the
Purchaser to purchase the Receivables is subject to the satisfaction of the
following conditions:
(a) Representations and Warranties True. The representations and
warranties of the Seller hereunder shall be true and correct on the Closing
Date with the same effect as if then made, and the Seller shall have
performed all obligations to be performed by it hereunder on or prior to
the Closing Date.
(b) Computer Files Marked. The Seller shall, at its own expense, on or
prior to the Closing Date, indicate in its computer files that the
Receivables have been sold to the Purchaser pursuant to this Agreement and
shall deliver to the Purchaser the Schedule of Receivables certified by the
Chairman,
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the President, the Vice President or the Treasurer of the Seller to be
true, correct and complete.
(c) Receivable Files Delivered. The Seller shall, at its own expense,
deliver the Receivable Files to the Trustee at the offices specified in
Schedule B to the Pooling and Servicing Agreement on or prior to the
Closing Date.
(d) Documents to be delivered by the Seller at the Closing.
(i) The Assignment. At the Closing, the Seller will execute and
deliver the Assignment. The Assignment shall be substantially in the
form of Exhibit A hereto.
(ii) Evidence of UCC-1 Filing. On or prior to the Closing Date,
the Seller shall record and file, at its own expense, a UCC-1
financing statement in each jurisdiction in which required by
applicable law, executed by the Seller, as seller or debtor, and
naming the Purchaser, as purchaser or secured party, naming the
Receivables and the other Transferred Property conveyed hereafter as
collateral, meeting the requirements of the laws of each such
jurisdiction and in such manner as is necessary to perfect the sale,
transfer, assignment and conveyance of such Receivables to the
Purchaser. The Seller shall deliver a file-stamped copy, or other
evidence satisfactory to the Purchaser of such filing, to the
Purchaser on or prior to the Closing Date.
(iii) Evidence of UCC-2 Filing. On or prior to the Closing Date,
the Seller shall cause to be recorded and filed, at its own expense, a
UCC-2 termination statement executed by General Electric Capital
Corporation ("GECC") in each jurisdiction in which required by
applicable law, meeting the requirements of the laws of each such
jurisdiction and in such manner as is necessary to release GECC's
interest in the Receivables, including without limitation, the
security interests in the Financed Vehicles securing the Receivables
and any proceeds of such security interests or the Receivables. The
Seller shall deliver a file-stamped copy, or other evidence
satisfactory to the Purchaser of such filing, to the Purchaser on or
prior to the Closing Date.
(iv) Other Documents. On or prior to the Closing Date, the Seller
shall deliver such other documents as the Purchaser may reasonably
request.
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(e) Other Transactions. The transactions contemplated by the Pooling
and Servicing Agreement and the Underwriting Agreements shall be consummated on
the Closing Date.
4.2. Conditions to Obligation of the Seller. The obligation of the Seller
to sell the Receivables to the Purchaser is subject to the satisfaction of the
following conditions:
(a) Representations and Warranties True. The representations and
warranties of the Purchaser hereunder shall be true and correct on the Closing
Date with the same effect as if then made, and the Seller shall have performed
all obligations to be performed by it hereunder on or prior to the Closing Date.
(b) Receivables Purchase Price. At the Closing Date, the Purchaser
will deliver to the Seller the Receivables Purchase Price as provided in Section
2.1(b). The Seller hereby directs the Purchaser to wire $88,904,774.06 of the
Receivables Purchase Price to Bank of America, ABA: 121000358, Account
#1458425131, Consumer Portfolio Services, Inc. pursuant to wire instructions to
be delivered to the Purchaser on or prior to the Closing Date.
