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) August 19, 1997
CONSUMER PORTFOLIO SERVICES, INC.
(Exact Name of Registrant as Specified in its Charter)
California
(State or Other Jurisdiction of Incorporation)
333-25301
(Commission File Number)
33-0459135
(I.R.S. Employer Identification No.)
2 Ada, Irvine, California 92618
(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)
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 Trust Agreement
4.2 Indenture
10.1 Sale and Servicing Agreement
10.2 Receivables Purchase Agreement
10.3 Receivables Purchase Agreement
10.4 Subsequent Transfer Agreement
10.5 Subsequent Receivables Purchase Agreement
10.6 Subsequent Receivables 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: November 11, 1997 By: /s/ Jeffrey P. Fritz
Jeffrey P. Fritz
Senior Vice President
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INDEX TO EXHIBITS
Sequential
Exhibit No. Document Description Page No.
1.1 Underwriting Agreement
4.1 Trust Agreement
4.2 Indenture
10.1 Sale and Servicing Agreement
10.2 Receivables Purchase Agreement
10.3 Receivables Purchase Agreement
10.4 Subsequent Transfer Agreement
10.5 Subsequent Receivables Purchase Agreement
10.6 Subsequent Receivables Purchase Agreement
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Exhibit 1.1
Underwriting Agreement
CPS AUTO RECEIVABLES TRUST 1997-3
$80,832,000 6.10% Class A-1 Asset Backed Notes
$61,668,000 6.38% Class A-2 Asset Backed Notes
$3,750,000 10.65% Class B Asset Backed Notes
UNDERWRITING AGREEMENT
August 15, 1997
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Black Diamond Securities, LLC
230 Park Avenue
New York, New York 10169
Ladies and Gentlemen:
CPS Receivables Corp. (the "Company"), a California corporation 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"), $80,832,000 aggregate principal amount of CPS
Auto Receivables Trust 1997-3 6.10% Asset Backed Notes, Class A-1 (the "Class
A-1 Notes") and $61,668,000 aggregate principal amount of 6.38% Asset Backed
Notes, Class A-2 (the "Class A-2 Notes" and; together with the Class A-1 Notes
the "Class A Notes") and $3,750,000 aggregate principal amount of 10.65% Asset
Backed Notes, Class B (the "Class B Notes" and, together with the Class A Notes,
the "Notes"). The Notes will be issued by CPS Auto Receivables Trust 1997-3 (the
"Trust") pursuant to the Indenture (the "Indenture") dated as of August 1, 1997
among CPS Auto Receivables Trust 1997-3 (the "Trust") and Norwest Bank
Minnesota, National Association, as trustee (the "Trustee"). The assets of the
Trust will include, among other things, a pool of retail installment sale
contracts consisting of the Initial Receivables and the Subsequent Receivables
and all rights and obligations thereunder (collectively, the "Receivables"),
with respect to Initial Receivables that are Rule of 78's Receivables, all
payments due thereon after July 31, 1997 (the "Cutoff Date") and, with respect
to Initial
Receivables that are Simple Interest Receivables, all payments received
thereunder after the Cutoff Date, with respect to Subsequent Receivables that
are Rule of 78's Receivables, all payments due thereon after the related
Subsequent Cutoff Date and, with respect to Subsequent Receivables that are
Simple Interest Receivables, all payments received thereunder after the related
Subsequent 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 Noteholders
only) and the right of the Company to receive certain insurance proceeds and
certain other property, all as more specifically described in the Sale and
Servicing Agreement, dated as of August 1, 1997, among the Trust, CPS, as
servicer (in such capacity, the "Servicer") the Company, as Seller and Norwest
Bank Minnesota, National Association, as trustee.
On the Closing Date, the Seller will deposit into the Pre-Funding
Account $27,084,817 from the proceeds of the sale of the Notes and the
Certificates. It is intended that from time to time on or before October 15,
1997, the Trust will purchase Subsequent Receivables from the Seller having an
aggregate principal balance of up to $27,084,817 with funds on deposit in the
Pre-Funding Account.
The Class A-1 Notes will be issued in an aggregate principal amount of
$80,832,000 and will bear interest at an annual rate equal to 6.10% (the "Class
A-1 Interest Rate"). The Class A-2 Notes will be issued in an aggregate
principal amount of $61,668,000 and will bear interest at an annual rate equal
to 6.38% (the "Class A-2 Interest Rate"). The Class B Notes will be issued in an
aggregate principal amount of $3,750,000 and will bear interest at an annual
rate equal to 10.65% (the "Class B Interest Rate"). The aggregate principal
amount of the Notes will equal 118.98% of the aggregate principal balance of the
Initial Receivables as of the Cutoff Date. Calculations of interest for each
class of Notes will be in accordance with the provisions of the Sale and
Servicing Agreement.
The Certificates will be issued in an aggregate principal amount of
$3,750,000 which is equal to 2.5% of the sum of (i) aggregate principal balance
of the Receivables as of the Cutoff Date and (ii) the amount to be deposited in
the Pre-Funding Account on the Closing Date. The Certificates will bear interest
at an annual rate equal to 10.65% (the "Pass-Through Rate") in accordance with
the provisions of the Trust Agreement. The Certificates will not be underwritten
by the Underwriters pursuant to this Agreement.
To the extent not otherwise defined herein, capitalized terms used
herein shall have the meanings assigned to such terms in the Indenture or, if
not defined therein, in the Sale 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 Notes set forth opposite your respective names in Schedule I hereto.
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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 Samco, with respect to Samco, 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. 333-25301),
- ---------- including a Base Prospectus, for registration of the offering and
sale of the Class A Notes under the Securities Act of 1933, as amended (the
"1933 Act"), and the rules and regulations (the "1933 Act Regulations") of the
Commissionthereunder 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 Class A Notes is a Delayed
Offering and, although the Base Prospectus may not include all the information
with respect to the Class A Notes 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 Class A Notes
and the offering thereof. As filed, such final supplement shall include all
required information with respect to the Class A Notes 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
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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 Statement or the Final
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with information specified in Section 9(b) 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 Insurer set forth under the heading
"THE 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 Notes
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 Notes.
"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 Notes that is first filed pursuant to Rule 424(b) under
the 1933 Act after the Execution Time, together with the Base
Prospectus.
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"Preliminary Final Prospectus" shall mean any preliminary
prospectus supplement to the Base Prospectus which describes the Notes
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, 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
Notes 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.
333-25301).
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.
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(d) The Seller, at its own expense in consultation with the
Underwriters, has prepared a private placement memorandum (together with any
exhibits attached thereto, the "Private Placement Memorandum") describing, among
other things, the Class B Notes, the Receivables, the Policy, the Trust and the
Trust Documents. Copies of the Private placement Memorandum and any amendments
or supplements thereto to date have been delivered to the Underwriters. From and
after the date of any amendment or supplement to the Private Placement
Memorandum, the term "Private Placement Memorandum" shall mean the Private
Placement Memorandum as so amended or supplemented. The Private Placement
Memorandum, as of its date, and any amendment thereof or supplement thereto, as
of their respective dates, and at all times up to and including the Closing
Date, does not and will not, as of such dates and at such times, contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that each of CPS and the Company
makes no representations or warranties as to (i) the information contained in or
omitted from the Private Placement Memorandum (or any amendment or supplement
thereto) in reliance upon and in conformity with information specified in
Section 9(b) furnished in writing to the Company by or on behalf of any
Underwriter specifically for inclusion in the Private Placement Memorandum (or
any supplement or amendment thereto) or (ii) the information regarding the
Insurer set forth under the heading "THE INSURER" in or incorporated by
reference in the Preliminary Final Prospectus and the Final Prospectus (which
information referred to in (ii) above the Underwriters acknowledge has not been
included in the Private Placement Memorandum).
(e) 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 qualify, taken in the aggregate, would have a material adverse effect on
it.
(f) Samco Acceptance Corp. ("Samco") is a corporation duly organized,
validly existing and in good standing under the laws of Delaware 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 failure to so qualify,
taken in the aggregate, would have a material adverse affect on it.
(g) Since the respective dates as of which information is given in the
Registration Statement and the Final Prospectus or in the Private Placement
Memorandum, 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, CPS or Samco or the Company's or
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CPS's or Samco's ability to perform its obligations under this Agreement, the
Indenture, the Trust Agreement or the Sale 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 or in the Private Placement Memorandum.
(h) Except for the registration of the Class A Notes 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 Notes 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 Notes or the consummation of the other transactions contemplated by this
Agreement or the Sale 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.
(i) Assuming that (i) the Underwriters' representations and warranties
in Section 3 are true, (ii) the representations and agreements of each
Accredited --------- Investor in the form of the letter set forth in Exhibit B-1
to the Private Placement Memorandum are true and will be complied with, (iii)
the Class B Notes are offered and sold in the manner contemplated in this
Agreement and in the Private Placement Memorandum and (iv) each Purchaser of
Class B Notes is an Eligible Purchaser (as defined in Section 3(b)), the Class B
Notes are not required to be registered under Section 5 of the Securities Act in
connection with the offer, issuance, sale and delivery thereof as contemplated
by the Private Placement Memorandum and this Agreement.
(j) None of the Seller, CPS, or anyone authorized to act on their
behalf has offered, transferred, pledged, sold or otherwise disposed of any
Class B Note, any interest in any Class B Note, or any other security similar to
the Class B Notes of the Seller or CPS or of any entity organized or originated
by the Seller or CPS to, or solicited any offer to buy or accept a transfer,
pledge or other disposition of any Class B Note, any interest in any Class B
Note or any such other similar security from, or otherwise approached or
negotiated with respect to any Class B Note, any interest in any Class B Note or
any such other similar security with, any person in any manner, or made any
general solicitation by means of general advertising or in any other manner or
taken any other action, that would constitute a distribution of the Class B
Notes under the Securities Act of 1933, as amended (the "Securities Act"), or
that would render the offer or sale of any Class B Note by the Underwriters a
violation of the Securities Act or any state securities law, or require
registration or qualification pursuant thereto, or would require qualification
of
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the Indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), or require registration under the Investment Company Act of
1940, as amended (the "Investment Company Act"), nor will the Seller or CPS act,
nor has the Seller or CPS authorized, nor will the Seller or CPS authorize, any
person to act, in such manner with respect to any Class B Note.
(k) The Commission has not issued an order preventing or suspending the
use of any Prospectus relating to the proposed offering of the Notes, 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.
(l) The documents (other than the financial statements of the Insurer,
as to which no representation is made by CPS or the Company) which are
incorporated by reference in the Registration Statement, the Final Prospectus
and the Private Placement Memorandum 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.
(m) Each of the Company, CPS and Samco 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, CPS and Samco 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, CPS's
or Samco's business with Cuba or with any person or affiliate located in Cuba
changes in any material way, each of the Company, CPS and Samco, as the case may
be, will provide the Department notice of such business or change, as
appropriate, in a form acceptable to the Department.
(n) All representations and warranties of the Company and CPS and Samco
contained in each of the Basic Documents, including this Agreement, will be true
and correct in all material respects when delivered and as of the Closing
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Date and are hereby incorporated by reference as if each such representation and
warranty were specifically made herein.
(o) Each of the Company and CPS and Samco has full power and authority
(corporate and other) to enter into and perform its obligations under this
Agreement, the Certificate Purchase Agreement, the Indenture, the Trust
Agreement, the Sale and Servicing Agreement, the CPS Purchase Agreement, the
Samco 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.
(p) On or before the Closing Date, the direction by the Company to the
Trustee to authenticate the Notes will have been duly authorized by the Company,
the Notes will have been duly executed and delivered by the Company and, when
authenticated by the Trustee in accordance with the Indenture and delivered and
paid for pursuant to this Agreement, will be duly issued and will entitle the
holder thereof to the benefits and security afforded by the Indenture, 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).
(q) This Agreement and each Basic Document to which the Company or CPS
or Samco is a party has been duly authorized, executed and delivered by each of
the Company and CPS and Samco, as applicable, and constitutes a valid and
binding agreement of each of the Company and CPS and Samco, as applicable,
enforceable against the Company and CPS and Samco 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.
(r) None of the Company, CPS or Samco is in breach or violation of its
Articles of Incorporation or Charter, as applicable, 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
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Company or CPS or Samco to perform its obligations under any of the Basic
Documents or the Notes.
(s) The issuance and delivery of the Notes, the consummation of any
other of the transactions contemplated herein or in the Indenture, the Trust
Agreement, the Sale and Servicing Agreement or in any of the other Basic
Documents or the fulfillment of the terms of this Agreement, the Indenture, the
Trust Agreement, or the Sale and Servicing Agreement or any of the other Basic
Documents, subject to the registration of the Class A Notes 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 Notes 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 Charter, as applicable, or By-Laws of the
Company or CPS or Samco, any statute, order or regulation applicable to the
Company or CPS or Samco of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Company or CPS or Samco 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 or Samco (other than in favor of the Trustee, the Trustee
or as otherwise permitted under the Indenture or the Sale 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 or Samco
is a party or by which the Company or CPS or Samco may be bound or to which any
of the property or assets of the Company or CPS or Samco 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
Samco or materially adverse to the transactions contemplated by this Agreement
or the Basic Documents.
(t) 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 Indenture, the Trust
Agreement, the Sale and Servicing Agreement, the other Basic Documents and the
Notes have been or will have been paid at or prior to the Closing Date.
(u) The Receivables are chattel paper as defined in the Uniform
Commercial Code as in effect in the State of California.
(v) Under generally accepted accounting principles, CPS will report its
transfer of the CPS Receivables to the Company pursuant to the CPS Purchase
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Agreement as a sale of the CPS Receivables, Samco will report its transfer of
the Samco Receivables to the Company pursuant to the Samco Purchase Agreement as
a sale of the Samco Receivables and the Company will report its transfer of the
Receivables to the Trustee pursuant to the Sale 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
CPS Purchase Agreement and the Samco 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 with
Statement No. 125 of the Financial Accounting Standards Board (June 1996).
(w) Pursuant to the CPS Purchase Agreement and the Samco Purchase
Agreement, CPS and Samco are 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 Property"), and, immediately
prior to the transfer of any Receivables 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 Property. The assignment of the
Receivables and the other Trust Property, including all the proceeds thereof, to
the Trust pursuant to the Sale 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.
(x) Immediately prior to the transfer of any Receivables to the Trust,
the Company's interest in such Receivables and the proceeds thereof shall have
been perfected, UCC-1 financing statements (the "Financing Statements")
evidencing (i) the transfer of the applicable CPS Receivables to the Seller
shall have been filed in the Office of the Secretary of State of the State of
California, (ii) the transfer of the applicable Samco Receivables to the Seller
shall have been filed in the Office of the Secretary of State of the State of
Texas, (iii) the transfer of the applicable Receivables to the Trust shall have
been filed in the Office of the Secretary of State of the State of Delaware, and
(iv) the pledge of the applicable Receivables by the Trust to the Trustee and
there shall be no unreleased statements affecting the Receivables filed in any
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
interest of the Trust in the Receivables, the other Trust Property 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 Sale and Servicing
Agreement and the transactions contemplated thereby constitute a grant by the
Company to the Trust of a valid security interest in the
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Receivables, the other Trust Property 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
offices of the Secretaries of State of the States of California, Delaware and
Texas referred to above and the execution and delivery of the Sale 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.
(y) The Indenture is not required to be qualified under the Trust
Indenture Act.
(z) None of the Company, CPS, Samco or the Trust is required to be
registered as an "investment company" under the Investment Company Act.
2. PURCHASE, SALE AND DELIVERY OF THE NOTES.
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 Notes
set forth opposite such Underwriter's name in Schedule I hereto, at the purchase
price specified in Schedule I with respect to each Class of Notes.
The Company will deliver against payment of the purchase price (i) the
Class A Notes in the form of one or more permanent global Notes in definitive
form (the "Global Notes") deposited with the Trustee as custodian for The
Depository Trust Company ("DTC") and registered in the name of Cede & Co., as
nominee for DTC and (ii) the Class B Certificates in definitive form registered
in the name of such party as the Underwriters shall direct. Interests in any
Global Notes will be held only in book-entry form through DTC except in the
limited circumstances described in the Final Prospectus. Payment for the Notes
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 August 19, 1997, or at such other time as is mutually agreed
(such time being herein referred to as the "Closing Date") against delivery of
the Global Notes and Class B Notes representing all of the Notes. The Notes will
be made available for inspection 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.
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3. OFFERING BY THE UNDERWRITERS.
(a) The Company and CPS are advised by the Underwriters that they
propose to make a public offering of the Class A Notes, as set forth in the
Final Prospectus, from time to time as and when the Underwriters deem advisable
after the Registration Statement becomes effective. The Company agrees that the
Underwriters may, but are not obligated to, make a market in the Class A Notes
and that any such market making by an Underwriter may be discontinued at any
time in the sole discretion of such Underwriter.
(b) The Company and CPS are advised by the Underwriters that one or
both of the Underwriters will make offers of the Class B Notes on the terms set
forth in the Private Placement Memorandum, as amended or supplemented, solely to
(i) persons whom the Underwriters reasonably believe to be "qualified
institutional buyers" as defined in Rule 144A under the 1933 Act (each, a
"QIB"), and/or (ii) a limited number of other institutional "accredited
investors", as defined in Rule 501(a)(1), (2), (3) or (7) under the 1933 Act,
that make certain representations and agreements to the Underwriters and the
Seller (each, and "Accredited Investor" and, together with the QIBs, the
"Eligible Purchasers");
(c) Each Underwriter purchasing Class B Notes severally represents and
warrants to the Company and CPS that it is an "accredited investor" as defined
in Rule 501(a)(1) under the Securities Act and a Qualified Institutional Buyer
within the meaning of Rule 144A of the Securities Act.
(d) Each Underwriter purchasing Class B Notes severally acknowledges
that (i) the Class B Notes have not been and will not be registered under the
Securities Act or any state securities laws and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S. persons
except pursuant to an exemption from the registration requirements of the
Securities Act and (ii) upon original issuance thereof, and until such time as
the same is no longer required under the applicable requirements of the 1933
Act, the Class B Notes (and all notes issued in exchange therefore or in
substitution thereof) shall bear the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES THAT THIS SECURITY MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON WHOM THE
TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT,
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PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, AND SUBJECT TO
THE RECEIPT BY THE TRUSTEE AND THE 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 2.4 OF
THE INDENTURE.
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.
(e) Each Underwriter purchasing Class B Notes severally agrees that it
and each of its affiliates will not offer or sell the Class B Notes by means of
any form of general solicitation or general advertising, within the meaning of
Rule 502(c) under the Securities Act, including, but not limited to (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, or
(ii) any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
(f) Each Underwriter purchasing Class B Notes acknowledges that none of
the Trust, the Seller or CPS, nor any person representing the Trust, the Seller
or CPS, has made any representation with respect to the Trust, the Seller, CPS
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or the offering or sale of the Class B Notes, other than the information
contained in the Private Placement Memorandum, which has been delivered to it
and upon which it is relying in making its investment decision with respect to
the Class B Notes. Each Under writer purchasing Class B Notes affirms that it
has access to such financial and other information concerning the Trust, the
Seller, CPS and the Class B Notes as it has deemed necessary in connection with
its decision to purchase Class B Notes, including an opportunity to ask
questions of and request information from the Trust, the Seller and CPS.
4. COVENANTS OF THE COMPANY AND CPS.
The Company, and CPS (if so stated), 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 Notes the Company will not
file any amendment of the Registration Statement or amendment 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 Notes,
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 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 Notes
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
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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
Notes 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, or upon the order of, the
Underwriters as many copies of the Private Placement Memorandum as the
Underwriters shall 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 Class A Notes 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 Notes, 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 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
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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) Until such time as all of the Class B Notes have been sold and
issued, if any event shall occur as a result of which it is necessary, in the
opinion of the Underwriters, to amend or supplement the Private Placement
Memorandum in order to correct any untrue statement of a material fact or to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, the
Seller shall forthwith prepare and furnish, without charge, to the Underwriters
a reasonable number of copies of an amendment of, or supplement to, the Private
Placement Memorandum (in form and substance satisfactory to the Underwriters),
so that, as so amended or supplemented, the Private Placement Memorandum will
not contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Until such time as all
of the Class B Notes have been sold and issued, the Seller will not at any time
amend or supplement the Private Placement Memorandum (i) prior to having
furnished the Underwriters with a copy of the proposed form of the amendment or
supplement and giving the Underwriters and its counsel a reasonable opportunity
to review the same or (ii) in a manner to which the Underwriters or their
counsel shall reasonably object. The Seller or CPS shall give prompt written
notice to the Underwriters of any event occurring on or prior to the Closing
Date, requiring an amendment of, or a supplement to, the Private Placement
Memorandum under this paragraph.
(f) The Company will cooperate with the Underwriters in endeavoring to
qualify the Notes 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 Notes, except that the Company will
not be obligated to qualify the Notes 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 Notes for purchase
by institutional investors. The Company will, from time to time, prepare and
file
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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 Notes.
(g) The Company shall not invest, or otherwise use the proceeds
received by the Company from its sale of the Notes in such a manner as would
require the Company, CPS or the Trust to register as an investment company under
the 1940 Act.
(h) Until the retirement of the Notes, or until such time as the
Underwriters shall cease to maintain a secondary market in the Notes, 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 Sale and Servicing Agreement, as soon
as such statements and reports are furnished to the Trustee.
(i) The Company, CPS and Samco 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, CPS or Samco possesses 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 Notes shall be reasonably satisfactory in form and substance to each
Underwriter.
(j) The Company will cause the Trust to make generally available to
Class A Noteholders 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).
(k) So long as any of the Notes are outstanding, the Company will
furnish to the Underwriters copies of all reports or other communications
(financial or otherwise) furnished or made available to Noteholders, 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
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1934, as amended, and (ii) such additional information concerning the business
and financial condition of the Company and CPS as the Underwriter may from time
to time reasonably request.
(l) The Company shall cause its affiliates and any person acting on its
behalf not to, directly or indirectly, make offers or sales of any security
(including, but not limited to the Notes and the Certificates), solicit offers
to buy or but any security (including, but not limited to the Notes and the
Certificates), under circumstances that would require the registration of the
Class B Notes under the 1933 Act, or to do or cause to be done any other action
that would require such registration.
(m) For so long as any of the Class B Notes are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, (1) the Seller and CPS will provide or cause to be provided to
any holder of Class B Notes and any prospective Underwriter of Class B Notes
designated by a holder of such Class B Notes, upon the reasonable request of
such holder or prospective Underwriter, the information required to be provided
to such holder or prospective Underwriter by Rule 144A(d)(4) under the
Securities Act; and (2) the Seller and CPS shall take such actions as are
necessary, in the opinion of counsel, to ensure that the safe harbor exemption
from the registration requirements of the Securities Act under Rule 144A is and
will be available for resales of the Class B Notes conducted in accordance with
Rule 144A.
(n) On or before the Closing Date, the Company and CPS and Samco shall
cause the respective computer records of the Company and CPS and Samco 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 nor
Samco shall take any action inconsistent with the Trust's ownership of such
Receivables, other than as expressly permitted by the Sale and Servicing
Agreement or any other Basic Document.
(o) To the extent, if any, that the ratings provided with respect to
the Notes by either of the Rating Agencies is conditional upon the furnishing of
documents or the taking of any other actions by the Company, CPS or Samco, CPS
shall, or shall cause the Company or Samco to, furnish such documents and take
any such other actions.
(p) On the Closing Date, the Company and CPS shall cause the Insurer to
issue the Policy to the Trustee for the benefit of the holders of the Class A
Notes in form and substance satisfactory to each Underwriter.
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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 and CPS 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 Notes 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 Mayer, Brown
& Platt; (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, the Private Placement Memorandum, this
Agreement, the listing application in respect of the Class A Notes, 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
Notes; and (vi) the fees and expenses of the Trustee and the Owner Trustee,
including the fees and disbursements of counsel for the Trustee and counsel for
the Owner Trustee, in connection with the Notes, the Sale and Servicing
Agreement and the other Basic Documents to which the Trustee or the Owner
Trustee, as applicable, is a party and the expenses, including the fees and
disbursements of counsel for the Underwriters, incurred in connection with the
qualification of the Notes 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 Notes or in
contemplation of performing their obligations hereunder upon receipt of a
written request therefor; but the Company shall 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 Notes. 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
Notes 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, CPS
and Samco contained herein, to the
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performance by the Company, CPS and Samco of their respective 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
Notes, 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 Notes 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 Notes.
(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 August 15, 1997, and as of the Closing Date, respectively, of KPMG Peat
Marwick LLP, Certified Public Accountants, substantially in the form of the
drafts to which each of the Underwriters has previously agreed and 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 Notes 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
-21-
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 market the Notes on the terms and
in the manner set forth in the Final Prospectus.
(d) The Company, CPS and Samco 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, the Notes 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 Notes, a conformed copy thereof. The Basic Documents,
the Notes and the Certificates shall be substantially in the forms heretofore
provided to each Underwriter.
(f) Each Underwriter shall have received evidence satisfactory to such
Underwriter that the Notes have been rated "Aaa" by Moody's and "AAA" by
Standard & Poor's.
(g) Each Underwriter shall have received from Mayer, Brown & Platt,
special counsel for CPS, Samco and the Company, opinions dated the Closing Date,
addressed to such Underwriter, in a form satisfactory to such Underwriter.
(h) 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.
(i) 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 Notes and such other related matters as such Underwriter
shall require and the Company or CPS shall have furnished or caused to be
-22-
furnished to such counsel such documents as they may reasonably request for the
purpose of enabling them to pass upon such matters.
(j) 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.
(k) Each Underwriter shall have received from counsel to the Owner
Trustee, 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.
(l) Each Underwriter shall have received from special Delaware counsel
to the Trust, 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.
(m) Each Underwriter shall have received from counsel to the 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.
(n) 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 Insurer relating to, among other things, the interest of the Trustee in
the Receivables and the other Trust Property 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 Notes. Any such opinions shall be
addressed to each Underwriter or shall indicate that such Underwriter may rely
on such opinions as though they were addressed to such Underwriter, and shall be
dated the Closing Date.
(o) At the Closing Date, the Company, CPS and Samco shall have
furnished to each Underwriter a certificate, dated the Closing Date, of the
President, the Chief Financial Officer or any Vice President of the Company, CPS
or Samco, as the case may be, in which each such officer shall state that: (i)
the representations and warranties of the Company, CPS or Samco, as applicable,
in this Agreement are true and correct on and as of the Closing Date; (ii) the
Company, CPS or Samco, 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, CPS
-23-
or Samco, as applicable, in each of the Basic Documents are true and correct as
of the dates specified therein; (iv) with respect to the certificate delivered
by CPS, 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) with respect to the
certificates delivered by CPS and the Company, he or she has carefully examined
the Registration Statement, the Final Prospectus and the Private Placement
Memorandum and, in his or her opinion, as of the Effective Date of the
Registration Statement, the statements contained in the Registration Statement
and the statements contained in the Private Placement Memorandum were true and
correct, and as of the Closing Date the Registration Statement, the Final
Prospectus and the Private Placement Memorandum do not contain any untrue
statement of a material fact or omit to state a material fact with respect to
the Company, CPS or Samco 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, CPS or Samco which should have been set forth in a
supplement to or an amendment of the Final Prospectus or the Private Placement
Memorandum which has not been so set forth in such supplement or amendment; and
(vi) with respect to the certificate delivered by the Company and CPS,
subsequent to the respective dates as of which information is given in the
Registration Statement, the Final Prospectus and the Private Placement
Memorandum, there has been no material adverse change, or any development with
respect to the Company, CPS or Samco 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, CPS or Samco except as contemplated by
the Final Prospectus and the Private Placement Memorandum or as described in
such certificate.
(p) Each Underwriter shall have received evidence satisfactory to such
Underwriter that the Insurer shall have issued the Policy to the Trustee for the
benefit of the Class A Noteholders in form and substance satisfactory to such
Underwriter.
(q) Each Underwriter shall have received evidence satisfactory to it
that, on or before the Closing Date, the Financing Statements have been filed in
(i) the office of the Secretary of State of California reflecting the assignment
of the interest of CPS in the CPS Receivables included in the Initial
Receivables and the related other Trust Property and the proceeds thereof to the
Company, (ii) the office of the Secretary of State of Texas reflecting the
assignment of the interest of Samco in the Samco Receivables included in the
Initial Receivables and the related other Trust Property and the proceeds
thereof to the Company, (iii) the office of the Secretary of State of California
reflecting
-24-
the transfer of the interest of the Company in the Initial Receivables and the
related other Trust Property and the proceeds thereof to the Trust and (iv) the
office of the Secretary of State of Delaware reflecting the transfer of the
interest of the Trust in the Initial Receivables and the related other Trust
Property and the proceeds thereof to the Trustee.
(r) All proceedings in connection with the transactions contemplated by
this Agreement, the Sale 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.
(s) 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
Notes 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 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
-25-
fact contained in the Registration Statement, the Base Prospectus, any
Preliminary Final Prospectus, the Final Prospectus, the Private Placement
Memorandum, or any amendment or supplement thereto (other than information
contained therein under the heading "the 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 of a written request therefor 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 Notes, whether or not such Underwriter or such person is a party
to any action or proceeding; 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, the Private Placement Memorandum, 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; provided, further,
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 Computational Materials (as defined below), except to the extent
expressly provided in (b) below. 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, the
Private Placement Memorandum, 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 or the Private
Placement Memorandum, as applicable (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 or Private
Placement Memorandum, as applicable, as so amended or supplemented, was required
under the 1933 Act to be delivered to such person.
-26-
(a) 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, the Private
Placement Memorandum, 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, the Private Placement
Memorandum, or any amendment or supplement thereto. This indemnity agreement
will be in addition to any liability which such Underwriter may otherwise have.
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 Final Prospectus and under the caption "Underwriting" in
the Final Prospectus.
(b) (i) 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
-27-
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
Materials" means information provided by an Underwriter to a prospective
purchaser of Notes, which information is not part of the Prospectus. For
purposes hereof, the term "Company Provided Information" means the information
contained in the data tape delivered by CPS to the Underwriters on or about
August 1, 1997 containing information with respect to the Receivables as of the
Cutoff Date.
(ii) 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 Notes.
(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 indemnity or 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
-28-
presentation of an invoice) 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
indemnified party has reasonably concluded (based on advice of counsel) that
there may be legal defenses available to it or other indemnified parties that
are different from or in addition to those available to the indemnifying party,
(iii) 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 (iv) the indemnifying party shall
have failed to assume the defense and employ counsel acceptable to the
indemnified party within a 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
Notes. 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
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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 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 Black Diamond Securities, LLC,
on the one hand, and Paine Webber Incorporated, 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 Notes 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, the Private
Placement Memorandum, 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
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served upon it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join it as an
additional defendant in any such proceeding in which such other contributing
party is a party.
(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
obligations of the Company and CPS pursuant to Section 6, 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 Notes 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 Notes 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, CPS or Samco), then PaineWebber 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 Notes which the defaulting
Underwriter failed to purchase. If during such 36 hours PaineWebber Incorporated
shall not have procured one or more additional Underwriters to purchase the
Notes agreed to be purchased by the defaulting Underwriter, then (a) if the
aggregate amount of Notes with respect to which such default shall occur does
not exceed 10% of the Notes covered hereby, PaineWebber Incorporated shall be
obligated to purchase the Notes which Black Diamond Securities, LLC failed to
purchase, or (b) if the aggregate principal balance of Notes with respect to
which such default shall occur exceeds 10% of the principal balance of Notes
covered hereby, the Company or (provided PaineWebber Incorporated has not
defaulted) PaineWebber Incorporated 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 PaineWebber Incorporated 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
-31-
changes in the Registration Statement or in the Final Prospectus or Private
Placement Memorandum 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:
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Attention: Barbara Dawson
Fax: (212) 713-7999
with a copy to:
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Attention: John Fearey
Fax: (212) 713-1374
and
Black Diamond Securities, LLC
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 92618
Attention: Charles Bradley, Jr.
Facsimile No.: (714) 753-6805;
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or, if sent to CPS at the following address:
Consumer Portfolio Services, Inc.
2 Ada
Irvine, California 92618
Attention: Charles Bradley, Jr.
Facsimile No.: (714) 753-6805
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
CPS, Samco or the Company, 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 Notes or to enforce contracts for
the sale of the Notes, (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
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(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, Samco and the Company and their respective successors,
executors, administrators, heirs and assigns, and the respective affiliates,
officers, directors, employees, agents and controlling persons referred to
herein, and no other person will have any right or obligation hereunder. No
purchaser of any of the Notes from any Underwriter shall be deemed a successor
or assign merely because of such purchase.
14. MISCELLANEOUS.
The reimbursement, indemnification and contribution agreements
contained in this Agreement, the obligations of the Company and CPS under
Section 6 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 Notes 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 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, Samco
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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:
SAMCO ACCEPTANCE CORP.
By:
Name:
Title:
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written:
PAINEWEBBER INCORPORATED
By:
Name:
Title:
BLACK DIAMOND SECURITIES, LLC
By:
Name:
Title:
SCHEDULE I
Schedule of Underwriters
Portion of Initial Principal
Amount of the Notes to be Purchase
Underwriter Purchased Price
PaineWebber Incorporated Class A-1: $80,775,275 $80,531,762
Class A-2: $61,624,725 $61,437,355
Class B: $3,750,000 $ 3,674,964
Black Diamond Securities, LLC Class A-1: $56,725 $ 56,554
Class A-2: $43,275 $ 43,143
Class B: $0 $ 0
Total $150,000,000
Exhibit 4.1
Trust Agreement
[EXECUTION COPY]
AMENDED AND RESTATED TRUST AGREEMENT
Dated as of August 19, 1997
between
CPS RECEIVABLES CORP., as Depositor
and
BANKERS TRUST (DELAWARE), as
Owner Trustee
TABLE OF CONTENTS
Page
ARTICLE I.
Definitions
SECTION 1.1. Capitalized Terms.............................................1
SECTION 1.2. Other Definitional Provisions.................................4
ARTICLE II.
Organization
SECTION 2.1. Name..........................................................5
SECTION 2.2. Office........................................................5
SECTION 2.3. Purposes and Powers...........................................5
SECTION 2.4. Appointment of Owner Trustee..................................6
SECTION 2.5. Initial Capital Contribution of Trust Estate..................6
SECTION 2.6. Declaration of Trust..........................................6
SECTION 2.7. Liability of Depositor as Depositor...........................7
SECTION 2.8. Title to Trust Property.......................................7
SECTION 2.9. Situs of Trust................................................8
SECTION 2.10. Representations and Warranties of the Depositor...............8
SECTION 2.11. Federal Income Tax Allocations................................9
SECTION 2.12. Covenants of the Depositor...................................10
SECTION 2.13. Covenants of the Certificateholders..........................12
ARTICLE III.
Certificates and Transfer of Interests
SECTION 3.1. Initial Ownership.............................................12
SECTION 3.2. The Certificates..............................................13
SECTION 3.3. Authentication of Certificates................................13
SECTION 3.4. Registration of Transfer and Exchange of Certificates.........13
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Certificates.............16
SECTION 3.6. Persons Deemed Certificateholders.............................17
SECTION 3.7. Access to List of Certificateholders' Names and Addresses.....17
SECTION 3.8. Maintenance of Office or Agency...............................17
SECTION 3.9. Disposition by the Depositor..................................18
SECTION 3.10. ERISA Restrictions............................................18
ARTICLE IV.
Voting Rights and Other Actions
SECTION 4.1. Prior Notice to Holders with Respect to Certain Matters.......18
SECTION 4.2. Action by Certificateholders with Respect to Certain Matters..19
SECTION 4.3. Action by Certificateholders with Respect to Bankruptcy.......19
SECTION 4.4. Restrictions on Certificateholders' Power.....................19
SECTION 4.5. Majority Control..............................................20
SECTION 4.6. Rights of Insurer.............................................20
ARTICLE V.
Certain Duties
SECTION 5.1. Accounting and Records to the Noteholders,
Certificateholders, the Internal Revenue Service
and Others.................................................20
SECTION 5.2. Signature on Returns; Tax Matters Partner....................21
SECTION 5.3. Underwriting Agreement.......................................21
SECTION 5.4. Trust Accounts...............................................21
SECTION 5.5. Application of Funds in Certificate Distribution Account.....22
ARTICLE VI.
Authority and Duties of Owner Trustee
SECTION 6.1. General Authority.............................................23
SECTION 6.2. General Duties................................................24
SECTION 6.3. Action upon Instruction.......................................24
SECTION 6.4. No Duties Except as Specified in this Agreement or in
Instructions................................................25
SECTION 6.5. No Action Except under Basic Documents or Instructions........25
SECTION 6.6. Restrictions .................................................25
ARTICLE VII.
Concerning the Owner Trustee
SECTION 7.1. Acceptance of Trusts and Duties...............................26
SECTION 7.2. Furnishing of Documents.......................................27
SECTION 7.3. Representations and Warranties................................27
SECTION 7.4. Reliance; Advice of Counsel...................................28
SECTION 7.5. Not Acting in Individual Capacity.............................28
SECTION 7.6. Owner Trustee Not Liable for Certificates or Receivables......28
SECTION 7.7. Owner Trustee May Own Certificates and Notes..................29
SECTION 7.8. Payments from Owner Trust Estate..............................29
SECTION 7.9. Doing Business in other Jurisdictions.........................29
ARTICLE VIII.
Compensation of Owner Trustee
SECTION 8.1. Owner Trustee's Fees and Expenses.............................30
SECTION 8.2. Indemnification...............................................30
SECTION 8.3. Payments to the Owner Trustee.................................30
SECTION 8.4. Non-recourse Obligations......................................30
ARTICLE IX.
Termination of Trust Agreement
SECTION 9.1. Termination of Trust Agreement................................31
SECTION 9.2. Dissolution upon Bankruptcy of the Depositor..................32
ARTICLE X.
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.1. Eligibility Requirements for Owner Trustee...................33
SECTION 10.2. Resignation or Removal of Owner Trustee......................33
SECTION 10.3. Successor Owner Trustee......................................34
SECTION 10.4. Merger or Consolidation of Owner Trustee.....................34
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee................34
Page
ARTICLE XI.
Miscellaneous
SECTION 11.1. Supplements and Amendments...................................36
SECTION 11.2. No Legal Title to Owner Trust Estate in Certificateholders...37
SECTION 11.3. Limitations on Rights of Others..............................37
SECTION 11.4. Notices .................................................37
SECTION 11.5. Severability.................................................38
SECTION 11.6. Separate Counterparts........................................38
SECTION 11.7. Assignments; Insurer.........................................38
SECTION 11.8. No Petition .................................................38
SECTION 11.9. No Recourse .................................................38
SECTION 11.10. Headings ..................................................39
SECTION 11.11. GOVERNING LAW................................................39
SECTION 11.12. Servicer ..................................................39
ARTICLE XII.
Amendment and Restatement
SECTION 12.1. Amendment and Restatement....................................39
EXHIBITS
Exhibit A Form of Certificate
Exhibit B Form of Certificate of Trust
Exhibit C Form of Transferee Certificate
AMENDED AND RESTATED TRUST AGREEMENT dated as of August 19, 1997
between CPS RECEIVABLES CORP., a California corporation (the "Depositor")
BANKERS TRUST (DELAWARE), a Delaware banking corporation as Owner Trustee.
W I T N E S S E T H
WHEREAS , Depositor and Owner Trustee are parties to that
certain trust agreement dated as of August 14, 1997 (the "Original Agreement")
and Depositor and Owner Trustee desire to amend and restate the Original
Agreement in its entirety.
NOW THEREFORE, in consideration of the foregoing, other good
and valuable considerations, and the mutual terms and covenants contained
herein, the parties hereto agree as follows:
ARTICLE I.
Definitions
SECTION 1.1. Capitalized Terms. For all purposes of this Agreement, the
following terms shall have the meanings set forth below:
"Agreement" shall mean the Original Agreement as amended and restated
by this Amended and Restated Trust Agreement, as the same may be further amended
or supplemented from time to time.
"Basic Documents" shall mean this Agreement, the Certificate of Trust,
the Sale and Servicing Agreement, the Spread Account Agreement, the Spread
Account Agreement Supplement, the Insurance Agreement, the Indenture and the
other documents and certificates delivered in connection therewith.
"Benefit Plan" shall have the meaning assigned to such term in Section
3.10.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code ss. 3801 et. seq. as the same may be amended from
time to time.
"Certificate" means a trust certificate evidencing the beneficial
interest of a Certificateholder in the Trust, substantially in the form of
Exhibit A attached hereto.
"Certificate Balance" means, as of any date of determination, the
Initial Certificate Balance reduced by all payments theretofore made on account
of principal of the Certificates.
"Certificate Distribution Account" shall mean the account designated as
such, established and maintained pursuant to Section 5.4.
"Certificate of Trust" shall mean the Certificate of Trust in the form
of Exhibit B to be filed for the Trust pursuant to Section 3810(a) of the
Business Trust Statute.
"Certificate Prepayment Amount" shall have the meaning assigned to such
term in the Sale and Servicing Agreement.
"Certificate Register" and "Certificate Registrar" shall mean the
register mentioned and the registrar appointed pursuant to Section 3.4.
"Certificateholders' Interest Carryover Shortfall" shall have the
meaning assigned to such term in the Sale and Servicing Agreement.
"Certificateholders' Interest Distributable Amount" shall have the
meaning assigned to such term in the Sale and Servicing Agreement.
"Certificateholders' Monthly Interest Distributable Amount" shall have
the meaning assigned to such term in the Sale and Servicing Agreement.
"Certificateholders' Monthly Principal Distributable Amount" shall have
the meaning assigned to such term in the Sale and Servicing Agreement.
"Certificateholders' Percentage" shall have the meaning assigned to
such term in the Sale and Servicing Agreement.
"Certificateholders' Principal Carryover Shortfall" shall have the
meaning assigned to such term in the Sale and Servicing Agreement.
"Certificateholders' Principal Distributable Amount" shall have the
meaning assigned to such term in the Sale and Servicing Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the Owner Trustee,
the principal corporate trust office of the Owner Trustee located at 1011 Centre
Road, Suite 200, Wilmington, Delaware 19805-1266 with a copy of all notices and
other documents to Bankers Trust Company, 4 Albany Street, 10th Floor, New York,
New York 10006, Attention: Corporate Trust and Agency Group, or at such other
address as the Owner Trustee may designate by notice to the Certificateholders
and the Depositor, or the principal corporate trust office of any successor
Owner Trustee (the address of which the successor owner trustee will notify the
Certificateholders and the Depositor).
"Demand Note" shall have the meaning assigned to such term in Section
2.10(h).
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"Depositor" shall mean CPS Receivables Corp. in its capacity as
Depositor hereunder.
"ERISA" shall have the meaning assigned to such term in Section 3.10.
"Expenses" shall have the meaning assigned to such term in Section 8.2.
"Holder" or "Certificateholder" shall mean the Person in whose name a
Certificate is registered on the Certificate Register.
"Indemnified Parties" shall have the meaning assigned to such term in
Section 8.2.
"Indenture" shall mean the Indenture dated as of August 1, 1997, among
the Issuer and Norwest Bank Minnesota, National Association, as Trustee, as the
same may be amended and supplemented from time to time.
"Initial Certificate Balance" means $3,750,000.
"Insurer" shall mean Financial Security Assurance Inc., or its
successor in interest.
"Minimum Net Worth" means at any time of determination, and with
respect to the Depositor, net worth equal to 10 percent of the sum of (i)
amounts paid to the Trust in respect of the issuance of Certificates and (ii)
amounts contributed to the capital of the Trust (including by sale of property
to the Trust for less than fair market value consideration). For the purpose of
the determination of Minimum Net Worth: (i) any Demand Note issued to the
Depositor shall be valued at par, (ii) assets subject to a lien shall be valued
at zero, (iii) Certificates or any interests in any entity taxable as a
partnership for federal income tax purposes shall be valued at zero, (iv)
investments shall be valued at their respective purchase prices plus accrued
interest, and (v) demand notes of CPS issued as contributions to the Depositor
in connection with its status as a Depositor of any other partnership formed
pursuant to trust agreements substantially similar to this Agreement shall be
valued at an amount equal to the excess, if any, of (a) the aggregate current
amount of all such demand notes over (b) 10% of the aggregate Certificate
Balance (as such terms are defined in the related trust agreement) of all
certificates issued by such partnerships, as of such date of determination.