ARTICLE V
COVENANTS OF THE SELLER
The Seller agrees with the Purchaser as follows; provided, however, that to
the extent that any provision of this ARTICLE V conflicts with any provision of
the Pooling and Servicing Agreement, the Pooling and Servicing Agreement shall
govern:
5.1. Protection of Right, Title and Interest.
(a) Filings. The Seller shall cause all financing statements and
continuation statements and any other necessary documents covering the right,
title and interest of the Purchaser in and to the Receivables and the other
Transferred Property to be promptly filed, and at all times to be kept recorded,
registered and filed, all in such manner and in such places as may be required
by law fully to preserve and protect the right, title and interest of the
Purchaser hereunder to the Receivables and the other Transferred Property. The
Seller shall deliver to the Purchaser file stamped copies of, or filing receipts
for, any document recorded, registered or filed as provided above, as soon as
available following such recordation, registration or filing. The Purchaser
shall cooperate fully with the Seller in connection with the obligations set
forth above and will execute any and all documents reasonably required to
fulfill the intent of this Section 5.1(a). In the event the Seller fails to
perform its
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obligations under this subsection, the Purchaser or the Trustee may do so at the
expense of the Seller.
(b) Name and Other Changes. At least 60 days prior to the date the
Seller makes any change in its name, identity or corporate structure which would
make any financing statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the applicable provisions of the
UCC or any title statute, the Seller shall give the Trustee, the Certificate
Insurer (so long as an Insurer Default shall not have occurred and be
continuing) and the Purchaser written notice of any such change and no later
than five days after the effective date thereof, shall file appropriate
amendments to all previously filed financing statements or continuation
statements. At least 60 days prior to the date of any relocation of its
principal executive office, the Seller shall give the Trustee, the Certificate
Insurer (so long as an Insurer Default shall not have occurred and be
continuing) and the Purchaser written notice thereof if, as a result of such
relocation, the applicable provisions of the UCC would require the filing of any
amendment of any previously filed financing or continuation statement or of any
new financing statement and the Seller shall within five days after the
effective date thereof, file any such amendment or new financing statement. The
Seller shall at all times maintain each office from which it shall service
Receivables, and its principal executive office, within the United States of
America.
(c) Accounts and Records. The Seller shall maintain accounts and
records as to each Receivable accurately and in sufficient detail to permit 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).
(d) Maintenance of Computer Systems. The Seller shall maintain its
computer systems so that, from and after the time of sale hereunder of the
Receivables to the Purchaser, the Seller's master computer records (including
any back-up archives) that refer to a Receivable shall indicate clearly the
interest of the Purchaser in such Receivable and that such Receivable is owned
by the Purchaser. Indication of the Purchaser's ownership of a Receivable shall
be deleted from or modified on the Seller's computer systems when, and only
when, the Receivable shall have been paid in full or repurchased.
(e) Sale of Other Receivables. If at any time the Seller shall propose
to sell, grant a security interest in, or otherwise transfer any interest in any
automobile or light-duty truck receivables (other than the Receivables) to any
prospective purchaser, lender, or other transferee, the Seller shall give to
such prospective purchaser, lender, or other transferee computer tapes, records,
or print-outs (including any restored from back-
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up archives) that, if they shall refer in any manner whatsoever to any
Receivable, shall indicate clearly that such Receivable has been sold and is
owned by the Purchaser unless such Receivable has been paid in full or
repurchased.
(f) Access to Records. The Seller shall permit the Purchaser and its
agents at any time during normal business hours to inspect, audit, and make
copies of and abstracts from the Seller's records regarding any Receivable.
(g) List of Receivables. Upon request, the Seller shall furnish to the
Purchaser, within five Business Days, a list of all Receivables (by contract
number and name of Obligor) then owned by the Purchaser, together with a
reconciliation of such list to the Schedule of Receivables.
5.2. Other Liens or Interests. Except for the conveyances hereunder and
pursuant to the Pooling and Servicing Agreement, the Seller will not sell,
pledge, assign or transfer to any other Person, or grant, create, incur, assume
or suffer to exist any lien on any interest therein, and the Seller shall defend
the right, title, and interest of the Purchaser in, to and under such
Receivables against all claims of third parties claiming through or under the
Seller; provided, however, that the Seller's obligations under this Section 5.2
shall terminate upon the termination of the Trust pursuant to the Pooling and
Servicing Agreement.
5.3. Chief Executive Office. During the term of the Receivables, the Seller
will maintain its chief executive office in one of the United States, except
Louisiana or Vermont.
5.4. Costs and Expenses. The Seller agrees to pay all reasonable costs and
disbursements in connection with the perfection, as against all third parties,
of the Purchaser's right, title and interest in and to the Receivables.
5.5. Delivery of Receivable Files. On or prior to the Closing Date, the
Seller shall deliver the Receivable Files to the Trustee at the location
specified in Schedule B to the Pooling and Servicing Agreement. The Seller shall
have until the last day of the second Collection Period following receipt from
the Trustee of notification, pursuant to Section 2.8 of the Pooling and
Servicing Agreement, that there has been a failure to deliver a file with
respect to a Receivable or that a file is unrelated to the Receivables
identified in Schedule A to the Pooling and Servicing Agreement or that any of
the documents referred to in Section 2.7 of the Pooling and Servicing Agreement
are not contained in a Receivable File, to deliver such file or any of the
aforementioned documents required to be included in such Receivable File to the
Trustee. Unless such defect with
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respect to such Receivable File shall have been cured by the last day of the
second Collection Period following discovery thereof by the Trustee, the Seller
hereby agrees to repurchase any such Receivable from the Trust as of such last
day. In consideration of the purchase of the Receivable, the Seller shall remit
the Purchase Amount in the manner specified in Section 4.5 of the Pooling and
Servicing Agreement. The sole remedy hereunder of the Trustee, the Trust or the
Certificateholders with respect to a breach of this Section 5.5, shall be to
require the Seller to repurchase the Receivable pursuant to this Section 5.5.
Upon receipt of the Purchase Amount, the Trustee shall release to the Seller or
its designee the related Receivable File and shall execute and deliver all
instruments of transfer or assignment, without recourse, as are prepared by the
Seller and delivered to the Trustee and are necessary to vest in the Seller or
such designee title to the Receivable.
5.6. Indemnification. (a) The Seller shall indemnify the Purchaser for any
liability as a result of the failure of a Receivable to be originated in
compliance with all requirements of law and for any breach of any of its
representations and warranties contained herein.
(b) The Seller shall defend, indemnify, and hold harmless the
Purchaser from and against any and all costs, expenses, losses, damages, claims,
and liabilities, arising out of or resulting from the use, ownership, or
operation by the Seller or any Affiliate thereof of a Financed Vehicle.
(c) The Seller shall defend, indemnify, and hold harmless the
Purchaser from and against any and all taxes, except for taxes on the net income
of the Purchaser, that may at any time be asserted against the Purchaser with
respect to the transactions contemplated herein, including, without limitation,
any sales, gross receipts, general corporation, tangible personal property,
privilege, or license taxes and costs and expenses in defending against the
same.
(d) The Seller shall defend, indemnify, and hold harmless the
Purchaser from and against any and all costs, expenses, losses, damages, claims
and liabilities to the extent that such cost, expense, loss, damage, claim or
liability arose out of, or was imposed upon the Purchaser through, the
negligence, willful misfeasance, or bad faith of the Seller in the performance
of its duties under the Agreement, or by reason of reckless disregard of the
Seller's obligations and duties under the Agreement.
(e) The Seller shall defend, indemnify, and hold harmless the
Purchaser from and against all costs, expenses, losses, damages, claims and
liabilities arising out of or
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incurred in connection with the acceptance or performance of the Seller's trusts
and duties as Servicer under the Pooling and Servicing Agreement, except to the
extent that such cost, expense, loss, damage, claim or liability shall be due to
the willful misfeasance, bad faith, or negligence (except for errors in
judgment) of the Purchaser.
Indemnification under this Section shall include reasonable fees and
expenses of litigation and shall survive termination of the Trust. These
indemnity obligations shall be in addition to any obligation that the Seller may
otherwise have.
5.7. Sale. The Seller agrees to treat this conveyance for all purposes
(including without limitation tax and financial accounting purposes) as a sale
on all relevant books, records, tax returns, financial statements and other
applicable documents.