"Original Agreement" shall mean the trust agreement dated as of August
14, 1997 between the Depositor and the Owner Trustee.
"Owner Trust Estate" shall mean all right, title and interest of the
Trust in and to the property and rights assigned to the Trust pursuant to
Article II of the Sale and Servicing Agreement, all funds on deposit from time
to time in the Trust Accounts and all other property of the Trust from time to
time, including any rights of the Owner Trustee and the Trust pursuant to the
Sale and Servicing Agreement and the Spread Account Agreement.
3
"Owner Trustee" shall mean Bankers Trust (Delaware), a Delaware banking
corporation, not in its individual capacity but solely as owner trustee under
this Agreement, and any successor Owner Trustee hereunder.
"Pass-Through Rate" shall mean 10.65% per annum.
"Paying Agent" shall mean Bankers Trust Company.
"Principal Certificates" means Certificates denominated in dollars.
"Record Date" shall mean with respect to any Payment Date, the close of
business on the 10th day of the calendar month in which such Payment Date
occurs.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement among the Trust, the Depositor, Consumer Portfolio Services, Inc. and
the Trustee, dated as of August 1, 1997 as the same may be amended and
supplemented from time to time.
"Secretary of State" shall mean the Secretary of State of the State of
Delaware.
"Spread Account" shall mean the Spread Account established and
maintained pursuant to the Spread Account Agreement.
"Spread Account Agreement" shall mean the Spread Account Agreement,
dated as of August 1, 1997, among the Depositor, the Insurer, and the Trustee,
as the same may be amended, supplemented or otherwise modified in accordance
with the terms thereof.
"Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" shall mean the trust established by this Agreement.
"Trustee" means the Person acting as Trustee under the Indenture, its
successors in interest and any successor trustee under the Indenture.
SECTION 1.2. Other Definitional Provisions.
(a) Capitalized terms used herein and not otherwise defined have the
meanings assigned to them in the Sale and Servicing Agreement or, if not defined
therein, in the Spread Account Agreement or in the Indenture.
4
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles as in effect on the date of
this Agreement or any such certificate or other document, as applicable. To the
extent that the definitions of accounting terms in this Agreement or in any such
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Agreement or in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
ARTICLE II.
Organization
SECTION 2.1. Name. There is hereby formed a trust to be known as "CPS
Auto Receivables Trust 1997-3", in which name the Owner Trustee may conduct the
business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.
SECTION 2.2. Office. The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address as the
Owner Trustee may designate by written notice to the Certificateholders and the
Depositor.
SECTION 2.3. Purposes and Powers. (a) The purpose of the Trust is, and
the Trust shall have the power and authority, to engage in the following
activities:
(i) to issue the Notes pursuant to the Indenture and the
Certificates pursuant to this Agreement, and to sell the Notes and the
Certificates;
5
(ii) with the proceeds of the sale of the Notes, to fund the
Pre-Funding Account, the Interest Reserve Account and the Spread
Account and to pay the organizational, start-up and transactional
expenses of the Trust and to pay the balance to the Depositor pursuant
to the Sale and Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey
the Owner Trust Estate to the Trustee pursuant to the Indenture for the
benefit of the Insurer and the Noteholders and to hold, manage and
distribute to the Certificateholders and the Depositor pursuant to the
terms of the Sale and Servicing Agreement any portion of the Owner
Trust Estate released from the Lien of, and remitted to the Trust
pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the Basic
Documents to which it is a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish
the foregoing or are incidental thereto or connected therewith; and
(vi) subject to compliance with the Basic Documents, to engage
in such other activities as may be required in connection with the
conservation of the Owner Trust Estate and the making of distributions
to the Certificateholders and the Noteholders.
The Trust is hereby authorized to engage in the foregoing activities. The Trust
shall not engage in any activity other than in connection with the foregoing or
other than as required or authorized by the terms of this Agreement or the Basic
Documents.
SECTION 2.4. Appointment of Owner Trustee. The Depositor hereby
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein.
SECTION 2.5. Initial Capital Contribution of Trust Estate. The
Depositor hereby sells, assigns, transfers, conveys and sets over to the Owner
Trustee, as of the date hereof, the sum of $10.00. The Owner Trustee hereby
acknowledges receipt of the foregoing contribution in trust from the Depositor,
as of the date hereof, which contribution shall constitute the initial Owner
Trust Estate and shall be deposited in the Certificate Distribution Account. The
Depositor shall pay organizational expenses of the Trust as they may arise.
SECTION 2.6. Declaration of Trust. The Owner Trustee hereby declares
that it will hold the Owner Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the Certificateholders,
subject to the conditions of the Trust under the Basic Documents. It is the
intention of the parties hereto that the Trust constitute a business trust under
the Business Statute and that this Agreement constitute the governing instrument
of such business trust. It is the intention of the parties hereto that (i) so
long as the Depositor is the
6
Owner of 100 percent of the Certificates (either directly or indirectly through
wholly-owned non-corporate subsidiaries), for federal income tax purposes and to
the extent consistent with the laws of any other jurisdiction other than
California for which the characterization of the Trust as an entity is relevant,
the Trust shall be treated solely as a security device and not as a separate
entity, and (ii) if the Depositor is not the direct or indirect Owner of 100
percent of the Certificates, then for federal income tax purposes and for
purposes of the laws of any other jurisdiction other than California for which
the characterization of the Trust as an entity is relevant, and in all events
for California franchise tax purposes, the Trust shall be treated as a
partnership and not as an association (or publicly traded partnership) taxable
as a corporation. The parties agree that, unless otherwise required by
appropriate tax authorities, the Trust will file or cause to be filed annual or
other necessary returns, reports and other forms, if any, consistent with such
characterization of the Trust. Effective as of the date hereof, the Owner
Trustee shall have all rights, powers and duties set forth herein and to the
extent not inconsistent herewith, in the Business Trust Statute with respect to
accomplishing the purposes of the Trust. The Owner Trustee shall file the
Certificate of Trust with the Secretary of State.
SECTION 2.7. Liability of Depositor as Depositor. (a) The Depositor
shall pay organizational expenses of the Trust as they may arise or shall upon
the request of the Owner Trustee, promptly reimburse the Owner Trustee for any
such expenses paid by the Owner Trustee. The Depositor shall also be liable
directly to and will indemnify each injured party for all losses, claims,
damages, liabilities and expenses of the Trust (including Expenses, to the
extent not paid out of the Owner Trust Estate) to the extent that the Depositor
would be liable if the Trust were a partnership under the Delaware Revised
Uniform Limited Partnership Act in which the Depositor were a Depositor;
provided, however, that the Depositor shall not be liable for any losses
incurred by a Holder in the capacity of an investor in the Certificates or a
Noteholder in the capacity of an investor in the Notes; provided further, that
the Depositor shall not be liable to indemnify any injured party if such party
has agreed that its recourse against the Trust for any obligation or liability
of the Trust to such party shall be limited to the assets of the Trust. In
addition, any third party creditors of the Trust (other than in connection with
the obligations described in the preceding sentence for which the Depositor
shall not be liable) shall be deemed third party beneficiaries of this
paragraph. The obligations of the Depositor under this paragraph shall be
evidenced by the Certificates described in Section 3.9, which for separate
purposes of the Business Trust Statute shall be deemed to be a separate class of
Certificates from all other Certificates issued by the Trust.
(b) No Holder, other than to the extent set forth in clause (a), shall
have any personal liability for any liability or obligation of the Trust.
SECTION 2.8. Title to Trust Property. (a) Legal title to all the Owner
Trust Estate shall be vested at all times in the Trust as a separate legal
entity except where applicable law in any jurisdiction requires title to any
part of the Owner Trust Estate to be vested in a trustee or trustees, in which
case title shall be deemed to be vested in the Owner Trustee, a co-trustee
and/or a separate trustee, as the case may be.
7
(b) The Holders shall not have legal title to any part of the Trust
Property. The Holders shall be entitled to receive distributions with respect of
their undivided ownership interest therein only in accordance with Article IX.
No transfer, by operation of law or otherwise, of any right, title or interest
by any Certificateholder of its ownership interest in the Owner Trust Estate
shall operate to terminate this Agreement or the trusts hereunder or entitle any
transferee to an accounting or the transfer to it of legal title to any part of
the Trust Property.
SECTION 2.9. Situs of Trust. The Trust will be located and administered
in the State of Delaware or the State of New York. All bank accounts maintained
by the Owner Trustee on behalf of the Trust shall be located in the State of
Delaware, the State of New York or the State of Minnesota. Payments will be
received by the Trust only in Delaware, New York or Minnesota and Payments will
be made by the Trust only from Delaware, New York or Minnesota. The Trust shall
not have any employees in any state other than Delaware or New York; provided,
however, that nothing herein shall restrict or prohibit the Owner Trustee or the
Servicer or any agent of the Trust from having employees within or without the
State of Delaware and New York. The only office of the Trust will be at the
Corporate Trust Office in Delaware.
SECTION 2.10. Representations and Warranties of the Depositor. The
Depositor makes the following representations and warranties on which the Owner
Trustee relies in accepting the Owner Trust Estate in trust and issuing the
Certificates and upon which the Insurer relies in issuing the Policy.
(a) Organization and Good Standing. The Depositor is duly organized and
validly existing as a California corporation with power and authority to own its
properties and to conduct its business as such properties are currently owned
and such business is presently conducted and is proposed to be conducted
pursuant to this Agreement and the Basic Documents.
(b) Due Qualification. The Depositor is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or lease of
its property, the conduct of its business and the performance of its obligations
under this Agreement and the Basic Documents requires such qualification.
(c) Power and Authority. The Depositor has the corporate power and
authority to execute and deliver this Agreement and to carry out its terms; the
Depositor has full power and authority to sell and assign the property to be
sold and assigned to and deposited with the Trust and the Depositor has duly
authorized such sale and assignment and deposit to the Trust by all necessary
corporate action; and the execution, delivery and performance of this Agreement
has been duly authorized by the Depositor by all necessary corporate action.
(d) No Consent Required. No consent, license, approval or authorization
or registration or declaration with, any Person or with any governmental
authority, bureau or agency is required
8
in connection with the execution, delivery or performance of this Agreement and
the Basic Documents, except for such as have been obtained, effected or made.
(e) No Violation. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof do not conflict with,
result in any breach of any of the terms and provisions of, or constitute (with
or without notice or lapse of time) a default under, the certificate of
incorporation or by-laws of the Depositor, or any material indenture, agreement
or other instrument to which the Depositor is a party or by which it is bound;
nor result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other instrument
(other than pursuant to the Basic Documents); nor violate any law or, to the
best of the Depositor's knowledge, any order, rule or regulation applicable to
the Depositor of any court or of any Federal or state regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Depositor or its properties.
(f) No Proceedings. There are no proceedings or investigations pending
or, to its knowledge, threatened against it before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality having
jurisdiction over it or its properties (A) asserting the invalidity of this
Agreement or any of the Basic Documents, (B) seeking to prevent the issuance of
the Certificates or the Notes or the consummation of any of the transactions
contemplated by this Agreement or any of the Basic Documents, (C) seeking any
determination or ruling that might materially and adversely affect its
performance of its obligations under, or the validity or enforceability of, this
Agreement or any of the Basic Documents, or (D) seeking to adversely affect the
federal income tax or other federal, state or local tax attributes of the
Certificates.
(g) Minimum Net Worth. The Depositor has been duly capitalized such
that its aggregate net worth is not less than the Minimum Net Worth.
(h) Demand Note. If the Depositor is capitalized, in whole or in part
by the delivery of a demand note (a "Demand Note") from CPS, the proceeds of
such Demand Note will not be used to pay (i) any of the expenses of the
Depositor in connection with the transactions contemplated by the Basic
Documents or (ii) the purchase price for the Certificates purchased pursuant to
Section 3.9. Such Demand Note shall be enforceable against CPS, subject to its
terms, and subject to applicable bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and similar laws now or hereafter in effect relating
to creditors' rights generally or the rights of creditors of banks the deposit
accounts of which are insured by the Federal Deposit Insurance Corporation and
subject to general principles of equity (whether applied in a proceeding at law
or in equity).
SECTION 2.11. Federal Income Tax Allocations. (a) For purposes of the
laws of any jurisdiction for which the Trust is characterized as a partnership
(consistent with the characterization of the Trust described in Section 2.6
above), the following allocations shall apply for Federal income tax purposes.
Interest payments on the Principal Certificates at the
9
Certificate Rate (including interest on amounts previously due on the Principal
Certificates but not yet distributed) shall be treated as "guaranteed payments"
under Section 707(c) of the Code. To the extent such characterization is not
respected, net income of the Trust for any month as determined for Federal
income tax purposes (and each item of income, gain, loss and deduction entering
into the computation thereof) shall be allocated:
(i) among the holders of Principal Certificates as of
the close of business on the last day of such month, in
proportion to their ownership of the principal amount of
Principal Certificates on such date, an amount of net income
up to the sum of: (x) the portion of the market discount on
the Receivables accrued during such month that is allocable to
the excess, if any, of the Initial Certificate Balance over
their initial aggregate issue price, (y) Certificateholders'
Prepayment Premium, if any, payable for such month and (z) any
other amounts of income payable to the Certificateholders for
such month; and such sum of amounts specified in clauses (x)
through (z) of this sentence shall be reduced by any
amortization by the Trust of premium on Receivables that
corresponds to any excess of the issue price of Trust
Certificates over their principal amount; and
(ii) to the Depositor, to the extent of any remaining
net income, in accordance with their respective interests
therein.
If the net income of the Trust for any month is insufficient for the
allocations described in clause (i), subsequent net income shall first
be allocated to make up such shortfall before being allocated as
provided in the preceding sentence. Net losses of the Trust, if any,
for any month as determined for Federal income tax purposes (and each
item of income, gain, loss and deduction entering into the computation
thereof) shall be allocated to the Depositor, to the extent it is
reasonably expected to bear the economic burden of such net losses, and
any remaining net losses shall be allocated among the other Holders of
Principal Certificates as of the close of business on the last day of
such month in proportion to their ownership of principal amount of
Principal Certificates on such day. The Depositor is authorized to
modify the allocations in this paragraph if necessary or appropriate,
in its sole discretion, for the allocations to fairly reflect the
economic income, gain or loss to the holders of Principal Certificates,
or as otherwise required by the Code. Notwithstanding anything provided
in this Section 2.11(a), if Principal Certificates are held solely by
the Depositor, the application of this Section 2.11(a) shall be
disregarded.
(b) One hundred percent of the "excess nonrecourse liabilities" of the
Trust represented by all outstanding Classes of Notes shall be allocated, for
purposes of Treasury regulations section 1.752-3(3), to the Depositor.
SECTION 2.12. Covenants of the Depositor. The Depositor agrees and
covenants for the benefit of each Certificateholder, the Insurer and the Owner
Trustee, during the term of this Agreement, and to the fullest extent permitted
by applicable law, that:
10
(a) it shall not assign, sell, convey, pledge, transfer,
reconvey, cancel, forgive, compromise or otherwise dispose of any
Demand Note held by it, in whole or in part;
(b) it shall not sell, assign, transfer, give or encumber, by
operation of law or otherwise, in whole or in part, the interest
evidenced by its Certificates acquired pursuant to Section 3.9 without
the consent of the Insurer;
(c) it shall not create, incur or suffer to exist any
indebtedness or engage in any business, except, in each case, as
permitted by its certificate of incorporation and the Basic Documents;
(d) it shall not, for any reason, institute proceedings for
the Trust to be adjudicated a bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against the Trust,
or file a petition seeking or consenting to reorganization or relief
under any applicable federal or state law relating to the bankruptcy of
the Trust, or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of the
Trust or a substantial part of the property of the Trust or cause or
permit the Trust to make any assignment for the benefit of creditors,
or admit in writing the inability of the Trust to pay its debts
generally as they become due, or declare or effect a moratorium on the
debt of the Trust or take any action in furtherance of any such action;
(e) it shall obtain from each counterparty to each Basic
Document to which it or the Trust is a party and each other agreement
entered into on or after the date hereof to which it or the Trust is a
party, an agreement by each such counterparty that prior to the
occurrence of the event specified in Section 9.1(e) such counterparty
shall not institute against, or join any other Person in instituting
against, it or the Trust, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or other similar proceedings
under the laws of the United States or any state of the United States;
(f) it shall not, for any reason, withdraw or attempt to
withdraw from this Agreement, dissolve, institute proceedings for it to
be adjudicated a bankrupt or insolvent, or consent to the institution
of bankruptcy or insolvency proceedings against it, or file a petition
seeking or consenting to reorganization or relief under any applicable
federal or state law relating to bankruptcy, or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator
(or other similar official) of it or a substantial part of its
property, or make any assignment for the benefit of creditors, or admit
in writing its inability to pay its debts generally as they become due,
or declare or effect a moratorium on its debt or take any action in
furtherance of any such action; and
(g) it shall not make any distribution other than to the Trust
or unless the aggregate net worth of the Depositor following such
distribution shall be at least equal to the Minimum Net Worth unless
the Depositor shall deliver to the Owner Trustee, the Trustee and the
Insurer an opinion of Counsel to the effect that the failure to
maintain
11
such Minimum Net Worth shall not cause the Trust to be an association
taxable as a corporation or a publicly traded partnership for
California franchise tax purposes.
SECTION 2.13. Covenants of the Certificateholders. Each
Certificateholder by its acceptance of a Certificate agrees:
(a) to be bound by the terms and conditions of the
Certificates of which such party is the record or beneficial owner and
of this Agreement, including any supplements or amendments hereto and
to perform the obligations of a Holder as set forth therein or herein,
in all respects as if it were a signatory hereto. This undertaking is
made for the benefit of the Trust, the Owner Trustee, the Insurer and
all other Holders present and future;
(b) to hereby appoint the Depositor as its agent and
attorney-in-fact to sign any federal income tax information return
filed on behalf of the Trust and agree that, if requested by the Trust,
it will sign such federal income tax information return in its capacity
as a Holder of an interest in the Trust. Each Holder also hereby agrees
that in its tax returns it will not take any position inconsistent with
those taken in any tax returns filed by the Trust;
(c) if such Holder is other than an individual or other entity
holding its Certificate through a broker who reports securities sales
on Form 1099-B, to notify the Owner Trustee of any transfer by it of a
Certificate or a beneficial interest in a Certificate in a taxable sale
or exchange, within 30 days of the date of the transfer; and
(d) until the completion of the events specified in Section
9.1(e), not to, for any reason, institute proceedings for the Trust or
the Depositor to be adjudicated a bankrupt or insolvent, or consent to
the institution of bankruptcy or insolvency proceedings against the
Trust, or file a petition seeking or consenting to reorganization or
relief under any applicable federal or state law relating to
bankruptcy, or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of the
Trust or a substantial part of its property, or cause or permit the
Trust to make any assignment for the benefit of its creditors, or admit
in writing its inability to pay its debts generally as they become due,
or declare or effect a moratorium on its debt or take any action in
furtherance of any such action.
ARTICLE III.
Certificates and Transfer of Interests
SECTION 3.1. Initial Ownership. Upon the formation of the Trust by the
contribution by the Depositor pursuant to Section 2.5 and until the issuance of
the Certificates, the Depositor shall be the sole beneficiary of the Trust.
12
SECTION 3.2. The Certificates. The Certificates shall be issued
initially to the Depositor with a Certificate Balance of $3,750,000.
Certificates shall be issued in minimum denominations of $1,000 provided,
however, that Certificates may be issued to the Depositor pursuant to Section
3.9 in such lesser denominations as to represent a Certificate Balance of at
least 1% of the Initial Certificate Balance. The Certificates shall be executed
on behalf of the Trust by manual or facsimile signature of an authorized officer
of the Owner Trustee. Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures shall have been affixed,
authorized to sign on behalf of the Trust, shall be validly issued and entitled
to the benefit of this Agreement, 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
authentication and delivery of such Certificates. A transferee of a Certificate
shall become a Certificateholder, and shall be entitled to the rights and
subject to the obligations of a Certificateholder hereunder, upon due
registration of such Certificate in such transferee's name pursuant to Section
3.4.
SECTION 3.3. Authentication of Certificates. Concurrently with the
initial sale of the Receivables to the Trust pursuant to the Sale and Servicing
Agreement, the Owner Trustee shall cause the Certificates with an aggregate
Certificate Balance equal to $3,750,000 to be executed on behalf of the Trust,
authenticated and delivered upon the written order of the Depositor, signed by
its chairman of the board, its president or any vice president, its treasurer or
any assistant treasurer without further corporate action by the Depositor, in
authorized denominations. 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, executed by the Owner Trustee or the Owner
Trustee's authentication agent, by manual signature; such authentication shall
constitute conclusive evidence that such Certificate shall have been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication. Bankers Trust Company shall be the initial
authentication agent of the Owner Trustee and all references herein to the
authentication of Certificates shall be deemed to include the authentication
agent.
SECTION 3.4. Registration of Transfer and Exchange of Certificates. (a)
The Certificate Registrar shall keep or cause to be kept, at the office or
agency maintained pursuant to Section 3.8, a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, the Owner Trustee
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. Bankers Trust Company shall be the
initial Certificate Registrar.
(b) The Certificate Registrar shall provide the Paying Agent with a
list of the names and addresses of the Certificateholders on the Closing Date in
the form in which such information is provided to the Certificate Registrar.
Upon any transfers of Certificates, the Certificate Registrar shall promptly
notify the Trustee of the name and address of the transferee in writing, by
facsimile.
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(c) No transfer of a 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 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
Certificateholder desiring to effect such transfer and such Certificateholder's
prospective transferee must each (x) certify in writing to the Certificate
Registrar the facts surrounding such transfer and (y) provide the Certificate
Registrar with a written opinion of counsel in form and substance satisfactory
to the Depositor and the Certificate Registrar that such transfer may be made
pursuant to an exemption from the Securities Act or laws, which Opinion of
Counsel shall not be an expense of the Depositor or the Certificate Registrar.
In the event that a transfer is to be made in reliance upon clause (iii) above,
the prospective transferee shall have furnished to the Certificate Registrar and
the Depositor a Transferee Certificate, signed by such transferee, in the form
of Exhibit C. Neither the Depositor nor the Certificate Registrar is under any
obligation to register the 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.
(d) In no event shall a 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 Seller, the Servicer, the Trustee, the Owner
Trustee, the Note 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.
(e) Each Holder of a Certificate, 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 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 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 Certificates, such Certificates
14
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 Certificates will bear a legend
substantially to the following effect:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE
HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES THAT THIS
SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
(1) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT
TO RULE 144A, TO A PERSON WHOM THE TRANSFEROR REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING
OF RULE 144A UNDER THE SECURITIES ACT, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, AND SUBJECT
TO THE RECEIPT BY THE CERTIFICATE REGISTRAR AND THE DEPOSITOR
OF A TRANSFEREE CERTIFICATE, (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 CERTIFICATE REGISTRAR AND THE DEPOSITOR, OF A
CERTIFICATION OF THE TRANSFEREE (SATISFACTORY TO THE
CERTIFICATE REGISTRAR AND THE DEPOSITOR) AND AN OPINION OF
COUNSEL (SATISFACTORY TO THE CERTIFICATE REGISTRAR AND THE
DEPOSITOR) TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE
WITH THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
AND IN COMPLIANCE WITH THE TRANSFER REQUIREMENTS SET FORTH IN
SECTION 3.4 OF THE TRUST 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
15
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.
(iv) It has not acquired the Certificates with the assets of
an Employee Plan.
(f) Upon surrender for registration of transfer of any Certificate at
the office or agency maintained pursuant to Section 3.8, the Owner Trustee shall
execute, authenticate and deliver (or shall cause as its authenticating agent to
authenticate and deliver), in the name of the designated transferee or
transferees, one or more new Certificates in authorized denominations of a like
class and aggregate Certificate Balance dated the date of authentication by the
Owner Trustee or any authenticating agent. At the option of a Holder,
Certificates may be exchanged for other Certificates of the same class in
authorized denominations of a like aggregate Certificate Balance upon surrender
of the Certificates to be exchanged at the office or agency maintained pursuant
to Section 3.8.
(g) 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 Owner Trustee and the Certificate Registrar duly
executed by the Certificateholder or his attorney duly authorized in writing,
with such signature guaranteed by an "eligible guarantor institution" meeting
the requirements of the Certificate Registrar, which requirements include
membership or participation in the Securities Transfer Agent's Medallion Program
("STAMP") or such other "signature guarantee program" as may be determined by
the Certificate Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Exchange Act. Each Certificate surrendered for registration
of transfer or exchange shall be canceled and subsequently disposed of by the
Owner Trustee in accordance with its customary practice.
(h) No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Owner Trustee or the Certificate Registrar 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 3.5. 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 Owner Trustee and (unless an Insurer Default
shall have occurred and be continuing) the 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 Owner Trustee on behalf of the
16
Trust shall execute and the Owner Trustee, or the Owner Trustee's authenticating
agent, shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
class, tenor and denomination. In connection with the issuance of any new
Certificate under this Section, the Owner Trustee or 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 shall constitute conclusive evidence
of an ownership interest in the Trust, as if originally issued, whether or not
the lost, stolen or destroyed Certificate shall be found at any time.
SECTION 3.6. Persons Deemed Certificateholders. Every Person by virtue
of becoming a Certificateholder in accordance with this Agreement and the rules
and regulations of the Clearing Agency shall be deemed to be bound by the terms
of this Agreement. Prior to due presentation of a Certificate for registration
of transfer, the Owner Trustee, the Certificate Registrar and the Insurer and
any agent of the Owner Trustee, the Certificate Registrar and the Insurer, may
treat the Person in whose name any Certificate shall be registered in the
Certificate Register as the owner of such Certificate for the purpose of
receiving distributions pursuant to the Sale and Servicing Agreement and for all
other purposes whatsoever, and none of the Owner Trustee, the Certificate
Registrar or the Insurer nor any agent of the Owner Trustee, the Certificate
Registrar or the Insurer shall be bound by any notice to the contrary.
SECTION 3.7. Access to List of Certificateholders' Names and Addresses.
The Certificate Registrar shall furnish or cause to be furnished to the
Servicer, the Depositor or (unless an Insurer Default shall have occurred and be
continuing) the Insurer, within 15 days after receipt by the Certificate
Registrar of a request therefor from such Person in writing, a list, of the
names and addresses of the Certificateholders as of the most recent Record Date.
If three or more Holders of Certificates or one or more Holders of Certificates
evidencing not less than 25% of the Certificate Balance then outstanding apply
in writing to the Certificate Registrar, 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
is accompanied by a copy of the communication that such applicants propose to
transmit, then the Certificate Registrar shall, within five Business Days after
the receipt of such application, afford such applicants access during normal
business hours to the current list of Certificateholders. Each Holder, by
receiving and holding a Certificate or a beneficial interest therein, shall be
deemed to have agreed not to hold any of the Depositor, the Servicer, the Owner
Trustee, the Certificate Registrar or the Insurer or any agent thereof
accountable by reason of the disclosure of its name and address, regardless of
the source from which such information was derived.
SECTION 3.8. Maintenance of Office or Agency. The Trust shall maintain
in New York, 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 Trust in respect of the Certificates and the Basic
Documents may be served. The Trust initially designates Bankers Trust Company at
4 Albany Street, 10th Floor, New York, New York 10006 as its principal corporate
trust office for such purposes. The Owner Trustee shall give prompt written
notice to the Depositor, the Certificateholders and (unless an Insurer Default
shall have
17
occurred and be continuing) the Insurer of any change in the location of the
Certificate Register or any such office or agency.
SECTION 3.9. Disposition by the Depositor. On the Closing Date, the
Depositor shall purchase for adequate consideration and retain beneficial and
record ownership of Certificates representing not less than 1 percent of the
Initial Certificate Balance, which Certificates issued to the Depositor shall be
issued in definitive form. Any attempted transfer of any Certificate, and any
purported issuance of any Certificate to any person, that would reduce such
interest of the Depositor to below 1 percent of the Initial Certificate Balance
shall be void. The Owner Trustee shall cause any such Certificate issued to the
Depositor to contain a legend stating "THIS CERTIFICATE IS NOT TRANSFERABLE,
EXCEPT UNDER THE LIMITED CONDITIONS SPECIFIED IN THE TRUST AGREEMENT".
SECTION 3.10. ERISA Restrictions. The Certificates may not be acquired
by or for the account of (i) an employee benefit plan (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) that is subject to the provisions of Title I of ERISA, (ii) a plan
described in Section 4975(e)(1) of the Internal Revenue Code of 1986, as
amended, or (iii) any entity whose underlying assets include plan assets by
reason of a plan's investment in the entity (each, a "Benefit Plan"). By
accepting and holding its ownership interest in its Certificate, the Holder
thereof shall be deemed to have represented and warranted that it is not a
Benefit Plan.
ARTICLE IV.
Voting Rights and Other Actions
SECTION 4.1. Prior Notice to Holders with Respect to Certain Matters.
With respect to the following matters, the Owner Trustee shall not take action
unless at least 30 days before the taking of such action, the Owner Trustee
shall have notified the Certificateholders in writing of the proposed action and
the Certificateholders shall not have notified the Owner Trustee in writing
prior to the 30th day after such notice is given that such Certificateholders
have withheld consent or provided alternative direction:
(a) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed
under the Business Trust Statute or unless such amendment would not
materially and adversely affect the interests of the Holders);
(b) the amendment of the Indenture by a supplemental indenture
in circumstances where the consent of any Noteholder is required;
(c) the amendment of the Indenture by a supplemental indenture
in circumstances where the consent of any Noteholder is not required
and such amendment materially adversely affects the interest of the
Certificateholders; or
18
(d) except pursuant to Section 13.1(b) of the Sale and
Servicing Agreement, the amendment, change or modification of the Sale
and Servicing Agreement, except to cure any ambiguity or defect or to
amend or supplement any provision in a manner that would not materially
adversely affect the interests of the Certificateholders.
The Servicer shall notify the Certificateholders in writing of any appointment
of a successor Note Registrar, Trustee or Certificate Registrar within five
Business Days thereof.
SECTION 4.2. Action by Certificateholders with Respect to Certain
Matters. The Owner Trustee shall not have the power, except upon the direction
of the Certificateholders or the Insurer in accordance with the Basic Documents,
to (a) remove the Servicer under the Sale and Servicing Agreement pursuant to
Section 8.1 thereof or (b) except as expressly provided in the Basic Documents,
sell the Receivables after the termination of the Indenture. The Owner Trustee
shall take the actions referred to in the preceding sentence only upon written
instructions signed by the Certificateholders and the furnishing of
indemnification satisfactory to the Owner Trustee by the Certificateholders.
SECTION 4.3. Action by Certificateholders with Respect to Bankruptcy.
The Owner Trustee shall not have the power to, and shall not, commence any
proceeding or other actions contemplated by Section 2.12(d) relating to the
Trust without the prior written consent of the Insurer (unless an Insurer
Default shall have occurred and be continuing) and the unanimous prior approval
of all Certificateholders and the delivery to the Owner Trustee by each such
Certificateholder of a certificate certifying that such Certificateholder
reasonably believes that the Trust is insolvent.
SECTION 4.4. Restrictions on Certificateholders' Power. (a) The
Certificateholders shall not direct the Owner Trustee to take or refrain from
taking any action if such action or inaction would be contrary to any obligation
of the Trust or the Owner Trustee under this Agreement or any of the Basic
Documents or would be contrary to Section 2.3 nor shall the Owner Trustee be
obligated to follow any such direction, if given.
(b) No 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
or any Basic Document, unless the Certificateholders are the Instructing Party
pursuant to Section 6.3 and unless a Certificateholder previously shall have
given to the Owner Trustee a written notice of default and of the continuance
thereof, as provided in this Agreement, and also unless Certificateholders
evidencing not less than 25% of the Certificate Balance then outstanding shall
have made written request upon the Owner Trustee to institute such action, suit
or proceeding in its own name as Owner Trustee under this Agreement and shall
have offered to the Owner Trustee such reasonable indemnity as it may require
against the costs, expenses and liabilities to be incurred therein or thereby,
and the Owner 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
19
Owner Trustee pursuant to and in compliance with this Section or Section 6.3; it
being understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Owner Trustee, that
no one or more Holders of 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 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 Certificateholders. For the protection and
enforcement of the provisions of this Section 4.4, each and every
Certificateholder and the Owner Trustee shall be entitled to such relief as can
be given either at law or in equity.
SECTION 4.5. Majority Control. No Certificateholder shall have any
right to vote or in any manner otherwise control the operation and management of
the Trust except as expressly provided in this Agreement. Except as expressly
provided herein, any action that may be taken by the Certificateholders under
this Agreement may be taken by the Holders of Certificates evidencing not less
than a majority of the aggregate Certificate Balance. Except as expressly
provided herein, any written notice of the Certificateholders delivered pursuant
to this Agreement shall be effective if signed by Certificateholders evidencing
not less than a majority of the Certificate Balance at the time of the delivery
of such notice.
SECTION 4.6. Rights of Insurer. Notwithstanding anything to the
contrary in the Basic Documents, without the prior written consent of the
Insurer (so long as no Insurer Default shall have occurred and be continuing),
the Owner Trustee shall not (i) remove the Servicer, (ii) initiate any claim,
suit or proceeding by the Trust or compromise any claim, suit or proceeding
brought by or against the Trust, other than with respect to the enforcement of
any Receivable or any rights of the Trust thereunder, (iii) authorize the merger
or consolidation of the Trust with or into any other business trust or other
entity (other than in accordance with Section 3.10 of the Indenture) or (iv)
amend the Certificate of Trust.
ARTICLE V.
Certain Duties
SECTION 5.1. Accounting and Records to the Noteholders,
Certificateholders, the Internal Revenue Service and Others. Subject to Sections
12.1(b)(iii) and 12.1(c) of the Sale and Servicing Agreement, the Depositor
shall (a) maintain (or cause to be maintained) the books of the Trust on a
calendar year basis on the accrual method of accounting, (b) deliver (or cause
to be delivered) to each Certificateholder, as may be required by the Code and
applicable Treasury Regulations, such information, if any, as may be required
(including, if appropriate consistent with the characterization of the Trust
pursuant to Section 2.6, Schedule K-1) to enable each Certificateholder to
prepare its Federal and state income tax returns, (c) file or cause to be filed
20
such tax returns, if any, relating to the Trust (including, if appropriate
consistent with the characterization of the Trust pursuant to Section 2.6, a
partnership information return on Internal Revenue Service Form 1065), and
direct the Owner Trustee to make such elections as may from time to time be
required or appropriate under any applicable state or Federal statute or rule or
regulation thereunder so as to maintain the Trust's characterization pursuant to
Section 2.6 for Federal income and California franchise tax purposes and for
purposes of any other jurisdiction for which the characterization of the Trust
is relevant and (d) collect or cause to be collected any withholding tax as
described in and in accordance with Section 5.9 of the Sale and Servicing
Agreement with respect to income or distributions to Certificateholders and the
appropriate forms relating thereto. The Depositor shall make all elections
pursuant to this Section. The Depositor shall have the power to sign all tax
information returns filed pursuant to this Section 5.1 and any other returns as
may be required by law, to the extent it is legally entitled to do so. In the
event the Trust is treated as a partnership for federal income tax purposes,
neither the Trust nor any Person on behalf of the Trust shall make the election
provided under Section 754 of the Code.
SECTION 5.2. Signature on Returns; Tax Matters Partner. (a) The
Depositor shall sign on behalf of the Trust the tax returns of the Trust, unless
applicable law requires a Certificateholder to sign such documents.
(b) In the event the Trust is treated as a partnership for federal
income tax purposes, the Depositor shall be the "tax matters partner" of the
Trust pursuant to the Code.
SECTION 5.3. Underwriting Agreement. The Servicer is hereby authorized
to execute and deliver the Underwriting Agreement with respect to the Notes.
SECTION 5.4. Trust Accounts. The Trust, on behalf of the
Certificateholders, shall establish and maintain in its own name an Eligible
Account (the "Certificate Distribution Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Trust on behalf of the Certificateholders. The Certificate Distribution Account
shall initially be established with the Norwest Bank Minnesota, National
Association.
Funds on deposit in the Certificate Distribution Account shall be
invested at the direction of the Trust (or any custodian with respect to funds
on deposit in such account) in Eligible Investments selected in writing by the
Servicer (pursuant to standing instructions or otherwise). All such Eligible
Investments shall be held by or on behalf of the Trust for the benefit of the
Certificateholders. Other than as permitted by the Rating Agencies and the Note
Insurer, funds on deposit in the Certificate Distribution Account shall be
invested in Eligible Investments that will mature so that such funds will be
available at the close of business on the Business Day immediately preceding the
following Payment Date. Funds deposited in the Certificate Distribution Account
on the day immediately preceding a Payment Date upon the maturity of any
Eligible Investments are not required to be invested overnight. All Eligible
investments will be held to maturity. All interest, dividends, gains upon sale
and other income from, or earnings on investment of funds in the Certificate
Distribution Account shall be distributed on the next
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Payment Date pursuant to Section 5.7 of the Sale and Servicing Agreement and
Section 5.5 hereof.
The Trust shall possess all right, title and interest in all funds on
deposit from time to time in the Certificate Distribution Account and in all
proceeds thereof. Except as otherwise provided herein, the Certificate
Distribution Account shall be under the sole dominion and control of the Trust
for the benefit of the Certificateholders. If at any time the Certificate
Distribution Account ceases to be an Eligible Account, the Trust shall within
five Business Days establish a new Certificate Distribution Account as an
Eligible Account and shall transfer any cash and/or any investments to such new
Certificate Distribution Account. The Servicer shall promptly notify the Rating
Agencies of any change in the location of the Certificate Distribution Account.
SECTION 5.5. Application of Funds in Certificate Distribution Account.
On each Payment Date, the Paying Agent shall distribute or cause to be
distributed all amounts on deposit in the Certificate Distribution Account to
Certificateholders in respect of the Certificates to the extent of amounts due
and unpaid on the Certificates for principal and interest in the following
amounts and in the following order of priority:
(a) to the Holders of the Certificates, the Certificateholders'
Interest Distributable Amount; provided that if there are not sufficient funds
in the Certificate Distribution Account to pay the entire amount of the
Certificateholders' Interest Distributable Amount, the amount in the Certificate
Distribution Account shall be applied to the payment of such interest on the
Certificates pro rata on the basis of the amount of accrued and unpaid interest
due on the Certificates;
(b) to the Holders of the Certificates, the Certificateholders'
Principal Distributable Amount and the Certificate Prepayment Amount until the
outstanding principal balance of the Certificates is reduced to zero.
(c) On each Payment Date, the Owner Trustee shall send or cause to be
sent to each Certificateholder the statement provided to the Owner Trustee by
the Servicer pursuant to Section 5.11 of the Sale and Servicing Agreement on
such Payment Date.
(d) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to a Certificateholder, such tax shall reduce
the amount otherwise distributable to the Certificateholder in accordance with
this Section. The Paying Agent is hereby authorized and directed to retain or
cause to be retained from amounts otherwise distributable to the
Certificateholders sufficient funds for the payment of any tax that is legally
owed by the Trust (but such authorization shall not prevent the Paying Agent
from contesting any such tax in appropriate proceedings, and withholding payment
of such tax, if permitted by law, pending the outcome of such proceedings). The
amount of any withholding tax imposed with respect to a Certificateholder shall
be treated as cash distributed to such Certificateholder at the time it is
withheld by the Trust and remitted to the appropriate taxing authority. If there
is a
22
possibility that withholding tax is payable with respect to a distribution (such
as a distribution to a non-US Certificateholder), the Paying Agent may in its
sole discretion withhold such amounts in accordance with this clause (c). In the
event that a Certificateholder wishes to apply for a refund of any such
withholding tax, the Paying Agent shall reasonably cooperate with such
Certificateholder in making such claim so long as such Certificateholder agrees
to reimburse the Paying Agent for any out-of-pocket expenses incurred.
(e) Any funds remaining in the Certificate Distribution Account after
distribution of all amounts specified in this Section and after payment of all
amounts owed to the Owner Trustee hereunder, shall be distributed to the Seller.
(f) Distributions required to be made to Certificateholders on any
Payment Date shall be made 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 (i) such Certificateholder shall have provided to the Certificate
Registrar appropriate written instructions at least five Business Days prior to
such Payment Date and such Holder's certificates in the aggregate evidence a
denomination of not less than $1,000,000 or (ii) such Certificateholder is the
Seller, or an Affiliate thereof, or, if not, by check mailed to such
Certificateholder at the address of such holder appearing in the Certificate
Register. Notwithstanding the foregoing, the final distribution in respect of
any Certificate (whether on the Final Scheduled Payment Date or otherwise) will
be payable only upon presentation and surrender of such Certificate at the
office or agency maintained for that purpose by the Certificate Registrar
pursuant to Section 3.8.
(g) Subject to Section 5.1 and this Section, monies received by the
Owner Trustee hereunder need not be segregated in any manner except to the
extent required by law and may be deposited under such general conditions as may
be prescribed by law, and the Owner Trustee shall not be liable for any interest
thereon.
ARTICLE VI.
Authority and Duties of Owner Trustee
SECTION 6.1. General Authority. The Owner Trustee is authorized and
directed to execute and deliver the Basic Documents to which the Trust is named
as a party and each certificate or other document attached as an exhibit to or
contemplated by the Basic Documents to which the Trust is named as a party and
any amendment thereto, in each case, in such form as the Depositor shall approve
as evidenced conclusively by the Owner Trustee's execution thereof, and on
behalf of the Trust, to direct the Trustee to authenticate and deliver Class A-1
Notes in the aggregate principal amount of $80,332,000, Class A-2 Notes in the
aggregate principal amount of $61,668,000 and Class B Notes in the aggregate
principal amount of $3,750,000. In addition to the foregoing, the Owner Trustee
is authorized but shall not be obligated, to take all actions required of the
Trust pursuant to the Basic Documents. The Owner Trustee is further
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authorized from time to time to take such action as the Instructing Party
recommends with respect to the Basic Documents so long as such activities are
consistent with the terms of the Basic Documents.
SECTION 6.2. General Duties. It shall be the duty of the Owner Trustee
to discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Agreement and the Sale and Servicing Agreement and to
administer the Trust in the interest of the Holders, subject to the Basic
Documents and in accordance with the provisions of this Agreement.
Notwithstanding the foregoing, the Owner Trustee shall be deemed to have
discharged its duties and responsibilities hereunder and under the Basic
Documents to the extent the Servicer has agreed in the Sale and Servicing
Agreement to perform any act or to discharge any duty of the Trust or the Owner
Trustee hereunder or under any Basic Document, and the Owner Trustee shall not
be liable for the default or failure of the Servicer to carry out its
obligations under the Sale and Servicing Agreement.
SECTION 6.3. Action upon Instruction. (a) Subject to Article IV and the
terms of the Spread Account Agreement, the Insurer (so long as an Insurer
Default shall not have occurred and be continuing) or the Certificateholders (if
an Insurer Default shall have occurred and be continuing) (the "Instructing
Party") shall have the exclusive right to direct the actions of the Owner
Trustee in the management of the Trust, so long as such instructions are not
inconsistent with the express terms set forth herein or in any Basic Document.
The Instructing Party shall not instruct the Owner Trustee in a manner
inconsistent with this Agreement or the Basic Documents.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if the Owner Trustee shall have reasonably
determined, or shall have been advised by counsel, that such action is likely to
result in liability on the part of the Owner Trustee or is contrary to the terms
hereof or of any Basic Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or any
Basic Document, the Owner Trustee shall promptly give notice (in such form as
shall be appropriate under the circumstances) to the Instructing Party
requesting instruction as to the course of action to be adopted, and to the
extent the Owner Trustee acts in good faith in accordance with any written
instruction received from the Instructing Party, the Owner Trustee shall not be
liable on account of such action to any Person. If the Owner Trustee shall not
have received appropriate instruction within ten days of such notice (or within
such shorter period of time as reasonably may be specified in such notice or may
be necessary under the circumstances) it may, but shall be under no duty to,
take or refrain from taking such action, not inconsistent with this Agreement or
the Basic Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
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(d) In the event that the Owner Trustee is unsure as to the application
of any provision of this Agreement or any Basic Document or any such provision
is ambiguous as to its application, or is, or appears to be, in conflict with
any other applicable provision, or in the event that this Agreement permits any
determination by the Owner Trustee or is silent or is incomplete as to the
course of action that the Owner Trustee is required to take with respect to a
particular set of facts, the Owner Trustee may give notice (in such form as
shall be appropriate under the circumstances) to the Instructing Party
requesting instruction and, to the extent that the Owner Trustee acts or
refrains from acting in good faith in accordance with any such instruction
received, the Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may but shall be under no duty to, take or refrain
from taking such action not inconsistent with this Agreement or the Basic
Documents as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
SECTION 6.4. No Duties Except as Specified in this Agreement or in
Instructions. The Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.3; and no implied duties or obligations
shall be read into this Agreement or any Basic Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to prepare or file any Commission filing for the Trust or to
record this Agreement or any Basic Document.
SECTION 6.5. No Action Except under Basic Documents or Instructions.
The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise
deal with any part of the Owner Trust Estate except (i) in accordance with the
powers granted to and the authority conferred upon the Owner Trustee pursuant to
this Agreement, (ii) in accordance with the Basic Documents and (iii) in
accordance with any document or instruction delivered to the Owner Trustee
pursuant to Section 6.3.
SECTION 6.6. Restrictions. The Owner Trustee shall not take any action
(a) that is inconsistent with the purposes of the Trust set forth in Section 2.3
or (b) that, to the actual knowledge of the Owner Trustee, would result in the
Trust's becoming taxable as a corporation for Federal income tax purposes or for
the purposes of any applicable state tax on corporations. The Certificateholders
shall not direct the Owner Trustee to take action that would violate the
provisions of this Section.
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ARTICLE VII.
Concerning the Owner Trustee
SECTION 7.1. Acceptance of Trusts and Duties. The Owner Trustee accepts
the trusts hereby created and agrees to perform its duties hereunder with
respect to such trusts but only upon the terms of this Agreement. The Owner
Trustee also agrees to disburse all moneys actually received by it constituting
part of the Owner Trust Estate upon the terms of the Basic Documents and this
Agreement. The Owner Trustee shall not be answerable or accountable hereunder or
under any Basic Document under any circumstances, except (i) for its own willful
misconduct, bad faith or negligence, (ii) in the case of the inaccuracy of any
representation or warranty contained in Section 7.3 expressly made by the Owner
Trustee, (iii) for liabilities arising from the failure of the Owner Trustee to
perform obligations expressly undertaken by it in the last sentence of Section
6.4 hereof, (iv) for any investments issued by the Owner Trustee or any branch
or affiliate thereof in its commercial capacity or (v) for taxes, fees or other
charges on, based on or measured by, any fees, commissions or compensation
received by the Owner Trustee. In particular, but not by way of limitation (and
subject to the exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of
judgment made by a Responsible Officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in accordance with the
instructions of the Instructing Party, the Servicer or any
Certificateholder;
(c) no provision of this Agreement or any Basic Document shall
require the Owner Trustee to expend or risk funds or otherwise incur
any financial liability in the performance of any of its rights or
powers hereunder or under any Basic Document if the Owner Trustee shall
have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably
assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable
for indebtedness evidenced by or arising under any of the Basic
Documents, including the principal of and interest on the Notes;
(e) the Owner Trustee shall not be responsible for or in
respect of the validity or sufficiency of this Agreement or for the due
execution hereof by the Depositor or for the form, character,
genuineness, sufficiency, value or validity of any of the Owner Trust
Estate or for or in respect of the validity or sufficiency of the Basic
Documents, other than the certificate of authentication on the
Certificates, and the Owner Trustee shall in no event assume or incur
any liability, duty or obligation to the Insurer, Trustee, the
26
Collateral Agent, any Noteholder or to any Certificateholder, other
than as expressly provided for herein and in the Basic Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Depositor, the Insurer, the Trustee or the Servicer
under any of the Basic Documents or otherwise and the Owner Trustee
shall have no obligation or liability to perform the obligations under
this Agreement or the Basic Documents that are required to be performed
by the Depositor under this Agreement, the Insurer or the Trustee under
the Note Policy, by the Trustee under the Indenture or the Trustee or
the Servicer under the Sale and Servicing Agreement; and
(g) the Owner 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
otherwise or in relation to this Agreement or any Basic Document, at
the request, order or direction of the Instructing Party or any of the
Certificateholders, unless such Instructing Party or Certificateholders
have offered to the Owner Trustee security or indemnity satisfactory to
it against the costs, expenses and liabilities that may be incurred by
the Owner Trustee therein or thereby. The right of the Owner Trustee to
perform any discretionary act enumerated in this Agreement or in any
Basic Document shall not be construed as a duty, and the Owner Trustee
shall not be answerable for other than its negligence, bad faith or
willful misconduct in the performance of any such act.
SECTION 7.2. Furnishing of Documents. The Owner Trustee shall furnish
to the Certificateholders promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Owner Trustee
under the Basic Documents.
SECTION 7.3. Representations and Warranties. The Owner Trustee hereby
represents and warrants to the Depositor, the Holders and the Insurer (which
shall have relied on such representations and warranties in issuing the Note
Policy), that:
(a) It is a banking corporation, duly organized and validly
existing in good standing under the laws of the State of Delaware. It
has all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize
the execution and delivery by it of this Agreement, and this Agreement
will be executed and delivered by one of its officers who is duly
authorized to execute and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated
hereby nor compliance by it with
27
any of the terms or provisions hereof will contravene or constitute any
default under its charter documents or by-laws.
SECTION 7.4. Reliance; Advice of Counsel. (a) The Owner Trustee shall
incur no liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper believed by it to be genuine and believed by it to be signed
by the proper party or parties. The Owner Trustee may accept a certified copy of
a resolution of the board of directors or other governing body of any corporate
party as conclusive evidence that such resolution has been duly adopted by such
body and that the same is in full force and effect. As to any fact or matter the
method of the determination of which is not specifically prescribed herein, the
Owner Trustee may for all purposes hereof rely on a certificate, signed by the
president or any vice president or by the treasurer, secretary or other
authorized officers of the relevant party, as to such fact or matter, and such
certificate shall constitute full protection to the Owner Trustee for any action
taken or omitted to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the Basic
Documents, the Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for the conduct or misconduct of such agents or
attorneys if such agents or attorneys shall have been selected by the Owner
Trustee with reasonable care, and (ii) may consult with counsel, accountants and
other skilled persons to be selected with reasonable care and employed by it.
The Owner Trustee shall not be liable for anything done, suffered or omitted in
good faith by it in accordance with the written opinion or advice of any such
counsel, accountants or other such persons and according to such opinion not
contrary to this Agreement or any Basic Document.
SECTION 7.5. Not Acting in Individual Capacity. Except as provided in
this Article VII, in accepting the trusts hereby created Bankers Trust
(Delaware) acts solely as Owner Trustee hereunder and not in its individual
capacity and all Persons having any claim against the Owner Trustee by reason of
the transactions contemplated by this Agreement or any Basic Document shall look
only to the Owner Trust Estate for payment or satisfaction thereof.
SECTION 7.6. Owner Trustee Not Liable for Certificates or Receivables.
The recitals contained herein and in the Certificates (other than the signature
and countersignature of the Owner Trustee on the Certificates) shall be taken as
the statements of the Depositor and the Owner Trustee assumes no responsibility
for the correctness thereof. The Owner Trustee makes no representations as to
the validity or sufficiency of this Agreement, of any Basic Document or of the
Certificates (other than the signature and countersignature of the Owner Trustee
on the Certificates) or the Notes, or of any Receivable or related documents.
The Owner Trustee shall at no time have any responsibility or liability for or
with respect to the legality, validity and enforceability of any Receivable, or
the perfection and priority of any security interest created by any Receivable
in any Financed Vehicle or the maintenance of any such perfection and priority,
or for or with respect to the sufficiency of the Owner Trust Estate or its
ability to generate the
28
payments to be distributed to Certificateholders under this Agreement or the
Noteholders under the Indenture, including, without limitation: the existence,
condition and ownership of any Financed Vehicle; the existence and
enforceability of any insurance thereon; the existence and contents of any
Receivable on any computer or other record thereof; the validity of the
assignment of any Receivable to the Trust or of any intervening assignment; the
completeness of any Receivable; the performance or enforcement of any
Receivable; the compliance by the Depositor, the Servicer or any other Person
with any warranty or representation made under any Basic Document or in any
related document or the accuracy of any such warranty or representation or any
action of the Trustee or the Servicer or any subservicer taken in the name of
the Owner Trustee.
SECTION 7.7. Owner Trustee May Own Certificates and Notes. The Owner
Trustee in its individual or any other capacity may become the owner or pledgee
of Certificates or Notes and may deal with the Depositor, the Trustee and the
Servicer in banking transactions with the same rights as it would have if it
were not Owner Trustee.
SECTION 7.8. Payments from Owner Trust Estate. All payments to be made
by the Owner Trustee under this Agreement or any of the Basic Documents to which
the Trust or the Owner Trustee is a party shall be made only from the income and
proceeds of the Owner Trust Estate and only to the extent that the Owner Trust
shall have received income or proceeds from the Owner Trust Estate to make such
payments in accordance with the terms hereof. Bankers Trust (Delaware), or any
successor thereto, in its individual capacity, will not be liable for any
amounts payable under this Agreement or any of the Basic Documents to which the
Trust or the Owner Trustee is a party.
SECTION 7.9. Doing Business in other Jurisdictions. Notwithstanding
anything contained to the contrary, neither Bankers Trust (Delaware) or any
successor thereto, nor the Owner Trustee shall be required to take any action in
any jurisdiction other than in the State of Delaware if the taking of such
action will, even after the appointment of a co-trustee or separate trustee in
accordance with Section 10.5 hereof, (i) require the consent or approval or
authorization or order of or the giving of notice to, or the registration with
or the taking of any other action in respect of, any state or other governmental
authority or agency of any jurisdiction other than the State of Delaware; (ii)
result in any fee, tax or other governmental charge under the laws of the State
of Delaware becoming payable by Bankers Trust (Delaware) (or any successor
thereto); or (iii) subject Bankers Trust (Delaware) (or any successor thereto)
to personal jurisdiction in any jurisdiction other than the State of Delaware
for causes of action arising from acts unrelated to the consummation of the
transactions by Bankers Trust (Delaware) (or any successor thereto) or the Owner
Trustee, as the case may be, contemplated hereby.
29
ARTICLE VIII.
Compensation of Owner Trustee
SECTION 8.1. Owner Trustee's Fees and Expenses. The Owner Trustee shall
receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between CPS and the Owner Trustee,
and the Owner Trustee shall be entitled to be reimbursed by the Depositor for
its other reasonable expenses hereunder, including the reasonable compensation
expenses and disbursements of such agents, representatives, experts and counsel
as the Owner Trustee may employ in connection with the exercise and performance
of its rights and its duties hereunder and under the Basic Documents.
SECTION 8.2. Indemnification. The Depositor shall be liable as primary
obliger for, and shall indemnify the Owner Trustee and its officers, directors,
successors, assigns, agents and servants (collectively, the "Indemnified
Parties") from and against, any and all liabilities, obligations, losses,
damages, taxes, claims, actions and suits, and any and all reasonable costs,
expenses and disbursements (including reasonable legal fees and expenses) of any
kind and nature whatsoever (collectively, "Expenses") which may at any time be
imposed on, incurred by, or asserted against the Owner Trustee or any
Indemnified Party in any way relating to or arising out of this Agreement, the
Basic Documents, the Owner Trust Estate, the administration of the Owner Trust
Estate or the action or inaction of the Owner Trustee hereunder, except only
that the Depositor shall not be liable for or required to indemnify the Owner
Trustee from and against Expenses arising or resulting from any of the matters
described in the third sentence of Section 7.1. The indemnities contained in
this Section and the rights under Section 8.1 shall survive the resignation or
termination of the Owner Trustee or the termination of this Agreement.
SECTION 8.3. Payments to the Owner Trustee. Any amounts paid to the
Owner Trustee pursuant to this Article VIII shall be deemed not to be a part of
the Owner Trust Estate immediately after such payment.
SECTION 8.4. Non-recourse Obligations. Notwithstanding anything in this
Agreement or any Basic Document, the Owner Trustee agrees in its individual
capacity and in its capacity as Owner Trustee for the Trust that all obligations
of the Trust to the Owner Trustee individually or as Owner Trustee for the Trust
shall be recourse to the Owner Trust Estate only and specifically shall not be
recourse to the assets of any Certificateholder.
30
ARTICLE IX.
Termination of Trust Agreement
SECTION 9.1. Termination of Trust Agreement. (a) This Agreement and the
Trust shall terminate and be of no further force or effect upon the latest of
(i) the maturity or other liquidation of the last Receivable (including the
purchase by the Servicer at its option of the corpus of the Trust as described
in Section 11.1 of the Sale and Servicing Agreement) and the subsequent
distribution of amounts in respect of such Receivables as provided in the Basic
Documents, (ii) the payment to Certificateholders of all amounts required to be
paid to them pursuant to this Agreement and the Sale and Servicing Agreement and
the payment to the Insurer of all amounts payable or reimbursable to it pursuant
to the Sale and Servicing Agreement, or (iii) at the time provided in Section
9.2; provided, however, that the rights to indemnification under Section 8.2 and
the rights under Section 8.1 shall survive the termination of the Trust. The
Servicer shall promptly notify the Owner Trustee and the Insurer of any
prospective termination pursuant to this Section 9.1. Except as provided in
Section 9.2, the bankruptcy, liquidation, dissolution, death or incapacity of
any Certificateholder, other than the Depositor as described in Section 9.2,
shall not (x) operate to terminate this Agreement or the Trust, nor (y) entitle
such Certificateholder's legal representatives or heirs to claim an accounting
or to take any action or proceeding in any court for a partition or winding up
of all or any part of the Trust or Owner Trust Estate nor (z) otherwise affect
the rights, obligations and liabilities of the parties hereto.
(b) Except as provided in clause (a), neither the Depositor nor any
Certificateholder shall be entitled to revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the Payment Date
upon which the Certificateholders shall surrender their Certificates to the
Paying Agent for payment of the final distribution and cancellation, shall be
given by the Paying Agent by letter to Certificateholders mailed within five
Business Days of receipt of notice of such termination from the Servicer given
pursuant to Section 11.1(c) of the Sale and Servicing Agreement, stating (i) the
Payment Date upon or with respect to which final payment of the Certificates
shall be made upon presentation and surrender of the Certificates at the office
of the Paying Agent therein designated (ii) the amount of any such final payment
and (iii) that the Record Date otherwise applicable to such Payment Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office of the Trustee therein specified. The Paying Agent
shall give such notice to the Certificate Registrar (if other than the Paying
Agent) and the Trustee at the time such notice is given to Certificateholders.
Upon presentation and surrender of the Certificates, if any, the Paying Agent
shall cause to be distributed to Certificateholders amounts distributable on
such Payment Date pursuant to Section 5.7 of the Sale and Servicing Agreement
and Section 5.5 hereof.
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 Paying Agent shall give a second
written notice to the remaining Certificateholders to surrender
31
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 Paying Agent may 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. Any funds remaining in the Trust after
exhaustion of such remedies shall be distributed, subject to applicable escheat
laws, by the Paying Agent to the Depositor and Holders shall look solely to the
Depositor for payment.
(d) Any funds remaining in the Trust after funds for final distribution
have been distributed or set aside for distribution and all amounts owed to the
Owner Trustee pursuant to this Agreement have been paid shall be distributed by
the Paying Agent to the Depositor.
(e) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute.
SECTION 9.2. Dissolution upon Bankruptcy of the Depositor. In the event
that an Insolvency Event shall occur with respect to the Depositor, this
Agreement shall be terminated in accordance with Section 9.1, 90 days after the
date of such Insolvency Event, unless, before the end of such 90-day period, the
Owner Trustee shall have received written instructions from Certificateholders
holding a majority of the Certificate Balance then outstanding to the effect
that each such party disapproves of the liquidation of the Receivables and
termination of the Trust. Promptly after the occurrence of any Insolvency Event
with respect to the Depositor, (i) the Depositor shall give the Trustee, the
Owner Trustee and the Insurer written notice of such Insolvency Event, (ii) the
Owner Trustee shall, upon the receipt of such written notice from the Depositor,
give prompt written notice to the Certificateholders and the Trustee of the
occurrence of such event and (iii) the Trustee shall, upon receipt of written
notice of such Insolvency Event from the Owner Trustee or the Depositor, give
prompt written notice to the Noteholders of the occurrence of such event;
provided, however, that any failure to give a notice required by this sentence
shall not prevent or delay, in any manner, a termination of the Trust pursuant
to the first sentence of this Section 9.2. Upon a termination pursuant to this
Section, the Insurer or, if an Insurer Default has occurred and is continuing,
the Owner Trustee shall direct the Trustee promptly to sell the assets of the
Owner Trust Estate in a commercially reasonable manner and on commercially
reasonable terms. The proceeds of such a sale of the assets of the Trust shall
be treated as collections under the Sale and Servicing Agreement and shall be
distributed in accordance with Section 11.1(b) thereof.
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ARTICLE X.
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.1. Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation (i) satisfying the provisions of
Section 3807(a) of the Business Trust Statute; (ii) authorized to exercise
corporate trust powers; (iii) having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by Federal or State
authorities; and (iv) acceptable to the Insurer in its sole discretion, so long
as an Insurer Default shall not have occurred and be continuing. 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, 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
Owner Trustee shall cease to be eligible in accordance with the provisions of
this Section, the Owner Trustee shall resign immediately in the manner and with
the effect specified in Section 10.2.
SECTION 10.2. Resignation or Removal of Owner Trustee. The Owner
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Depositor, the Insurer and the Servicer.
Upon receiving such notice of resignation, the Depositor shall promptly appoint
a successor Owner Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Owner Trustee and one copy to the
successor Owner Trustee, provided that the Depositor shall have received written
confirmation from each of the Rating Agencies that the proposed appointment will
not result in an increased capital charge to the Insurer by either of the Rating
Agencies. If no successor Owner Trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Owner Trustee or the Insurer may petition any court
of competent jurisdiction for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Depositor, or if at any time the Owner Trustee
shall be legally unable to act or shall be adjudged bankrupt or insolvent, or a
receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Depositor with the consent of the Insurer (so long as an
Insurer Default shall not have occurred and be continuing) may remove the Owner
Trustee. If the Depositor shall remove the Owner Trustee under the authority of
the immediately preceding sentence, the Depositor shall promptly appoint a
successor Owner Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the outgoing Owner Trustee so removed, one copy
to the Insurer and one copy to the successor Owner Trustee and payment of all
fees owed to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this section shall
not become effective until
33
acceptance of appointment by the successor Owner Trustee pursuant to Section
10.3 and payment of all fees and expenses owed to the outgoing Owner Trustee.
The Depositor shall provide notice of such resignation or removal of the Owner
Trustee to each of the Rating Agencies.
SECTION 10.3. Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.2 shall execute, acknowledge and deliver to the
Depositor, the Servicer, the Insurer and to its predecessor Owner Trustee an
instrument accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Owner Trustee shall become effective
and such successor Owner 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
Owner Trustee. The predecessor Owner Trustee shall upon payment of its fees and
expenses deliver to the successor Owner Trustee all documents and statements and
monies held by it under this Agreement; and the Depositor and the predecessor
Owner 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 Owner Trustee all such rights, powers, duties and
obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this section, the Servicer shall mail notice of the successor of such Owner
Trustee to all Certificateholders, the Trustee, the Noteholders and the Rating
Agencies. If the Servicer shall fail to mail such notice within 10 days after
acceptance of appointment by the successor Owner Trustee, the successor Owner
Trustee shall cause such notice to be mailed at the expense of the Servicer.
SECTION 10.4. Merger or Consolidation of Owner Trustee. Any corporation
into which the Owner 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 Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, provided
such corporation shall be eligible pursuant to Section 10.1, without the
execution or filing of any instrument or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding; provided
further that the Owner Trustee shall mail notice of such merger or consolidation
to the Rating Agencies.
SECTION 10.5. Appointment of Co-Trustee or 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 Owner Trust Estate or any Financed Vehicle may at the time be located,
the Servicer and the Owner Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved by
the Owner Trustee and the Insurer to act as co-trustee, jointly with the Owner
Trustee, or
34
separate trustee or separate trustees, of all or any part of the owner Trust
Estate, and to vest in such Person, in such capacity, such title to the Trust,
or any part thereof, and, subject to the other provisions of this Section, such
powers, duties, obligations, rights and trusts as the Servicer and the Owner
Trustee may consider necessary or desirable. If the Servicer shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, the Owner Trustee subject, unless an Insurer Default shall have
occurred and be continuing, to the approval of the Insurer (which approval shall
not be unreasonably withheld) 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 10.1 and no
notice of the appointment of any co-trustee or separate trustee shall be
required pursuant to Section 10.3.
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 Owner Trustee shall be conferred upon and exercised or
performed by the Owner 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 Owner 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,
the Owner Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in
any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the
Owner 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) the Servicer and the Owner 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 Owner Trustee shall
be deemed to have been given to each of the 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. 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 Owner
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 Owner Trustee. Each such instrument shall be filed with the Owner
Trustee and a copy thereof given to the Servicer and the Insurer.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any
35
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 Owner Trustee, to the extent
permitted by law, without the appointment of a new or successor trustee.
ARTICLE XI.
Miscellaneous
SECTION 11.1. Supplements and Amendments. (a) This Agreement may be
amended by the Depositor and the Owner Trustee, with the prior written consent
of the Insurer (so long as an Insurer Default shall not have occurred and be
continuing) and with prior written notice to the Rating Agencies, without the
consent of any of the Noteholders or the Certificateholders, (i) to cure any
ambiguity or defect or (ii) to correct, supplement or modify any provisions in
this Agreement; provided, however, that such action shall not, as evidenced by
an Opinion of Counsel which may be based upon a certificate of the Servicer,
adversely affect in any material respect the interests of any Noteholder or
Certificateholder.
(b) This Agreement may also be amended from time to time, with the
prior written consent of the Insurer (so long as an Insurer Default shall not
have occurred and be continuing) by the Depositor and the Owner Trustee, with
prior written notice to the Rating Agencies, to the extent such amendment
materially and adversely affects the interests of the Noteholders, with the
consent of the Noteholders evidencing not less than a majority of the
Outstanding Amount of the Notes and, the consent of the Certificateholders
evidencing not less than a majority by aggregate Certificate Balance (which
consent of any Holder of a Certificate or Note 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 or Note and
of any Certificate or Note 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 or Note) for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders or the Certificateholders;
provided, however, that, subject to the express rights of the Insurer under the
Basic Documents, no such amendment shall (a) increase or reduce in any manner
the amount of, or accelerate or delay the timing of, collections of payments on
Receivables or distributions that shall be required to be made for the benefit
of the Noteholders or the Certificateholders or (b) reduce the aforesaid
percentage of the outstanding Amount of the Notes and the Certificate Balance
required to consent to any such amendment, without the consent of the Holders of
all the outstanding Notes and Holders of all outstanding Certificates.
Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Trustee and each of the
Rating Agencies.
36
It shall not be necessary for the consent of Certificateholders, the
Noteholders or the Trustee pursuant to this Section to approve the particular
form of any proposed amendment or consent, but it shall be sufficient if such
consent shall approve the substance thereof. The manner of obtaining such
consents (and any other consents of Certificateholders provided for in this
Agreement or in any other Basic Document) and of evidencing the authorization of
the execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe. Promptly after the execution of
any amendment to the Certificate of Trust, the Owner Trustee shall cause the
filing of such amendment with the Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner 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 that all conditions precedent to
the execution and delivery of such amendment have been satisfied. The Owner
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Owner Trustee's own rights, duties or immunities under this
Agreement or otherwise.
SECTION 11.2. No Legal Title to Owner Trust Estate in
Certificateholders. The Certificateholders shall not have legal title to any
part of the Owner Trust Estate. The Certificateholders shall be entitled to
receive distributions with respect to their undivided ownership interest therein
only in accordance with Article IX. No transfer, by operation of law or
otherwise, of any right, title or interest of the Certificateholders to and in
their ownership interest in the Owner Trust Estate shall operate to terminate
this Agreement or the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any part of the Owner
Trust Estate.
SECTION 11.3. Limitations on Rights of Others. Except for Section 2.7,
the provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Depositor, the Certificateholders, the Servicer and, to the extent
expressly provided herein, the Insurer, the Trustee and the Noteholders, and
nothing in this Agreement, whether express or implied, shall be construed to
give to any other Person any legal or equitable right, remedy or claim in the
Owner Trust Estate or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.
SECTION 11.4. Notices. (a) Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt personally delivered, delivered by overnight courier
or mailed first class mail or certified mail, in each case return receipt
requested, and shall be deemed to have been duly given upon receipt, if to the
Owner Trustee, addressed to the Corporate Trust Office; if to the Depositor,
addressed to CPS Receivables Corp., 2 Ada, Irvine, California 92618; if to the
Note Insurer, addressed to Financial Security Assurance Inc., 350 Park Avenue,
New York, New York 10022, Attention: Senior Vice President Surveillance
(Telecopy: (212) 339-3547); (in each case in which notice or other communication
to the Note Insurer refers to an Event of Default, a claim on the Policy or with
respect to which failure on the part of the Note Insurer to respond shall be
deemed to constitute consent or acceptance, then a copy of such notice or other
communication should also be sent to
37
the attention of the General Counsel and the Head-Financial Guaranty Group
"URGENT MATERIAL ENCLOSED"); or, as to each party, at such other address as
shall be designated by such party in a written notice to each other party.
(b) Any notice required or permitted to be given to a Certificateholder
shall be given by first-class mail, 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 receives such notice.
SECTION 11.5. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.6. Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.7. Assignments; Insurer. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Upon issuance of the Note Policy, this
Agreement shall also inure to the benefit of the Insurer for so long as an
Insurer Default shall not have occurred and be continuing. Without limiting the
generality of the foregoing, all covenants and agreements in this Agreement
which confer rights upon the Insurer shall be for the benefit of and run
directly to the Insurer, and the Insurer shall be entitled to rely on and
enforce such covenants, subject, however, to the limitations on such rights
provided in this Agreement and the Basic Documents. The Insurer may disclaim any
of its rights and powers under this Agreement (but not its duties and
obligations under the Policies) upon delivery of a written notice to the Owner
Trustee.
SECTION 11.8. No Petition. The Owner Trustee (not in its individual
capacity but solely as Owner Trustee), by entering into this Agreement, each
Certificateholder, by accepting a Certificate, and the Trustee and each
Noteholder by accepting the benefits of this Agreement, hereby covenants and
agrees that it will not at any time institute against the Depositor, or join in
any institution against the Depositor of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Certificates, the Notes, this Agreement or any
of the Basic Documents.
SECTION 11.9. No Recourse. Each Certificateholder, by accepting a
Certificate, acknowledges that such Certificateholder's Certificates represent
beneficial interests in the Trust only and do not represent interests in or
obligations of the Depositor, the Servicer, the Depositor, the Owner Trustee,
the Trustee, the Insurer or any Affiliate thereof and no recourse may be had
38
against such parties or their assets, except as may be expressly set forth or
contemplated in this Agreement, the Certificates or the Basic Documents.
SECTION 11.10. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.11. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.12. Servicer. The Servicer is authorized to prepare, or
cause to be prepared, execute and deliver on behalf of the Trust all such
documents, reports, filings, instruments, certificates and opinions as it shall
be the duty of the Trust or Owner Trustee to prepare, file or deliver pursuant
to the Basic Documents. Upon written request, the Owner Trustee shall execute
and deliver to the Servicer a limited power of attorney appointing the Servicer
the Trust's agent and attorney-in-fact to prepare, or cause to be prepared,
execute and deliver all such documents, reports, filings, instruments,
certificates and opinions.
ARTICLE XII.
Amendment and Restatement
SECTION 12.1. Amendment and Restatement. The parties hereby agree that
this Amended and Restated Trust Agreement replaces and supersedes the Original
Agreement.
39
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed by their respective officers hereunto duly authorized as of
the day and year first above written.
BANKERS TRUST (DELAWARE), as
Owner Trustee
By:
Name:
Title:
CPS RECEIVABLES CORP., as
Depositor
By:
Name:
Title:
40
EXHIBIT A
NUMBER $______________
R-
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, TO A PERSON WHOM THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT,
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, AND SUBJECT TO THE RECEIPT BY THE CERTIFICATE
REGISTRAR AND THE DEPOSITOR OF A TRANSFEREE CERTIFICATE, (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 CERTIFICATE REGISTRAR AND THE DEPOSITOR, OF A
CERTIFICATION OF THE TRANSFEREE (SATISFACTORY TO THE CERTIFICATE REGISTRAR AND
THE DEPOSITOR) AND AN OPINION OF COUNSEL (SATISFACTORY TO THE CERTIFICATE
REGISTRAR AND THE DEPOSITOR) TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE
WITH THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND IN COMPLIANCE WITH THE
TRANSFER REQUIREMENTS SET FORTH IN SECTION 3.4 OF THE TRUST 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 PRINCIPAL OF THIS CERTIFICATE IS DISTRIBUTABLE IN INSTALLMENTS AS
SET FORTH IN THE TRUST AGREEMENT. ACCORDINGLY, THE
OUTSTANDING PRINCIPAL OF THIS CERTIFICATE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
[THIS CERTIFICATE IS NOT TRANSFERABLE]1/
10.65% ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in certain distributions of the
Trust, as defined below, the property of which includes a pool of retail
installment sale contracts secured by new or used automobiles, vans or light
duty trucks and sold to the Trust by CPS Receivables Corp.
(This Certificate does not represent an interest in or obligation of CPS
Receivables Corp. or any of its Affiliates, except to the extent described
below.)
- --------
1/ To be inserted on the Certificate to be held by the Depositor.
2
THIS CERTIFIES THAT ___________________ is the registered owner of [ ]
Dollars nonassessable, fully-paid, beneficial interest in certain distributions
of CPS Auto Receivables Trust 1997-3 (the "Trust") formed by CPS Receivables
Corp., a California corporation.
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Trust Agreement.
BANKERS TRUST (DELAWARE) BANKERS TRUST (DELAWARE)
not in its individual not in its individual
capacity but solely or capacity but solely as
as Owner Trustee Owner Trustee
By: By: Bankers Trust Company
Authenticating Agent
By:
The Trust was created pursuant to a Trust Agreement dated as of August
14, 1997, between the Depositor and Bankers Trust (Delaware), as owner trustee
(the "Owner Trustee") as amended by an amendment, dated as of August 19, 1997,
between the Depositor and the Owner Trustee (the "Trust Agreement"), 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 Trust Agreement.
This Certificate is one of the duly authorized Certificates designated
as "Asset Backed Certificates" (herein called the "Certificates"). Issued under
the Indenture, dated as of August 1, between the Trust and Norwest Bank
Minnesota, National Association, as trustee and collateral agent, are three
classes of Notes designated as "Class A-1 6.10% Asset Backed Notes" (the "Class
A-1 Notes"), "Class A-2 6.38% Asset Backed Notes" (the "Class A-2 Notes",
together with the Class A-1 Notes, the "Class A Notes") and "Class B 10.65%
Asset Backed Notes" (the "Class B Notes" and, together with the Class A Notes,
the "Notes"). This Certificate is issued under and is subject to the terms,
provisions and conditions of the Trust Agreement, to which Trust Agreement the
holder of this 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 secured by new and used automobiles, vans or light
duty trucks (the "Receivables"), all monies due thereunder on or after the
Initial Cutoff Date, security interests in the vehicles financed thereby,
certain bank accounts and the proceeds thereof, proceeds from claims on certain
insurance policies and certain other rights under the Trust Agreement and the
Sale and Servicing Agreement, all right, to and interest of the Depositor in and
to the Purchase Agreement
3
dated as of August 1, 1997 between Consumer Portfolio Services, Inc. and the
Depositor, all right to and interest of the Depositor in and to the Purchase
Agreement dated as of August 1, 1997 between Samco Acceptance Corp. and the
Depositor, and all proceeds of the foregoing.
Under the Trust Agreement, there will be distributed on the 5th day of
each month or, if such 15th day is not a Business Day, the next Business Day
(the "Payment Date"), commencing on September 15, 1997, to the Person in whose
name this Certificate is registered at the close of business on the Business Day
preceding such Payment Date (the "Record Date") such Certificateholder's
fractional undivided interest in the amount to be distributed to
Certificateholders on such Payment Date.
The holder of this Certificate acknowledges and agrees that its rights
to receive distributions in respect of this Certificate are subordinated to the
rights of the Noteholders as described in the Sale and Servicing Agreement, the
Indenture and the Trust Agreement, as applicable.
It is the intent of the Depositor, Servicer, and Certificateholders
that, for purposes of Federal income taxes, the Trust will be treated as a
partnership and the Certificateholders (including the Depositor) will be treated
as partners in that partnership. The Depositor and the other Certificateholders
by acceptance of a Certificate, agree to treat, and to take no action
inconsistent with the treatment of, the Certificates for such tax purposes as
partnership interests in the Trust. Each Certificateholder, by its acceptance of
a Certificate, covenants and agrees that such Certificateholder will not at any
time institute against the Trust or the Depositor, or join in any institution
against the Trust or the Depositor of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Certificates, the Notes, the Trust Agreement or
any of the Basic Documents.
Distributions on this Certificate will be made as provided in the Trust
Agreement by the Owner Trustee or its agent by wire transfer or check mailed to
the Certificateholder of record in the Certificate Register without the
presentation or surrender of this Certificate or the making of any notation
hereon. Except as otherwise provided in the Trust Agreement and notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Owner Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for the purpose by the Owner Trustee in the Borough of Manhattan, The
City of New York.
Reference is hereby made to the further provisions of this 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 Owner Trustee or its agent, by manual
signature, this Certificate shall not entitle
4
the holder hereof to any benefit under the Trust Agreement or the Sale and
Servicing Agreement or be valid for any purpose.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE IN ACCORDANCE
WITH SUCH LAWS.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not
in its individual capacity, has caused this Certificate to be duly executed.
CPS AUTO RECEIVABLES TRUST 1997-3
By: BANKERS TRUST (DELAWARE), not in its
individual capacity, but solely as
Owner Trustee
By: _______________________________
Name:
Title:
Date: ______________________
5
(Reverse of Certificate)
The Certificates do not represent an obligation of, or an interest in
the Servicer, the Depositor, the Owner Trustee or any Affiliates of any of them
and no recourse may be had against such parties or their assets, except as may
be expressly set forth or contemplated herein or in the Trust Agreement, the
Indenture or the Basic Documents. In addition, this Certificate is not
guaranteed by any governmental agency or instrumentality and is limited in right
of payment to certain collections with respect to the Receivables, all as more
specifically set forth herein and in the Sale and Servicing Agreement. A copy of
each of the Sale and Servicing Agreement and the Trust Agreement may be examined
during normal business hours at the principal office of the Depositor, and at
such other places, if any, designated by the Depositor, by any Certificateholder
upon written request.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Trust Agreement at
any time by the Depositor and the Owner Trustee with the consent of the holders
of the Notes and the Certificates evidencing not less than a majority of the
outstanding principal balance of the Notes and the 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. The Trust
Agreement also permits the amendment thereof, in certain limited circumstances,
without the consent of the holders of any of the Certificates.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained by
the Owner Trustee in the Borough of Manhattan, The City of New York, accompanied
by a written instrument of transfer in form satisfactory to the Owner 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 in authorized denominations evidencing the same aggregate interest
in the Trust will be issued to the designated transferee. The initial
Certificate Registrar appointed under the Trust Agreement is Bankers Trust
Company.
Except for Certificates issued to the Depositor, the Certificates are
issuable only as registered Certificates without coupons in denominations of
$1,000 or integral multiples thereof. As provided in the Trust Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates in 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 Owner
Trustee or the Certificate Registrar may require payment of a sum sufficient to
cover any tax or governmental charge payable in connection therewith.
6
The Owner Trustee, the Certificate Registrar, the Insurer and any agent
of the Owner Trustee, the Certificate Registrar or the Insurer may treat the
person in whose name this Certificate is registered as the owner hereof for all
purposes, and none of the Owner Trustee, the Certificate Registrar, the Insurer
nor any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Trust 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 Trust Agreement and
the Sale and Servicing Agreement and the disposition of all property held as
part of the Trust. The Servicer of the Receivables may at its option (i) sell in
a public auction all remaining Receivables on or after the last day of any month
as of which the then outstanding Pool Balance is equal to 15% or less of the
Original Pool Balance or (ii) purchase all remaining Receivables from the Trust
on or after the last day of any month as of which the then outstanding Pool
Balance is equal to 10% or less of the Original Pool Balance. The Certificates
are also subject to mandatory prepayment, pro rata on the basis of the initial
Certificate Balance, on the Payment Date on or immediately following the last
day of the Funding Period in the event that any portion of the Pre-Funded Amount
remains on deposit in the Pre-Funding Account after giving effect to the
purchase of all Subsequent Receivables, including any purchase of Subsequent
Receivables on such date. The aggregate principal amount of the Certificates to
be prepaid will be an amount equal to the Certificate Prepayment Amount.
The Certificates may not be acquired by (a) an employee benefit plan
(as defined in Section 3(3) of ERISA) that is subject to the provisions of Title
I of ERISA, (b) a plan described in Section 4975(e) (1) of the Code or (c) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity (each, a "Benefit Plan"). By accepting and holding this
Certificate, the Holder hereof shall be deemed to have represented and warranted
that it is not a Benefit Plan.
The recitals contained herein shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Certificate or of any
Receivable or related document.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee or its agent, by manual
or facsimile signature, this Certificate shall not entitle the holder hereof to
any benefit under the Trust Agreement or the Sale and Servicing Agreement or be
valid for any purpose.
7
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 type 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:
_______________________*
Signature
Guaranteed:
_______________________*
________________
* NOTICE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within
Certificate in every particular, without alteration, enlargement or any
change whatever. Such signature must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the Certificate
Registrar, which requirements include membership or participation in
STAMP or such other "signature guarantee program" as may be determined
by the Certificate Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.
EXHIBIT B
[FORM OF]
CERTIFICATE OF TRUST OF
CPS AUTO RECEIVABLES TRUST 1997-3
This Certificate of Trust of CPS Auto Receivables Trust 1997-3 (the
"Trust"), dated as of ___________, 199_, is being duly executed and filed by
_______________________________, a ____________, and ______________, an
individual, as trustees, to form a business trust under the Delaware Business
Trust Act (12 Del. Code, ss. 3801 et seq.).
1. Name. The name of the business trust formed hereby is CPS Auto
Receivables Trust 1997-3.
2. This Certificate of Trust will be effective ______ __, 199_.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
BANKERS TRUST (DELAWARE),
not in its individual capacity, but
solely as owner trustee of the Trust.
By:
Name:
Title:
Exhibit 4.2
Indenture
[EXECUTION COPY]
CPS AUTO RECEIVABLES TRUST 1997-3
Class A-1 6.10% Asset-Backed Notes
Class A-2 6.38% Asset-Backed Notes
Class B 10.65% Asset-Backed Notes
---------------------------------
INDENTURE
Dated as of August 1, 1997
-----------------------------------
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Trustee
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1. Definitions....................................................3
SECTION 1.2. Incorporation by Reference
of Trust Indenture Act......................................13
SECTION 1.3. Other Definitional Provisions.................................13
ARTICLE II
The Notes
SECTION 2.1. Form.........................................................14
SECTION 2.2. Execution, Authentication and Delivery.......................14
SECTION 2.3. Temporary Notes..............................................15
SECTION 2.4. Registration; Registration
of Transfer and Exchange...................................16
SECTION 2.5. Mutilated, Destroyed, Lost or Stolen Notes...................20
SECTION 2.6. Persons Deemed Owner.........................................21
SECTION 2.7. Payment of Principal and Interest;
Defaulted Interest.........................................21
SECTION 2.8. Cancellation.................................................22
SECTION 2.9. Release of Collateral........................................23
SECTION 2.10. Book-Entry Notes.............................................23
SECTION 2.11. Notices to Clearing Agency...................................24
SECTION 2.12. Definitive Notes.............................................24
ARTICLE III
Covenants
SECTION 3.1. Payment of Principal and Interest...........................25
SECTION 3.2. Maintenance of Office or Agency.............................25
SECTION 3.3. Money for Payments to be Held in Trust......................25
SECTION 3.4. Existence...................................................27
SECTION 3.5. Protection of Trust Estate..................................27
SECTION 3.6. Opinions as to Trust Estate.................................28
SECTION 3.7. Performance of Obligations;
Servicing of Receivables..................................29
SECTION 3.8. Negative Covenants..........................................30
SECTION 3.9. Annual Statement as to Compliance...........................31
SECTION 3.10. Issuer May Consolidate, Etc.
Only on Certain Terms.....................................31
SECTION 3.11. Successor or Transferee.....................................34
SECTION 3.12. No Other Business...........................................34
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SECTION 3.13. No Borrowing................................................34
SECTION 3.14. Servicer's Obligations......................................34
SECTION 3.15. Guarantees, Loans, Advances
and Other Liabilities.....................................34
SECTION 3.16. Capital Expenditures........................................35
SECTION 3.17. Compliance with Laws........................................35
SECTION 3.18. Restricted Payments.........................................35
SECTION 3.19. Notice of Events of Default.................................35
SECTION 3.20. Further Instruments and Acts................................36
SECTION 3.21. Amendments of Sale and Servicing Agreement and Trust
Agreement.................................................36
SECTION 3.22. Income Tax Characterization.................................36
ARTICLE IV
Satisfaction and Discharge
SECTION 4.1. Satisfaction and Discharge of Indenture.....................36
SECTION 4.2. Application of Trust Money..................................37
SECTION 4.3. Repayment of Moneys Held by Note Paying Agent...............37
ARTICLE V
Remedies
SECTION 5.1. Events of Default...........................................37
SECTION 5.2. Rights Upon Event of Default................................39
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement
by Trustee................................................41
SECTION 5.4. Remedies....................................................44
SECTION 5.5. Optional Preservation of the Receivables....................45
SECTION 5.6. Priorities..................................................46
SECTION 5.7. Limitation of Suits.........................................47
SECTION 5.8. Unconditional Rights of Noteholders
To Receive Principal and Interest.........................48
SECTION 5.9. Restoration of Rights and Remedies..........................48
SECTION 5.10. Rights and Remedies Cumulative..............................49
SECTION 5.11. Delay or Omission Not a Waiver..............................49
SECTION 5.12. Control by Noteholders......................................49
SECTION 5.13. Waiver of Past Defaults.....................................50
SECTION 5.14. Undertaking for Costs.......................................50
SECTION 5.15. Waiver of Stay or Extension Laws............................51
ARTICLE VI
The Trustee
SECTION 6.1. Duties of Trustee............................................51
SECTION 6.2. Rights of Trustee............................................53
SECTION 6.3. Individual Rights of Trustee.................................54
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SECTION 6.4. Trustee's Disclaimer.......................................54
SECTION 6.5. Notice of Defaults.........................................55
SECTION 6.6. Reports by Trustee to Holders..............................55
SECTION 6.7. Compensation and Indemnity.................................55
SECTION 6.8. Replacement of Trustee.....................................56
SECTION 6.9. Successor Trustee by Merger................................57
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee..............58
SECTION 6.11. Eligibility: Disqualification..............................59
SECTION 6.12. Preferential Collection of Claims Against Issuer...........60
SECTION 6.13. Appointment and Powers.....................................60
SECTION 6.14. Performance of Duties......................................60
SECTION 6.15. Limitation on Liability....................................60
SECTION 6.16. Reliance Upon Documents....................................61
SECTION 6.17. Successor Trustee..........................................61
SECTION 6.18. [Reserved].................................................63
SECTION 6.19. Representations and Warranties of the Trustee..............63
SECTION 6.20. Waiver of Setoffs..........................................64
SECTION 6.21. Control by the Controlling Party...........................64
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.1. Issuer To Furnish To Trustee Names and Addresses of
Noteholders...............................................64
SECTION 7.2. Preservation of Information; Communications to
Noteholders...............................................64
SECTION 7.3. Reports by Issuer...........................................65
SECTION 7.4. Reports by Trustee..........................................65
ARTICLE VIII
Collection of Money and Releases of Trust Estate
SECTION 8.1. Collection of Money.........................................66
SECTION 8.2. Release of Trust Estate.....................................66
SECTION 8.3. Opinion of Counsel..........................................66
ARTICLE IX
Supplemental Indentures
SECTION 9.1. Supplemental Indentures Without Consent of Noteholders......67
SECTION 9.2. Supplemental Indentures with Consent of Noteholders.........68
SECTION 9.3. Execution of Supplemental Indentures........................70
SECTION 9.4. Effect of Supplemental Indenture............................70
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SECTION 9.5. Conformity With Trust Indenture Act.........................71
SECTION 9.6. Reference in Notes to Supplemental Indentures...............71
ARTICLE X
Redemption of Notes
SECTION 10.1. Redemption..................................................71
SECTION 10.2. Form of Redemption Notice...................................72
SECTION 10.3. Notes Payable on Redemption Date............................73
ARTICLE XI
Miscellaneous
SECTION 11.1. Compliance Certificates and Opinions, etc...................73
SECTION 11.2. Form of Documents Delivered to Trustee......................75
SECTION 11.3. Acts of Noteholders.........................................76
SECTION 11.4. Notices, etc., to Trustee, Issuer and Rating Agencies.......76
SECTION 11.5. Notices to Noteholders; Waiver..............................78
SECTION 11.6. Alternate Payment and Notice Provisions.....................78
SECTION 11.7. Conflict with Trust Indenture Act...........................79
SECTION 11.8. Effect of Headings and Table of Contents....................79
SECTION 11.9. Successors and Assigns......................................79
SECTION 11.10. Severability................................................79
SECTION 11.11. Benefits of Indenture.......................................79
SECTION 11.12. Legal Holidays..............................................80
SECTION 11.13. Governing Law...............................................80
SECTION 11.14. Counterparts................................................80
SECTION 11.15. Recording of Indenture......................................80
SECTION 11.16. Trust Obligation............................................80
SECTION 11.17. No Petition.................................................81
SECTION 11.18. Inspection..................................................81
Exhibit A-1 Form of Class A-1 Note
Exhibit A-2 Form of Class A-2 Note
Exhibit B Form of Class B Note
Exhibit C Transference Certificate
Exhibit D Form of Depository Agreement
- iv -
INDENTURE dated as of August 1, 1997, between CPS AUTO RECEIVABLES
TRUST 1997-3, a Delaware business trust (the "Issuer"), and NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION, a national banking association, as trustee (the
"Trustee").