5.8. Non-Petition. In the event of any breach of a representation and
warranty made by the Purchaser hereunder, the Seller covenants and agrees that
it will not take any action to pursue any remedy that it may have hereunder, in
law, in equity or otherwise, until a year and a day have passed since the date
on which all certificates issued by the Trust or a similar trust formed by the
Purchaser have been paid in full. The Purchaser and the Seller agree that
damages will not be an adequate remedy for such breach and that this covenant
may be specifically enforced by the Purchaser or by the Trustee on behalf of the
Trust.
ARTICLE VI
MISCELLANEOUS PROVISIONS
6.1. Obligations of Seller. The obligations of the Seller under this
Agreement shall not be affected by reason of any invalidity, illegality or
irregularity of any Receivable.
6.2. Repurchase Events. The Seller hereby covenants and agrees with the
Purchaser for the benefit of the Purchaser, the Trustee, the Certificate Insurer
and the Certificateholders, that (i) the occurrence of a breach of any of the
Seller's representations and warranties contained in Section 3.2(b) hereof
(without regard to any limitations regarding the Seller's knowledge) and (ii)
the failure of the Seller to timely comply with its obligations pursuant to
Section 5.5 hereof, shall constitute events obligating the Seller to repurchase
the affected Receivables hereunder ("Repurchase Events"), at the Purchase Amount
from the Trust. Unless the breach of any of the Seller's representations and
warranties shall have been cured by the last day of the second Collection Period
following the
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discovery thereof by or notice to the Purchaser and the Seller of such breach,
the Seller shall repurchase any Receivable if such Receivable is materially and
adversely affected by the breach as of the last day of such second Collection
Period (or, at the Seller'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 Trust is
materially and adversely affected by such breach, unless the breach shall have
been cured by such second Collection Period, the Seller 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. The provisions of this Section 6.2 are
intended to grant the Trustee a direct right against the Seller to demand
performance hereunder, and in connection therewith the Seller waives any
requirement of prior demand against the Purchaser and waives any defaults it
would have against the Purchaser with respect to such repurchase obligation. Any
such purchase shall take place in the manner specified in Section 4.5 of the
Pooling and Servicing Agreement. For purposes of this Section 6.2, the Purchase
Amount of a Receivable which is not consistent with the warranty pursuant to
Section 3.2(b)(iv)(a)(3) or (iv)(a)(5) shall include such additional amount as
shall be necessary to provide the full amount of interest as contemplated
therein. The sole remedy hereunder of the Certificateholders, the Trust, the
Certificate Insurer, the Trustee or the Purchaser against the Seller with
respect to any Repurchase Event shall be to enforce the Seller's obligation to
repurchase such Receivables pursuant to this Agreement; provided, however, that
the Seller shall indemnify the Trustee, the Certificate Insurer, the Trust and
the Certificateholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them, as a result of third party claims
arising out of the events or facts giving rise to such breach. Upon receipt of
the Purchase Amount, the Purchaser shall cause the Trustee to release the
related Receivables File to the Seller and to execute and deliver all
instruments of transfer or assignment, without recourse, as are necessary to
vest in the Seller title to the Receivable. Notwithstanding the foregoing, if it
is determined that consummation of the transactions contemplated by the Pooling
and Servicing Agreement and the other transaction documents referenced in such
Agreement, servicing and operation of the Trust pursuant to such Agreement and
such other documents, or the ownership of a 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 ("Code") for which no statutory exception or administrative
exemption applies, such violation shall not be treated as a Repurchase Event.
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6.3. Seller's Assignment of Purchased Receivables. With respect to all
Receivables repurchased by the Seller pursuant to this Agreement, the Purchaser
shall assign, without recourse except as provided herein, representation or
warranty, to the Seller all the Purchaser's right, title and interest in and to
such Receivables, and all security and documents relating thereto.