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the Holders of the Issuer's Class A-1 6.10%
Asset-Backed Notes (the "Class A-1 Notes"), Class A-2 6.38% Asset-Backed Notes
(the "Class A-2 Notes" and, together with the Class A-1 Notes, the "Class A
Notes") and Class B 10.65% Asset-Backed Notes (the "Class B Notes" and, together
with the Class A Notes, the "Notes"):
As security for the payment and performance by the Issuer of its
obligations under this Indenture and the Notes, the Issuer has agreed to assign
the Collateral (as defined below) as collateral to the Trustee for the benefit
of the Noteholders.
Financial Security Assurance Inc. (the "Note Insurer") has issued and
delivered a financial guaranty insurance policy, dated the Closing Date (with
endorsements, the "Note Policy"), pursuant to which the Note Insurer guarantees
Scheduled Payments, as defined in the Note Policy.
As an inducement to the Note Insurer to issue and deliver the Note
Policy, the Issuer and the Note Insurer have executed and delivered the
Insurance and Indemnity Agreement, dated as of August 1, 1997 (as amended from
time to time, the "Insurance Agreement") among the Note Insurer, the Issuer,
Consumer Portfolio Services, Inc., and CPS Receivables Corp.
As an additional inducement to the Note Insurer to issue the Note
Policy, and as security for the performance by the Issuer of the Insurer Secured
Obligations and as security for the performance by the Issuer of the Trustee
Secured Obligations, the Issuer has agreed to assign the Collateral (as defined
below) as collateral to the Trustee for the benefit of the Issuer Secured
Parties, as their respective interests may appear.
GRANTING CLAUSE
The Issuer hereby Grants to the Trustee at the Closing Date,
for the benefit of the Issuer Secured Parties,
(i) all right, title and interest of the Issuer in and to the
Initial Receivables listed in Schedule A to the Sale and Servicing
Agreement and, with respect to Initial 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 Issuer or CPS on or before the
Cutoff Date) and, with respect to Initial 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 Initial Receivables after the Cutoff Date;
(ii) all right, title and interest of the Seller in and to the
Subsequent Receivables listed in Schedule A to the related Subsequent
Transfer Agreement and, with respect to Subsequent Receivables that are
Rule of 78's Receivables, all monies due or to become due thereon after
the related Subsequent Cutoff Date (including Scheduled Payments due
after the related Subsequent Cutoff Date (including principal
prepayments relating to such Scheduled Payments) but received by the
Seller or CPS on or before the related Subsequent Cutoff Date) and,
with respect to Subsequent Receivables that are Simple Interest
Receivables, all monies received thereunder after the related
Subsequent Cutoff Date and all Liquidation Proceeds and Recoveries
received with respect to such Subsequent Receivables on or after the
related Subsequent Cutoff Date;
(iii) all right, title and interest of the Issuer in and to
the security interests in the Financed Vehicles granted by Obligors
pursuant to the Receivables and any other interest of the Issuer 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;
(iv) all right, title and interest of the Issuer 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;
(v) all right, title and interest of the Issuer in and to the
Purchase Agreements, including a direct right to cause CPS to purchase
Receivables under certain circumstances;
(vi) the Issuer's rights and benefits, but none of its
obligations or burdens, under the Sale and Servicing Agreement
(including all rights of the Seller under the Purchase Agreements), any
Subsequent Purchase Agreement and any Subsequent Transfer Agreement
assigned to the Issuer pursuant to the Sale and Servicing Agreement;
(vii) all right, title and interest of the Issuer in and to
refunds for the costs of extended service contracts with
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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;
(viii) the Receivable File related to each Initial Receivable;
(ix) all amounts and property from time to time held in or
credited to the Collection Account, the Note Distribution Account, the
Pre-Funding Account or the Interest Reserve Account; and
(x) all present and future claims, demands, causes and chooses
in action in respect of any or all of the foregoing and all payments on
or under and all proceeds of every kind and nature whatsoever in
respect of any or all of the foregoing, including all proceeds of the
conversion, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every kind
and other forms of obligations and receivables, instruments and other
property which at any time constitute all or part of or are included in
the proceeds of any of the foregoing (collectively, the "Collateral").
In addition, the Issuer shall cause the Note Policy to be issued for the benefit
of the Class A Noteholders.
The foregoing Grant is made in trust to the Trustee, for the benefit of
the Holders of the Notes and for the benefit of the Note Insurer. The Trustee
hereby acknowledges such Grant, accepts the trusts under this Indenture in
accordance with the provisions of this Indenture and agrees to perform its
duties required in this Indenture to the best of its ability to the end that the
interests of such parties, recognizing the priorities of their respective
interests may be adequately and effectively protected.
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1. Definitions. Except as otherwise specified herein, the
following terms have the respective meanings set
- 3 -
forth below for all purposes of this Indenture and the definitions of such terms
are equally applicable to both the singular and plural forms of such terms and
to each gender.
Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in the Sale and Servicing Agreement or, if
not defined therein, in the Trust Agreement.
"Act" has the meaning specified in Section 11.3(a).
"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.
"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.
"Authorized Officer" means, with respect to the Issuer and the
Servicer, any officer or agent acting pursuant to a power of attorney of the
Owner Trustee or the Servicer, as applicable, who is authorized to act for the
Owner Trustee or the Servicer, as applicable, in matters relating to the Issuer
and who is identified on the list of Authorized Officers delivered by each of
the Owner Trustee and the Servicer to the Trustee on the Closing Date (as such
list may be modified or supplemented from time to time thereafter).
"Basic Documents" means this Indenture, the Certificate of Trust, the
Trust Agreement, the Sale and Servicing Agreement, the Master Spread Account
Agreement, the Master Spread Account Agreement Supplement, the Insurance
Agreement and other documents and certificates delivered in connection
therewith.
"Book Entry Notes" means a beneficial interest in the Class A Notes,
ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 2.10.
"Business Day" means (i) with respect to the Note Policy, any day other
than a Saturday, Sunday, legal holiday or other day
- 4 -
on which commercial banking institutions in Wilmington, Delaware, the City of
New York, Minneapolis, Minnesota, or the state in which the principal Corporate
Trust Office of the Trustee is located or any other location of any successor
Servicer, successor Owner Trustee or successor Trustee are authorized or
obligated by law, executive order or governmental decree to be closed and (ii)
otherwise, a day other than a Saturday, a Sunday or other day on which
commercial banks located in the states of Delaware, Minnesota, California or New
York are authorized or obligated to be closed.
"Certificate of Trust" means the certificate of trust of the Issuer
substantially in the form of Exhibit B to the Trust Agreement.
"Class A-1 Interest Rate" means 6.10% per annum.
"Class A-1 Notes" means the Class A-1 6.10% Asset-Backed Notes,
substantially in the form of Exhibit A-1.
"Class A-1 Prepayment Amount" means, as of the Payment Date on or
immediately following the last day of the Funding Period, after giving effect to
any transfer of Subsequent Receivables on such date, an amount equal to the
Class A-1 Noteholders' pro rata share (based on the respective current
outstanding principal balance of each class of Notes) of the Pre-Funded Amount
as of such Payment Date.
"Class A-2 Interest Rate" means 6.38% per annum.
"Class A-2 Notes" means the Class A-2 6.38% Asset-Backed Notes,
substantially in the form of Exhibit A-2.
"Class A-2 Prepayment Amount" means, as of the Payment Date on or
immediately following the last day of the Funding Period, after giving effect to
any transfer of Subsequent Receivables on such date, an amount equal to the
Class A-2 Noteholders' pro rata share (based on the respective current
outstanding principal balance of each class of Notes) of the Pre-Funded Amount
as of such Payment Date.
"Class B Interest Rate" means 10.65% per annum.
"Class B Notes" means the Class B 10.65% Asset-Backed Notes,
substantially in the form of Exhibit B.
"Class B Prepayment Amount" means as of the Payment Date on or
immediately following the last day of the Funding Period, after giving effect to
any transfer of Subsequent Receivables on such date, an amount equal to the
Class B Noteholders' pro rata share (based on the respective current outstanding
principal
- 5 -
balance of each class of Notes) of the Pre-Funded Amount as of such Payment
Date.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act, or any successor provision
thereto. The initial Clearing Agency shall be The Depository Trust Company.
"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 August 19, 1997.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning specified in the Granting
Clause of this Indenture.
"Controlling Party" has the meaning specified in the Sale and Servicing
Agreement.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered
which office at date of the execution of this Agreement is located at Sixth
Street and Marquette Avenue, Minneapolis, Minnesota 55479-0070, Attention:
Corporate Trust Services--Asset-Backed Administration, or at such other address
as the Trustee may designate from time to time by notice to the Noteholders, the
Note Insurer, the Servicer and the Issuer, or the principal corporate trust
office of any successor Trustee (the address of which the successor Trustee will
notify the Noteholders and the Issuer).
"Default" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"Definitive Notes" has the meaning specified in Section 2.10.
"Depositor" means the Seller, in its capacity as such under
the Trust Agreement.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
- 6 -
"Executive Officer" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, President,
Executive Vice President, any Vice President, the Secretary or the Treasurer of
such corporation; with respect to any limited liability company, the manager;
and with respect to any partnership, any general partner thereof.
"Grant" means to mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this Indenture. A Grant of the Collateral or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the Granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
proceedings in the name of the Granting party or otherwise and generally to do
and receive anything that the Granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Note Register.
"Indebtedness" means, with respect to any Person at any time, (a)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (including trade obligations); (b)
obligations of such Person as lessee under leases which should be, in accordance
with generally accepted accounting principles, recorded as capital leases; (c)
current liabilities of such Person in respect of unfunded vested benefits under
plans covered by Title IV of ERISA; (d) obligations issued for or liabilities
incurred on the account of such Person; (e) obligations or liabilities of such
Person arising under acceptance facilities; (f) obligations of such Person under
any guarantees, endorsements (other than for collection or deposit in the
ordinary course of business) and other contingent obligations to purchase, to
provide funds for payment, to supply funds to invest in any Person or otherwise
to assure a creditor against loss; (g) obligations of such Person secured by any
lien on property or assets of such Person, whether or not the obligations have
been assumed by such Person; or (h) obligations of such Person under any
interest rate or currency exchange agreement.
- 7 -
"Indenture" means this Indenture as amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Independent" means, when used with respect to any specified Person,
that the person (a) is in fact independent of the Issuer, any other obliger upon
the Notes, the Seller and any Affiliate of any of the foregoing persons, (b)
does not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obliger, the Seller or any Affiliate of
any of the foregoing Persons and (c) is not connected with the Issuer, any such
other obliger, the Seller or any Affiliate of any of the foregoing Persons as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1, prepared by an
Independent appraiser or other expert appointed by an Issuer Order and approved
by the Trustee in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read the definition of "Independent"
in this Indenture and that the signer is Independent within the meaning thereof.
"Insurance Agreement Indenture Cross Default" has the meaning specified
therefor in the Insurance Agreement.
"Insurer Secured Obligations" means all amounts and obligations which
the Issuer may at any time owe to or on behalf of the Note Insurer under this
Indenture, the Insurance Agreement or any other Basic Document.
"Interest Rate" means, with respect to the (i) Class A-1 Notes, the
Class A-1 Interest Rate, (ii) Class A-2 Notes, the Class A-2 Interest Rate and
(iii) Class B Notes, the Class B Interest Rate.
"Issuer" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the Notes.
"Issuer Order" and "Issuer Request" means a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Trustee.
"Issuer Secured Obligations" means the Insurer Secured Obligations and
the Trustee Secured obligations.
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"Issuer Secured Parties" means each of the Trustee, in respect of the
Trustee Secured Obligations, and the Note Insurer, in respect of the Insurer
Secured Obligations.
"Note" means a Class A-1 Note, a Class A-2 Note or a Class B Note.
"Note Owner" means, with respect to a Book-Entry Note, the person who
is the owner of such Book-Entry Note, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency Participant or as an indirect participant,
in each case in accordance with the rules of such Clearing Agency).
"Note Paying Agent" means the Trustee or any other Person that meets
the eligibility standards for the Trustee specified in Section 6.11 and is
authorized by the Issuer to make the payments to and distributions from the
Collection Account and the Note Distribution Account, including payment of
principal of or interest on the Notes on behalf of the Issuer.
"Note Policy" means the insurance policy issued by the Note Insurer
with respect to the Notes, including any endorsements thereto.
"Note Policy Claim Amount" has the meaning specified in the Sale and
Servicing Agreement.
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 2.4.
"Notice of Claim" has the meaning specified in the Sale and Servicing
Agreement.
"Officer's Certificate" means a certificate signed by any Authorized
Officer of the Owner Trustee, under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1 and TIA
ss. 314, and delivered to the Trustee. Unless otherwise specified, any reference
in this Indenture to an Officer's Certificate shall be to an Officer's
Certificate of any Authorized Officer of the Issuer.
"Opinion of Counsel" means one or more written opinions of counsel who
may, except as otherwise expressly provided in this Indenture, be employees of
or counsel to the Issuer and who shall be satisfactory to the Trustee and, if
addressed to the Note Insurer, satisfactory to the Note Insurer, and which shall
comply with any applicable requirements of Section 11.1, and shall be in form
and substance satisfactory to the Trustee, and if addressed to the Note Insurer,
satisfactory to the Note Insurer.
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"Outstanding" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore canceled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in
the necessary amount has been theretofore deposited with the Trustee or
any Note Paying Agent in trust for the Holders of such Notes (provided,
however, that if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture, satisfactory
to the Trustee); and
(iii) Notes in exchange for or in lieu of other Notes which
have been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Trustee is presented that any such Notes are
held by a bona fide purchaser;
provided, however, that Notes which have been paid with proceeds of the Note
Policy shall continue to remain Outstanding for purposes of this Indenture until
the Note Insurer has been paid as subrogee hereunder or reimbursed pursuant to
the Insurance Agreement as evidenced by a written notice from the Note Insurer
delivered to the Trustee, and the Note Insurer shall be deemed to be the Holder
thereof to the extent of any payments thereon made by the Note Insurer;
provided, further, that in determining whether the Holders of the requisite
outstanding Amount of the Notes have given any request, demand, authorization,
direction, notice, consent or waiver hereunder or under any Basic Document,
Notes owned by the Issuer, any other obliger upon the Notes, the Seller or any
Affiliate of any of the foregoing Persons shall be disregarded and deemed not to
be Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Notes that a Responsible Officer of the Trustee
either actually knows to be so owned or has received written notice thereof
shall be so disregarded. Notes so owned that have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgees right so to act with respect to such Notes and that the
pledgee is not the Issuer, any other obliger upon the Notes, the Seller or any
Affiliate of any of the foregoing Persons.
"Outstanding Amount" means the aggregate principal amount of all Notes,
or class of Notes, as applicable, Outstanding at the date of determination.
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"Owner Trustee" means Bankers Trust (Delaware), and its successors.
"Payment Date" has the meaning specified in the Notes.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.5 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Preference Claim" has the meaning specified in the Sale and Servicing
Agreement.
"Proceeding" means any suit in equity, action at law or other judicial
or administrative proceeding.
"Rating Agency" means each of Moody's and Standard & Poor's, so long as
such Persons maintain a rating on the Notes; and if either Moody's or Standard &
Poor's no longer maintains a rating on the Notes, such other nationally
recognized statistical rating organization selected by the Seller and (so long
as an Insurer Default shall not have occurred and be continuing) acceptable to
the Note Insurer.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 10 days' (or such shorter period as shall be
acceptable to each Rating Agency) prior notice thereof and that each of the
Rating Agencies shall have notified the Seller, the Servicer, the Note Insurer,
the Trustee, the Owner Trustee and the Issuer in writing that such action will
not result in a reduction or withdrawal of the then current rating of the Notes.
"Record Date" means, with respect to a Payment Date or Redemption Date,
the close of business on the 10th day of the calendar month in which such
Payment Date or Redemption Date occurs.
"Redemption Date" means (a) in the case of a redemption of the Notes
pursuant to Section 10.1(a) or a payment to Noteholders pursuant to Section
10.1(b), the Payment Date specified by the Servicer or the Issuer pursuant to
Section 10.1(a) or (b) as applicable.
"Redemption Price" means (a) in the case of a redemption of the Notes
pursuant to Section 10.1(a), an amount equal to the unpaid principal amount of
each class of Notes being redeemed plus accrued and unpaid interest thereon to
but excluding the
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Redemption Date, or (b) in the case of a payment made to Noteholders pursuant to
Section 10.1(b), the amount on deposit in the Note Distribution Account, but not
in excess of the amount specified in clause (a) above.
"Responsible Officer" means, with respect to the Trustee, any officer
within the Corporate Trust Office of the Trustee, including any Vice President,
Assistant Vice President, Assistant Treasurer, Assistant Secretary, or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
dated as of August 1, 1997, among the Issuer, the Seller, the Servicer and the
Trustee as Backup Servicer and Trustee, as the same may be amended or
supplemented from time to time.
"Scheduled Payments" has the meaning specified in the Note Policy.
"SEC" means the United State Securities and Exchange Commission.
"State" means any one of the 50 states of the United States of America
or the District of Columbia.
"Termination Date" means the latest of (i) the expiration of the Note
Policy and the return of the Note Policy to the Note Insurer for cancellation,
(ii) the date on which the Note Insurer shall have received payment and
performance of all Insurer Secured Obligations and (iii) the date on which the
Trustee shall have received payment and performance of all Trustee Secured
Obligations.
"Trust Estate" means all money, instruments, rights and other property
that are subject or intended to be subject to the lien and security interest of
this Indenture for the benefit of the Noteholders (including all property and
interests Granted to the Trustee), including all proceeds thereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939,
as amended and as in force on the date hereof, unless otherwise specifically
provided.
"Trustee" means Norwest Bank Minnesota, National Association, a
national banking association, not in its
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individual capacity but as trustee under this Indenture, or any successor
trustee under this Indenture.
"Trustee Secured Obligations" means all amounts and obligations which
the Issuer may at any time owe to or on behalf of the Trustee for the benefit of
the Noteholders under this Indenture or the Notes.
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from time
to time.
SECTION 1.2. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Issuer.
All other TIA terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by Commission rule have the
meaning assigned to them by such definitions.
SECTION 1.3. Other Definitional Provisions. Unless the context
otherwise requires:
(i) All references in this instrument to designated
"Articles," "Sections," "Subsections" and other subdivisions are to the
designated Articles, Sections, Subsections and other subdivisions of
this instrument as originally
executed.
(ii) The words "herein," "hereof," "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any
particular Article, Section, Subsection or other subdivision.
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(iii) an accounting term not otherwise defined herein has the
meaning assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;
(iv) "or" is not exclusive; and
(v) "including" means including without limitation;
ARTICLE II
The Notes
SECTION 2.1. Form. (a) The Class A-1 Notes, the Class A-2 Notes and the
Class B Notes, in each case together with the Trustee's certificate of
authentication, shall be in substantially the form set forth in Exhibits A-1,
A-2 and B, respectively, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may, consistently herewith,
be determined by the officers executing such Notes, as evidenced by their
execution of the Notes. Any portion of the text of any Note may be set forth on
the reverse thereof, with an appropriate reference thereto on the face of the
Note.
(b) The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders), all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
(c) Each Note shall be dated the date of its authentication. The terms
of the Notes set forth in Exhibits A-1, A-2 and B are part of the terms of this
Indenture.
SECTION 2.2. Execution, Authentication and Delivery. (a) The Notes
shall be executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
(b) Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
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(c) The Trustee shall upon receipt of the Note Policy and Issuer Order
authenticate and deliver Class A-1 Notes for original issue in an aggregate
principal amount of $80,332,000, Class A-2 Notes for original issue in the
aggregate principal amount of $61,668,000 and Class B Notes for original issue
in the aggregate principal amount of $3,750,000. Class A-1 Notes, Class A-2
Notes and Class B Notes outstanding at any time may not exceed such amounts
except as provided in Section 2.5.
(d) Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of $1,000 and
in integral multiples thereof (except for one Note of each class which may be
issued in a denomination other than an integral multiple of $1,000).
(e) No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein,
executed by the Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and delivered
hereunder.
SECTION 2.3. Temporary Notes. (a) Pending the preparation of Definitive
Notes, the Issuer may execute, and upon receipt of an Issuer Order the Trustee
shall authenticate and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, of the tenor of the Definitive
Notes in lieu of which they are issued and with such variations not inconsistent
with the terms of this Indenture as the officers executing such Notes may
determine, as evidenced by their execution of such Notes.
(b) If temporary Notes are issued, the Issuer will cause Definitive
Notes to be prepared without unreasonable delay. After the preparation of
Definitive Notes, the temporary Notes shall be exchangeable for Definitive Notes
upon surrender of the temporary Notes at the office or agency of the Issuer to
be maintained as provided in Section 3.2, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
like principal amount of Definitive Notes of authorized denominations. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as Definitive Notes.
SECTION 2.4. Registration; Registration of Transfer and Exchange. (a)
The Issuer shall cause to be kept a register (the "Note Register") in which,
subject to such reasonable regulations as it may prescribe, the Issuer shall
provide for the
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registration of Notes and the registration of transfers of Notes. The Trustee is
hereby initially appointed "Note Registrar" for the purpose of registering Notes
and transfers of Notes as herein provided. Upon any resignation or removal of
any Note Registrar, the Issuer shall promptly appoint a successor or, in the
absence of such an appointment, assume the duties of Note Registrar.
(b) No transfer of a Class B Note 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 Note 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 Noteholder desiring to effect such transfer and such Class B
Noteholder'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 C. Neither the Seller nor the Trustee is under any
obligation to register the Class B Notes under said Securities Act or any other
securities law. The Note Registrar may request and shall receive in connection
with any transfer signature guarantees satisfactory to it in its sole
discretion.
(c) In no event shall a Class B Note 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 Seller, the Servicer, the Trustee, the Note Insurer
and the Standby Servicer shall not be responsible for confirming or otherwise
investigating whether a
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proposed purchaser is an employee benefit plan, trust or account subject to
ERISA, or described in Section 4975(e)(1) of the Code.
(i) Each Holder of Class B Notes, by virtue of the acquisition
and holding thereof, will be deemed to have represented and agreed as
follows:
(A) 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 Notes for its own institutional
account or for the account of a qualified institutional buyer
or an institutional accredited investor.
(B) It understands that the Class B Notes 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 Notes, such Class B Notes 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.
(C) It understands that the Class B Notes will bear a
legend substantially to the following effect:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES THAT THIS SECURITY MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON WHOM THE
TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT, PURCHASING
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER
IS BEING MADE IN RELIANCE ON RULE 144A, AND SUBJECT TO THE RECEIPT BY
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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 2.4 OF THE
INDENTURE.
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.
(D) It has not acquired the Class B Notes with the
assets of an Employee Plan.
(d) If a Person other than the Trustee is appointed by the Issuer as
Note Registrar, the Issuer will give the Trustee prompt written notice of the
appointment of such Note Registrar and of the location, and any change in the
location, of the Note Register, and the Trustee shall have the right to inspect
the Note Register at all reasonable times and to obtain copies thereof, and the
Trustee shall have the right to rely upon a certificate executed on behalf of
the Note Registrar by an Executive Officer thereof as to the names and addresses
of the Holders of the Notes and the principal amounts and number of such Notes.
(e) Subject to Sections 2.10 and 2.12 hereof, upon surrender for
registration of transfer of any Note at the office or agency of the Issuer to be
maintained as provided in Section 3.2, if the requirements of Section 8-401(l)
of the UCC are met the Issuer shall execute, and upon request by the Issuer the
Trustee shall authenticate, and the Noteholder shall obtain
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from the Trustee, in the name of the designated transferee or transferees, one
or more new Notes in any authorized denominations of the same class and a like
aggregate principal amount.
(f) At the option of the Holder, Notes may be exchanged for other Notes
in any authorized denominations, of the same class and a like aggregate
principal amount, upon surrender of the Notes to be exchanged at such office or
agency. Whenever any Notes are so surrendered for exchange, subject to Sections
2.10 and 2.12 hereof, if the requirements of Section 8-401(1) of the UCC are met
the Issuer shall execute, and upon request by the Issuer the Trustee shall
authenticate, and the Noteholder shall obtain from the Trustee, the Notes which
the Noteholder making the exchange is entitled to receive.
(g) All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
(h) Every Note presented or surrendered for registration of transfer or
exchange shall be (i) duly endorsed by, or accompanied by a written instrument
of transfer in the form attached to Exhibits A-1, A-2 and B duly executed by,
the Holder thereof or such Holder's attorney duly authorized in writing with
such signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar which requirements include membership or
participation in Securities Transfer Agents Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Note Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Exchange Act and (ii) accompanied by such other documents as the Trustee may
require.
(i) No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Note Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.3 or 9.6 not involving any transfer.
(j) The preceding provisions of this section notwithstanding, the
Issuer shall not be required to make and the Note Registrar shall not register
transfers or exchanges of Notes selected for redemption or of any Note for a
period of 15 days preceding the due date for any payment with respect to the
Note.
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SECTION 2.5. Mutilated, Destroyed, Lost or Stolen Notes. (a) If (i) any
mutilated Note is surrendered to the Trustee, or the Trustee receives evidence
to its satisfaction of the destruction, loss or theft of any Note, and (ii)
there is delivered to the Trustee and the Note Insurer (unless an Insurer
Default shall have occurred and be continuing) such security or indemnity as may
be required by it to hold the Issuer, the Trustee and the Note Insurer harmless,
then, in the absence of notice to the Issuer, the Note Registrar or the Trustee
that such Note has been acquired by a bona fide purchaser, and, provided that
the requirements of Section 8-405 of the UCC are met, the Issuer shall execute,
and upon request by the Issuer the Trustee shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a
replacement Note; provided, however, that if any such destroyed, lost or stolen
Note, but not a mutilated Note, shall have become, or within seven days shall
be, due and payable or shall have been called for redemption, instead of issuing
a replacement Note, the Issuer may direct the Trustee, in writing, to pay such
destroyed, lost or stolen Note when so due or payable or upon the Redemption
Date without surrender thereof. If, after the delivery of such replacement Note
or payment of a destroyed, lost or stolen Note pursuant to the proviso to the
preceding sentence, a bona fide purchaser of the original Note in lieu of which
such replacement Note was issued, presents for payment such original Note, the
Issuer, the Trustee and the Note Insurer shall be entitled to recover such
replacement Note (or such payment) from the Person to whom it was delivered or
any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person, except a bona
fide purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Issuer or the Trustee in connection therewith.
(b) Upon the issuance of any replacement Note under this Section, the
Issuer may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Trustee) connected therewith.
(c) Every replacement Note issued pursuant to this Section in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
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(d) The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.6. Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Trustee and any agent of
Issuer, the Trustee, the Note Insurer may treat the Person in whose name any
Note is registered (as of the applicable Record Date) as the owner of such Note
for the purpose of receiving payments of principal of and interest, if any, on
such Note and for all other purposes whatsoever, whether or not such Note be
overdue, and none of the Issuer, the Note Insurer, the Trustee nor any agent of
the Issuer or the Trustee shall be affected by notice to the contrary.
SECTION 2.7. Payment of Principal and Interest; Defaulted Interest. (a)
The Notes shall accrue interest as provided in the forms of the Class A-1 Note,
the Class A-2 Note and the Class B Note set forth in Exhibits A-1, A-2 and B,
respectively, and such interest shall be payable on each Payment Date as
specified therein. Any installment of interest or principal, if any, payable on
any Note which is punctually paid or duly provided for by the Issuer on the
applicable Payment Date shall be paid to the Person in whose name such Note (or
one or more Predecessor Notes) is registered on the Record Date, by check mailed
first-class, postage prepaid, to such Person's address as it appears on the Note
Register on such Record Date, except that, unless Definitive Notes have been
issued pursuant to Section 2.12, with respect to Notes registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payment will be made by wire transfer in immediately
available funds to the account designated by such nominee, except for the final
installment of principal payable with respect to such Note on a Payment Date or
on the Final Scheduled Payment Date (and except for the Redemption Price for any
Note called for redemption pursuant to Section 10.1(a)), which shall be payable
as provided below. The funds represented by any such checks returned undelivered
shall be held in accordance with Section 3.3.
(b) The principal of each Note shall be payable in installments on each
Payment Date as provided in the forms of the Class A-1 Notes, the Class A-2
Notes and the Class B Notes set forth in Exhibits A-1, A-2 and B, respectively.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable, if not previously paid, on the date on which an Event
of Default shall have occurred and be continuing, if the Trustee or the Holders
of the Notes representing 25% of the Outstanding Amount of the Notes have
declared the Notes to be immediately due and payable in the manner provided in
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Section 5.2. All principal payments on each class of Notes shall be made pro
rata to the Noteholders of such class entitled thereto. Upon written notice from
the Issuer, the Trustee shall notify the Person in whose name a Note is
registered at the close of business on the Record Date preceding the Payment
Date on which the Issuer expects that the final installment of principal of and
interest on such Note will be paid. Such notice shall be mailed or transmitted
by facsimile prior to such final Payment Date and shall specify that such final
installment will be payable only upon presentation and surrender of such Note
and shall specify the place where such Note may be presented and surrendered for
payment of such installment. Notices in connection with redemptions of Notes
shall be mailed to Noteholders as provided in Section 10.2.
(c) If the Issuer defaults in a payment of interest on the Notes, the
Issuer shall pay defaulted interest (plus interest on such defaulted interest to
the extent lawful) at the applicable Interest Rate in any lawful manner. The
Issuer may pay such defaulted interest to the Persons who are Noteholders on a
subsequent special record date, which date shall be at least five Business Days
prior to the payment date. The Issuer shall fix or cause to be fixed any such
special record date and payment date, and, at least 15 days before any such
special record date, the Issuer shall mail to each Noteholder and the Trustee a
notice that states the special record date, the payment date and the amount of
defaulted interest to be paid.
(d) Promptly following the date on which all principal of and interest
on the Notes has been paid in full and the Notes have been surrendered to the
Trustee, the Trustee shall, if the Note Insurer has paid any amount in respect
of the Notes under the Note Policy or otherwise which has not been reimbursed to
it, deliver such surrendered Notes to the Note Insurer.
SECTION 2.8. Cancellation. Subject to Section 2.7(d), all Notes
surrendered for payment, registration of transfer, exchange or redemption shall,
if surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by the Trustee. Subject to Section 2.7(d), the
Issuer may at any time deliver to the Trustee for cancellation any Notes
previously authenticated and delivered hereunder which the Issuer may have
acquired in any manner whatsoever, and all Notes so delivered shall be promptly
canceled by the Trustee. No Notes shall be authenticated in lieu of or in
exchange for any Notes canceled as provided in this Section, except as expressly
permitted by this Indenture. Subject to Section 2.7(d), all canceled Notes may
be held or disposed of by the Trustee in accordance with its standard retention
or disposal policy as in effect at the time unless the Issuer shall direct by an
Issuer Order that they be destroyed or returned to it; provided that
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such Issuer Order is timely and the Notes have not been previously disposed of
by the Trustee.
SECTION 2.9. Release of Collateral. The Trustee shall, on or after the
Termination Date, release any remaining portion of the Trust Estate from the
lien created by this Indenture and deposit in the Collection Account any funds
then on deposit in any other Trust Account. The Trustee shall release property
from the lien created by this Indenture pursuant to this Section 2.9 only upon
receipt of an Issuer Request accompanied by an Officer's Certificate, an Opinion
of Counsel and (if required by the TIA) Independent Certificates in accordance
with TIA ss. 314(c) and 314(d)(1) meeting the applicable requirements of Section
11.1.
SECTION 2.10. Book-Entry Notes. The Class A Notes, upon original
issuance, will be issued in the form of typewritten Notes representing the
Book-Entry Notes, to be delivered to DTC or to the Trustee as custodian, the
initial Clearing Agency, by, or on behalf of, the Issuer. Such Class A Notes
shall initially be registered on the Note Register in the name of Cede & Co.,
the nominee of the initial Clearing Agency, and no Note Owner will receive a
Definitive Note representing such Note Owner's interest in such Class A Note,
except as provided in Section 2.12. Unless and until definitive, fully
registered Class A Notes (the "Definitive Notes") have been issued to Note
Owners pursuant to Section 2.12:
(i) the provisions of this Section shall be in full
force and effect;
(ii) the Note Registrar and the Trustee shall be entitled to
deal with the Clearing Agency for all purposes of this Indenture
(including the payment of principal of and interest on the Class A
Notes and the giving of instructions or directions hereunder) as the
sole Holder of the Class A Notes, and shall have no obligation to the
Note Owners;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Indenture, the provisions of
this Section shall control;
(iv) the rights of Note Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law
and agreements between such Note Owners and the Clearing Agency and/or
the Clearing Agency Participants. Unless and until Definitive Notes are
issued pursuant to Section 2.12, the Clearing Agency will make
book-entry transfers among the Clearing Agency Participants and receive
and transmit payments of principal of and
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interest on the Class A Notes to such Clearing Agency
Participants;
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Class A Notes
evidencing a specified percentage of the Outstanding Amount of the
Class A Notes, the Clearing Agency shall be deemed to represent such
percentage only to the extent that it has received instructions to such
effect from Note Owners and/or Clearing Agency Participants owning or
representing, respectively, such required percentage of the beneficial
interest in the Class A Notes and has delivered such instructions to
the Trustee; and
(vi) Note Owners may receive copies of any reports sent to
Noteholders pursuant to this Indenture, upon written request, together
with a certification that they are Note Owners and payment of
reproduction and postage expenses associated with the distribution of
such reports, from the Trustee at the Corporate Trust Office.
SECTION 2.11. Notices to Clearing Agency. Whenever a notice or other
communication to the Class A Noteholders is required under this Indenture,
unless and until Definitive Notes shall have been issued to Note Owners pursuant
to Section 2.12, the Trustee shall give all such notices and communications
specified herein to be given to Holders of the Class A Notes to the Clearing
Agency and shall have no obligation to deliver such notices or communications to
the Note Owners.
SECTION 2.12. Definitive Notes. If (i) the Servicer advises the Trustee
in writing that the Clearing Agency is no longer willing or able to properly
discharge its responsibilities with respect to the Class A Notes, and the
Servicer is unable to locate a qualified successor, (ii) the Servicer 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, Note Owners representing beneficial interests aggregating at least a
majority of the Outstanding Amount of the Class A Notes advise the Trustee
through the Clearing Agency in writing that the continuation of a book entry
system through the Clearing Agency is no longer in the best interests of the
Note Owners, then the Clearing Agency shall notify all Note Owners and the
Trustee of the occurrence of any such event and of the availability of
Definitive Notes to Note Owners requesting the same. Upon surrender to the
Trustee of the typewritten Note or Notes representing the Book-Entry Notes by
the Clearing Agency, accompanied by registration instructions, the Issuer shall
execute and the Trustee shall authenticate the Definitive Notes in accordance
with the instructions of the Clearing Agency. None of the Issuer, the Note
Registrar or the
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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 Notes, the Trustee shall recognize the Holders
of the Definitive Notes as Class A Noteholders.
ARTICLE III
Covenants
SECTION 3.1. Payment of Principal and Interest. The Issuer will duly
and punctually pay the principal of and interest on the Notes in accordance with
the terms of the Notes and this Indenture. Without limiting the foregoing, the
Issuer will cause to be distributed all amounts on deposit in the Note
Distribution Account on a Payment Date deposited therein pursuant to the Sale
and Servicing Agreement (i) for the benefit of the Class A-1 Notes, to Class A-1
Noteholders, (ii) for the benefit of the Class A-2 Notes, to Class A-2
Noteholders, and (iii) for the benefit of the Class B Notes, to Class B
Noteholders. Amounts properly withheld under the Code by any Person from a
payment to any Noteholder of interest and/or principal shall be considered as
having been paid by the Issuer to such Noteholder for all purposes of this
Indenture.
SECTION 3.2. Maintenance of Office or Agency. The Issuer will maintain
in Minneapolis, Minnesota, an office or agency where Notes may be surrendered
for registration of transfer or exchange, and where notices and demands to or
upon the Issuer in respect of the Notes and this Indenture may be served. The
Issuer hereby initially appoints the Trustee to serve as its agent for the
foregoing purposes. The Issuer will give prompt written notice to the Trustee of
the location, and of any change in the location, of any such office or agency.
If at any time the Issuer shall fail to maintain any such office or agency or
shall fail to furnish the Trustee with the address thereof, such surrenders,
notices and demands may be made or served at the Corporate Trust Office, and the
Issuer hereby appoints the Trustee as its agent to receive all such surrenders,
notices and demands.
SECTION 3.3. Money for Payments to be Held in Trust. (a) On or before
each Payment Date and Redemption Date, the Issuer shall deposit or cause to be
deposited in the Note Distribution Account from the Collection Account an
aggregate sum sufficient to pay the amounts then becoming due under the Notes,
such sum to be held in trust for the benefit of the Persons entitled thereto and
(unless the Note Paying Agent is the Trustee) shall promptly notify the Trustee
of its action or failure so to act.
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(b) The Issuer will cause each Note Paying Agent other than the Trustee
to execute and deliver to the Trustee and the Note Insurer an instrument in
which such Note Paying Agent shall agree with the Trustee (and if the Trustee
acts as Note Paying Agent, it hereby so agrees), subject to the provisions of
this Section, that such Note Paying Agent will:
(i) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(ii) give the Trustee notice of any default by the Issuer (or
any other obligor upon the Notes) of which it has actual knowledge in
the making of any payment required to be made with respect to the
Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Note Paying Agent;
(iv) immediately resign as a Note Paying Agent and forthwith
pay to the Trustee all sums held by it in trust for the payment of
Notes if at any time it ceases to meet the standards required to be met
by a Note Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
(c) The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Note Paying Agent to pay to the Trustee all sums held in trust
by such Note Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which the sums were held by such Note Paying Agent; and
upon such a payment by any Note Paying Agent to the Trustee, such Note Paying
Agent shall be released from all further liability with respect to such money.
(d) Subject to applicable laws with respect to the escheat of funds,
any money held by the Trustee or any Note Paying Agent in trust for the payment
of any amount due with respect to any Note and remaining unclaimed for two years
after such amount has become due and payable shall be discharged from such trust
and be
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paid to the Issuer on Issuer Request with the consent of the Note Insurer
(unless an Insurer Default shall have occurred and be continuing) and shall be
deposited by the Trustee in the Collection Account; and the Holder of such Note
shall thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Trustee or such Note Paying Agent with respect to such
trust money shall thereupon cease; provided, however, that if such money or any
portion thereof had been previously deposited by the Note Insurer with the
Trustee for the payment of principal or interest on the Notes, to the extent any
amounts are owing to the Note Insurer, such amounts shall be paid promptly to
the Note Insurer upon receipt of a written request by the Note Insurer to such
effect, and provided, further, that the Trustee or such Note Paying Agent,
before being required to make any such repayment, shall at the expense of the
Issuer cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in The City of New York, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Issuer. The Trustee shall also adopt and employ, at the
expense of the Issuer, any other reasonable means of notification of such
repayment (including, but not limited to, mailing notice of such repayment to
Holders whose Notes have been called but have not been surrendered for
redemption or whose right to or interest in moneys due and payable but not
claimed is determinable from the records of the Trustee or of any Note Paying
Agent, at the last address of record for each such Holder).
SECTION 3.4. Existence. Except as otherwise permitted by the provisions
of Section 3.10, the Issuer will keep in full effect its existence, rights and
franchises as a business trust under the laws of the State of Delaware (unless
it becomes, or any successor Issuer hereunder is or becomes, organized under the
laws of any other state or of the United States of America, in which case the
Issuer will keep in full effect its existence, rights and franchises under the
laws of such other jurisdiction) and will obtain and preserve its qualification
to do business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Indenture, the
Notes, the Collateral and each other instrument or agreement included in the
Trust Estate.
SECTION 3.5. Protection of Trust Estate. The Issuer intends the
security interest Granted pursuant to this Indenture in favor of the Issuer
Secured Parties to be prior to all other liens in respect of the Trust Estate,
and the Issuer shall take all actions necessary to obtain and maintain, in favor
of the
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Trustee, for the benefit of the Issuer Secured Parties, a first lien on and a
first priority, perfected security interest in the Trust Estate. The Issuer will
from time to time prepare (or shall cause to be prepared), execute and deliver
all such supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other instruments,
and will take such other action necessary or advisable to:
(i) Grant more effectively all or any portion of the
Trust Estate;
(ii) maintain or preserve the lien and security interest (and
the priority thereof) in favor of the Trustee for the benefit of the
Issuer Secured Parties created by this Indenture or carry out more
effectively the purposes hereof;
(iii) perfect, publish notice of or protect the
validity of any Grant made or to be made by this Indenture;
(iv) enforce any of the collateral;
(v) preserve and defend title to the Trust Estate and the
rights of the Trustee in such Trust Estate against the claims of all
persons and parties; and
(vi) pay all taxes or assessments levied or assessed upon the
Trust Estate when due.
The Issuer hereby designates the Trustee its agent and attorney-in-fact to
execute any financing statement, continuation statement or other instrument
required by the Trustee pursuant to this Section.
SECTION 3.6. Opinions as to Trust Estate. (a) On the Closing Date, the
Issuer shall furnish to the Trustee and the Note Insurer an Opinion of Counsel
either stating that, in the opinion of such counsel, such action has been taken
with respect to the recording and filing of this Indenture, any indentures
supplemental hereto, and any other requisite documents, and with respect to the
execution and filing of any financing statements and continuation statements, as
are necessary to perfect and make effective the first priority lien and security
interest in favor of the Trustee, for the benefit of the Issuer Secured Parties,
created by this Indenture and reciting the details of such action, or stating
that, in the opinion of such counsel, no such action is necessary to make such
lien and security interest effective.