6.4. Conveyance as Sale of Receivables Not Financing. The parties hereto
intend that the conveyance hereunder be a sale of the Receivables and the other
Transferred Property from the Seller to the Purchaser and not a financing
secured by such assets; and the beneficial interest in and title to the
Receivables and the other Transferred 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 any conveyance hereunder is
for any reason not considered a sale, the parties intend that this Agreement
constitute a security agreement under the UCC (as defined in the UCC as in
effect in the State of California) and applicable law, and the Seller hereby
grants to the Purchaser a first priority perfected security interest in, to and
under the Receivables and the other Transferred Property being delivered to the
Purchaser on the Closing Date, and other property conveyed hereunder and all
proceeds of any of the foregoing for the purpose of securing payment and
performance of the Certificates and the repayment of amounts owed to the
Purchaser from the Seller.
6.5. Trust. The Seller acknowledges that the Purchaser will, pursuant to
the Pooling and Servicing Agreement, sell the Receivables to the Trust and
assign its rights under this Agreement to the Trustee for the benefit of the
Certificate- holders, and that the representations and warranties contained in
this Agreement and the rights of the Purchaser under this Agreement, including
under Sections 6.2 and 6.3 hereof are intended to benefit such Trust and the
Certificateholders. The Seller also acknowledges that the Trustee on behalf of
the Certificateholders as assignee of the Purchaser's rights hereunder may
directly enforce, without making any prior demand on the Purchaser, all the
rights of the Purchaser hereunder including the rights under Section 6.2 and 6.3
hereof. The Seller hereby consents to such sale and assignment.
6.6. Amendment. This Agreement may be amended from time to time by a
written amendment duly executed and delivered by the Seller and the Purchaser
with the consent of the Certificate Insurer; provided, however, that (i) any
such amendment that materially adversely affects the rights of the Class A
Certificateholders under the Pooling and Servicing Agreement must be consented
to by the holders of Class A Certificates representing 66-2/3% or more of the
Class A Certificate Balance
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and (ii) any such amendment that materially adversely affects the rights of the
Class B Certificateholders under the Pooling and Servicing Agreement must be
consented to by the holders of Class B Certificates representing 66-2/3% or more
of the Class B Certificate Balance.
6.7. Accountants' Letters. (a) KPMG Peat Marwick will review the
characteristics of the Receivables and will compare those characteristics to the
information with respect to the Receivables contained in the Offering Documents;
(b) The Seller will cooperate with the Purchaser and KPMG Peat Marwick in making
available all information and taking all steps reasonably necessary to permit
such accountants to complete the review set forth in Section 6.7(a) above and to
deliver the letters required of them under the Underwriting Agreements; and (c)
KPMG Peat Marwick will deliver to the Purchaser a letter, dated the Closing
Date, in the form previously agreed to by the Seller and the Purchaser, with
respect to the financial and statistical information contained in the Offering
Documents under the captions "CPS's Automobile Contract Portfolio -- Delinquency
and Loss Experience" and "The Receivables Pool", certain information relating to
the Receivables on magnetic tape obtained from the Seller and the Purchaser and
with respect to such other information as may be agreed in the form of letter.
6.8. Waivers. No failure or delay on the part of the Purchaser in
exercising any power, right or remedy under this Agreement or the Assignment
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or remedy preclude any other or further exercise thereof
or the exercise of any other power, right or remedy.
6.9. Notices. All communications and notices pursuant hereto to either
party shall be in writing or by telegraph or telex and addressed or delivered to
it at its address (or in case of telex, at its telex number at such address)
shown in the opening portion of this Agreement or at such other address as may
be designated by it by notice to the other party and, if mailed or sent by
telegraph or telex, shall be deemed given when mailed, communicated to the
telegraph office or transmitted by telex.
6.10. Costs and Expenses. The Seller will pay all expenses incident to the
performance of its obligations under this Agreement and the Seller agrees to pay
all reasonable out-of-pocket costs and expenses of the Purchaser, excluding fees
and expenses of counsel, in connection with the perfection as against third
parties of the Purchaser's right, title and interest in and to the Receivables
and security interests in the Financed Vehicles and the enforcement of any
obligation of the Seller hereunder.