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(b) 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, the Issuer shall furnish to the Trustee and the Note Insurer an Opinion of
Counsel either stating that, in the opinion of such counsel, such action has
been taken with respect to the recording, filing, re-recording and refiling of
this Indenture, any indentures supplemental hereto and any other requisite
documents and with respect to the execution and filing of any financing
statements and continuation statements as are necessary to maintain the lien and
security interest created by this Indenture and reciting the details of such
action or stating that in the opinion of such counsel no such action is
necessary to maintain such lien and security interest. Such Opinion of Counsel
shall also describe any action necessary (as of the date of such opinion) to be
taken in the following year to maintain the lien and security interest of this
Indenture.
SECTION 3.7. Performance of Obligations; Servicing of Receivables. (a)
The Issuer will not take any action and will use its best efforts not to permit
any action to be taken by others that would release any Person from any of such
Person's material covenants or obligations under any instrument or agreement
included in the Trust Estate or that would result in the amendment,
hypothecation, subordination, termination or discharge of or impair the validity
or effectiveness of, any such instrument or agreement, except as ordered by any
bankruptcy or other court or as expressly provided in this Indenture, the Basic
Documents or such other instrument or agreement.
(b) The Issuer may contract with other Persons acceptable to the Note
Insurer (so long as no Insurer Default shall have occurred and be continuing) to
assist it in performing its duties under this Indenture, and any performance of
such duties by a Person identified to the Trustee and the Note Insurer in an
Officer's Certificate of the Issuer shall be deemed to be action taken by the
Issuer. Initially, the Issuer has contracted with the Servicer to assist the
Issuer in performing its duties under this Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Basic Documents and
in the instruments and agreements included in the Trust Estate, including but
not limited to preparing (or causing to prepared) and filing (or causing to be
filed) all UCC financing statements and continuation statements required to be
filed by the terms of this Indenture and the Sale and Servicing Agreement in
accordance with and within the time periods provided for herein and therein.
Except as otherwise expressly provided therein, the Issuer shall not waive,
amend, modify, supplement or terminate any Basic Document or any provision
thereof without the
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consent of the Trustee, the Note Insurer or the Holders of at least a majority
of the Outstanding Amount of the Notes.
(d) If a responsible officer of the Owner Trustee shall have written
notice or actual knowledge of the occurrence of a Servicer Termination Event
under the Sale and Servicing Agreement, the Issuer shall promptly notify the
Trustee, the Note Insurer and the Rating Agencies thereof in accordance with
Section 11.4, and shall specify in such notice the action, if any, the Issuer is
taking in respect of such default. If a Servicer Termination Event shall arise
from the failure of the Servicer to perform any of its duties or obligations
under the Sale and Servicing Agreement with respect to the Receivables, the
Issuer shall take all reasonable steps available to it to remedy such failure.
(e) The Issuer agrees that it will not waive timely performance or
observance by the Servicer or the Seller of their respective duties under the
Basic Documents (x) without the prior consent of the Note Insurer (unless an
Insurer Default shall have occurred and be continuing) or (y) if the effect
thereof would adversely affect the Holders of the Notes.
SECTION 3.8. Negative Covenants. So long as any Notes are Outstanding,
the Issuer shall not:
(i) except as expressly permitted by this Indenture or the
Basic Documents, sell, transfer, exchange or otherwise dispose of any
of the properties or assets of the Issuer, including those included in
the Trust Estate, unless directed to do so by the Controlling Party;
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Noteholder by reason of the
payment of the taxes levied or assessed upon any part of the Trust
Estate; or
(iii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien in favor of the Trustee
created by this Indenture to be amended, hypothecated, subordinated,
terminated or discharged, or permit any Person to be released from any
covenants or obligations with respect to the Notes under this Indenture
except as may be expressly permitted hereby, (B) permit any lien,
charge, excise, claim, security interest, mortgage or other encumbrance
(other than the lien of this Indenture) to be created on or extend to
or otherwise arise upon or burden the Trust Estate or any part thereof
or any interest therein or the proceeds thereof (other than tax liens,
mechanics'
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liens and other liens that arise by operation of law, in each case on a
Financed Vehicle and arising solely as a result of an action or
omission of the related Obligor), (C) permit the lien of this Indenture
not to constitute a valid first priority (other than with respect to
any such tax, mechanics' or other lien) security interest in the Trust
Estate or (D) amend, modify or fail to comply with the provisions of
the Basic Documents without the prior written consent of the
Controlling Party.
SECTION 3.9. Annual Statement as to Compliance. The Issuer will deliver
to the Trustee and the Note Insurer, on or before July 31 of each year,
beginning July 31, 1998 and otherwise in compliance with the requirements of TIA
Section 314(a)(4) an Officer's Certificate, dated as of March 31 of such year,
stating, as to the Authorized Officer signing such Officer's Certificate, that
(i) a review of the activities of the Issuer during such year
and of performance under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based
on such review, the Issuer has complied with all conditions and
covenants under this Indenture throughout such year, or, if there has
been a default in the compliance of any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof.
SECTION 3.10. Issuer May Consolidate, Etc. Only on Certain Terms. (a)
The Issuer shall not consolidate or merge with or into any other Person, unless
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger shall be a Person organized and
existing under the laws of the United States of America or any state
and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the
Trustee and the Note Insurer (so long as no Insurer Default shall have
occurred and be continuing), the due and punctual payment of the
principal of and interest on all Notes and the performance or
observance of every agreement and covenant of this Indenture on the
part of the Issuer to be performed or observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
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(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Trustee and the Note Insurer
(so long as no Insurer Default shall have occurred and be continuing))
to the effect that such transaction will not have any material adverse
tax consequence to the Trust, the Note Insurer, any Noteholder or any
Certificateholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation or merger and such supplemental indenture comply with
this Article III and that all conditions precedent herein provided for
relating to such transaction have been complied with (including any
filing required by the Exchange Act); and
(vii) so long as no Insurer Default shall have occurred and be
continuing, the Issuer shall have given the Note Insurer written notice
of such conveyance or transfer at least 20 Business Days prior to the
consummation of such action and shall have received the prior written
approval of the Note Insurer of such conveyance or transfer and the
Issuer or the Person (if other than the Issuer) formed by or surviving
such conveyance or transfer has a net worth, immediately after such
conveyance or transfer, that is (a) greater than zero and (b) not less
than the net worth of the Issuer immediately prior to giving effect to
such conveyance or transfer.
(b) The Issuer shall not convey or transfer all or substantially all of
its properties or assets, including those included in the Trust Estate, to any
Person, unless
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer the conveyance or transfer of which
is hereby restricted shall (A) be a United States citizen or a Person
organized and existing under the laws of the United States of America
or any state, (B) expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form satisfactory to
the Trustee, and the Note Insurer (so long as no Insurer Default shall
have occurred and be continuing), the due and punctual payment of the
principal of and interest on all Notes and the performance or
observance of every agreement
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and covenant of this Indenture and each of the Basic Documents on the
part of the Issuer to be performed or observed, all as provided herein,
(C) expressly agree by means of such supplemental indenture that all
right, title and interest so conveyed or transferred shall be subject
and subordinate to the rights of Holders of the Notes, (D) unless
otherwise provided in such supplemental indenture, expressly agree to
indemnify, defend and hold harmless the Issuer against and from any
loss, liability or expense arising under or related to this Indenture
and the Notes and (E) expressly agree by means of such supplemental
indenture that such Person (or if a group of persons, then one
specified Person) shall prepare (or cause to be prepared) and make all
filings with the Commission (and any other appropriate Person) required
by the Exchange Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been
satisfied with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Trustee and the Note Insurer
(so long as no Insurer Default shall have occurred and be continuing))
to the effect that such transaction will not have any material adverse
tax consequence to the Trust, the Note Insurer, any Noteholder or any
Certificateholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel each stating that such
conveyance or transfer and such supplemental indenture comply with this
Article III and that all conditions precedent herein provided for
relating to such transaction have been complied with (including any
filing required by the Exchange Act); and
(vii) so long as no Insurer Default shall have occurred and be
continuing, the Issuer shall have given the Note Insurer written notice
of such conveyance or transfer at least 20 Business Days prior to the
consummation of such action and shall have received the prior written
approval of the Note Insurer of such consolidation or merger and the
Issuer or the Person (if other than the Issuer) formed by or
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surviving such consolidation or merger has a net worth, immediately
after such consolidation or merger, that is (a) greater than zero and
(b) not less than the net worth of the Issuer immediately prior to
giving effect to such consolidation or merger.
SECTION 3.11. Successor or Transferee. (a) Upon any consolidation or
merger of the Issuer in accordance with Section 3.10(a), the Person formed by or
surviving such consolidation or merger (if other than the Issuer) shall succeed
to, and be substituted for, and may exercise every right and power of, the
Issuer under this Indenture with the same effect as if such Person had been
named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of
the Issuer pursuant to Section 3.10(b), CPS Auto Receivables Trust 1997-3 will
be released from every covenant and agreement of this Indenture to be observed
or performed on the part of the Issuer with respect to the Notes immediately
upon the delivery of written notice to the Trustee stating that CPS Auto
Receivables Trust 1997-3 is to be so released.
SECTION 3.12. No Other Business. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing the
Receivables in the manner contemplated by this Indenture and the Basic Documents
and activities incidental thereto. After the Funding Period, the Issuer shall
not fund the purchase of any additional Receivables.
SECTION 3.13. No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Notes (ii) obligations owing from time to time
to the Note Insurer under the Insurance Agreement and (iii) any other
Indebtedness permitted by or arising under the Basic Documents. The proceeds of
the Notes and the Certificates shall be used exclusively to fund the Issuer's
purchase of the Receivables and the other assets specified in the Sale and
Servicing Agreement, to fund the Pre-Funding Account, the Interest Reserve
Account and the Spread Account and to pay the Issuer's organizational,
transactional and start-up expenses.
SECTION 3.14. Servicer's Obligations. The Issuer shall cause the
Servicer to comply with Sections 4.9, 4.10, 4.11 and 5.11 of the Sale and
Servicing Agreement.
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities. Except
as contemplated by the Sale and Servicing Agreement or this Indenture, the
Issuer shall not make any loan or advance or credit to, or guarantee (directly
or indirectly or by an instrument having the effect of assuring another's
payment
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or performance on any obligation or capability of so doing or otherwise),
endorse or otherwise become contingently liable, directly or indirectly, in
connection with the obligations, stocks or dividends of, or own, purchase,
repurchase or acquire (or agree contingently to do so) any stock, obligations,
assets or securities of, or any other interest in, or make any capital
contribution to, any other Person.
SECTION 3.16. Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
SECTION 3.17. Compliance with Laws. The Issuer shall comply with the
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Issuer to perform its obligations under the Notes, this Indenture or any
Basic Document.
SECTION 3.18. Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer or to the Servicer, (ii) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest or security or
(iii) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Issuer may make, or cause to be made, distributions
to the Servicer, the Owner Trustee, the Trustee and the Certificateholders as
permitted by, and to the extent funds are available for such purpose under, the
Sale and Servicing Agreement or the Trust Agreement. The Issuer will not,
directly or indirectly, make payments to or distributions from the Collection
Account except in accordance with this Indenture and the Basic Documents.
SECTION 3.19. Notice of Events of Default. Upon a responsible officer
of the Owner Trustee having notice or actual knowledge thereof, the Issuer
agrees to give the Trustee, the Note Insurer and the Rating Agencies prompt
written notice of each Event of Default hereunder and each default on the part
of the Servicer or the Seller of its obligations under the Sale and Servicing
Agreement.
SECTION 3.20. Further Instruments and Acts. Upon request of the Trustee
or the Note Insurer, the Issuer will execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper to
carry out more effectively the purpose of this Indenture.
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SECTION 3.21. Amendments of Sale and Servicing Agreement and Trust
Agreement. The Issuer shall not agree to any amendment to Section 13.1 of the
Sale and Servicing Agreement or Section 11.1 of the Trust Agreement to eliminate
the requirements thereunder that the Trustee or the Holders of the Notes consent
to amendments thereto as provided therein.
SECTION 3.22. Income Tax Characterization. For purposes of federal
income, state and local income and franchise and any other income taxes, the
Issuer will treat the Notes as indebtedness of the Issuer and hereby instructs
the Trustee to treat the Notes as indebtedness of the Issuer for federal and
state tax reporting purposes.
ARTICLE IV
Satisfaction and Discharge
SECTION 4.1. Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.3, 3.4, 3.5, 3.8,
3.10, 3.12, 3.13, 3.20, 3.21 and 3.22, (v) the rights, obligations and
immunities of the Trustee hereunder (including the rights of the Trustee under
Section 6.7 and the obligations of the Trustee under Section 4.2) and (vi) the
rights of Noteholders as beneficiaries hereof with respect to the property so
deposited with the Trustee payable to all or any of them, and the Trustee, on
demand of and at the expense of the Issuer, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture with respect to the
Notes, when
(A) all Notes theretofore authenticated and delivered (other
than (i) Notes that have been destroyed, lost or stolen and that have
been replaced or paid as provided in Section 2.5 and (ii) Notes for
whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Issuer and thereafter repaid to the
Issuer or discharged from such trust, as provided in Section 3.3) have
been delivered to the Trustee for cancellation and the Note Policy has
expired and been returned to the Note Insurer for cancellation;
(B) the Issuer has paid or caused to be paid all
Insurer Secured Obligations and all Trustee Secured
Obligations; and
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(C) the Issuer has delivered to the Trustee and the Note
Insurer an Officer's Certificate, an Opinion of Counsel and if required
by the TIA, the Trustee or the Note Insurer (so long as an Insurer
Default shall not have occurred and be continuing) an Independent
Certificate from a firm of certified public accountants, each meeting
the applicable requirements of Section 11.1(a) and each stating that
all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied with.
SECTION 4.2. Application of Trust Money. All moneys deposited with the
Trustee pursuant to Section 4.1 hereof shall be held in trust and applied by it,
in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Note Paying Agent, as the Trustee may
determine, to the Holders of the particular Notes for the payment or redemption
of which such moneys have been deposited with the Trustee, of all sums due and
to become due thereon for principal and interest; but such moneys need not be
segregated from other funds except to the extent required herein or in the Sale
and Servicing Agreement or required by law.
SECTION 4.3. Repayment of Moneys Held by Note Paying Agent. In
connection with the satisfaction and discharge of this Indenture with respect to
the Notes, all moneys then held by any Note Paying Agent other than the Trustee
under the provisions of this Indenture with respect to such Notes shall, upon
demand of the Issuer, be paid to the Trustee to be held and applied according to
Section 3.3 and thereupon such Note Paying Agent shall be released from all
further liability with respect to such moneys.
ARTICLE V
Remedies
SECTION 5.1. Events of Default. "Event of Default", wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) default in the payment of any interest on any Note when
the same becomes due and payable, and such default shall continue for a
period of five days (solely for purposes of this clause, a payment on
the Notes funded by the Note Insurer or the Collateral Agent pursuant
to the
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Master Spread Account Agreement shall be deemed to be a
payment made by the Issuer); or
(ii) default in the payment of the principal of or any
installment of the principal of any Note when the same becomes due and
payable (solely for purposes of this clause, a payment on the Notes
funded by the Note Insurer or the Collateral Agent pursuant to the
Master Spread Account Agreement, shall be deemed to be a payment made
by the Issuer); or
(iii) so long as an Insurer Default shall not have occurred
and be continuing, an Insurance Agreement Indenture Cross Default shall
have occurred; provided, however, that the occurrence of an Insurance
Agreement Indenture Cross Default may not form the basis of an Event of
Default unless the Note Insurer shall, upon prior written notice to the
Rating Agencies, have delivered to the Issuer and the Trustee and not
rescinded a written notice specifying that such Insurance Agreement
Indenture Cross Default constitutes an Event of Default under the
Indenture; or
(iv) so long as an Insurer Default shall have occurred and be
continuing, default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant
or agreement, a default in the observance or performance of which is
elsewhere in this Section specifically dealt with), or any
representation or warranty of the Issuer made in this Indenture or in
any certificate or other writing delivered pursuant hereto or in
connection herewith proving to have been incorrect in any material
respect as of the time when the same shall have been made, and such
default shall continue or not be cured, or the circumstance or
condition in respect of which such misrepresentation or warranty was
incorrect shall not have been eliminated or otherwise cured, for a
period of 30 days (or for such longer period, not in excess of 90 days,
as may be reasonably necessary to remedy such default; provided that
such default is capable of remedy within 90 days or less and the
Servicer on behalf of the Owner Trustee delivers an Officer's
Certificate to the Trustee to the effect that the Issuer has commenced,
or will promptly commence and diligently pursue, all reasonable efforts
to remedy such default) after there shall have been given, by
registered or certified mail, to the Issuer by the Trustee or to the
Issuer and the Trustee by the Holders of at least 25% of the
Outstanding Amount of the Notes, a written notice specifying such
default or incorrect representation or warranty and requiring it to be
remedied and stating that such notice is a "Notice of Default"
hereunder; or
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(v) so long as an Insurer Default shall have occurred and be
continuing, the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Issuer or any
substantial part of the Trust Estate in an involuntary case under any
applicable Federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the
Issuer or for any substantial part of the Trust Estate, or ordering the
winding-up or liquidation of the Issuer's affairs, and such decree or
order shall remain unstayed and in effect for a period of 60
consecutive days; or
(vi) so long as an Insurer Default shall have occurred and be
continuing, the commencement by the Issuer of a voluntary case under
any applicable Federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or the consent by the Issuer to the
entry of an order for relief in an involuntary case under any such law,
or the consent by the Issuer to the appointment or taking possession by
a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Issuer or for any substantial part of the Trust
Estate, or the making by the Issuer of any general assignment for the
benefit of creditors, or the failure by the Issuer generally to pay its
debts as such debts become due, or the taking of action by the Issuer
in furtherance of any of the foregoing.
The Issuer shall deliver to the Trustee and the Note Insurer, within
five days after the occurrence thereof, written notice in the form of an
Officer's Certificate of any event which with the giving of notice and the lapse
of time would become an Event of Default under clause (iii), its status and what
action the Issuer is taking or proposes to take with respect thereto.
SECTION 5.2. Rights Upon Event of Default. (a) If an Insurer Default
shall not have occurred and be continuing and an Event of Default shall have
occurred and be continuing, the Notes shall become immediately due and payable
at par, together with accrued interest thereon. If an Event of Default shall
have occurred and be continuing, the Controlling Party may exercise any of the
remedies specified in Section 5.4(a). In the event of any acceleration of any
Notes by operation of this Section 5.2, the Trustee shall continue to be
entitled to make claims under the Note Policy pursuant to the Sale and Servicing
Agreement for Scheduled Payments on the Notes. Payments under the Note Policy
following acceleration of any Notes shall be applied by the Trustee:
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FIRST: to Noteholders for amounts due and unpaid on
the Notes for interest, ratably, without preference or
priority of any kind, according to the amounts due and
payable on the Notes for interest; and
SECOND: to Noteholders for amounts due and unpaid on
the Notes for principal, ratably, without preference or
priority of any kind, according to the amounts due and
payable on the Notes for principal.
(b) In the event any Notes are accelerated due to an Event of Default,
the Note Insurer shall have the right (in addition to its obligation to pay
Scheduled Payments on the Notes in accordance with the Note Policy), but not the
obligation, to make payments under the Note Policy or otherwise of interest and
principal due on such Notes, in whole or in part, on any date or dates following
such acceleration as the Note Insurer, in its sole discretion, shall elect.
(c) If an Insurer Default shall have occurred and be continuing and an
Event of Default shall have occurred and be continuing, the Trustee in its
discretion may, or if so requested in writing by Holders holding Notes
representing not less than a majority of the Outstanding Amount of the Notes,
declare by written notice to the Issuer that the Notes become, whereupon they
shall become, immediately due and payable at par, together with accrued interest
thereon.
(d) If an Insurer Default shall have occurred and be continuing, then
at any time after such declaration of acceleration of maturity has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article V provided, the Holders of Notes
representing a majority of the Outstanding Amount of the Notes, by written
notice to the Issuer and the Trustee, may rescind and annul such declaration and
its consequences if:
(i) the Issuer has paid or deposited with the Trustee
a sum sufficient to pay
(A) all payments of principal of and interest on all
Notes and all other amounts that would then be due hereunder
or upon such Notes if the Event of Default giving rise to such
acceleration had not occurred; and
(B) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and
counsel; and
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(ii) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such acceleration,
have been cured or waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by
Trustee. (a) The Issuer covenants that if (i) default is made in the payment of
any interest on any Note when the same becomes due and payable, and such default
continues for a period of five days, or (ii) default is made in the payment of
the principal of or any installment of the principal of any Note when the same
becomes due and payable, the Issuer will, upon demand of the Trustee, pay to it,
for the benefit of the Holders of the Notes, the whole amount then due and
payable on such Notes for principal and interest, with interest upon the overdue
principal, and, to the extent payment at such rate of interest shall be legally
enforceable, upon overdue installments of interest, at the applicable Interest
Rate and in addition thereto such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee and its agents and counsel.
(b) Each Issuer Secured Party hereby irrevocably and unconditionally
appoints the Controlling Party as the true and lawful attorney-in-fact of such
Issuer Secured Party for so long as such Issuer Secured Party is not the
Controlling Party, with full power of substitution, to execute, acknowledge and
deliver any notice, document, certificate, paper, pleading or instrument and to
do in the name of the Controlling Party as well as in the name, place and stead
of such Issuer Secured Party such acts, things and deeds for or on behalf of and
in the name of such Issuer Secured Party under this Indenture (including
specifically under Section 5.4) and under the Basic Documents which such Issuer
Secured Party could or might do or which may be necessary, desirable or
convenient in such Controlling Party's sole discretion to effect the purposes
contemplated hereunder and under the Basic Documents and, without limitation,
following the occurrence of an Event of Default, exercise full right, power and
authority to take, or defer from taking, any and all acts with respect to the
administration, maintenance or disposition of the Trust Estate.
(c) If an Event of Default occurs and is continuing, the Trustee may in
its discretion but with the consent of the Controlling Party and shall, at the
direction of the Controlling Party (except as provided in Section 5.3(d) below),
proceed to protect and enforce its rights and the rights of the Noteholders
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by such appropriate Proceedings as the Trustee or the Controlling Party shall
deem most effective to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy
or legal or equitable right vested in the Trustee by this Indenture or by law.
(d) Notwithstanding anything to the contrary contained in this
Indenture (including without limitation Sections 5.4(a), 5.12 and 5.13) and
regardless of whether an Insurer Default shall have occurred and be continuing,
if the Issuer fails to perform its obligations under Section 10.1(b) hereof when
and as due, the Trustee may in its discretion (and without the consent of the
Controlling Party) proceed to protect and enforce its rights and the rights of
the Noteholders by such appropriate proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for specific
performance of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy or
legal or equitable right vested in the Trustee by this Indenture or by law;
provided that the Trustee shall only be entitled to take any such actions
without the consent of the Controlling Party to the extent such actions (x) are
taken only to enforce the Issuer's obligations to redeem the principal amount of
Notes and (y) are taken only against the portion of the Collateral, if any,
consisting of the Pre-Funding Account, the Interest Reserve Account, any
investments therein and any proceeds thereof.
(e) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Trust Estate, proceedings under Title 11 of the United States Code or any
other applicable Federal or state bankruptcy, insolvency or other similar law,
or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Trustee, irrespective of whether the principal of any
Notes shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section, shall be entitled and empowered, by
intervention in such proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount
of principal and interest owing and unpaid in respect of the Notes and
to file such other papers or documents as may be necessary or advisable
in order to have the claims of
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the Trustee (including any claim for reasonable compensation to the
Trustee and each predecessor Trustee, and their respective agents,
attorneys and counsel, and for reimbursement of all expenses and
liabilities incurred, and all advances made, by the Trustee and each
predecessor Trustee, except as a result of negligence, bad faith or
willful misconduct) and of the Noteholders allowed in such proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of Notes in any election of a trustee, a
standby trustee or person performing similar functions in any such
proceedings;
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders and of the
Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims
of the Trustee or the Holders of Notes allowed in any judicial
proceedings relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such proceeding is hereby authorized by each of such Noteholders to make
payments to the Trustee, and, in the event that the Trustee shall consent to the
making of payments directly to such Noteholders, to pay to the Trustee such
amounts as shall be sufficient to cover reasonable compensation to the Trustee,
each predecessor Trustee and their respective agents, attorneys and counsel, and
all other expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee except as a result of negligence or bad
faith.
(f) Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or vote for or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Noteholder in any such proceeding
except, as aforesaid, to vote for the election of a trustee in bankruptcy or
similar person.
(g) All rights of action and of asserting claims under this Indenture,
the Master Spread Account Agreement or under any of the Notes, may be enforced
by the Trustee without the possession of any of the Notes or the production
thereof in any trial or other proceedings relative thereto, and any such action
or
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proceedings instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment, subject to the
payment of the expenses, disbursements and compensation of the Trustee, each
predecessor Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders of the Notes.
(h) In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture or the Master
Spread Account Agreement), the Trustee shall be held to represent all the
Holders of the Notes, and it shall not be necessary to make any Noteholder a
party to any such proceedings.
SECTION 5.4. Remedies. (a) If an Event of Default shall have occurred
and be continuing, the Controlling Party may do one or more of the following
(subject to Section 5.5):
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the
Notes or under this Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect
from the Issuer and any other obligor upon such Notes moneys adjudged
due;
(ii) institute Proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to the Trust
Estate;
(iii) exercise any remedies of a secured party under the UCC
and take any other appropriate action to protect and enforce the rights
and remedies of the Trustee and the Holders of the Notes; and
(iv) direct the Trustee to sell the Trust Estate or any
portion thereof or rights or interest therein, at one or more public or
private sales called and conducted in any manner permitted by law;
provided, however, that
(A) if the Note Insurer is the Controlling Party, the
Note Insurer may not sell or otherwise liquidate the Trust
Estate following an Insurance Agreement Indenture Cross
Default unless
(I) the proceeds of such sale or liquidation
distributable to the Noteholders are sufficient to
discharge in full all amounts then due and unpaid
upon such Notes for principal and interest and it
shall have received instruction to do so by holders
of at least 66-2/3% of the outstanding
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principal balance of each of the Class A Notes,
the Class B Notes and the Certificates,
respectively; or
(B) if the Trustee is the Controlling Party, the
Trustee may not sell or otherwise liquidate the Trust Estate
following an Event of Default unless
(I) such Event of Default is of the type
described in Section 5.1(i) or (ii), or
(II) either
(x) the Holders of 100% of the
Outstanding Amount of the Notes consent
thereto,
(y) the proceeds of such sale or
liquidation distributable to the Noteholders
are sufficient to discharge in full all
amounts then due and unpaid upon such Notes
for principal and interest, or
(z) the Trustee determines that the
Trust Estate will not continue to provide
sufficient funds for the payment of
principal of and interest on the Notes as
they would have become due if the Notes had
not been declared due and payable, and the
Trustee provides prior written notice to the
Rating Agencies and obtains the consent of
Holders of 66-2/3% of the Outstanding Amount
of the Notes.
In determining such sufficiency or insufficiency with respect to
clauses (y) and (z), the Trustee may, but need not, obtain and rely upon an
opinion of an Independent investment banking or accounting firm of national
reputation as to the feasibility of such proposed action and as to the
sufficiency of the Trust Estate for such purpose.
SECTION 5.5. Optional Preservation of the Receivables. If the Trustee
is the Controlling Party and if the Notes have been declared to be due and
payable under Section 5.2 following an Event of Default and such declaration and
its consequences have not been rescinded and annulled, the Trustee may, but need
not, elect to maintain possession of the Trust Estate. It is the desire of the
parties hereto and the Noteholders that there be at all times sufficient funds
for the payment of principal of and interest on the Notes, and the Trustee shall
take such desire into account when determining whether or not to maintain
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possession of the Trust Estate. In determining whether to maintain possession of
the Trust Estate, the Trustee may, but need not, obtain and rely upon an opinion
of an Independent investment banking or accounting firm of national reputation
as to the feasibility of such proposed action and as to the sufficiency of the
Trust Estate for such purpose.
SECTION 5.6. Priorities.
(a) Following (1) the acceleration of the Notes pursuant to Section 5.2
or (2) if an Insurer Default shall have occurred and be continuing, the
occurrence of an Event of Default pursuant to Section 5.1(i), 5.1(ii), 5.1(iv),
5.1(v) or 5.1(vi) of this Indenture or (3) the receipt of Insolvency Proceeds
pursuant to Section 11.1(b) of the Sale and Servicing Agreement, the Total
Distribution Amount, including any money or property collected pursuant to
Section 5.4 of this Indenture and any such Insolvency Proceeds, shall be applied
by the Trustee on the related Payment Date in the following order of priority:
FIRST: amounts due and owing and required to be distributed to
the Servicer, the Standby Servicer, the Owner Trustee, the Trustee and
the Collateral Agent, respectively, pursuant to priorities (i) through
(iv) of Section 5.7(b) of the Sale and Servicing Agreement and not
previously distributed, in the order of such priorities and without
preference or priority of any kind within such priorities;
SECOND: to Class A Noteholders for amounts due and unpaid on
the Class A Notes for interest, ratably, without preference or priority
of any kind, according to the amounts due and payable on the Class A
Notes for interest;
THIRD: to Class B Noteholders for amounts due and unpaid on
the Class B Notes for interest, ratably, without preference or priority
of any kind, according to the amounts due and payable on the Class B
Notes for interest;
FOURTH: to Class A Noteholders for amounts due and unpaid on
the Class A Notes for principal, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Class A Notes for principal;
FIFTH: amounts due and owing and required to be distributed to
the Note Insurer pursuant to priority (viii) of Section 5.7(b) of the
Sale and Servicing Agreement and not previously distributed); and
SIXTH: in the event any Person other than the Standby Servicer
becomes the successor Servicer, to such successor Servicer, reasonable
transition expenses (up to a maximum of
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$50,000 for all such expenses) incurred in acting as successor
Servicer;
SEVENTH: to Class B Noteholders for amounts due and unpaid on
the Class B Notes for principal, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Class B Notes for Principal;
EIGHTH: to the Certificateholders for amounts due and unpaid
on the Certificates for interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Certificates for interest;
NINTH: to the Certificateholders for amounts due and unpaid on
the Certificates for principal, ratably, without preference or priority
of any kind, according to the amounts due and payable on the
Certificates for principal;
TENTH: to the Collateral Agent to be applied as provided in
the Master Spread Account Agreement;
provided that any amounts collected from the Pre-Funding Account or the Interest
Reserve Account shall be paid for amounts due and unpaid on the Notes for
principal for distribution to Noteholders in accordance with Section 10.1(b)
and, second, in accordance with Section 5.7(b) of the Sale and Servicing
Agreement and, third in accordance with priorities ONE through SEVENTH above.
(b) The Trustee may fix a record date and payment date for any payment
to Noteholders pursuant to this Section. At least 15 days before such record
date the Issuer shall mail to each Noteholder and the Trustee a notice that
states the record date, the payment date and the amount to be paid.
SECTION 5.7. Limitation of Suits. No Holder of any Note shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(i) such Holder has previously given written notice to
the Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding
Amount of the Notes have made written request to the Trustee to
institute such proceeding in respect of such Event of Default in its
own name as Trustee hereunder;
(iii) such Holder or Holders have offered to the
Trustee indemnity reasonably satisfactory to it against the
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costs, expenses and liabilities to be incurred in complying with such
request;
(iv) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such
proceedings;
(v) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority of the Outstanding Amount of the Notes; and
(vi) an Insurer Default shall have occurred and be continuing;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of Notes, each
representing less than a majority of the Outstanding Amount of the Notes, the
Trustee in its sole discretion may determine what action, if any, shall be
taken, notwithstanding any other provisions of this Indenture.
SECTION 5.8. Unconditional Rights of Noteholders To Receive Principal
and Interest. Notwithstanding any other provisions of this Indenture, the Holder
of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest, if any, on such Note on or
after the respective due dates thereof expressed in such Note or in this
Indenture (or, in the case of redemption, on or after the Redemption Date) and
to institute suit for the enforcement of any such payment, and such right shall
not be impaired without the consent of such Holder.
SECTION 5.9. Restoration of Rights and Remedies. If the Controlling
Party or any Noteholder has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Trustee or to
such Noteholder, then and in every such case the Issuer, the Trustee and the
Noteholders shall, subject to any determination in such Proceeding, be restored
severally and respectively to their former positions hereunder, and thereafter
all rights and
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remedies of the Trustee and the Noteholders shall continue as though no such
proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Controlling Party or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not a Waiver. No delay or omission of
the Controlling Party or any Holder of any Note to exercise any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by law
to the Trustee or to the Noteholders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Noteholders, as the
case may be.
SECTION 5.12. Control by Noteholders. If the Trustee is the Controlling
Party, the Holders of a majority of the Outstanding Amount of the Notes shall
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee with respect to the Notes or exercising
any trust or power conferred on the Trustee; provided that
(i) such direction shall not be in conflict with any rule of
law or with this Indenture;
(ii) subject to the express terms of Section 5.4, any
direction to the Trustee to sell or liquidate the Trust Estate shall be
by the Holders of Notes representing not less than 100% of the
Outstanding Amount of the Notes;
(iii) if the conditions set forth in Section 5.5 have been
satisfied and the Trustee elects to retain the Trust Estate pursuant to
such Section, then any direction to the Trustee by Holders of Notes
representing less than 100% of the Outstanding Amount of the Notes to
sell or liquidate the Trust Estate shall be of no force and effect; and
(iv) the Trustee may take any other action deemed proper by
the Trustee that is not inconsistent with such direction;
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provided, however, that, subject to Section 6.1, the Trustee need not take any
action that it determines might involve it in liability or might materially
adversely affect the rights of any Noteholders not consenting to such action.
SECTION 5.13. Waiver of Past Defaults. (a) If an Insurer Default shall
have occurred and be continuing, prior to the declaration of the acceleration of
the maturity of the Notes as provided in Section 5.4, the Holders of Notes of
not less than a majority of the Outstanding Amount of the Notes may waive any
past Default or Event of Default and its consequences except a Default (i) in
payment of principal of or interest on any of the Notes or (ii) in respect of a
covenant or provision hereof which cannot be modified or amended without the
consent of the Holder of each Note. In the case of any such waiver, the Issuer,
the Trustee and the Holders of the Notes shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend to
any subsequent or other Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
SECTION 5.14. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to (a)
any suit instituted by the Trustee, (b) any suit instituted by any Noteholder,
or group of Noteholders, in each case holding in the aggregate more than 10% of
the Outstanding Amount of the Notes or (c) any suit instituted by any Noteholder
for the enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this Indenture (or,
in the case of redemption, on or after the Redemption Date).
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SECTION 5.15. Waiver of Stay or Extension Laws. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power and any right of the
Issuer to take such action shall be suspended.
ARTICLE VI
The Trustee
SECTION 6.1. Duties of Trustee. (a) If an Event of Default has occurred
and is continuing, the Trustee shall exercise the rights and powers vested in it
by this Indenture and the Basic Documents and use the same degree of care and
skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; however, the Trustee shall examine the certificates and
opinions to determine whether or not they conform on their face to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
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(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.12.
(d) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Issuer.
(e) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law or the terms of this Indenture
or the Sale and Servicing Agreement.
(f) No provision of this Indenture shall require the Trustee 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 it shall have reasonable grounds to believe that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(g) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
(h) The Trustee shall permit any representative of the Note Insurer,
during the Trustee's normal business hours, to examine all books of account,
records, reports and other papers of the Trustee relating to the Notes, to make
copies and extracts therefrom and to discuss the Trustee's affairs and actions,
as such affairs and actions relate to the Trustee's duties with respect to the
Notes, with the Trustee's officers and employees responsible for carrying out
the Trustee's duties with respect to the Notes.
(i) The Trustee shall, and hereby agrees that it will, perform all of
the obligations and duties required of it under the Sale and Servicing
Agreement.
(j) The Trustee shall, and hereby agrees that it will, hold the Note
Policy in trust, and will hold any proceeds of any claim on the Note Policy in
trust solely for the use and benefit of the Noteholders.
(k) In no event shall Norwest Bank Minnesota, National Association, in
any of its capacities hereunder, be deemed to have assumed any duties of the
Owner Trustee under the Delaware Business Trust Statute, common law, or the
Trust Agreement.
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(l) Except for actions expressly authorized by this Indenture, 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.
(m) All information obtained by the Trustee regarding the Obligors and
the Receivables, whether upon the exercise of its rights under this Indenture or
otherwise, shall be maintained by the Trustee in confidence and shall not be
disclosed to any other Person, other than the Trustee's attorneys, accountants
and agents unless such disclosure is required by this Indenture or any
applicable law or regulation.
SECTION 6.2. Rights of Trustee. (a) The Trustee may rely on any
document believed by it to be genuine and to have been signed or presented by
the proper person. The Trustee need not investigate any fact or matter stated in
the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officer's Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Officer's Certificate or Opinion of Counsel.
(c) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and the Trustee shall not be responsible
for any misconduct or negligence on the part of, or for the supervision of
Consumer Portfolio Services, Inc., or any other such agent, attorney, custodian
or nominee appointed with due care by it hereunder.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute wilful
misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the Notes
shall be full and complete authorization and protection from liability in
respect to any action taken, omitted or suffered by it hereunder in good faith
and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall be under no obligation to institute, conduct or
defend any litigation under this Indenture or in relation to this Indenture, at
the request, order or direction of any of the Holders of Notes or the
Controlling Party, pursuant to the provisions of this Indenture, unless such
Holders of Notes or
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the Controlling Party shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities that may be incurred
therein or thereby; provided, however, that the Trustee shall, upon the
occurrence of an Event of Default (that has not been cured), exercise the rights
and powers vested in it by this Indenture with reasonable care and skill.
(g) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other paper
or document, unless requested in writing to do so by the Note Insurer (so long
as no Insurer Default shall have occurred and be continuing) or (if an insurer
Default shall have occurred and be continuing) by the Holders of Notes
evidencing not less than 25% of the Outstanding Amount thereof; 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 is, in the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of this Indenture or the
Sale and Servicing 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.
SECTION 6.3. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Trustee. Any Note Paying Agent, Note Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the
Trustee must comply with Sections 6.11 and 6.12.
SECTION 6.4. Trustee's Disclaimer. The Trustee shall not be responsible
for and makes no representation as to the validity or adequacy of this
Indenture, the Trust Estate or the Notes, it shall not be accountable for the
Issuer's use of the proceeds from the Notes, and it shall not be responsible for
any statement of the Issuer in the Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the Trustee's
certificate of authentication.
SECTION 6.5. Notice of Defaults. If an Event of Default occurs and is
continuing and if it is either known by, or written notice of the existence
thereof has been delivered to, a Responsible Officer of the Trustee, the Trustee
shall mail to each Noteholder notice of the Default within 90 days after such
knowledge or notice occurs. Except in the case of a Default in
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payment of principal of or interest on any Note (including payments pursuant to
the mandatory redemption provisions of such Note), the Trustee may withhold the
notice if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of Noteholders.
SECTION 6.6. Reports by Trustee to Holders. The Trustee shall on behalf
of the Issuer deliver to each Noteholder such information as may be reasonably
required to enable such Holder to prepare its Federal and state income tax
returns.
SECTION 6.7. Compensation and Indemnity. (a) Pursuant to Section 5.7(b)
of the Sale and Servicing Agreement, the Issuer shall, or shall cause the
Servicer to, pay to the Trustee from time to time compensation for its services.
The Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Issuer shall or shall cause the Servicer to
reimburse the Trustee, for all reasonable out-of-pocket expenses incurred or
made by it, including costs of collection, in addition to the compensation for
its services. Such expenses shall include the reasonable compensation and
expenses, disbursements and advances of the Trustee's agents, counsel,
accountants and experts. The Issuer shall or shall cause the Servicer to
indemnify the Trustee against any and all loss, liability or expense incurred by
the Trustee without willful misfeasance, negligence or bad faith on its part
arising out of or in connection with the acceptance or the administration of
this trust and the performance of its duties hereunder, including the costs and
expenses of defending itself against any claim or liability in connection
therewith. The Trustee shall notify the Issuer and the Servicer promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Issuer and the Servicer shall not relieve the Issuer of its obligations
hereunder or the Servicer of its obligations under Article XII of the Sale and
Servicing Agreement. The Trustee may have separate counsel and the Issuer shall
or shall cause the Servicer to pay the fees and expenses of such counsel.
Neither the Issuer nor the Servicer need reimburse any expense or indemnify
against any loss, liability or expense incurred by the Trustee through the
Trustee's own wilful misconduct, negligence or bad faith.
(b) The Issuer's payment obligations to the Trustee pursuant to this
Section shall survive the discharge of this Indenture. When the Trustee incurs
expenses after the occurrence of a Default specified in Section 5.1(v) or (vi)
with respect to the Issuer, the expenses are intended to constitute expenses of
administration under Title 11 of the United States Code or any other applicable
Federal or state bankruptcy, insolvency or similar law. Notwithstanding anything
else set forth in this Indenture or the Basic Documents, the Trustee hereunder
and under
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the Basic Documents shall be recourse to the Trust Estate only and specifically
shall not be recourse to the assets of the General Partner of the Issuer or any
Securityholder. In addition, the Trustee agrees that its recourse to the Issuer,
the Trust Estate, the Seller and amounts held pursuant to the Spread Account
Agreement shall be limited to the right to receive the distributions referred to
in Section 5.7(b) of the Sale and Servicing Agreement.
SECTION 6.8. Replacement of Trustee. The Issuer may, with the consent
of the Note Insurer, and, at the request of the Note Insurer, shall, remove the
Trustee (unless an Insurer Default shall have occurred and be continuing) if:
(i) the Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect of the
Trustee in an involuntary case or proceeding under federal or state banking or
bankruptcy laws, as now or hereafter constituted, or any other applicable
federal or state bankruptcy, insolvency or other similar law, shall have entered
a decree or order granting relief or appointing a receiver, liquidator,
assignee, custodian, trustee, conservator, sequestrator (or similar official)
for the Trustee or for any substantial part of the Trustee's property, or
ordering the winding-up or liquidation of the Trustee's affairs;
(iii)an involuntary case under the federal bankruptcy laws, as now or
hereafter in effect, or another present or future federal or state bankruptcy,
insolvency or similar law is commenced with respect to the Trustee and such case
is not dismissed within 60 days;
(iv) the Trustee commences a voluntary case under any federal or state
banking or bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law, or
consents to the appointment of or taking possession by a received, liquidator,
assignee, custodian, trustee, conservator or sequestrator (or other similar
official) for the Trustee or for any substantial part of the Trustee's property,
or makes any assignment for the benefit of creditors or fails generally to pay
its debts as such debts become due or takes any corporate action in furtherances
of any of the foregoing; or
(v) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Issuer shall promptly appoint a successor
Trustee acceptable to
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the Note Insurer (so long as an Insurer Default shall not have occurred and be
continuing). If the Issuer fails to appoint such a successor Trustee, the Note
Insurer may appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee, the Note Insurer (provided that no Insurer
Default shall have occurred and be continuing) and the Issuer, whereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the retiring
Trustee under this Indenture, subject to satisfaction of the Rating Agency
Condition. The successor Trustee shall mail a notice of its succession to each
Noteholder. The retiring Trustee shall promptly transfer all property held by it
as Trustee to the successor Trustee.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuer or the
Holders of a majority in outstanding Amount of the Notes may petition any court
of competent jurisdiction for the appointment of a successor Trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor Trustee
pursuant to Section 6.8.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Issuer's and the Servicer's obligations under Section 6.7 shall
continue for the benefit of the retiring Trustee.
SECTION 6.9. Successor Trustee by Merger. (a) If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee. The Trustee shall provide the Rating
Agencies prior written notice of any such transaction.