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6.11. Representations of the Seller and the Purchaser. The respective
agreements, representations, warranties and other statements by the Seller and
the Purchaser set forth in or made pursuant to this Agreement shall remain in
full force and effect and will survive the closing under Section 2.2 hereof.
6.12. Confidential Information. The Purchaser agrees that it will neither
use nor disclose to any person the names and addresses of the Obligors, except
in connection with the enforcement of the Purchaser's rights hereunder, under
the Receivables, under the Pooling and Servicing Agreement or as required by
law.
6.13. Headings and Cross-References. The various headings in this Agreement
are included for convenience only and shall not affect the meaning or
interpretation of any provision of this Agreement. References in this Agreement
to Section names or numbers are to such Sections of this Agreement.
6.14. Third Party Beneficiaries. The parties hereto hereby expressly agree
that each of the Trustee for the benefit of the Certificateholders and the
Certificate Insurer shall be third party beneficiaries with respect to this
Agreement, provided, however, that no third party other than the Trustee for the
benefit of the Certificateholders and the Certificate Insurer shall be deemed a
third party beneficiary of this Agreement.
6.15. Governing Law. THIS AGREEMENT AND THE ASSIGNMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
6.16. Counterparts. This Agreement may be executed in two or more
counterparts and by different parties on separate counterparts, each of which
shall be an original, but all of which together shall constitute one and the
same instrument.
[Rest of page left intentionally blank.]
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IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
and year first above written.
CPS RECEIVABLES CORP.
By:-------------------------
Name:
Title:
CONSUMER PORTFOLIO SERVICES, INC.
By:-------------------------
Name:
Title:
Exhibit A
ASSIGNMENT
For value received, in accordance with the Purchase Agreement dated as of
September 26, between the undersigned and CPS Receivables Corp. (the
"Purchaser") (the "Purchase Agreement"), the undersigned does hereby sell,
transfer, assign and otherwise convey unto the Purchaser, without recourse
(subject to the obligations in the Purchase Agreement and the Pooling and
Servicing Agreement), (i) all right, title and interest of the Seller in and to
the Receivables listed in the Schedule of Receivables and, with respect to
Receivables which are Rule of 78's Receivables, all monies due or to become due
thereon after the Cutoff Date (including Scheduled Payments due after the Cutoff
Date (including principal prepayments relating to such Scheduled Payments) but
received by the Seller on or before the Cutoff Date) and, with respect to
Receivables which are Simple Interest Receivables, all monies received
thereunder after the Cutoff Date and all Liquidation Proceeds and Recoveries
received with respect to such Receivables; (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 Receivables and any other interest of the Seller in the
Financed Vehicles, including, without limitation, the certificates of title or,
with respect to Financed Vehicles in the State of Michigan, such other evidence
of ownership with respect to 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 related to the Receivables or the
Obligors thereunder; (iv) all right, title and interest of the Seller in and to
refunds for the costs of extended service contracts with respect to Financed
Vehicles related to Seller Financed Vehicles, refunds of unearned premiums with
respect to credit life and credit accident and health insurance policies or
certificates covering an Obligor under a Receivable or Financed Vehicle or his
or her obligations with respect to a Financed Vehicle related to a Receivable
and any recourse to Dealers for any of the foregoing; (v) the Receivable File
related to each Receivable; and (vi) the proceeds of any and all of the
foregoing. The foregoing sale does not constitute and is not intended to result
in any assumption by the Purchaser of any obligation of the undersigned to the
Obligors, insurers or any other person in connection with the Receivables, the
Receivable Files, any insurance policies or any agreement or instrument relating
to any of them.
This Assignment is made pursuant to and upon the representations,
warranties and agreements on the part of the
undersigned contained in the Purchase Agreement and is to be governed by the
Purchase Agreement.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Purchase Agreement.
THIS ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed as of September 26, 1996.
CONSUMER PORTFOLIO SERVICES, INC.
By:-------------------------
Name:
Title:
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Exhibit B
Schedule of Receivables
[Delivered by Servicer at Closing]