(b) In case at the time such successor or successors to the Trustee by
merger, conversion or consolidation shall succeed to the trusts created by this
Indenture any of the Notes shall have been authenticated but not delivered, any
such successor to the Trustee may adopt the certificate of authentication of any
predecessor trustee, and deliver such Notes so authenticated; and in case at
that time any of the Notes shall not have been authenticated, any successor to
the Trustee may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor to the Trustee; and in all such cases
such
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certificates shall have the full force which it is anywhere in the Notes or in
this Indenture provided that the certificate of the Trustee shall have.
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions of this Indenture, at any time, for the
purpose of meeting any legal requirement of any jurisdiction in which any part
of the Trust may at the time be located, the Trustee with the consent of the
Note Insurer (so long as an Insurer Default shall not have occurred and be
continuing) shall have the power and may execute and deliver all instruments to
appoint one or more Persons to act as a co-trustee or co-trustees, or separate
trustee or separate trustees, of all or any part of the Trust, and to vest in
such Person or Persons, in such capacity and for the benefit of the Noteholders,
such title to the Trust, or any part hereof, and, subject to the other
provisions of this Section, such powers, duties, obligations, rights and trusts
as the Trustee may consider necessary or desirable. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor trustee under Section 6.11 and no notice to Noteholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 6.8 hereof.
(b) Every 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 or imposed 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
the Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in
any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the
Trustee;
(ii) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder, including acts
or omissions of predecessor or successor trustees; and
(iii) the Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
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(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the 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 VI. 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 Indenture,
specifically including every provision of this Indenture relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may at any time constitute 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, dissolve, become insolvent, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall
invest in and be exercised by the Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.
SECTION 6.11. Eligibility: Disqualification. The Trustee shall at all
times satisfy the requirements of TIA ss. 310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition 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. The Trustee shall provide copies of
such reports to the Note Insurer upon request. The Trustee shall comply with TIA
ss. 310(b), including the optional provision permitted by the second sentence of
TIA ss. 310(b)(9); provided, however, that there shall be excluded from the
operation of TIA ss. 310(b)(1) any indenture or indentures under which other
securities of the Issuer are outstanding if the requirements for such exclusion
set forth in TIA ss. 310(b)(1) are met.
SECTION 6.12. Preferential Collection of Claims Against Issuer. The
Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship
listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be
subject to TIA ss. 311(a) to the extent indicated.
SECTION 6.13. Appointment and Powers. Subject to the terms and
conditions hereof, each of the Issuer Secured Parties hereby
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appoints Norwest Bank Minnesota, National Association as the Trustee with
respect to the Collateral, and Norwest Bank Minnesota, National Association
hereby accepts such appointment and agrees to act as Trustee with respect to the
Collateral for the Issuer Secured Parties, to maintain custody and possession of
such Collateral (except as otherwise provided hereunder) and to perform the
other duties of the Trustee in accordance with the provisions of this Indenture
and the other Basic Documents. Each Issuer Secured Party hereby authorizes the
Trustee to take such action on its behalf, and to exercise such rights,
remedies, powers and privileges hereunder, as the Controlling Party may direct
and as are specifically authorized to be exercised by the Trustee by the terms
hereof, together with such actions, rights, remedies, powers and privileges as
are reasonably incidental thereto. The Trustee shall act upon and in compliance
with the written instructions of the Controlling Party delivered pursuant to
this Indenture promptly following receipt of such written instructions; provided
that the Trustee shall not act in accordance with any instructions (i) which are
not authorized by, or in violation of the provisions of, this Indenture, (ii)
which are in violation of any applicable law, rule or regulation or (iii) for
which the Trustee has not received reasonable indemnity. Receipt of such
instructions shall not be a condition to the exercise by the Trustee of its
express duties hereunder, except where this Indenture provides that the Trustee
is permitted to act only following and in accordance with such instructions.
SECTION 6.14. Performance of Duties. The Trustee shall have no duties
or responsibilities except those expressly set forth in this Indenture and the
other Basic Documents to which the Trustee is a party or as directed by the
Controlling Party in accordance with this Indenture. The Trustee shall not be
required to take any discretionary actions hereunder except at the written
direction and with the indemnification of the Controlling Party. The Trustee
shall, and hereby agrees that it will, perform all of the duties and obligations
required of it under the Sale and Servicing Agreement.
SECTION 6.15. Limitation on Liability. Neither the Trustee nor any of
its directors, officers or employees shall be liable for any action taken or
omitted to be taken by it or them in good faith hereunder, or in connection
herewith, except that the Trustee shall be liable for its negligence, bad faith
or willful misconduct; nor shall the Trustee be responsible for the validity,
effectiveness, value, sufficiency or enforceability against the Issuer of this
Indenture or any of the Collateral (or any part thereof). Notwithstanding any
term or provision of this Indenture, the Trustee shall incur no liability to the
Issuer or the Issuer Secured Parties for any action taken or omitted by the
Trustee in connection with the Collateral, except for the
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negligence, bad faith or willful misconduct on the part of the Trustee, and,
further, shall incur no liability to the Issuer Secured Parties except for
negligence, bad faith or willful misconduct in carrying out its duties to the
Issuer Secured Parties. Subject to Section 6.16, the Trustee shall be protected
and shall incur no liability to any such party in relying upon the accuracy,
acting in reliance upon the contents, and assuming the genuineness of any
notice, demand, certificate, signature, instrument or other document reasonably
believed by the Trustee to be genuine and to have been duly executed by the
appropriate signatory, and (absent actual knowledge to the contrary) the Trustee
shall not be required to make any independent investigation with respect
thereto. The Trustee shall at all times be free independently to establish to
its reasonable satisfaction, but shall have no duty to independently verify, the
existence or nonexistence of facts that are a condition to the exercise or
enforcement of any right or remedy hereunder or under any of the Basic
Documents. The Trustee may consult with counsel, and shall not be liable for any
action taken or omitted to be taken by it hereunder in good faith and in
accordance with the written advice of such counsel. The Trustee shall not be
under any obligation to exercise any of the remedial rights or powers vested in
it by this Indenture or to follow any direction from the Controlling Party
unless it shall have received reasonable security or indemnity satisfactory to
the Trustee against the costs, expenses and liabilities which might be incurred
by it.
SECTION 6.16. Reliance Upon Documents. In the absence of negligence,
bad faith or willful misconduct on its part, the Trustee shall be entitled to
rely on any communication, instrument, paper or other document reasonably
believed by it to be genuine and correct and to have been signed or sent by the
proper Person or Persons and shall have no liability in acting, or omitting to
act, where such action or omission to act is in reasonable reliance upon any
statement or opinion contained in any such document or instrument.
SECTION 6.17. Successor Trustee.
(a) Merger. Any Person into which the Trustee may be converted or
merged, or with which it may be consolidated, or to which it may sell or
transfer its trust business and assets as a whole or substantially as a whole,
or any Person resulting from any such conversion, merger, consolidation, sale or
transfer to which the Trustee is a party, shall (provided it is otherwise
qualified to serve as the Trustee hereunder) be and become a successor Trustee
hereunder and be vested with all of the title to and interest in the Collateral
and all of the trusts, powers, descriptions, immunities, privileges and other
matters as was its predecessor without the execution or filing of any instrument
or
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any further act, deed or conveyance on the part of any of the parties hereto,
anything herein to the contrary notwithstanding, except to the extent, if any,
that any such action is necessary to perfect, or continue the perfection of, the
security interest of the Issuer Secured Parties in the Collateral; provided that
any such successor shall also be the successor Trustee under Section 6.9.
(b) Removal. The Trustee may be removed by the Controlling Party at any
time, with or without cause, by an instrument or concurrent instruments in
writing delivered to the Trustee, the other Issuer Secured Party and the Issuer.
A temporary successor may be removed at any time to allow a successor Trustee to
be appointed pursuant to subsection (c) below. Any removal pursuant to the
provisions of this subsection (b) shall take effect only upon the date which is
the latest of (i) the effective date of the appointment of a successor Trustee
and the acceptance in writing by such successor Trustee of such appointment and
of its obligation to perform its duties hereunder in accordance with the
provisions hereof, and (ii) receipt by the Controlling Party of an Opinion of
Counsel to the effect described in Section 3.6.
(c) Acceptance by Successor. The Controlling Party shall have the sole
right to appoint each successor Trustee. Every temporary or permanent successor
Trustee appointed hereunder shall execute, acknowledge and deliver to its
predecessor and to the Trustee, each Issuer Secured Party and the Issuer an
instrument in writing accepting such appointment hereunder and the relevant
predecessor shall execute, acknowledge and deliver such other documents and
instruments as will effectuate the delivery of all Collateral to the successor
Trustee, whereupon such successor, without any further act, deed or conveyance,
shall become fully vested with all the estates, properties, rights, powers,
duties and obligations of its predecessor. Such predecessor shall, nevertheless,
on the written request of either Issuer Secured Party or the Issuer, execute and
deliver an instrument transferring to such successor all the estates,
properties, rights and powers of such predecessor hereunder. In the event that
any instrument in writing from the Issuer or an Issuer Secured Party is
reasonably required by a successor Trustee to more fully and certainly vest in
such successor the estates, properties, rights, powers, duties and obligations
vested or intended to be vested hereunder in the Trustee, any and all such
written instruments shall at the request of the temporary or permanent successor
Trustee, be forthwith executed, acknowledged and delivered by the Trustee or the
Issuer, as the case may be. The designation of any successor Trustee and the
instrument or instruments removing any Trustee and appointing a successor
hereunder, together with all other instruments provided for herein, shall be
maintained with the records relating to the Collateral and, to the extent
required by applicable law, filed
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or recorded by the successor Trustee in each place where such filing or
recording is necessary to effect the transfer of the Collateral to the successor
Trustee or to protect or continue the perfection of the security interests
granted hereunder.
SECTION 6.18. [Reserved]
SECTION 6.19. Representations and Warranties of the Trustee. The
Trustee represents and warrants to the Issuer and to each Issuer Secured Party
as follows:
(a) Due Organization. The Trustee is a national banking
association, duly organized, validly existing and in good standing
under the laws of the United States and is duly authorized and licensed
under applicable law to conduct its business as presently conducted.
(b) Corporate Power. The Trustee has all requisite right,
power and authority to execute and deliver this Indenture and to
perform all of its duties as Trustee hereunder.
(c) Due Authorization. The execution and delivery by the
Trustee of this Indenture and the other Basic Documents to which it is
a party, and the performance by the Trustee of its duties hereunder and
thereunder, have been duly authorized by all necessary corporate
proceedings and no further approvals or filings, including any
governmental approvals, are required for the valid execution and
delivery by the Trustee, or the performance by the Trustee, of this
Indenture and such other Basic Documents.
(d) Valid and Binding Indenture. The Trustee has duly executed
and delivered this Indenture and each other Basic Document to which it
is a party, and each of this Indenture and each such other Basic
Document constitutes the legal, valid and binding obligation of the
Trustee, enforceable against the Trustee in accordance with its terms,
except as (i) such enforceability may be limited by bankruptcy,
insolvency, reorganization and similar laws relating to or affecting
the enforcement of creditors' rights generally and (ii) the
availability of equitable remedies may be limited by equitable
principles of general applicability.
SECTION 6.20. Waiver of Setoffs. The Trustee hereby expressly waives
any and all rights of setoff that the Trustee may otherwise at any time have
under applicable law with respect to any Trust Account and agrees that amounts
in the Trust Accounts shall at all times be held and applied solely in
accordance with the provisions hereof.
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SECTION 6.21. Control by the Controlling Party. The Trustee shall
comply with notices and instructions given by the Issuer only if accompanied by
the written consent of the Controlling Party, except that if any Event of
Default shall have occurred and be continuing, the Trustee shall act upon and
comply with notices and instructions given by the Controlling Party alone in the
place and stead of the Issuer.
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.1. Issuer To Furnish To Trustee Names and Addresses of
Noteholders. The Issuer will furnish or cause to be furnished to the Trustee (a)
not more than five days after the earlier of (i) each Record Date and (ii) three
months after the last Record Date, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders as of such Record
Date, (b) at such other times as the Trustee may request in writing, within 30
days after receipt by the Issuer of any such request, a list of similar form and
content as of a date not more than 10 days prior to the time such list is
furnished; provided, however, that so long as the Trustee is the Note Registrar,
no such list shall be required to be furnished. The Trustee or, if the Trustee
is not the Note Registrar, the Issuer shall furnish to the Note Insurer in
writing on an annual basis on each March 31 and at such other times as the Note
Insurer may request a copy of the list.
SECTION 7.2. Preservation of Information; Communications to
Noteholders. (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders contained in the
most recent list furnished to the Trustee as provided in Section 7.1 and the
names and addresses of Holders received by the Trustee in its capacity as Note
Registrar. The Trustee may destroy any list furnished to it as provided in such
Section 7.1 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA ss. 312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Trustee and the Note Registrar shall have the
protection of TIA ss. 312(c).
SECTION 7.3. Reports by Issuer. (a) The Issuer shall:
(i) file with the Trustee, within 15 days after the Issuer is
required to file the same with the Commission,
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copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as
the Commission may from time to time by rules and regulations
prescribe) which the Issuer may be required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Trustee and the Commission in accordance
with rules and regulations prescribed from time to time by the
Commission such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations; and
(iii) supply to the Trustee (and the Trustee shall transmit by
mail to all Noteholders described in TIA ss. 313(c)) such summaries of
any information, documents and reports required to be filed by the
Issuer pursuant to clauses (i) and (ii) of this Section 7.3(a) as may
be required by rules and regulations prescribed from time to time by
the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
SECTION 7.4. Reports by Trustee. (a) If required by TIA ss. 313(a),
within 60 days after each November 30, beginning with November 30, 1997, the
Trustee shall mail to each Noteholder as required by TIA ss. 313(c) a brief
report dated as of such date that complies with TIA ss. 313(a). The Trustee also
shall comply with TIA ss. 313(b).
(b) A copy of each report at the time of its mailing to Noteholders
shall be filed by the Trustee with the Commission and each stock exchange, if
any, on which the Notes are listed. The Issuer shall notify the Trustee if and
when the Notes are listed on any stock exchange.
ARTICLE VIII
Collection of Money and Releases of Trust Estate
SECTION 8.1. Collection of Money. Except as otherwise expressly
provided herein, the Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Trustee pursuant to this Indenture and the Sale and Servicing
Agreement. The Trustee shall apply all such money
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received by it as provided in this Indenture and the Sale and Servicing
Agreement. Except as otherwise expressly provided in this Indenture or in the
Sale and Servicing Agreement, if any default occurs in the making of any payment
or performance under any agreement or instrument that is part of the Trust
Estate, the Trustee may take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution of appropriate
proceedings. Any such action shall be without prejudice to any right to claim a
Default or Event of Default under this Indenture and any right to proceed
thereafter as provided in Article V.
SECTION 8.2. Release of Trust Estate. (a) Subject to the payment of its
fees and expenses pursuant to Section 6.7, the Trustee may, and when required by
the provisions of this Indenture shall, execute instruments to release property
from the lien of this Indenture, in a manner and under circumstances that are
not inconsistent with the provisions of this Indenture. No party relying upon an
instrument executed by the Trustee as provided in this Article VIII shall be
bound to ascertain the Trustee's authority, inquire into the satisfaction of any
conditions precedent or see to the application of any moneys.
(b) The Trustee shall, at such time as there are no Notes outstanding
and all sums due the Trustee pursuant to Section 6.7 have been paid, release any
remaining portion of the Trust Estate that secured the Notes from the lien of
this Indenture and release to the Issuer or any other Person entitled thereto
any funds then on deposit in the Trust Accounts. The Trustee shall release
property from the lien of this Indenture pursuant to this Section 8.2(b) only
upon receipt of an Issuer Request accompanied by an Officer's Certificate, an
Opinion of Counsel and (if required by the TIA) Independent Certificates in
accordance with TIA ss. 314(c) and ss. 314(d)(1) meeting the applicable
requirements of Section 11.1.
SECTION 8.3. Opinion of Counsel. The Trustee shall receive at least
seven days' notice when requested by the Issuer to take any action pursuant to
Section 8.2(a), accompanied by copies of any instruments involved, and the
Trustee shall also require as a condition to such action, an Opinion of Counsel
in form and substance satisfactory to the Trustee, stating the legal effect of
any such action, outlining the steps required to complete the same, and
concluding that all conditions precedent to the taking of such action have been
complied with and such action will not materially and adversely affect the
security for the Notes or the rights of the Noteholders in contravention of the
provisions of this Indenture; provided, however, that such Opinion of Counsel
shall not be required to express an opinion as to the fair value of the Trust
Estate. Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and
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validity of any certificate or other instrument delivered to the Trustee in
connection with any such action.
ARTICLE IX
Supplemental Indentures
SECTION 9.1. Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Holders of any Notes but with the consent of the
Note Insurer (unless an Insurer Default shall have occurred and be continuing)
and with prior notice to the Rating Agencies by the Issuer, the Issuer and the
Trustee, when authorized by an Issuer Order, at any time and from time to time,
may enter into one or more indentures supplemental hereto (which shall conform
to the provisions of the Trust Indenture Act as in force at the date of the
execution thereof), in form satisfactory to the Trustee, for any of the
following purposes:
(i) to correct or amplify the description of any property at
any time subject to the lien of this Indenture, or better to assure,
convey and confirm unto the Trustee any property subject or required to
be subjected to the lien of this Indenture, or to subject to the lien
of this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein
and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit
of the Holders of the Notes, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture which may be
inconsistent with any other provision herein or in any supplemental
indenture or to make any other provisions with respect to matters or
questions arising under this Indenture or in any supplemental
indenture; provided that such action shall not adversely affect the
interests of the Holders of the Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of
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this Indenture as shall be necessary to facilitate the administration
of the trusts hereunder by more than one trustee, pursuant to the
requirements of Article VI; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA.
The Trustee is hereby authorized to join in the execution of any such
supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) The Issuer and the Trustee, when authorized by an Issuer Order,
may, also without the consent of any of the Holders of the Notes but with prior
notice to the Rating Agencies by the Issuer, enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to, or
changing in any manner or eliminating any of the provisions of, this Indenture
or of modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests of
any Noteholder.
SECTION 9.2. Supplemental Indentures with Consent of Noteholders. The
Issuer and the Trustee, when authorized by an Issuer Order, also may, with prior
notice to the Rating Agencies, with the consent of the Note Insurer (unless an
Insurer Default shall have occurred and be continuing) and with the consent of
the Holders of not less than a majority of the outstanding Amount of the Notes,
by Act of such Holders delivered to the Issuer and the Trustee, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture or of modifying in any manner the rights of the Holders of
the Notes under this Indenture; provided, however, that, subject to the express
rights of the Note Insurer under the Basic Documents, no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Note
affected thereby:
(i) change the date of payment of any installment of principal
of or interest on any Note, or reduce the principal amount thereof, the
interest rate thereon or the Redemption Price with respect thereto,
change the provision of this Indenture relating to the application of
collections on, or the proceeds of the sale of, the Trust Estate to
payment of principal of or interest on the Notes, or change
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any place of payment where, or the coin or currency in which, any Note
or the interest thereon is payable;
(ii) impair the right to institute suit for the enforcement of
the provisions of this Indenture requiring the application of funds
available therefor, as provided in Article V, to the payment of any
such amount due on the Notes on or after the respective due dates
thereof (or, in the case of redemption, on or after the Redemption
Date);
(iii) reduce the percentage of the Outstanding Amount of the
Notes, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences provided
for in this Indenture;
(iv) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(v) reduce the percentage of the Outstanding Amount of the
Notes required to direct the Trustee to direct the Issuer to sell or
liquidate the Trust Estate pursuant to Section 5.4;
(vi) modify any provision of this Section except to increase
any percentage specified herein or to provide that certain additional
provisions of this Indenture or the Basic Documents cannot be modified
or waived without the consent of the Holder of each Outstanding Note
affected thereby;
(vii) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the amount of any payment of
interest or principal due on any Note on any Payment Date (including
the calculation of any of the individual components of such
calculation) or as to affect the rights of the Holders of Notes to the
benefit of any provisions for the mandatory redemption of the Notes
contained herein; or
(viii) permit the creation of any lien ranking prior to or on
a parity with the lien of this Indenture with respect to any part of
the Trust Estate or, except as otherwise permitted or contemplated
herein or in any of the Basic Documents, terminate the lien of this
Indenture on any property at any time subject hereto or deprive the
Holder of any Note of the security provided by the lien of this
Indenture.
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The Trustee may determine whether or not any Notes would be affected by
any supplemental indenture and any such determination shall be conclusive upon
the Holders of all Notes, whether theretofore or thereafter authenticated and
delivered hereunder. The Trustee shall not be liable for any such determination
made in good faith.
It shall not be necessary for any Act of Noteholders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to this Section, the Trustee shall mail to the
Holders of the Notes to which such amendment or supplemental indenture relates a
notice setting forth in general terms the substance of such supplemental
indenture. Any failure of the Trustee to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental indenture.
SECTION 9.3. Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, the Trustee shall be entitled to receive, and subject to
Sections 6.1 and 6.2, shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture that affects the Trustee's own
rights, duties, liabilities or immunities under this Indenture or otherwise.
SECTION 9.4. Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the Trustee, the Issuer and the Holders of the Notes shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 9.5. Conformity With Trust Indenture Act. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as then
in effect so long
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as this Indenture shall then be qualified under the Trust Indenture Act.
SECTION 9.6. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Issuer shall, bear a
notation in form approved by the Issuer as to any matter provided for in such
supplemental indenture. If the Issuer shall so determine, new Notes so modified
as to conform, in the opinion of the Issuer, to any such supplemental indenture
may be prepared and executed by the Issuer and authenticated and delivered by
the Trustee in exchange for Outstanding Notes.
ARTICLE X
Redemption of Notes
SECTION 10.1. Redemption. (a) The Notes are subject to redemption in
whole, but not in part, at the direction of the Seller or the Servicer pursuant
to Section 11.1(a) of the Sale and Servicing Agreement, on any Payment Date on
which the Servicer exercises its option to purchase the Trust Estate pursuant to
said Section 11.1(a), for a purchase price equal to the Redemption Price;
provided, however, that the Issuer has available funds sufficient to pay the
Redemption Price. The Servicer or the Issuer shall furnish the Note Insurer and
the Rating Agencies notice of such redemption. If the Notes are to be redeemed
pursuant to this Section 10.1(a), the Servicer or the Issuer shall furnish
notice of such election to the Trustee not later than 35 days prior to the
Redemption Date and the Issuer shall deposit with the Trustee in the Note
Distribution Account the Redemption Price of the Notes to be redeemed whereupon
all such Notes shall be due and payable on the Redemption Date upon the
furnishing of a notice complying with Section 10.2 to each Holder of Notes.
(b) In the event that on the Payment Date on or immediately following
the last day of the Funding Period, any portion of the Pre-Funded Amount remains
on deposit in the Pre-Funding Account after giving effect to the purchase of all
Subsequent Receivables, including any such purchase on such Redemption Date,
each class of Notes will be redeemed in part, on a pro rata basis, in an
aggregate principal amount equal to the Class A-1 Prepayment Amount, the Class
A-2 Prepayment Amount and the Class B Prepayment Amount.
(c) In the event that the assets of the Trust are sold pursuant to
Section 9.2 of the Trust Agreement, all amounts on deposit in the Note
Distribution Account shall be paid to the
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Noteholders up to the Outstanding Amount of the Notes and all accrued and unpaid
interest thereon. If amounts are to be paid to Noteholders pursuant to this
Section 10.1(c), the Servicer or the Issuer shall, to the extent practicable,
furnish notice of such event to the Trustee not later than 25 days prior to the
Redemption Date whereupon all such amounts shall be payable on the Redemption
Date.
SECTION 10.2. Form of Redemption Notice. (a) Notice of redemption under
Section 10.1(a) shall be given by the Trustee by facsimile or by first-class
mail, postage prepaid, transmitted or mailed prior to the applicable Redemption
Date to each Holder of Notes, as of the close of business on the Record Date
preceding the applicable Redemption Date, at such Holder's address appearing in
the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) that the Record Date otherwise applicable to such
Redemption Date is not applicable and that payments shall be made only
upon presentation and surrender of such Notes and the place where such
Notes are to be surrendered for payment of the Redemption Price (which
shall be the office or agency of the Issuer to be maintained as
provided in Section 3.2); and
(iv) that interest on the Notes shall cease to accrue on the
Redemption Date.
Notice of redemption of the Notes shall be given by the Trustee in the
name and at the expense of the Issuer. Failure to give notice of redemption, or
any defect therein, to any Holder of any Note shall not impair or affect the
validity of the redemption of any other Note.
(b) Prior notice of redemption under Section 10.1(b) is not required to
be given to Noteholders.
SECTION 10.3. Notes Payable on Redemption Date. The Notes to be
redeemed shall, following notice of redemption as required by Section 10.2 (in
the case of redemption pursuant to Section 10.1(a)), on the Redemption Date
become due and payable at the Redemption Price and (unless the Issuer shall
default in the payment of the Redemption Price) no interest shall accrue on the
Redemption Price for any period after the date to which accrued interest is
calculated for purposes of calculating the Redemption Price.
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ARTICLE XI
Miscellaneous
SECTION 11.1. Compliance Certificates and Opinions, etc. (a) Upon any
application or request by the Issuer to the Trustee to take any action under any
provision of this Indenture, the Issuer shall furnish to the Trustee and to the
Note Insurer (i) an Officer's Certificate stating that all conditions precedent,
if any, provided for in this Indenture relating to the proposed action have been
complied with, (ii) an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with and (iii)
(if required by the TIA) an Independent Certificate from a firm of certified
public accountants meeting the applicable requirements of this Section, except
that, in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture,
no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Trustee that is to be made the basis for the release of any
property or securities subject to the lien of this Indenture, the Issuer shall,
in addition to any obligation imposed in Section 11.1(a) or elsewhere in this
Indenture, furnish to the Trustee and the Note Insurer an
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Officer's Certificate certifying or stating the opinion of each person signing
such certificate as to the fair value (on the date of such deposit) to the
Issuer of the Collateral or other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the Trustee
and the Note Insurer an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause (i)
above, the Issuer shall also deliver to the Trustee and the Note
Insurer an Independent Certificate as to the same matters, if the fair
value to the Issuer of the securities to be so deposited and of all
other such securities made the basis of any such withdrawal or release
since the commencement of the then-current fiscal year of the Issuer,
as set forth in the certificates delivered pursuant to clause (i) above
and this clause (ii) is 10% or more of the Outstanding Amount of the
Notes, but such a certificate need not be furnished with respect to any
securities so deposited, if the fair value thereof to the Issuer as set
forth in the related Officer's Certificate is less than $25,000 or less
than 1% percent of the Outstanding Amount of the Notes.
(iii) other than with respect to the release of any Purchased
Receivables or Liquidated Receivables, whenever any property or
securities are to be released from the lien of this Indenture, the
Issuer shall also furnish to the Trustee and the Note Insurer an
Officer's Certificate certifying or stating the opinion of each person
signing such certificate as to the fair value (within 90 days of such
release) of the property or securities proposed to be released and
stating that in the opinion of such person the proposed release will
not impair the security under this Indenture in contravention of the
provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Trustee
and the Note Insurer an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause
(iii) above, the Issuer shall also furnish to the Trustee and the Note
Insurer an Independent Certificate as to the same matters if the fair
value of the property or securities and of all other property other
than Purchased Receivables and Defaulted Receivables, or securities
released from the lien of this Indenture since the commencement of the
then current calendar year, as set forth in the certificates required
by clause (iii) above and this clause (iv), equals 10% or more of the
Outstanding Amount of the Notes, but such certificate need not be
furnished in the case of any release of property or securities if the
fair value thereof as set forth in the
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related Officer's Certificate is less than $25,000 or less than 1
percent of the then Outstanding Amount of the Notes.
(v) Notwithstanding Section 2.9 or any provision of this
Section, the Issuer may (A) collect, liquidate, sell or otherwise
dispose of Receivables as and to the extent permitted or required by
the Basic Documents and (B) make cash payments out of the Trust
Accounts as and to the extent permitted or required by the Basic
Documents.
SECTION 11.2. Form of Documents Delivered to Trustee. (a) In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.
(b) Any certificate or opinion of an Authorized Officer of the Issuer
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his or her certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Servicer, the Seller or the Issuer, stating that the information with
respect to such factual matters is in the possession of the Servicer, the Seller
or the Issuer, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
(c) Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
(d) Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of such application, or as
evidence of the Issuer's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in
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such document shall in such case be conditions precedent to the right of the
Issuer to have such application granted or to the sufficiency of such
certificate or report. The foregoing shall not, however, be construed to affect
the Trustee's right to rely upon the truth and accuracy of any statement or
opinion contained in any such document as provided in Article VI.
SECTION 11.3. Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by agents duly appointed in writing; and except as
herein otherwise expressly provided such action shall become effective when such
instrument or instruments are delivered to the Trustee, and, where it is hereby
expressly required, to the Issuer. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Noteholders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 6.1)
conclusive in favor of the Trustee and the Issuer, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any customary manner of the Trustee.
(c) The ownership of Notes shall be proved by the Note
Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
SECTION 11.4. Notices, etc., to Trustee, Issuer and Rating Agencies.
(a) Any request, demand, authorization, direction, notice, consent, waiver or
Act of Noteholders or other documents provided or permitted by this Indenture to
be made upon, given or furnished to or filed with:
(i) the Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if personally delivered,
delivered by overnight courier or mailed certified mail, return receipt
requested and shall be
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deemed to have been duly given upon receipt to the Trustee at its
Corporate Trust Office, or
(ii) the Issuer by the Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if personally delivered,
delivered by overnight courier or mailed certified mail, return receipt
requested and shall deemed to have been duly given upon receipt to the
Issuer addressed to: CPS Auto Receivables Trust 1997-3, in care of
Bankers Trust (Delaware), 1011 Centre Street, Suite 200, Wilmington,
Delaware 19805-1266 with a copy of all notices and other documents to
Bankers Trust Company, 4 Albany Street, 10th Floor, Attn: Corporate
Trust and Agency Division, New York, New York 10006, Attention: Alfia
Monastra, or at any other address previously furnished in writing to
the Trustee by the Issuer. The Issuer shall promptly transmit any
notice received by it from the Noteholders to the Trustee.
(iii) the Note Insurer by the Issuer or the Trustee shall be
sufficient for any purpose hereunder if in writing and mailed by
registered mail or personally delivered or telexed or telecopied to the
recipient as follows:
To the Note Insurer:
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Surveillance Department
Telex No.: (212) 688-3101
Confirmation: (212) 826-0100
Telecopy Nos.: (212) 339-3518 or
(212) 339-3529
(In each case in which notice or other communication to the Note
Insurer refers to an Event of Default, a claim on the Note Policy or
with respect to which failure on the part of the Note Insurer to
respond shall be deemed to constitute consent or acceptance, then a
copy of such notice or other communication should also be sent to the
attention of the General Counsel and the Head--Financial Guaranty Group
"URGENT MATERIAL ENCLOSED.")
(b) Notices required to be given to the Rating Agencies by the Issuer,
the Trustee or the Owner Trustee shall be in writing, personally delivered,
delivered by overnight courier or mailed certified mail, return receipt
requested to (i) in the case of Moody's, at the following address: Moody's
Investors Service, Inc., 99 Church Street, New York New York 10004 and (ii) in
the
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case of S&P, at the following address: Standard & Poor's Ratings Services, 26
Broadway (15th Floor), New York, New York 10004, Attention of Asset-Backed
Surveillance Department; or as to each of the foregoing, at such other address
as shall be designated by written notice to the other parties.
SECTION 11.5. Notices to Noteholders; Waiver. (a) Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise expressly provided herein) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner here
in provided shall conclusively be presumed to have been duly given.
(b) Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.
(c) In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
(d) Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.
SECTION 11.6. Alternate Payment and Notice Provisions. Notwithstanding
any provision of this Indenture or any of the Notes to the contrary, the Issuer
may enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Trustee or any Note Paying Agent to such Holder, that
is different from the methods provided for in this Indenture for such payments
or notices, provided that such methods are reasonable and consented to by the
Trustee (which consent shall not be unreasonably withheld). The Issuer will
furnish to the
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Trustee a copy of each such agreement and the Trustee will cause payments to be
made and notices to be given in accordance with such agreements.
SECTION 11.7. Conflict with Trust Indenture Act. (a) If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this Indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
(b) The provisions of TIA ss. 310 through 317 that impose duties on any
person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 11.8. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 11.9. Successors and Assigns. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Trustee in this
Indenture shall bind its successors. All agreements of the Trustee in this
Indenture shall bind its successors.
SECTION 11.10. Severability. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 11.11. Benefits of Indenture. The Note Insurer and its
successors and assigns shall be a third-party beneficiary to the provisions of
this Indenture, and shall be entitled to rely upon and directly to enforce such
provisions of this Indenture so long as no Insurer Default shall have occurred
and be continuing. Nothing in this Indenture or in the Notes, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, and the Noteholders, and any other party secured
hereunder, and any other person with an ownership interest in any part of the
Trust Estate, any benefit or any legal or equitable right, remedy or claim under
this Indenture. The Note Insurer may disclaim any of its rights and powers under
this Indenture (in which case the Trustee may exercise such right or power
hereunder), but not its duties and obligations under the Note Policy, upon
delivery of a written notice to the Trustee.
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SECTION 11.12. Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
SECTION 11.13. Governing Law. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.14. Counterparts. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 11.15. Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Trustee or any other counsel reasonably acceptable
to the Trustee and the Note Insurer) to the effect that such recording is
necessary either for the protection of the Noteholders or any other person
secured hereunder or for the enforcement of any right or remedy granted to the
Trustee under this Indenture or to the Collateral Agent under the Master Spread
Account Agreement.
SECTION 11.16. Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Seller, the
Servicer, the Depositor, the Owner Trustee or the Trustee on the Notes or under
this Indenture or any certificate or other writing delivered in connection
herewith or therewith, against (i) the Seller, the Servicer, the Depositor, the
Trustee or the Owner Trustee in its individual capacity, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director, employee or agent of the Seller, the Servicer, the
Depositor, the Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Seller, the Servicer, the
Depositor, the Owner Trustee or the Trustee or of any successor or assign of the
Seller, the Servicer, the Depositor, the Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Trustee and the Owner Trustee have no such obligations
in their individual capacity) and except that any such partner, owner or
beneficiary shall be
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fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity. For all purposes of this Indenture, in
the performance of any duties or obligations of the Issuer hereunder, the Owner
Trustee shall be subject to, and entitled to the benefits of, the terms and
provisions of Article VI, VII and VIII of the Trust Agreement.
SECTION 11.17. No Petition. The Trustee, by entering into this
Indenture, and each Noteholder and Note Owner, by accepting a Note or a
beneficial interest therein, hereby covenant and agree that they will not at any
time institute against the Seller, the Depositor, or the Issuer, or join in any
institutional against the Seller, the Depositor, or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States Federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, this
Indenture or any of the Basic Documents.
SECTION 11.18. Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Trustee or of the Note Insurer,
during the Issuer's normal business hours, to examine all the books of account,
records, reports, and other papers of the Issuer, to make copies and extracts
therefrom, to cause such books to be audited by independent certified public
accountants, and to discuss the Issuer's affairs, finances and accounts with the
Issuer's officers, employees, and independent certified public accountants, all
at such reasonable times and as often as may be reasonably requested. The
Trustee shall and shall cause its representatives to hold in confidence all such
information except to the extent disclosure may be required by law (and all
reasonable applications for confidential treatment are unavailing) and except to
the extent that the Trustee may reasonably determine that such disclosure is
consistent with its Obligations hereunder.
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IN WITNESS WHEREOF, the Issuer and the Trustee have caused this
Indenture to be duly executed by their respective officers, hereunto duly
authorized, all as of the day and year first above written.
CPS AUTO RECEIVABLES TRUST 1997-3,
By: BANKERS TRUST (DELAWARE),
not in its individual capacity,
but solely as Owner Trustee
By:__________________________________
Title:
Name:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
By:__________________________________
Title:
Name:
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[Form of Class A-1 Note] EXHIBIT A-1
REGISTERED $__________
No. R
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. _______________
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange or payment, and any Note issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
CPS AUTO RECEIVABLES TRUST 1997-3
CLASS A-1 6.10% Asset-Backed NOTES
CPS Auto Receivables Trust 1997-3, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of [ ] DOLLARS payable on each Payment
Date in an amount equal to the result obtained by multiplying (i) a fraction the
numerator of which is $ [INSERT INITIAL PRINCIPAL AMOUNT OF NOTE] and the
denominator of which is $ ____________ by (ii) the aggregate amount, if any,
payable from the Note Distribution Account in respect of principal on the Class
A-1 Notes pursuant to Section 3.1 of the Indenture and Section 5.8 of the Sale
and Servicing Agreement; provided, however, that the entire unpaid principal
amount of this Note shall be due and payable on the December, 2002 Payment Date
(the "Final Scheduled Payment Date"). The Issuer will pay interest on this Note
at the rate per annum shown above on each Payment Date until the principal of
this Note is paid or made available for payment, on the principal amount of this
Note outstanding on the preceding Payment Date (after giving effect to all
payments of principal
A-1-1
made on the preceding Payment Date). Interest on this Note will accrue for each
Payment Date from the most recent Payment Date on which interest has been paid
to but excluding such Payment Date or, if no interest has yet been paid, from
and including August 19, 1997. Interest will be computed on the basis of a
360-day year of twelve 30-day months. Such principal of and interest on this
Note shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
The Notes are entitled to the benefits of a financial guaranty
insurance policy (the "Note Policy") issued by Financial Security Assurance Inc.
(the "Note Insurer"), pursuant to which the Note Insurer has unconditionally
guaranteed payments of the Noteholders' Interest Distributable Amount and the
Noteholders' Principal Distributable Amount on each Payment Date, all as more
fully set forth in the Indenture.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
A-1-2
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer as of the date set forth
below.
CPS AUTO RECEIVABLES TRUST 1997-3
By: BANKERS TRUST (DELAWARE), not
in its individual capacity,
but solely as Owner Trustee
By:
Name:
Title:
A-1-3
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: [ ] NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its
individual capacity but solely as
Trustee,
By
Authorized Signatory
A-1-4
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-1 6.10% Asset-Backed Notes (herein called the "Class
A-1 Notes"), all issued under an Indenture dated as of August 1, 1997 (such
indenture, as supplemented or amended, is herein called the "Indenture"),
between the Issuer and Norwest Bank Minnesota, National Association, as trustee
(the "Trustee", which term includes any successor Trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights and obligations thereunder of the
Issuer, the Trustee and the Holders of the Notes. The Notes are subject to all
terms of the Indenture. All terms used in this Note that are defined in the
Indenture, supplemented or amended, shall have the meanings assigned to them in
or pursuant to the Indenture, as so supplemented or amended.
The Class A-1 Notes, the Class A-2 Notes and the Class B Notes
(together, the "Notes") are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
Principal of the Class A-1 Notes will be payable on each Payment Date
in an amount described on the face hereof. "Payment Date" means the fifteenth
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing September 15, 1997.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Final Scheduled Payment Date and
the Redemption Date, if any, pursuant to Section 10.1(a) or 10.1(c) of the
Indenture. As described above, a portion of the unpaid principal balance of this
Note shall be due and payable on the Redemption Date, if any, pursuant to
Section 10.1(b) of the Indenture. Notwithstanding the foregoing, the entire
unpaid principal amount of the Notes shall be due and payable (i) on the date on
which an Event of Default shall have occurred and be continuing so long as an
Insurer Default shall not have occurred and be continuing or (ii) if an Insurer
Default shall have occurred and be continuing, on the date on which an Event of
Default shall have occurred and be continuing and the Trustee or the Holders of
the Notes representing at least 66-2/3% of the Outstanding Amount of the Notes
have declared the Notes to be immediately due and payable in the manner provided
in Section 5.2 of the Indenture. All principal payments on the Class A-1 Notes
shall be made pro rata to the Class A-1 Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Payment Date,
together with the installment of principal, if any,
A-1-5
to the extent not in full payment of this Note, shall be made by check mailed to
the Person whose name appears as the Holder of this Note (or one or more
Predecessor Notes) in the Note Register as of the close of business on each
Record Date, except that with respect to Notes registered on the Record Date in
the name of the nominee of the Clearing Agency (initially, such nominee to be
Cede & Co.), payments will be made by wire transfer in immediately available
funds to the account designated by such nominee. Such checks shall be mailed to
the Person entitled thereto at the address of such Person as it appears on the
Note Register as of the applicable Record Date without requiring that this Note
be submitted for notation of payment. Any reduction in the principal amount of
this Note (or any one or more Predecessor Notes) effected by any payments made
on any Payment Date shall be binding upon all future Holders of this Note and of
any Note issued upon the registration of transfer hereof or in exchange hereof
or in lieu hereof, whether or not rated hereon. If funds are expected to be
available, as provided in the Indenture, for payment in full of the then
remaining unpaid principal amount of this Note on a Payment Date, then the
Trustee, in the name of and on behalf of the Issuer, will notify the Person who
was the Holder hereof as of the Record Date preceding such Payment Date by
notice mailed prior to such Payment Date and the amount then due and payable
shall be payable only upon presentation and surrender of this Note at the
Trustee's principal Corporate Trust Office or at the office of the Trustee's
agent appointed for such purposes located in Minneapolis, Minnesota.
The Issuer shall pay interest on overdue installments of interest at
the Class A-1 Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed (a) pursuant to
Section 10.1(a) of the Indenture, in whole, but not in part, at the option of
the Servicer (with the consent of the Note Insurer under certain circumstances),
on any Payment Date on or after the date on which the Pool Balance is less than
or equal to (i) in the case of a redemption through a sale of all outstanding
Receivables in a public auction, 15% and (ii) in the case of a redemption
through the purchase of all outstanding Receivables by the Servicer, 10% of the
Original Pool Balance, and (b) pursuant to Section 10.1(b) of the Indenture, in
part, on a pro rata basis, on the Payment Date on or immediately following the
last day of the Funding Period in the event that any Pre-Funded Amount remains
on deposit in the Pre-Funding Account after giving effect to the purchase of all
Subsequent Receivables, including any such purchase on the Redemption Date.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by
A-1-6
the Issuer pursuant to the Indenture, (i) duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Trustee duly executed
by, the Holder hereof or his attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar which requirements include membership or
participation in Securities Transfer Agents Medallion Program ("Stamp") or such
other "signature guarantee program" as may be determined by the Note Registrar
in addition to, or in substitution for, Stamp, all in accordance with the
Exchange Act, and (ii) accompanied by such other documents as the Trustee may
require, and thereupon one or more new Notes of authorized denominations and in
the same aggregate principal amount will be issued to the designated transferee
or transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the transferor may be required to pay a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Seller, the Servicer, the Depositor, the Trustee or the Owner
Trustee in its individual capacity, (ii) any owner of a beneficial interest in
the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or
employee of the Seller, the Servicer, the Depositor, the Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Seller, the Servicer, the Depositor, the Owner Trustee or the
Trustee or of any successor or assign of the Seller, the Servicer, the
Depositor, the Trustee or the Owner Trustee in its individual capacity, except
as any such Person may have expressly agreed (it being understood that the
Trustee and the Owner Trustee have no such obligations in their individual
capacity) and except that any such partner, owner or beneficiary shall be fully
liable, to the extent provided by applicable law, for any unpaid consideration
for stock, unpaid capital contribution or failure to pay any installment or call
owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note covenants and agrees that by
accepting the benefits of the Indenture that such Noteholder will not at any
time institute against the Depositor or the Issuer or join in any institution
against the Depositor or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation
A-1-7
proceedings, or other proceedings, under any United States Federal or state
bankruptcy or similar law in connection with any obligations relating to the
Notes, the Indenture or the Basic Documents.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Trustee and the Note Insurer and any agent of the Issuer, the
Trustee or the Note Insurer may treat the Person in whose name this Note (as of
the day of determination or as of such other date as may be specified in the
Indenture) is registered as the owner hereof for all purposes, whether or not
this Note be overdue, and neither the Issuer, the Trustee nor any such agent
shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Note Insurer and of the Holders of
Notes representing a majority of the Outstanding Amount of all Notes at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
Notes representing specified percentages of the Outstanding Amount of the Notes,
on behalf of the Holders of all the Notes, to waive compliance by the Issuer
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Note (or any one of more Predecessor Notes) shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Note issued
upon the registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Note. The
Indenture also permits the Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the Holders of
Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and
A-1-8
remedies of the parties hereunder and thereunder shall be determined in
accordance with such laws.
No reference herein to the indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Indenture or the Basic Documents, neither Owner Trustee in its
individual capacity, any owner of a beneficial interest in the Issuer, nor any
of their respective partners, beneficiaries, agents, officers, directors,
employees or successors or assigns shall be personally liable for, nor shall
recourse be had to any of them for, the payment of principal of or interest on,
or performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in this Note or the Indenture, it being expressly
understood that said covenants, obligations and indemnifications have been made
by the Owner Trustee for the sole purposes of binding the interests of the Owner
Trustee in the assets of the Issuer. The Holder of this Note by the acceptance
hereof agrees that except as expressly provided in the Indenture or the Basic
Documents, in the case of an Event of Default under the Indenture, the Holder
shall have no claim against any of the foregoing for any deficiency, loss or
claim therefrom; provided, however, that nothing contained herein shall be taken
to prevent recourse to, and enforcement against, the assets of the Issuer for
any and all liabilities, obligations and undertakings contained in the Indenture
or in this Note.
A-1-9
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints, attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated:________________________ __________________________1/
Signature Guaranteed:
_____________________________ _____________________________
- ------------
1/ NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in
every particular, without alteration, enlargement or any change
whatsoever.
A-1-10
[Form of Class A-2 Note] EXHIBIT A-2
REGISTERED $___________
No. R
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. _____________
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer or its
agent for registration of transfer, exchange or payment, and any Note issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
CPS AUTO RECEIVABLES TRUST 1997-3
CLASS A-2 6.38% Asset-Backed NOTES
CPS Auto Receivables Trust 1997-3, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of [ ] DOLLARS payable on each Payment
Date in an amount equal to the result obtained by multiplying (i) a fraction the
numerator of which is $ [INSERT INITIAL PRINCIPAL AMOUNT OF NOTE] and the
denominator of which is $ by (ii) the aggregate amount, if any, payable from the
Note Distribution Account in respect of principal on the Class A-2 Notes
pursuant to Section 3.1 of the Indenture and Section 5.8 of the Sale and
Servicing Agreement provided, however, that the entire unpaid principal amount
of this Note shall be due and payable on the December, 2002 Payment Date (the
"Final Scheduled Payment Date"). The Issuer will pay interest on this Note at
the rate per annum shown above on each Payment Date until the principal of this
Note is paid or made available for payment, on the principal amount of this Note
outstanding on the preceding Payment Date (after giving effect to all payments
of principal made on the preceding Payment Date). Interest on this Note will
A-2-1
accrue for each Payment Date from the most recent Payment Date on which interest
has been paid to but excluding such Payment Date or, if no interest has yet been
paid, from and including August [19], 1997. Interest will be computed on the
basis of a 360-day year of twelve 30-day months. Such principal of and interest
on this Note shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
The Notes are entitled to the benefits of a financial guaranty
insurance policy (the "Note Policy") issued by Financial Security Assurance Inc.
(the "Note Insurer"), pursuant to which the Note Insurer has unconditionally
guaranteed payments of the Noteholders' Interest Distributable Amount and the
Noteholders' Principal Distributable Amount on each Payment Date, all as more
fully set forth in the Indenture.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
A-2-2
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer as of the date set forth
below.
CPS AUTO RECEIVABLES TRUST 1997-3
By: BANKERS TRUST (DELAWARE), not
in its individual capacity
but solely as Owner Trustee
under the Trust Agreement
By:
Name:
Title:
A-2-3
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its
individual capacity but solely
as Trustee,
By:
Authorized Signatory
A-2-4
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-2 6.38% Asset-Backed Notes (herein called the "Class
A-2 Notes"), all issued under an Indenture dated as of August 1, 1997 (such
indenture, as supplemented or amended, is herein called the "Indenture"),
between the Issuer and Norwest Bank Minnesota, National Association, as trustee
(the "Trustee", which term includes any successor Trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights and obligations thereunder of the
Issuer, the Trustee and the Holders of the Notes. The Notes are subject to all
terms of the Indenture. All terms used in this Note that are defined in the
Indenture, as supplemented or amended, shall have the meanings assigned to them
in or pursuant to the Indenture, as so supplemented or amended.
The Class A-1 Notes, the Class A-2 Notes and the Class B Notes
(together, the "Notes") are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
Principal of the Class A-2 Notes will be payable on each Payment Date
in an amount described on the face hereof. "Payment Date" means the fifteenth
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing September 15, 1997.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Final Scheduled Payment Date and
the Redemption Date, if any, pursuant to Section 10.1(a) or 10.1(c) of the
Indenture. As described above, a portion of the unpaid principal balance of this
Note shall be due and payable on the Redemption Date, if any, pursuant to
Section 10.1(b) of the Indenture. Notwithstanding the foregoing, the entire
unpaid principal amount of the Notes shall be due and payable (i) on the date on
which an Event of Default shall have occurred and be continuing so long as an
Insurer Default shall not have occurred and be continuing or (ii) if an Insurer
Default shall have occurred and be continuing, on the date on which an Event of
Default shall have occurred and be continuing and the Trustee or the Holders of
the Notes representing at least 66-2/3% of the Outstanding Amount of the Notes
have declared the Notes to be immediately due and payable in the manner provided
in Section 5.2 of the Indenture. All principal payments on the Class A-2 Notes
shall be made pro rata to the Class A-2 Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Payment Date,
together with the installment of principal, if any,
A-2-5
to the extent not in full payment of this Note, shall be made by check mailed to
the Person whose name appears as the Holder of this Note (or one or more
Predecessor Notes) in the Note Register as of the close of business on each
Record Date, except that with respect to Notes registered on the Record Date in
the name of the nominee of the Clearing Agency (initially, such nominee to be
Cede & Co.), payments will be made by wire transfer in immediately available
funds to the account designated by such nominee. Such checks shall be mailed to
the Person entitled thereto at the address of such Person as it appears on the
Note Register as of the applicable Record Date without requiring that this Note
be submitted for notation of payment. Any reduction in the principal amount of
this Note (or any one or more Predecessor Notes) effected by any payments made
on any Payment Date shall be binding upon all future Holders of this Note and of
any Note issued upon the registration of transfer hereof or in exchange hereof
or in lieu hereof, whether or not noted hereon. If funds are expected to be
available, as provided in the Indenture, for payment in full of the then
remaining unpaid principal amount of this Note on a Payment Date, then the
Trustee, in the name of and on behalf of the Issuer, will notify the Person who
was the Holder hereof as of the Record Date preceding such Payment Date by
notice mailed prior to such Payment Date and the amount then due and payable
shall be payable only upon presentation and surrender of this Note at the
Trustee's principal Corporate Trust Office or at the office of the Trustee's
agent appointed for such purposes located in Minneapolis, Minnesota.
The Issuer shall pay interest on overdue installments of interest at
the Class A-2 Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed (a) pursuant to
Section 10.1(a) of the Indenture, in whole, but not in part, at the option of
the Servicer (with the consent of the Note Insurer under certain circumstances),
on any Payment Date on or after the date on which the Pool Balance is less than
or equal to (i) in the case of a redemption through a sale of all outstanding
Receivables in a public auction, 15% and (ii) in the case of a redemption
through the purchase of all outstanding Receivables by the Servicer, 10% of the
Original Pool Balance, and (b) pursuant to Section 10.1(b) of the Indenture, in
part, on a pro rata basis, on the Payment Date on or immediately following the
last day of the Funding Period in the event that any Pre-Funded Amount remains
on deposit in the Pre-Funding Account after giving effect to the purchase of all
Subsequent Receivables, including any such purchase on the Redemption Date.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by
A-2-6
the Issuer pursuant to the Indenture, (i) duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Trustee duly executed
by, the Holder hereof or his attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar which requirements include membership or
participation in Securities Transfer Agents Medallion Program ("Stamp") or such
other "signature guarantee program" as may be determined by the Note Registrar
in addition to, or in substitution for, Stamp, all in accordance with the
Exchange Act, and (ii) accompanied by such other documents as the Trustee may
require, and thereupon one or more new Notes of authorized denominations and in
the same aggregate principal amount will be issued to the designated transferee
or transferees. No service charge will be charged for any registration of
transfer or exchange of this Note, but the transferor may be required to pay a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Seller, the Servicer, the Depositor, the Trustee or the Owner
Trustee in its individual capacity, (ii) any owner of a beneficial interest in
the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or
employee of the Seller, the Servicer, the Depositor, the Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Seller, the Servicer, the Depositor, the Owner Trustee or the
Trustee or of any successor or assign of the Seller, the Servicer, the
Depositor, the Trustee or the Owner Trustee in its individual capacity, except
as any such Person may have expressly agreed (it being understood that the
Trustee and the Owner Trustee have no such obligations in their individual
capacity) and except that any such partner, owner or beneficiary shall be fully
liable, to the extent provided by applicable law, for any unpaid consideration
for stock, unpaid capital contribution or failure to pay any installment or call
owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note covenants and agrees that by
accepting the benefits of the Indenture that such Noteholder will not at any
time institute against the Depositor or the Issuer or join in any institution
against the Depositor or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation
A-2-7
proceedings, or other proceedings, under any United States Federal or state
bankruptcy or similar law in connection with any obligations relating to the
Notes, the Indenture or the Basic Documents.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Trustee and the Note Insurer and any agent of the Issuer, the
Trustee or the Note Insurer may treat the Person in whose name this Note (as of
the day of determination or as of such other date as may be specified in the
Indenture) is registered as the owner hereof for all purposes, whether or not
this Note be overdue, and neither the Issuer, the Trustee nor any such agent
shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Note Insurer and of the Holders of
Notes representing a majority of the Outstanding Amount of all Notes at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
Notes representing specified percentages of the Outstanding Amount of the Notes,
on behalf of the Holders of all the Notes, to waive compliance by the Issuer
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Note (or any one or more Predecessor Notes) shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Note issued
upon the registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Note. The
Indenture also permits the Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the Holders of
Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and
A-2-8
remedies of the parties hereunder and thereunder shall be determined in
accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Indenture or the Basic Documents, neither Owner Trustee in its
individual capacity, any owner of a beneficial interest in the Issuer, nor any
of their respective partners, beneficiaries, agents, officers, directors,
employees or successors or assigns shall be personally liable for, nor shall
recourse be had to any of them for, the payment of principal of or interest on,
or performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in this Note or the Indenture, it being expressly
understood that said covenants, obligations and indemnifications have been made
by the Owner Trustee for the sole purposes of binding the interests of the Owner
Trustee in the assets of the Issuer. The Holder of this Note by the acceptance
hereof agrees that except as expressly provided in the Indenture or the Basic
Documents, in the case of an Event of Default under the Indenture, the Holder
shall have no claim against any of the foregoing for any deficiency, loss or
claim therefrom; provided, however, that nothing contained herein shall be taken
to prevent recourse to, and enforcement against, the assets of the Issuer for
any and all liabilities, obligations and undertakings contained in the Indenture
or in this Note.
A-2-9
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints, attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated:__________________________ _______________________(2)
Signature Guaranteed:
________________________________ ___________________________
- --------------
(2) NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in
every particular, without alteration, enlargement or any change
whatsoever.
A-2-1
[Form of Class B Note] EXHIBIT B
REGISTERED $___________
No. R
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO._________________
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES THAT THIS SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY (1) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A, TO A PERSON WHOM THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT,
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, AND SUBJECT TO THE RECEIPT BY THE TRUSTEE AND THE
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 2.4 OF THE INDENTURE.
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.
B-1
THE PRINCIPAL OF THIS NOTE, IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
CPS AUTO RECEIVABLES TRUST 1997-3
CLASS B 10.65% Asset-Backed NOTES
CPS Auto Receivables Trust 1997-3, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of [ ] DOLLARS payable on each Payment
Date in an amount equal to the result obtained by multiplying (i) a fraction the
numerator of which is $ [INSERT INITIAL PRINCIPAL AMOUNT OF NOTE] and the
denominator of which is $ by (ii) the aggregate amount, if any, payable from the
Note Distribution Account in respect of principal on the Class B Notes pursuant
to Section 3.1 of the Indenture and Section 5.8 of the Sale and Servicing
Agreement provided, however, that the entire unpaid principal amount of this
Note shall be due and payable on the December, 2002 Payment Date (the "Final
Scheduled Payment Date"). The Issuer will pay interest on this Note at the rate
per annum shown above on each Payment Date until the principal of this Note is
paid or made available for payment, on the principal amount of this Note
outstanding on the preceding Payment Date (after giving effect to all payments
of principal made on the preceding Payment Date). Interest on this Note will
accrue for each Payment Date from the most recent Payment Date on which interest
has been paid to but excluding such Payment Date or, if no interest has yet been
paid, from and including August 19, 1997. Interest will be computed on the basis
of a 360-day year of twelve 30-day months. Such principal of and interest on
this Note shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under
B-2
the Indenture referred to on the reverse hereof, or be valid or obligatory for
any purpose.
B-3
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer as of the date set forth
below.
CPS AUTO RECEIVABLES TRUST 1997-3
By: BANKERS TRUST (DELAWARE), not
in its individual capacity
but solely as Owner Trustee
under the Trust Agreement
By:
Name:
Title:
B-4
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
Date: NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its
individual capacity but solely
as Trustee,
By:
Authorized Signatory
B-5
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class B 10.65% Asset-Backed Notes (herein called the "Class B
Notes"), all issued under an Indenture dated as of August 1, 1997 (such
indenture, as supplemented or amended, is herein called the "Indenture"),
between the Issuer and Norwest Bank Minnesota, National Association, as trustee
(the "Trustee", which term includes any successor Trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights and obligations thereunder of the
Issuer, the Trustee and the Holders of the Notes. The Notes are subject to all
terms of the Indenture. All terms used in this Note that are defined in the
Indenture, as supplemented or amended, shall have the meanings assigned to them
in or pursuant to the Indenture, as so supplemented or amended.
The Class A-1 Notes, the Class A-2 Notes and the Class B Notes
(together, the "Notes") are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
The right of the Class B Noteholders to receive payments of principal
and interest are subordinated to the rights of the Class A Noteholders as and to
the extent provided in the Indenture.
Principal of the Class B Notes will be payable on each Payment Date in
an amount described on the face hereof. "Payment Date" means the fifteenth day
of each month, or, if any such date is not a Business Day, the next succeeding
Business Day, commencing September 15, 1997.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Final Scheduled Payment Date and
the Redemption Date, if any, pursuant to Section 10.1(a) or 10.1(c) of the
Indenture. As described above, a portion of the unpaid principal balance of this
Note shall be due and payable on the Redemption Date, if any, pursuant to
Section 10.1(b) of the Indenture. Notwithstanding the foregoing, the entire
unpaid principal amount of the Notes shall be due and payable (i) on the date on
which an Event of Default shall have occurred and be continuing so long as an
Insurer Default shall not have occurred and be continuing or (ii) if an Insurer
Default shall have occurred and be continuing, on the date on which an Event of
Default shall have occurred and be continuing and the Trustee or the Holders of
the Notes representing at least 66-2/3% of the Outstanding Amount of the Notes
have declared the Notes to be immediately due and payable in the manner provided
in Section 5.2 of the Indenture. All
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principal payments on the Class B Notes shall be made pro rata to the Class B
Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Payment Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made by check mailed to the Person whose name
appears as the Holder of this Note (or one or more Predecessor Notes) in the
Note Register as of the close of business on each Record Date. Such checks shall
be mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Note be submitted for notation of payment. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) effected by
any payments made on any Payment Date shall be binding upon all future Holders
of this Note and of any Note issued upon the registration of transfer hereof or
in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are
expected to be available, as provided in the Indenture, for payment in full of
the then remaining unpaid principal amount of this Note on a Payment Date, then
the Trustee, in the name of and on behalf of the Issuer, will notify the Person
who was the Holder hereof as of the Record Date preceding such Payment Date by
notice mailed prior to such Payment Date and the amount then due and payable
shall be payable only upon presentation and surrender of this Note at the
Trustee's principal Corporate Trust Office or at the office of the Trustee's
agent appointed for such purposes located in Minneapolis, Minnesota.
The Issuer shall pay interest on overdue installments of interest at
the Class B Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed (a) pursuant to
Section 10.1(a) of the Indenture, in whole, but not in part, at the option of
the Servicer (with the consent of the Note Insurer under certain circumstances),
on any Payment Date on or after the date on which the Pool Balance is less than
or equal to (i) in the case of a redemption through a sale of the Receivables in
a public auction, 15% and (ii) in the case of a purchase by the Servicer of all
outstanding Receivables, 10% of the Original Pool Balance, and (b) pursuant to
Section 10.1(b) of the Indenture, in part, on a pro rata basis, on the Payment
Date on or immediately following the last day of the Funding Period in the event
that any Pre-Funded Amount remains on deposit in the Pre-Funding Account after
giving effect to the purchase of all Subsequent Receivables, including any such
purchase on the Redemption Date.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for
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registration of transfer at the office or agency designated by the Issuer
pursuant to the Indenture, (i) duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by, the
Holder hereof or his attorney duly authorized in writing, with such signature
guaranteed by an "eligible guarantor institution" meeting the requirements of
the Note Registrar which requirements include membership or participation in
Securities Transfer Agents Medallion Program ("Stamp") or such other "signature
guarantee program" as may be determined by the Note Registrar in addition to, or
in substitution for, Stamp, all in accordance with the Exchange Act, and (ii)
accompanied by such other documents as the Trustee may require, and thereupon
one or more new Notes of authorized denominations and in the same aggregate
principal amount will be issued to the designated transferee or transferees. No
service charge will be charged for any registration of transfer or exchange of
this Note, but the transferor may be required to pay a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Seller, the Servicer, the Depositor, the Trustee or the Owner
Trustee in its individual capacity, (ii) any owner of a beneficial interest in
the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or
employee of the Seller, the Servicer, the Depositor, the Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Seller, the Servicer, the Depositor, the Owner Trustee or the
Trustee or of any successor or assign of the Seller, the Servicer, the
Depositor, the Trustee or the Owner Trustee in its individual capacity, except
as any such Person may have expressly agreed (it being understood that the
Trustee and the Owner Trustee have no such obligations in their individual
capacity) and except that any such partner, owner or beneficiary shall be fully
liable, to the extent provided by applicable law, for any unpaid consideration
for stock, unpaid capital contribution or failure to pay any installment or call
owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note covenants and agrees that by
accepting the benefits of the Indenture that such Noteholder will not at any
time institute against the Depositor, or the Issuer or join in any institution
against the Depositor or the Issuer of, any bankruptcy,
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reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings, under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes, the Indenture or the
Basic Documents.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Trustee and the Note Insurer and any agent of the Issuer, the
Trustee or the Note Insurer may treat the Person in whose name this Note (as of
the day of determination or as of such other date as may be specified in the
Indenture) is registered as the owner hereof for all purposes, whether or not
this Note be overdue, and neither the Issuer, the Trustee nor any such agent
shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Note Insurer and of the Holders of
Notes representing a majority of the Outstanding Amount of all Notes at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
Notes representing specified percentages of the Outstanding Amount of the Notes,
on behalf of the Holders of all the Notes, to waive compliance by the Issuer
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Note (or any one or more Predecessor Notes) shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Note issued
upon the registration of transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Note. The
Indenture also permits the Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the Holders of
Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its
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conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Indenture or the Basic Documents, neither Owner Trustee in its
individual capacity, any owner of a beneficial interest in the Issuer, nor any
of their respective partners, beneficiaries, agents, officers, directors,
employees or successors or assigns shall be personally liable for, nor shall
recourse be had to any of them for, the payment of principal of or interest on,
or performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in this Note or the Indenture, it being expressly
understood that said covenants, obligations and indemnifications have been made
by the Owner Trustee for the sole purposes of binding the interests of the Owner
Trustee in the assets of the Issuer. The Holder of this Note by the acceptance
hereof agrees that except as expressly provided in the Indenture or the Basic
Documents, in the case of an Event of Default under the Indenture, the Holder
shall have no claim against any of the foregoing for any deficiency, loss or
claim therefrom; provided, however, that nothing contained herein shall be taken
to prevent recourse to, and enforcement against, the assets of the Issuer for
any and all liabilities, obligations and undertakings contained in the Indenture
or in this Note.
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ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________________________________-
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints, attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated:______________________ ________________________(2)
Signature Guaranteed:
____________________________ __________________________
- -------
(2) NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in
every particular, without alteration, enlargement or any change
whatsoever.
B-1
Exhibit 10.1
Sale and Servicing Agreement
[EXECUTION COPY]
----------------------------------------------------------------
SALE AND SERVICING
AGREEMENT
among
CPS AUTO RECEIVABLES TRUST 1997-3, as
Issuer,
CPS RECEIVABLES CORP., as
Seller,
CONSUMER PORTFOLIO SERVICES, INC., as
Servicer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as
Standby Servicer and Trustee
Dated as of August 1, 1997
----------------------------------------------------------------
SALE AND SERVICING AGREEMENT dated as of August 1, 1997, among CPS AUTO
RECEIVABLES TRUST 1997-3, a Delaware business trust (the "Issuer"), CPS
RECEIVABLES CORP., a California corporation (the "Seller"), CONSUMER PORTFOLIO
SERVICES, INC., a California corporation (the "Servicer"), and NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION, a national banking association, in its capacity
as Standby Servicer and Trustee.
WHEREAS the Issuer desires to purchase a portfolio of receivables
arising in connection with motor vehicle retail installment sale contracts
acquired by Consumer Portfolio Services, Inc. or Samco Acceptance Corp. through
motor vehicle dealers and independent finance companies;
WHEREAS the Seller has purchased such receivables from Consumer
Portfolio Services, Inc. and Samco Acceptance Corp. and is willing to sell such
receivables to the Issuer;
WHEREAS the Issuer desires to purchase additional receivables arising
in connection with motor vehicle retail installment sale contracts to be
acquired by Consumer Portfolio Services, Inc. or Samco Acceptance Corp. through
motor vehicle dealers and independent finance companies;
WHEREAS the Seller has agreements to purchase such additional
receivables from Consumer Portfolio Services, Inc. and from Samco Acceptance
Corp. and is willing to sell such receivables to the Issuer;
WHEREAS the Servicer is willing to service all such receivables;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. Whenever used in this Agreement, the
following words and phrases shall have the following meanings:
"Accountants' Report" means the report of a firm of nationally
recognized independent accountants described in Section 4.11.
"Addition Notice" means, with respect to any transfer of Subsequent
Receivables to the Trust pursuant to Section 2.2 of this Agreement, notice of
the Seller's election to transfer Subsequent Receivables to the Trust, such
notice to designate the related Subsequent Transfer Date and the approximate
principal
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amount of Subsequent Receivables to be transferred on such Subsequent Transfer
Date.
"Administrative Receivable" means, with respect to any Collection
Period, a Receivable which the Servicer is required to purchase pursuant to
Section 4.7 with respect to such Collection Period.
"Affiliate" of any Person means any Person who directly or indirectly
controls, is controlled by, or is under direct or indirect common control with
such Person. For purposes of this definition, the term "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling", "controlled
by" and "under common control with" have meanings correlative to the foregoing.
"Aggregate Principal Balance" means, with respect to any date of
determination, the sum of the Principal Balances for all Receivables (other than
(i) any Receivable that became a Liquidated Receivable prior to the end of the
related Collection Period and (ii) any Receivable that became a Purchased
Receivable prior to the end of the related Collection Period) as of the date of
determination.
"Agreement" means this Sale and Servicing Agreement, as the same may be
amended and supplemented from time to time.
"Amount Financed" means, with respect to a Receivable, the aggregate
amount advanced under such Receivable toward the purchase price of the Financed
Vehicle and any related costs, including amounts advanced in respect of
accessories, insurance premiums, service and warranty contracts, other items
customarily financed as part of retail automobile installment sale contracts or
promissory notes, and related costs.
"Annual Percentage Rate" or "APR" of a Receivable means the annual
percentage rate of finance charges or service charges, as stated in the related
Contract.
"Assumed Reinvestment Rate" means 2.50% per annum.
"Assumption Date" shall have the meaning specified in Section 10.3(a).
"Bank of America" means Bank of America Trust and Savings Association
and its successors.
"Basic Documents" means this Agreement, the Certificate of Trust, the
Trust Agreement, the Indenture, each Purchase
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Agreement, each Subsequent Purchase Agreement, the Master Spread Account
Agreement, the Spread Account Supplement the Insurance Agreement, the
Indemnification Agreement, and other documents and certificates delivered in
connection therewith.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in the City of New York, the State in which the
Corporate Trust Office is located, the State in which the executive offices of
the Servicer are located or the State in which the principal place of business
of the Note Insurer is located shall be authorized or obligated by law,
executive order, or governmental decree to be closed.
"Certificate" has the meaning assigned to such term in the Trust
Agreement.
"Certificate Balance" has the meaning assigned to such term in the
Trust Agreement.
"Certificate Pool Factor" as of the close of business on any Payment
Date means a seven-digit decimal figure equal to the outstanding principal
amount of the Certificates divided by the original outstanding principal amount
of the Certificates.
"Certificate Prepayment Amount" means, as of the Payment Date on or
immediately following the last day of the Funding Period, after giving effect to
any transfer of Subsequent Receivables on such date, an amount equal to the
Certificateholders' pro rata share (based on the respective then-current
outstanding principal balance of each Class of Notes and the Certificates) of
the Pre-Funded Amount on such Payment Date (after giving effect to any
application thereof to acquire Subsequent Receivables on such Payment Date).
"Certificateholder" has the meaning assigned to such term in the Trust
Agreement.
"Certificateholders' Interest Carryover Shortfall" means, with respect
to any Payment Date, the excess of the Certificateholders' Interest
Distributable Amount for the preceding Payment Date over the amount that was
actually deposited in the Certificate Distribution Account on such preceding
Payment Date on account of the Certificateholders' Interest Distributable
Amount, plus interest on the amount of interest due but not paid to
Certificateholders on the preceding Payment Date, to the extent permitted by
law, at the Pass-Through Rate from such preceding Payment Date to but excluding
the current Payment Date.
"Certificateholders' Interest Distributable Amount" means, with respect
to any Payment Date, the sum of the
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Certificateholders' Monthly Interest Distributable Amount for such Payment Date
and the Certificateholders' Interest Carryover Shortfall for such Payment Date.
"Certificateholders' Monthly Interest Distributable Amount" means, (a)
for the first Payment Date, an amount equal to the product of (i) the
Pass-Through Rate, (ii) the initial principal balance of the Certificates and
(iii) a fraction, the numerator of which is the actual number of days elapsed
from and including the Closing Date to but excluding such first Payment Date,
and the denominator of which is 360 and (b) for any Payment Date after the first
Payment Date, an amount equal to the product of (i) one-twelfth of the
Pass-Through Rate and (ii) the principal balance of the Certificates as of the
close of the preceding Payment Date (after giving effect to all distributions on
account of principal on such preceding Payment Date).
"Certificateholders' Monthly Principal Distributable Amount" means,
with respect to any Payment Date, the Certificateholders' Percentage of the
Principal Distributable Amount.
"Certificateholders' Percentage" will (a) on any Payment Date prior to
the Payment Date on which the principal amount of the Class A-2 Notes is reduced
to zero, be 2.5%, (b) on the Payment Date on which the principal amount of the
Class A-2 Notes is reduced to zero and each Payment Date thereafter until the
principal amount of the Certificates is reduced to zero, be the percentage
equivalent of a fraction, the numerator of which is the principal amount of the
Certificates immediately prior to such Payment Date, and the denominator of
which is the Principal Distributable Amount.
"Certificateholders' Principal Carryover Shortfall" means, with respect
to any Payment Date, the excess of the Certificateholders' Principal
Distributable Amount for the preceding Payment Date over the amount that was
actually deposited in the Certificate Distribution Account on such preceding
Payment Date on account of the Certificateholders' Principal Distributable
Amount.
"Certificateholders' Principal Distributable Amount" means, with
respect to any Payment Date, (other than the Final Scheduled Payment Date), the
sum of the Certificateholders' Monthly Principal Distributable Amount for such
Payment Date and the Certificateholders' Principal Carryover Shortfall for such
Payment Date. The Certificateholders' Principal Distributable Amount of the
Final Scheduled Payment Date will equal the outstanding principal amount of the
Certificates.
"Class" means the Class A-1 Notes, the Class A-2 Notes or the Class B
Notes as the context requires.
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"Class A Noteholders' Interest Distributable Amount" means, with
respect to any Payment Date, the sum of (i) the Class A-1 Noteholders' Interest
Distributable Amount and (ii) the Class A- 2 Noteholders' Interest Distributable
Amount.
"Class A Noteholders' Monthly Principal Distributable Amount" means,
with respect to any Payment Date, the Class A Noteholders' Percentage of the
Principal Distributable Amount.
"Class A Noteholders' Percentage" will (a) on any Payment Date on or
prior to the Target Payment Date, be 95%, (b) on any Payment Date after the
Target Payment Date but prior to the Payment Date on which the principal amount
of the Class A-2 Notes is reduced to zero, be 91%, (c) on the Payment Date on
which the principal amount of the Class A-2 Notes is reduced to zero, be the
percentage equivalent of a fraction, the numerator of which is the principal
amount of the Class A-2 Notes immediately prior to such Payment Date, and the
denominator of which is the sum of the then outstanding principal amount of the
Notes and the Certificates and (d) on any other Payment Date, be 0%.
"Class A Noteholders' Principal Carryover Shortfall" means, with
respect to any Payment Date, the excess of the Class A Noteholders' Principal
Distributable Amount for the preceding Payment Date over the amount that was
actually deposited in the Note Distribution Account on such Payment Date on
account of the Class A Noteholders' Principal Distributable Amount.
"Class A Noteholders' Principal Distributable Amount" means, with
respect to any Payment Date, (other than the Final Scheduled Payment Date for
any Class of Class A Notes), the sum of the Class A Noteholders' Monthly
Principal Distributable Amount for such Payment Date and the Noteholders'
Principal Carryover Shortfall for such Payment Date. The Class A Noteholders'
Principal Distributable Amount on the Final Scheduled Payment Date for any Class
of Class A Notes will equal the outstanding principal amount of such Class of
Class A Notes.
"Class A Notes" means the Class A-1 Notes and the Class A-2 Notes.
"Class A Target Amount" means, with respect to any Payment Date, an
amount equal to 90% of the Aggregate Principal Balance of the Receivables as of
such Payment Date after giving effect to all payments of principal on the
Receivables received during the related Collection Period.
"Class A-1 Interest Rate" means 6.10% per annum.
"Class A-1 Noteholders' Interest Carryover Shortfall" means, with
respect to any Payment Date, the excess of the Class A-1
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Noteholders' Interest Distributable Amount for the preceding Payment Date over
the amount that was actually deposited in the Note Distribution Account on such
preceding Payment Date on account of the Class A-1 Noteholders' Interest
Distributable Amount, plus interest on the amount of interest due but not paid
to Class A-1 Noteholders on the preceding Payment Date, to the extent permitted
by law, at the Class A-1 Interest Rate from such preceding Payment Date to but
excluding the current Payment Date.
"Class A-1 Noteholders' Interest Distributable Amount" means, with
respect to any Payment Date, the sum of the Class A-1 Noteholders' Monthly
Interest Distributable Amount for such Payment Date and the Class A-1
Noteholders' Interest Carryover
Shortfall for such Payment Date.
"Class A-1 Noteholders' Monthly Interest Distributable Amount" means,
(a) for the first Payment Date, an amount equal to the product of (i) the Class
A-1 Interest Rate, (ii) the initial principal balance of the Class A-1 Notes and
(iii) a fraction, the numerator of which is the actual number of days elapsed
from and including the Closing Date to but excluding such first Payment Date,
and the denominator of which is 360 and (b) for any Payment Date after the first
Payment Date, an amount equal to the product of (i) one-twelfth of the Class A-1
Interest Rate and (ii) the principal balance of the Class A-1 Notes as of the
close of the preceding Payment Date (after giving effect to all distributions on
account of principal on such preceding Payment Date).
"Class A-1 Notes" has the meaning assigned to such term in the
Indenture.
"Class A-1 Prepayment Amount" means, as of the Payment Date on or
immediately following the last day of the Funding Period, after giving effect to
any transfer of Subsequent Receivables on such date, an amount equal to the
Class A-1 Noteholders' pro rata share (based on the respective then-current
outstanding principal balance of each Class of Notes and the Certificates) of
the Pre-Funded Amount on such Payment Date (after giving effect to any
application thereof to acquire Subsequent Receivables on such Payment Date).
"Class A-2 Interest Rate" means 6.38% per annum.
"Class A-2 Noteholders' Interest Carryover Shortfall" means, with
respect to any Payment Date, the excess of the Class A-2 Noteholders' Interest
Distributable Amount for the preceding Payment Date over the amount that was
actually deposited in the Note Distribution Account on such preceding Payment
Date on account of the Class A-2 Noteholders' Interest Distributable Amount,
plus interest on the amount of interest due but not paid
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to Class A-2 Noteholders on the preceding Payment Date, to the extent permitted
by law, at the Class A-2 Interest Rate from such preceding Payment Date to but
excluding the current Payment Date.
"Class A-2 Noteholders' Interest Distributable Amount" means, with
respect to any Payment Date, the sum of the Class A-2 Noteholders' Monthly
Interest Distributable Amount for such Payment Date and the Class A-2
Noteholders' Interest Carryover
Shortfall for such Payment Date.
"Class A-2 Noteholders' Monthly Interest Distributable Amount" means,
(a) for the first Payment Date, an amount equal to the product of (i) the Class
A-2 Interest Rate, (ii) the initial principal balance of the Class A-2 Notes and
(iii) a fraction, the numerator of which is the actual number of days elapsed
from and including the Closing Date to but excluding such first Payment Date,
and the denominator of which is 360 and (b) for any Payment Date after the first
Payment Date, an amount equal to the product of (i) one-twelfth of the Class A-2
Interest Rate and (ii) the principal balance of the Class A-2 Notes as of the
close of the preceding Payment Date (after giving effect to all distributions on
account of principal on such preceding Payment Date).
"Class A-2 Notes" has the meaning assigned to such term in the
Indenture.
"Class A-2 Prepayment Amount" means, as of the Payment Date on or
immediately following the last day of the Funding Period, after giving effect to
any transfer of Subsequent Receivables on such date, an amount equal to the
Class A-2 Noteholders' pro rata share (based on the respective then-current
outstanding principal balance of each Class of Notes and the Certificates) of
the Pre-Funded Amount on such Payment Date (after giving effect to any
application thereof to acquire Subsequent Receivables on such Payment Date).
"Class B Deficiency" shall have the meaning specified in Section
5.5(c).
"Class B Interest Rate" means 10.65% per annum.
"Class B Noteholders' Interest Carryover Shortfall" means, with respect
to any Payment Date, the excess of the Class B Noteholders' Interest
Distributable Amount for the preceding Payment Date, over the amount that was
actually deposited in the Note Distribution Account on such preceding Payment
Date on account of the Class B Noteholders' Interest Distributable Amount, plus
interest on the amount of interest due but not paid to Class B Noteholders on
the preceding Payment Date, to the
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extent permitted by law, at the Class B Interest Rate from such preceding
Payment Date to but excluding the current Payment Date.
"Class B Noteholders' Interest Distributable Amount" means, with
respect to any Payment Date, the sum of the Class B Noteholders' Monthly
Interest Distributable Amount for such Payment Date and the Class B Noteholders'
Interest Carryover
Shortfall for such Payment Date.
"Class B Noteholders' Monthly Interest Distributable Amount" means,(a)
for the first Payment Date, an amount equal to the product of (i) the Class B
Interest Rate, (ii) the initial principal balance of the Class B Notes and (iii)
a fraction, the numerator of which is the actual number of days elapsed from and
including the Closing Date to but excluding such first Payment Date, and the
denominator of which is 360 and (b) for any Payment Date after the first Payment
Date, an amount equal to the product of (i) one-twelfth of the Class B Interest
Rate and (ii) the principal balance of the Class B Notes as of the close of the
preceding Payment Date (after giving effect to all distributions on account of
principal on such preceding Payment Date).
"Class B Noteholders' Monthly Principal Distributable Amount" means,
with respect to any Payment Date, the Class B Noteholders' Percentage of the
Principal Distributable Amount.
"Class B Noteholders' Percentage" will (a) on any Payment Date prior to
the Payment Date on which the principal amount of the Class A-2 Notes is reduced
to zero, be 2.5%, (b) on the Payment Date on which the principal amount of the
Class A-2 Notes is reduced to zero and each Payment Date thereafter until the
principal amount of the Class B Notes is reduced to zero, be the percentage
equivalent of a fraction, the numerator of which is the principal amount of the
Class B Notes immediately prior to such Payment Date, and the denominator of
which is the sum of the then outstanding principal amount of the Notes and the
Certificates.
"Class B Prepayment Amount" means, as of the Payment Date on or
immediately following the last day of the Funding Period, after giving effect to
any transfer of Subsequent Receivables on such date, an amount equal to the
Class B Noteholders' pro rata share (based on the respective then-current
outstanding principal balance of each Class of Notes and the Certificates) of
the Pre-Funded Amount on such Payment Date (after giving effect to any
application thereof to acquire Subsequent Receivables on such Payment Date).
"Class B Noteholders' Principal Carryover Shortfall" means, with
respect to any Payment Date, the excess of the Class B Noteholders' Principal
Distributable Amount for the preceding
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Payment Date over the amount that was actually paid to the Class B Noteholders
on such preceding Payment Date on account of the Class B Principal Distributable
Amount.
"Class B Noteholders' Principal Distributable Amount" means, with
respect to any Payment Date, (other than the Final Scheduled Payment Date), the
sum of the Class B Noteholders' Monthly Principal Distributable Amount for such
Payment Date and the Class B Noteholders' Principal Carryover Shortfall for such
close of the preceding Payment Date. The Class B Noteholders' Principal
Distributable Amount on the Final Scheduled Payment Date will equal the
outstanding principal amount of the Class B Notes.
"Class B Notes" has the meaning assigned to such term in the Indenture.
"Closing Date" means August 19, 1997.
"Code" shall have the meaning specified in Section 3.2.
"Collateral Agent" means Norwest Bank Minnesota, National Association,
in its capacity as Collateral Agent under the Master Spread Account Agreement.
"Collateral Agent Fee" means the fee payable to the Collateral Agent on
each Payment Date in an amount equal to one-twelfth of 0.01% of the aggregate
outstanding principal amount of the Securities on the last day of the second
preceding Collection Period; provided, however, that on the first Payment Date
the Trustee will be entitled to receive an amount equal to the product of (i)
the percentage equivalent of a fraction the numerator of which is the number
days from the Closing Date to but excluding the Payment Date and the denominator
of which is 360, (ii) 0.01% and (iii) the aggregate outstanding principal amount
of the Securities as of the Closing Date.
"Collection Account" means the account designated as such, established
and maintained pursuant to Section 5.1.
"Collection Period" means, with respect to the first Payment Date, the
period beginning on the close of business on the Initial Cutoff Date and ending
on the close of business on August 31, 1997. With respect to each subsequent
Payment Date, the preceding calendar month. Any amount stated "as of the close
of business of the last day of a Collection Period" shall give effect to the
following calculations as determined as of the end of the day on such last day:
(i) all applications of collections, and (ii) all distributions.
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"Confidential Information" means, in relation to any Person, any
written information delivered or made available by or on behalf of CPS or the
Seller to such Person in connection with or pursuant to this Agreement or the
transactions contemplated hereby which is proprietary in nature and clearly
marked or identified as being confidential information, other than information
(i) which was publicly known, or otherwise known to such Person, at the time of
disclosure (except pursuant to disclosure in connection with this Agreement),
(ii) which subsequently becomes publicly known through no act or omission by
such Person, or (iii) which otherwise becomes known to such Person other than
through disclosure by CPS or the Seller.
"Contract" means a motor vehicle retail installment sale contract.
"Controlling Party" shall be determined in accordance with the
provisions of Section 13.15.
"Corporate Trust Office" means (i) with respect to the Owner Trustee,
the principal corporate trust office of the Owner Trustee, which at the time of
execution of this agreement is 1011 Centre Street, Suite 200, Wilmington,
Delaware 19805-1266 with a copy to Bankers Trust Company, 4 Albany Street, 10th
Floor, New York, New York 10006, Attention: Corporate Trust and Agency Division,
and (ii) with respect to the Trustee and the Collateral Agent, the principal
corporate trust office of the Trustee, which at the time of execution of this
agreement is Sixth Street and Marquette Avenue, Minneapolis, Minnesota
55479-0070.
"CPS" means Consumer Portfolio Services, Inc. a California corporation
and its successors.
"CPS Purchase Agreement" means the Purchase Agreement dated as of
August 1, 1997 by and between the Seller and CPS, as such agreement may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof, relating to the purchase of the CPS Receivables by the Seller
from CPS.
"CPS Receivables" means a Receivable purchased by the Seller from CPS.
"Cram Down Loss" means, with respect to a Receivable, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the amount owed on a Receivable or otherwise modifying or restructuring
Scheduled Payments to be made on a Receivable, an amount equal to such reduction
in Principal Balance of such Receivable or the reduction in the net present
value (using as the discount rate the lower of the contract rate or the rate of
interest specified by the court in such order) of the Scheduled Payments as so
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modified or restructured. A "Cram Down Loss" shall be deemed to have occurred on
the date such order is entered.
"Cutoff Date" means the Initial Cutoff Date and/or the applicable
Subsequent Cutoff Date, as the context may require.
"Dealer" means, with respect to a Receivable, the seller of the related
Financed Vehicle, who originated and assigned such Receivable to CPS, who in
turn sold such Receivable to the Seller.
"Deficiency Claim Amount" shall have the meaning set forth in Section
5.5(a).
"Deficiency Claim Date" means, with respect to any Payment Date, the
fourth Business Day immediately preceding such Payment Date.
"Deficiency Notice" shall have the meaning set forth in Section 5.5(a).
"Delegation Notice" shall have the meaning specified in Section 9.5.
"Delivery" when used with respect to Trust Account Property means:
(a) with respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute "instruments"
within the meaning of Section 9- 105(l)(i) of the UCC and are susceptible of
physical delivery, transfer thereof to the Trustee or its nominee or custodian
by physical delivery to the Trustee or its nominee or custodian endorsed to, or
registered in the name of, the Trustee or its nominee or custodian or endorsed
in blank, and, with respect to a certificated security (as defined in Section
8-102 of the UCC) transfer thereof (i) by delivery of such certificated security
endorsed to, or registered in the name of, the Trustee or its nominee or
custodian or endorsed in blank to a financial intermediary (as defined in
Section 8-313 of the UCC) and the making by such financial intermediary of
entries on its books and records identifying such certificated securities as
belonging to the Trustee or its nominee or custodian and the sending by such
financial intermediary of a confirmation of the purchase of such certificated
security by the Trustee or its nominee or custodian, or (ii) by delivery thereof
to a "clearing corporation" (as defined in Section 8-102(3) of the UCC) and the
making by such clearing corporation of appropriate entries on its books reducing
the appropriate securities account of the transferor and increasing the
appropriate securities account of a financial intermediary by the amount of such
certificated security, the
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identification by the clearing corporation of the certificated securities for
the sole and exclusive account of the financial intermediary, the maintenance of
such certificated securities by such clearing corporation or a "custodian bank"
(as defined in Section 8-102(4) of the UCC) or the nominee of either subject to
the clearing corporation's exclusive control, the sending of a confirmation by
the financial intermediary of the purchase by the Trustee or its nominee or
custodian of such securities and the making by such financial intermediary of
entries on its books and records identifying such certificated securities as
belonging to the Trustee or its nominee or custodian (all of the foregoing,
"Physical Property"), and, in any event, any such Physical Property in
registered form shall be in the name of the Trustee or its nominee or custodian;
and such additional or alternative procedures as may hereafter become
appropriate to effect the complete transfer of ownership of any such Trust
Account Property to the Trustee or its nominee or custodian, consistent with
changes in applicable law or regulations or the interpretation thereof;
(b) with respect to any security issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or by the Federal National Mortgage
Association that is a book-entry security held through the Federal Reserve
System pursuant to Federal book-entry regulations, the following procedures, all
in accordance with applicable law, including applicable Federal regulations and
Articles 8 and 9 of the UCC: book-entry registration of such Trust Account
Property to an appropriate book-entry account maintained with a Federal Reserve
Bank by a financial intermediary which is also a "depository" pursuant to
applicable Federal regulations and issuance by such financial intermediary of a
deposit advice or other written confirmation of such book-entry registration to
the Trustee or its nominee or custodian of the purchase by the Trustee or its
nominee or custodian of such book-entry securities; the making by such financial
intermediary of entries in its books and records identifying such book-entry
security held through the Federal Reserve System pursuant to Federal book-entry
regulations as belonging to the Trustee or its nominee or custodian and
indicating that such custodian folds such Trust Account Property solely as agent
for the Trustee or its nominee or custodian; and such additional or alternative
procedures as may hereafter become appropriate to effect complete transfer of
ownership of any such Trust Account Property to the Trustee or its nominee or
custodian, consistent with changes in applicable law or regulations or the
interpretation thereof; and
(c) with respect to any item of Trust Account Property that is an
uncertificated security under Article 8 of the UCC and that is not governed by
clause (b) above, registration on the books and records of the issuer thereof in
the name of the financial
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intermediary, the sending of a confirmation by the financial intermediary of the
purchase by the Trustee or its nominee or custodian of such uncertificated
security, the making by such financial intermediary of entries on its books and
records identifying such uncertificated certificates as belonging to the Trustee
or its nominee or custodian.
"Depositor" shall mean the Seller in its capacity as Depositor under
the Trust Agreement.
"Determination Date" means the earlier of (i) the seventh Business Day
of each calendar month and (ii) the fifth Business Day preceding the related
Payment Date.
"Draw Date" means with respect to any Payment Date, the third Business
Day immediately preceding such Payment Date.
"Eligible Account" means (i) a segregated trust account that is
maintained with a depository institution acceptable to the Note Insurer (so long
as an Insurer Default shall not have occurred and be continuing), or (ii) a
segregated direct deposit account maintained with a depository institution or
trust company organized under the laws of the United States of America, or any
of the States thereof, or the District of Columbia, having a certificate of
deposit, short-term deposit or commercial paper rating of at least "A-1" by
Standard & Poor's and "P-1" by Moody's and (so long as an Insurer Default shall
not have occurred and be continuing) acceptable to the Note Insurer.
"Eligible Investments" mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully guaranteed as to the
full and timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of the
United States of America or any State thereof (or any domestic branch of a
foreign bank) and subject to supervision and examination by Federal or State
banking or depository institution authorities; provided, however, that at the
time of the investment or contractual commitment to invest therein, the
commercial paper or other short-term unsecured debt obligations (other than such
obligations the rating of which is based on the credit of a Person other than
such depository institution or trust company) thereof shall be rated "A-1+" by
Standard & Poor's and "P-1" by Moody's;
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(c) commercial paper that, at the time of the investment or contractual
commitment to invest therein, is rated "A-1+" by Standard & Poor's and "P-1" by
Moody's;
(d) bankers' acceptances issued by any depository institution or trust
company referred to in clause (b) above;
(e) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed as to the full and timely payment by,
the United States of America or any agency or instrumentality thereof the
obligations of which are backed by the full faith and credit of the United
States of America, in either case entered into with (i) a depository institution
or trust company (acting as principal) described in clause (b) or (ii) a
depository institution or trust company whose commercial paper or other short
term unsecured debt obligations are rated "A-1+" by Standard & Poor's and "P-1"
by Moody's and long term unsecured debt obligations are rated "AAA" by Standard
& Poor's and "Aaa" by Moody's;
(f) with the prior written consent of the Note Insurer, money market
mutual funds registered under the Investment Company Act of 1940, as amended,
having a rating, at the time of such investment, from each of the Rating
Agencies in the highest investment category granted thereby; and
(g) any other investment as may be acceptable to the Note Insurer, as
evidenced by a writing to that effect, as may from time to time be confirmed in
writing to the Trustee by the Note Insurer.
Any of the foregoing Eligible Investments may be purchased by or
through the Owner Trustee or the Trustee or any of their respective Affiliates.
"ERISA" shall have the meaning specified in Section 3.2.
"FDIC" means the Federal Deposit Insurance Corporation.
"Final Scheduled Payment Date" means, with respect to each Class of
Notes and the Certificates, the December 2002 Payment Date.
"Financed Vehicle" means a new or used automobile, light truck, van or
minivan, together with all accessions thereto, securing an Obligor's
indebtedness under a Receivable.
"Funding Period" means the period beginning on and including the
Closing Date and ending on the first to occur of (a) the first date on which the
amount on deposit in the Pre-Funding Account (after giving effect to any
transfers therefrom in
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connection with the transfer of Subsequent Receivables to the Issuer on such
date) is less than $100,000, (b) the date on which an Event of Default or a
Servicer Termination Event occurs, (c) the date on which an Insolvency Event
occurs with respect to the Seller and (d) October 15, 1997.
"Indenture" means the Indenture dated as of August 1, 1997, between the
Issuer and Norwest Bank Minnesota, National Association, as Trustee, as the same
may be amended and
supplemented from time to time.
"Initial Cutoff Date" means July 31, 1997.
"Initial Receivables" means any Receivable conveyed to the Trust on the
Closing Date.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a petition against such Person or the entry of a decree or order for
relief by a court having jurisdiction in the premises in respect of such Person
or any substantial part of its property in an involuntary case under any
applicable federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official for such Person or for any substantial
part of its property, or ordering the winding-up or liquidation or such Person's
affairs, and such petition, decree or order shall remain unstayed and in effect
for a period of 60 consecutive days; or (b) the commencement by such Person of a
voluntary case under any applicable federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or the consent by such Person to
the entry of an order for relief in an involuntary case under any such law, or
the consent by such Person to the appointment of or taking possession by, a
receiver, liquidator, assignee, custodian, trustee, sequestrator, or similar
official for such Person or for any substantial part of its property, or the
making by such Person of any general assignment for the benefit of creditors, or
the failure by such Person generally to pay its debts as such debts become due,
or the taking of action by such Person in furtherance of any of the foregoing.
"Insurance Agreement" means the Insurance and Indemnity Agreement among
the Trust, CPS, the Seller, and the Note Insurer, dated as of August 1, 1997, as
such agreement may be amended, supplemented or otherwise modified from time to
time in accordance with the terms thereof.
"Insurance Agreement Event of Default" means an "Event of Default" as
defined in the Insurance Agreement.
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"Insurance Policy" means, with respect to a Receivable, any insurance
policy (including the insurance policies described in Section 4.4 hereof)
benefiting the holder of the Receivable providing loss or physical damage,
credit life, credit disability, theft, mechanical breakdown or similar coverage
with respect to the Financed Vehicle or the Obligor.
"Insurer Default" shall mean any one of the following events shall have
occurred and be continuing:
(i) the Note Insurer fails to make a payment required under
the Policy in accordance with its terms;
(ii) the Note Insurer (A) files any petition or commences any
case or proceeding under any provision or chapter of the United States
Bankruptcy Code, the New York Department of Insurance Code or similar
Federal or State law relating to insolvency, bankruptcy,
rehabilitation, liquidation or reorganization, (B) makes a general
assignment for the benefit of its creditors or (C) has an order for
relief entered against it under the United States Bankruptcy Code or
any other similar Federal or State law relating to insolvency,
bankruptcy, rehabilitation, liquidation or reorganization which is
final and nonappealable; or
(iii) a court of competent jurisdiction, the New York
Department of Insurance or other competent regulatory authority enters
a final and nonappealable order, judgment or decree (A) appointing a
custodian, trustee, agent or receiver for the Note Insurer or for all
or any material portion of its property or (B) authorizing the taking
of possession by a custodian, trustee, agent or receiver of the Note
Insurer (or the taking of possession of all or any material portion of
the property of the Note Insurer).
"Interest Period" means, with respect to any Payment Date, the period
from and including the Closing Date (in the case of the first Payment Date) or
from and including the most recent Payment Date on which interest has been paid
to but excluding such Payment Date.
"Interest Rate" means the Class A-1 Interest Rate, the Class A-2
Interest Rate or the Class B Interest Rate, as applicable.
"Interest Reserve Account" means the account designated as such,
established and maintained pursuant to Section 5.2.
"Interest Reserve Account Initial Deposit" means $1,038,063.19
deposited on the Closing Date.
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"Investment Earnings" means, with respect to any Payment Date and Trust
Account, the investment earnings on amounts on deposit in such Trust Account on
such Payment Date.
"Issuer" means CPS Auto Receivables Trust 1997-3.
"Lien" means a security interest, lien, charge, pledge, equity, or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Receivable by operation of law.
"Lien Certificate" means, with respect to a Financed Vehicle, an
original certificate of title, certificate of lien or other notification issued
by the Registrar of Titles of the applicable state to a secured party which
indicates that the lien of the secured party on the Financed Vehicle is recorded
on the original certificate of title. In any jurisdiction in which the original
certificate of title is required to be given to the obligor, the term "Lien
certificate" shall mean only a certificate or notification issued to a secured
party.
"Liquidated Receivable" means any Receivable (i) which has been
liquidated by the Servicer through the sale of the Financed Vehicle or (ii) for
which the related Financed Vehicle has been repossessed and 90 days have elapsed
since the date of such repossession or (iii) as to which an Obligor has failed
to make more than 90% of a Scheduled Payment of more than ten dollars for 120 or
more days as of the end of a Collection Period or (iv) with respect to which
proceeds have been received which, in the Servicer's judgment, constitute the
final amounts recoverable in respect of such Receivable.
"Lockbox Account" means an account maintained on behalf of the Trustee
by the Lockbox Bank pursuant to Section 4.2(c).
"Lockbox Agreement" means the Tri-Party Remittance Processing
Agreement, dated as of August 1, 1997, by and among the Lockbox Processor, the
Servicer and the Trustee, as such agreement may be amended or supplemented from
time to time, unless the Trustee shall cease to be a party thereunder, or such
agreement shall be terminated in accordance with its terms, in which event
"Lockbox Agreement" shall mean such other agreement, in form and substance
acceptable to the Controlling Party, among the Servicer, the Trustee and the
Lockbox Processor.
"Lockbox Bank" means as of any date a depository institution named by
the Servicer and acceptable to the Controlling Party at which the Lockbox
Account is established and maintained as of such date.
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"Lockbox Processor" means Bank of America and its successors and
assigns.
"Mandatory Redemption Date" means the earlier of (i) the Payment Date
in October 1997, and (ii) if the last day of the Funding Period occurs on or
prior to the Determination Date in October 1997, then on the first Payment Date
after the Funding Period ends.
"Master Spread Account Agreement" means the Master Spread Account
Agreement dated as of August 1, 1997 among the Note Insurer, the Seller and the
Collateral Agent, as the same may be modified, supplemented or otherwise amended
in accordance with the terms thereof.
"Moody's" means Moody's Investors Service, Inc., or its
successor.
"Net Liquidation Proceeds" means, with respect to a Liquidated
Receivable, all amounts realized with respect to such Receivable (other than
amounts withdrawn from the Spread Account and drawings under the Note Policy)
net of (i) reasonable expenses incurred by the Servicer in connection with the
collection of such Receivable and the repossession and disposition of the
Financed Vehicle and (ii) amounts that are required to be refunded to the
obligor on such Receivable; provided, however, that the Liquidation Proceeds
with respect to any Receivable shall in no event be less than zero.
"Note" shall have the meaning provided in Section 1.1 of the Indenture.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.1.
"Note Insurer" means Financial Security Assurance Inc., a stock
insurance company organized and created under the laws of the State of New York,
or its successors in interest.
"Note Policy" means the Financial Guaranty Insurance Policy No. 50618-N
issued by the Note Insurer for the benefit of the Holders of the Class A Notes
issued under the Indenture, including any endorsements thereto.
"Note Policy Claim Amount" means, with respect to a Payment Date, the
sum of: (I) the lesser of (i) the amount required to be distributed pursuant to
Section 5.7(b)(v), and (ii) the excess of the sum of the amounts required to be
distributed pursuant to Section 5.7(b)(i) through (v) over the sum of the Total
Distribution Amount and the amount distributed (or available to be distributed
pursuant to the Master Spread Account Agreement)
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in respect of the Deficiency Claim Amount, plus (II) the lesser of (i) the
amount required to be distributed pursuant to Section 5.7(b)(vii), and (ii) the
excess of the sum of the amounts required to be distributed pursuant to Section
5.7(b)(i) through (vii) over the sum of the Total Distribution Amount and the
amount distributed (or available to be distributed pursuant to the Master Spread
Account Agreement) in respect of the Deficiency Claim Amount.
"Note Pool Factor" for each Class of Notes as of the close of business
on any Payment Date means a seven-digit decimal figure equal to the outstanding
principal amount of such Class of Notes divided by the original outstanding
principal amount of such Class of Notes.
"Note Prepayment Amount" means, as of the Payment Date on or
immediately following the last day of the Funding Period, after giving effect to
any transfer of Subsequent Receivables on such date, an amount equal to the
Noteholders' pro rata share (based on the respective current outstanding
principal balance of each Class of Notes and the Certificates) of the Pre-Funded
Amount as of such Payment Date; provided, that if the aggregate remaining amount
in the Pre-Funding Account is $100,000 or less, such amount will be applied
exclusively to reduce the outstanding principal balance of the Class of Notes
then entitled to receive distributions of principal.
"Notes" means the Class A Notes and the Class B Notes.
"Objection Date" shall have the meaning specified in Section 9.5.
"Objection Notice" shall have the meaning specified in Section 9.5.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
Financed Vehicle and any other Person who owes payments under the Receivable.
"Officers' Certificate" means a certificate signed by the chairman of
the board, the president, any vice chairman of the board, any vice president,
the treasurer, the controller or assistant treasurer or any assistant
controller, secretary or assistant secretary of CPS, the Seller or the Servicer,
as appropriate.
"Opinion of Counsel" means a written opinion of counsel who may but
need not be counsel to the Seller or the Servicer, which counsel shall be
reasonably acceptable to the Trustee and the Note Insurer and which opinion
shall be acceptable in form and substance to the Trustee and, if such opinion or
a copy thereof
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is required by the provisions of this Agreement to be delivered to the Note
Insurer, to the Note Insurer.
"Original Pool Balance" means the sum, as of any date, of the Pool
Balance as of the Initial Cutoff Date, plus the aggregate Principal Balance of
the Subsequent Receivables, if any, sold to the Trust, as of their respective
Subsequent Cutoff Dates.
"Other Conveyed Property" means all property conveyed by the Seller to
the Trust pursuant to Section 2.1(b) through (h) of this Agreement and all
property described in Section 2.2(a)(ii) through (viii) of this Agreement which
is conveyed by the Seller to the Trust pursuant to a Subsequent Transfer
Agreement.
"Owner Trust Estate" has the meaning assigned to such term in the Trust
Agreement.
"Owner Trustee" means Bankers Trust (Delaware), not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, its successors
in interest or any successor Owner Trustee under the Trust Agreement.
"Pass-Through Rate" means 10.65% per annum.
"Payment Date" means, with respect to each Collection Period, the 15th
day of the following calendar month, or if such day is not a Business Day, the
immediately following Business Day, commencing on September 15, 1997.
"Person" means any individual, corporation, estate, partnership,
limited liability company, joint venture, association, joint stock company,
trust (including any beneficiary thereof), unincorporated organization or
government or any agency or political subdivision thereof.
"Physical Property" has the meaning assigned to such term in the
definition of "Delivery" above.
"Pool Balance" means, as of any date of determination, the aggregate
Principal Balance of the Receivables (excluding Purchased Receivables and
Liquidated Receivables).
"Post-Office Box" means the separate post-office box in the name of the
Trustee for the benefit of the Securityholders and the Note Insurer, established
and maintained pursuant to Section 4.1.
"Preference Claim" shall have the meaning specified in Section 6.2(b).
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"Pre-Funded Amount" means, with respect to any Payment Date, the amount
on deposit in the Pre-Funding Account, (exclusive of Pre-Funding Earnings) which
initially shall be $27,084,817.
"Pre-Funding Account" has the meaning specified in Section 5.1.
"Pre-Funding Earnings" means any Investment Earnings on amounts on
deposit in the Pre-Funding Account.
"Prepayment Amount" means the amount deposited in the Collection
Account from the Pre-Funding Account on the Mandatory Redemption Date pursuant
to Section 5.7(a)(ii) hereof.
"Principal Balance" of a Receivable, as of the close of business on the
last day of a Collection Period means the Amount Financed minus the sum of the
following amounts without duplication: (i) in the case of a Rule of 78's
Receivable, that portion of all Scheduled Payments actually received on or prior
to such day allocable to principal using the actuarial or constant yield method;
(ii) in the case of a Simple Interest Receivable, that portion of all Scheduled
Payments actually received on or prior to such day allocable to principal using
the Simple Interest Method; (iii) any payment of the Purchase Amount with
respect to the Receivable allocable to principal; (iv) any Cram Down Loss in
respect of such Receivable; and (v) any prepayment in full or any partial
prepayment applied to reduce the Principal Balance of the Receivable.
"Principal Distributable Amount" means, with respect to any Payment
Date, the sum of (i) the principal portion of all Scheduled Payments received
during the preceding Collection Period on Rule of 78's Receivables (excluding
Net Liquidation Proceeds) and all payments of principal received on Simple
Interest Receivables during such preceding Collection Period; (ii) the principal
portion of all prepayments in full received during the preceding Collection
Period (including prepayments in full resulting from collections with respect to
a Receivable received during the preceding Collection Period (without
duplication of amounts included in clause (i) above and clause (iv) below);
(iii) the portion of the Purchase Amount allocable to principal of each
Receivable that became a Purchased Receivable as of the last day of the
preceding Collection Period and, at the option of the Note Insurer the Principal
Balance of each Receivable that was required to be but was not so purchased or
repurchased (without duplication of amounts referred to in clauses (i) and (ii)
above); (iv) the Principal Balance of each Receivable that first became a
Liquidated Receivable during the preceding Collection Period (without
duplication of the amounts included in clauses (i) and (ii) above); and (v) the
aggregate amount of Cram Down Losses with respect to the Receivables that
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have occurred during the preceding Collection Period (without duplication of
amounts referred to in clauses (i) through (iv) above); and (vi) following the
acceleration of the Notes pursuant to Section 5.2 of the Indenture, the amount
of money or property collected pursuant to Section 5.4 of the Indenture since
the preceding Determination Date by the Trustee or Controlling Party for
distribution pursuant to Section 5.7 hereof.
"Program" shall have the meaning specified in Section 4.11.
"Purchase Agreement" means the CPS Purchase Agreement and/or the Samco
Purchase Agreement.
"Purchase Amount" means, with respect to a Receivable, the Principal
Balance and all accrued and unpaid interest on the Receivable, after giving
effect to the receipt of any moneys collected (from whatever source) on such
Receivable, if any.
"Purchased Receivable" means a Receivable purchased as of the close of
business on the last day of a Collection Period by the Servicer pursuant to
Section 4.7 or repurchased by the Seller or CPS pursuant to Section 3.2 or
Section 11.1(a).
"Rating Agency" means each of Moody's and Standard & Poor's, and any
successors thereof. If no such organization or successor maintains a rating on
the Securities, "Rating Agency" shall be a nationally recognized statistical
rating organization or other comparable Person designated by the Note Insurer
(so long as an Insurer Default shall not have occurred and be continuing),
notice of which designation shall be given to the Trustee, the Owner Trustee and
the Servicer.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 3 days' (or such shorter period as shall be
acceptable to each Rating Agency) prior notice thereof and that each of the
Rating Agencies shall have notified the Seller, the Servicer, the Note Insurer,
the Owner Trustee and the Trustee in writing that such action will not result in
a reduction or withdrawal of the then current rating of any Class of Notes or
the Certificates.
"Realized Losses" means, with respect to any Receivable that becomes a
Liquidated Receivable, the excess of the Principal Balance of such Liquidated
Receivable over Net Liquidation Proceeds to the extent allocable to principal.
"Receivable" means each retail installment sale contract for a Financed
Vehicle listed on Schedule A (which Schedule A may be in the form of microfiche)
and all rights and obligations thereunder except for Receivables that shall have
become
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Purchased Receivables, as such Schedule shall be amended to reflect the transfer
of Subsequent Receivables to the Trust.
"Receivable Files" means the documents specified in Section 3.3.
"Record Date" means, with respect to any Payment Date, the tenth day of
the calendar month in which such Payment Date occurs.
"Registrar of Titles" means, with respect to any state, the
governmental agency or body responsible for the registration of, and the
issuance of certificates of title relating to, motor vehicles and liens thereon.
"Requisite Reserve Amount" means as of the Initial Closing Date
$1,038,063.19 and as of any Payment Date thereafter during the Funding Period an
amount equal to the difference between: (a) the product of (i) the weighted
average of the Interest Rates and the Pass-Through Rate for each Class of Notes
and the Certificates (based on the outstanding principal amount of each Class of
Notes and the Certificates) divided by 360, (ii) the Pre-Funded Amount on such
date and (iii) the number of days until the October 15, 1997 Payment Date and
(b) the product of (i) the Assumed Reinvestment Rate divided by 360, (ii) the
Pre-Funded Amount on such date and (iii) the number of days until the October
15, 1997 Payment Date. On the October 15, 1997 Payment Date, the Requisite
Reserve Amount will be $0.
"Rule of 78's Receivable" means any Receivable under which the portion
of a payment allocable to earned interest (which may be referred to in the
related retail installment sale contract as an add-on finance charge) and the
portion allocable to the Amount Financed is determined according to the method
commonly referred to as the "Rule of 78's" method or the "sum of the months'
digits" method or any equivalent method.
"Samco" means Samco Acceptance Corp., a subsidiary of CPS.
"Samco Purchase Agreement" means the Purchase Agreement, dated as of
August 1, 1997 by and between Samco and the Seller, as such agreement may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof, relating to the purchase of the Samco Receivables by the
Seller from Samco.
"Samco Receivables" means a Receivable purchased by the Seller from
Samco.
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"Schedule of Receivables" means the schedule of all retail installment
sales contracts and promissory notes originally held as part of the Trust which
is attached as Schedule A, as amended from time to time.
"Scheduled Payment" means, with respect to any Collection Period for
any Receivable, the amount set forth in such Receivable as required to be paid
by the Obligor in such Collection Period (without giving effect to deferments of
payments pursuant to Section 4.2 or any rescheduling of payments in any
insolvency or similar proceedings).
"Securities" means the Notes and the Certificates.
"Security Majority" means a majority by principal amount of the
Noteholders so long as the Notes are outstanding and a majority by Certificate
Balance of the Certificateholders thereafter.
"Securityholders" means the Noteholders and the Certificateholders.
"Seller" means CPS Receivables Corp., a California corporation, and its
successors in interest to the extent permitted hereunder.
"Series 1997-3 Spread Account" means the account designated as such,
established and maintained pursuant to the Spread Account Supplement.
"Servicer" means Consumer Portfolio Services, Inc., as the servicer of
the Receivables, and each successor Servicer pursuant to Section 10.3.
"Servicer Termination Event" means an event specified in Section 10.1.
"Servicer's Certificate" means a certificate completed and executed by
a Servicing Officer and delivered pursuant to Section 4.9, substantially in the
form of Exhibit B.
"Servicing Assumption Agreement" means the Servicing Assumption
Agreement, dated as of August 1, 1997 among CPS, the Standby Servicer and the
Trustee, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.
"Servicing Fee" has the meaning specified in Section 4.8.
"Servicing Fee Rate" shall be 2.00% per annum, payable monthly,
provided, however, that if the Standby Servicer becomes
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the successor Servicer, the "Servicing Rate" shall be equal to a percentage per
annum determined pursuant to the Servicing Assumption Agreement not to exceed
3.00% per annum.
"Servicing Officer" means any Person whose name appears on a list of
Servicing Officers delivered to the Trustee and the Note Insurer, as the same
may be amended from time to time.
"Simple Interest Method" means the method of allocating a fixed level
payment between principal and interest, pursuant to which the portion of such
payment that is allocated to interest is equal to the product of the APR
multiplied by the unpaid balance multiplied by the period of time (expressed as
a fraction of a year, based on the actual number of days in the calendar month
and the actual number of days in the calendar year) elapsed since the preceding
payment of interest was made and the remainder of such payment is allocable to
principal.
"Simple Interest Receivable" means a Receivable under which the portion
of the payment allocable to interest and the portion allocable to principal is
determined in accordance with the Simple interest Method.
"Specified Spread Account Requisite Amount" has the meaning specified
in the Spread Account Supplement.
"Spread Account Supplement" means the Series 1997-3 Supplement to the
Master Spread Account Agreement dated as of August 1, 1997 among the Note
Insurer, the Seller and the Collateral Agent, as the same may be modified,
supplemented or otherwise amended in accordance with the terms thereof.
"Standard & Poor's" means Standard & Poor's Ratings Services, or its
successor.
"Standby Fee" means the fee payable to the Standby Servicer so long as
CPS is the Servicer, on each Payment Date in an amount equal to one-twelfth of
0.06% of the aggregate outstanding principal amount of the Securities on the
last day of the second preceding Collection Period; provided, however, that on
the first Payment Date the Trustee will be entitled to receive an amount equal
to the product of (i) the percentage equivalent of a fraction the numerator of
which is the number days from the Closing Date to but excluding the first
Payment Date and the denominator of which is 360, (ii) 0.06% and (iii) the
aggregate outstanding principal amount of the Securities as of the Closing Date.
"Standby Servicer" means Norwest Bank Minnesota, National Association,
in its capacity as Standby Servicer pursuant to the terms of the Servicing
Assumption Agreement or such Person as
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shall have been appointed Standby Servicer pursuant to Section 9.2(c).
"Subsequent Cutoff Date" means (i) the last day of the month preceding
the month in which particular Subsequent Receivables are conveyed to the Trust
pursuant to this Agreement or (ii) if any such Subsequent Receivable is
originated in the month of the related Subsequent Transfer Date, the date of
origination.
"Subsequent Purchase Agreement" means an agreement by and between the
Seller and CPS or the Seller and Samco pursuant to which the Seller will acquire
Subsequent Receivables.
"Subsequent Receivables" means the Receivables transferred to the
Issuer pursuant to Section 2.2, which shall be listed on Schedule A to the
related Subsequent Transfer Agreement.
"Subsequent Spread Account Deposit" means, with respect to each
Subsequent Transfer Date, an amount equal to 3.5% of the aggregate principal
balance of related Subsequent Receivables as of the related Subsequent Cutoff
Date transferred to the Trust on such Subsequent Transfer Date from amounts
released from the Pre-Funding Account.
"Subsequent Transfer Agreement" means the agreement among the Issuer,
the Seller and the Servicer, substantially in the form of Exhibit A.
"Subsequent Transfer Date" means, with respect to Subsequent
Receivables, any date, occurring not more frequently than once per month, during
the Funding Period on which Subsequent Receivables are to be transferred to the
Trust pursuant to this Agreement, and a Subsequent Transfer Agreement is
executed and delivered to the Trust.
"Target Payment Date" means the first Payment Date on which the Class A
Target Amount equals or exceeds the then outstanding principal balance of the
Class A Notes.
"Total Distribution Amount" means, for each Payment Date, the sum of
the following amounts with respect to the preceding Collection Period: (i) all
collections on the Receivables, (ii) Net Liquidation Proceeds received during
the Collection Period with respect to Liquidated Receivables; (iii) all Purchase
Amounts deposited in the Collection Account during the related Collection
Period; (iv) Investment Earnings for the related Payment Date; (v) following the
acceleration of the Notes pursuant to Section 5.2 of the Indenture, the amount
of money or property collected pursuant to Section 5.7 of the Indenture since
the preceding Payment Date by the Trustee or Controlling Party for distribution
pursuant to Section 5.6 and Section 5.8 hereof,
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(vi) any amount deposited into the Collection Account on such Payment Date
pursuant to Section 5.2(c) hereof, and (vii) the proceeds of any purchase or
sale of the assets of the Trust described in Section 11.1 hereof.
"Trigger Event" has the meaning assigned thereto in the Spread Account
Supplement.
"Trust" means the Issuer.
"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), and all proceeds of the foregoing.
"Trust Accounts" has the meaning assigned thereto in Section 5.1.
"Trust Agreement" means the Trust Agreement dated as of August 14, 1997
between the Seller and the Owner Trustee as amended and restated by an amended,
dated as of August 19, 1997, between the Depositor and the Owner Trustee, as the
same may be further amended or supplemented from time to time.
"Trust Officer" means, (i) in the case of the Trustee, any vice
president, any assistant vice president, any assistant secretary, any assistant
treasurer, any trust officer, or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject, and (ii) in the case of the Owner
Trustee, any officer in the corporate trust office of the Owner Trustee or any
agent of the Owner Trustee under a power of attorney with direct responsibility
for the administration of this Agreement or any of the Basic Documents on behalf
of the Owner Trustee.
"Trust Property" means the property and proceeds conveyed pursuant to
Section 2.1, together with certain monies paid on or after the Initial Cutoff
Date, the Insurance Policies, the Collection Account (including all Eligible
Investments therein and all proceeds therefrom), the Lockbox Account, the
Pre-Funding Account, the Interest Reserve Account and certain other rights under
this Agreement. Although the Seller has pledged the Spread Account to the
Trustee and the Note Insurer pursuant to the Master Spread Account Agreement,
the Spread Account shall not under any circumstances be deemed to be a part of
or otherwise includable in the Trust or the Trust Property.
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"Trust Receipt" has the meaning assigned thereto by Section 3.5.
"Trustee" means the Person acting as Trustee under the Indenture, its
successors in interest and any successor trustee under the Indenture.
"Trustee Fee" means the fee payable to the Trustee on each Payment Date
an amount equal to one-twelfth of 0.01% of the aggregate outstanding principal
amount of the Securities on the last day of the second preceding Collection
Period; provided, however, that on the first Payment Date the Trustee will be
entitled to receive an amount equal to the product of (i) the percentage
equivalent of a fraction the numerator of which is the number days from the
Closing Date to but excluding the first Payment Date and the denominator of
which is 360, (ii) 0.01% and (iii) the aggregate outstanding principal amount of
the Securities as of the Closing Date.
"UCC" means the Uniform Commercial Code as in effect in the relevant
jurisdiction on the date of the Agreement.
SECTION 1.2. Other Definitional Provisions.
(a) Capitalized terms used herein and not otherwise defined herein have
the meanings assigned to them in the Indenture or, if not defined therein, in
the Trust Agreement.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any instrument governed hereby and in any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein.
(c) Accounting terms used but not defined or partly defined in this
Agreement, in any instrument governed hereby or in any certificate or other
document made or delivered pursuant hereto, to the extent not defined, shall
have the respective meanings given to them under generally accepted accounting
principles as in effect on the date of this Agreement or any such instrument,
certificate or other document, as applicable. To the extent that the definitions
of accounting terms in this Agreement or in any such instrument, certificate or
other document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement or
in any such instrument, certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement.
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(e) Section, Schedule and Exhibit references contained in this
Agreement are references to Sections, Schedules and Exhibits in or to this
Agreement unless otherwise specified; and the term "including" shall mean
"including without limitation."
(f) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
(g) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as the same may from time to time be amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments and instruments associated therewith; all
references to a Person include its permitted successors and assigns.
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.1. Conveyance of Initial Receivables. In consideration of the
Issuer's delivery to or upon the order of the Seller on the Closing Date of the
net proceeds from the sale of the Notes and the Certificates and the other
amounts to be distributed from time to time to the Seller in accordance with the
terms of this Agreement, the Seller does hereby sell, transfer, assign, set over
and otherwise convey to the Issuer, without recourse (subject to the obligations
set forth herein):
(a) all right, title and interest of the Seller in and to the
Initial Receivables listed in Schedule A hereto and, with respect to
Initial Receivables that are Rule of 78's Receivables, all monies due
or to become due thereon after the Initial Cutoff Date (including
Scheduled Payments due after the Initial Cutoff Date (including
principal prepayments relating to such Scheduled Payments) but received
by the Seller or CPS on or before the Initial Cutoff Date) and, with
respect to Initial Receivables that are Simple Interest Receivables,
all monies received thereunder after the Initial Cutoff Date and all
Net Liquidation Proceeds received with respect to such Initial
Receivables on or after the Initial Cutoff Date;
(b) all right, title and interest of the Seller in and to the
security interests in the Financed Vehicles granted by Obligors
pursuant to the Receivables and any other interest of the Seller in
such Financed Vehicles, including,
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without limitation, the certificates of title or, with respect to such
Financed Vehicles in the State of Michigan, all other evidence of
ownership with respect to such Financed Vehicles;
(c) all right, title and interest of the Seller in and to any
proceeds from claims on any physical damage, credit life and credit
accident and health insurance policies or certificates relating to the
Financed Vehicles or the Obligors;
(d) all right, title and interest of the Seller in and to the
Purchase Agreements, including a direct right to cause CPS to purchase
Initial Receivables from the Trust under certain circumstances;
(e) all right, title and interest of the Seller in and to
refunds for the costs of extended service contracts with respect to
Financed Vehicles securing Initial Receivables, refunds of unearned
premiums with respect to credit life and credit accident and health
insurance policies or certificates covering an Obligor or Financed
Vehicle or his or her obligations with respect to a Financed Vehicle
and any recourse to Dealers for any of the foregoing;
(f) the Receivable File related to each Initial Receivable;
(g) all amounts and property from time to time held in or
credited to the Collection Account, the Pre-Funding Account, the
Interest Reserve Account or the Lockbox Account; and
(h) the proceeds of any and all of the foregoing.
It is the intention of the Seller that the transfer and assignment
contemplated by this Agreement shall constitute a sale of the Receivables and
other Trust Property from the Seller to the Issuer and the beneficial interest
in and title to the Receivables and the other Trust Property shall not be part
of the Seller's estate in the event of the filing of a bankruptcy petition by or
against the Seller under any bankruptcy law. In the event that, notwithstanding
the intent of the Seller, the transfer and assignment contemplated hereby is
held not to be a sale, this Agreement shall constitute a grant of a security
interest in the property referred to in this Section 2.1 for the benefit of the
Securityholders and the Note Insurer.
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SECTION 2.2. Conveyance of Subsequent Receivables.
(a) Subject to the conditions set forth in paragraph (b) below, in
consideration of the Issuer's delivery on each related Subsequent Transfer Date
to or upon the order of the Seller of the amount described in Section 5.10(a) to
be delivered to the Seller, the Seller does hereby sell, transfer, assign, set
over and otherwise convey to the Issuer without recourse (subject to the
obligations set forth herein):
(i) all right, title and interest of the Seller in and to the
Subsequent Receivables listed in Schedule A to the related Subsequent
Transfer Agreement and, with respect to Subsequent Receivables that are
Rule of 78's Receivables, all monies due or to become due thereon after
the related Subsequent Cutoff Date (including Scheduled Payments due
after the related Subsequent Cutoff Date (including principal
prepayments relating to such Scheduled Payments) but received by the
Seller or CPS on or before the related Subsequent Cutoff Date) and,
with respect to Subsequent Receivables that are Simple Interest
Receivables, all monies received thereunder after the related
Subsequent Cutoff Date and all Liquidation Proceeds and Recoveries
received with respect to such Subsequent Receivables on or after the
related Subsequent Cutoff Date;
(ii) all right, title and interest of the Seller in and to the
security interests in the Financed Vehicles granted by Obligors
pursuant to the Subsequent Receivables and any other interest of the
Seller in such Financed Vehicles, including, without limitation, the
certificates of title or, with respect to such Financed Vehicles in the
State of Michigan, all other evidence of ownership with respect to such
Financed Vehicles;
(iii) all right, title and interest of the Seller in and to
any proceeds from claims on any physical damage, credit life and credit
accident and health insurance policies or certificates relating to the
Financed Vehicles or the Obligors;
(iv) all right, title and interest of the Seller in and to the
Subsequent Purchase Agreements, including a direct right to cause CPS
to purchase Subsequent Receivables from the Trust under certain
circumstances;
(v) all right, title and interest of the Seller in and to
refunds for the costs of extended service contracts with respect to
Financed Vehicles securing Subsequent Receivables, refunds of unearned
premiums with respect to credit life and credit accident and health
insurance
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policies or certificates covering an Obligor or Financed Vehicle or his
or her obligations with respect to a Financed Vehicle and any recourse
to Dealers for any of the foregoing;
(vi) the Receivable File related to each Subsequent
Receivable;
(vii) the proceeds of any and all of the foregoing.
(b) The Seller shall transfer to the Issuer the Subsequent Receivables
and the other property and rights related thereto described in paragraph (a)
above only upon the satisfaction of each of the following conditions on or prior
to the related Subsequent Transfer Date:
(i) the Seller shall have provided the Trustee, the Owner
Trustee, the Note Insurer and the Rating Agencies with an Addition
Notice not later than five days prior to such Subsequent Transfer Date
and shall have provided any information reasonably requested by any of
the foregoing with respect to the Subsequent Receivables;
(ii) the Seller shall have delivered to the Owner Trustee and
the Trustee a duly executed Subsequent Transfer Agreement which shall
include supplements to Schedule A, listing the Subsequent Receivables;
(iii) the Seller shall, to the extent required by Section 4.2
of this Agreement, have deposited in the Collection Account all
collections in respect of the Subsequent Receivables;
(iv) as of each Subsequent Transfer Date, (A) the Seller shall
not be insolvent and shall not become insolvent as a result of the
transfer of Subsequent Receivables on such Subsequent Transfer Date,
(B) the Seller shall not intend to incur or believe that it shall incur
debts that would be beyond its ability to pay as such debts mature, (C)
such transfer shall not have been made with actual intent to hinder,
delay or defraud any Person and (D) the assets of the Seller shall not
constitute unreasonably small capital to carry out its business as
conducted;
(v) the Funding Period shall not have terminated;
(vi) after giving effect to any transfer of Subsequent
Receivables on a Subsequent Transfer Date, the Receivables then owned
by the Trust shall meet the following criteria (based on the
characteristics of the Initial Receivables on the Initial Cutoff Date
and the Subsequent Receivables on
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the related Subsequent Cutoff Dates): (a) the weighted average APR of
such Receivables will not be less than 1% below the weighted average
APR of the Initial Receivables on the Cutoff Date, (b) the weighted
average remaining term of such Receivables will be within a range of 55
to 60 months, (c) not more than 95% of the aggregate principal balance
of such Receivables will represent financing of used Financed Vehicles
and (d) no fewer than 45% of the Subsequent Receivables will be
originated under the CPS alpha program, (e) not more than 13% of the
Subsequent Receivables will be originated under the CPS delta program,
(f) not more than 13.5% of the Subsequent Receivables will be
originated under the CPS first time buyer program and (g) no fewer than
20% and no more than 40% of the Subsequent Receivables will be
originated under the CPS standard program, and the Trust, the Trustee,
the Owner Trustee and the Note Insurer shall have received written
confirmation from a firm of certified independent public accountants as
to the satisfaction of the criteria in clauses (a) through (g) above;
(vii) each of the representations and warranties made by the
Seller pursuant to Section 3.1 with respect to the Subsequent
Receivables to be transferred on such Subsequent Transfer Date shall be
true and correct as of the related Subsequent Transfer Date, and the
Seller shall have performed all obligations to be performed by it
hereunder on or prior to such Subsequent Transfer Date;
(viii) the Seller shall, at its own expense, on or prior to
the Subsequent Transfer Date indicate in its computer files that the
Subsequent Receivables identified in the Subsequent Transfer Agreement
have been sold to the Trust pursuant to this Agreement;
(ix) the Seller shall have taken any action required to
maintain the first priority perfected ownership interest of the Trust
in the Owner Trust Estate and the first priority perfected security
interest of the Trustee in the Collateral;
(x) no selection procedures adverse to the interests of the
Securityholders or the Note Insurer shall have been utilized in
selecting the Subsequent Receivables;
(xi) the addition of any such Subsequent Receivables shall not
result in a material adverse tax consequence to the Trust or the
Securityholders;
(xii) the Seller shall have delivered (A) to the Rating
Agencies and the Note Insurer an Opinion of Counsel with respect to the
transfer of such Subsequent Receivables
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substantially in the form of the Opinion of Counsel delivered to the
Rating Agencies and the Note Insurer on the Closing Date and (B) to the
Trustee the Opinion of Counsel required by Section 13.2(i)(1);
(xiii) each Rating Agency shall have confirmed that the rating
on the Notes shall not be withdrawn or reduced as a result of the
transfer of such Subsequent Receivables to the Trust;
(xiv) the Note Insurer (so long as no Insurer Default shall
have occurred and be continuing), in its absolute and sole discretion,
shall have approved the transfer of such Subsequent Receivables to the
Trust and the Note Insurer shall have been reimbursed for any fees and
expenses incurred by the Note Insurer in connection with the granting
of such approval;
(xv) the Seller shall simultaneously transfer the Subsequent
Spread Account Deposit to the Collateral Agent with respect to the
Subsequent Receivables transferred on such Subsequent Transfer Date;
and
(xvi) the Seller shall have delivered to the Note Insurer and
the Trustee an Officers' Certificate confirming the satisfaction of
each condition precedent specified in this paragraph (b).
The Seller covenants that in the event any of the foregoing conditions
precedent are not satisfied with respect to any Subsequent Receivable on the
date required as specified above, the Seller will immediately repurchase such
Subsequent Receivable from the Trust, at a price equal to the Purchase Amount
thereof, in the manner specified in Section 4.7.
SECTION 2.3. Further Encumbrance of Trust Property.
(a) Immediately upon the conveyance to the Trust by the Seller of any
item of the Trust Property pursuant to Section 2.1 or 2.2, all right, title and
interest of the Seller in and to such item of Trust Property shall terminate,
and all such right, title and interest shall vest in the Trust, in accordance
with the Trust Agreement and Sections 3802 and 3805 of the Business Trust
Statute (as defined in the Trust Agreement).
(b) Immediately upon the vesting of the Trust Property in the Trust,
the Trust shall have the sole right to pledge or otherwise encumber, such Trust
Property. Pursuant to the Indenture, the Trust shall grant a security interest
in the Trust Property to secure the repayment of the Notes. The Certificates
shall represent beneficial ownership interests in the Trust
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Property, and the Certificateholders shall be entitled to receive distributions
with respect thereto as set forth herein.
(c) Following the payment in full of the Notes and the release and
discharge of the Indenture, all covenants of the Issuer under Article III of the
Indenture shall, until all amounts due in respect of the Certificates have been
paid in full, remain as covenants of the Issuer for the benefit of the
Certificateholders, enforceable by the Certificateholders to the same extent as
such covenants were enforceable by the Noteholders prior to the discharge of the
Indenture. Any rights of the Trustee under Article III of the Indenture,
following the discharge of the Indenture, shall vest in the Certificateholders.
(d) The Trustee shall, at such time as there are no Securities
outstanding and all sums due to the Trustee pursuant to the Indenture and this
Agreement, have been paid, release any remaining portion of the Trust Property
to the Certificateholders.
ARTICLE III
THE RECEIVABLES
SECTION 3.1. Representations and Warranties of Seller. The Seller makes
the following representations and warranties as to the Receivables to the Note
Insurer, the Issuer and to the Trustee on which the Issuer relies in acquiring
the Receivables and on which the Note Insurer relies in issuing the Note Policy.
Such representations and warranties speak as of the execution and delivery of
this Agreement and as of the Closing Date, in the case of the Initial
Receivables, and as of the related Subsequent Transfer Date, in case of the
Subsequent Receivables, but shall survive the sale, transfer and assignment of
the Receivables to the Issuer and the pledge thereof to the Trustee pursuant to
the Indenture.
(i) Characteristics of Receivables. (A) Each Receivable (1)
has been originated in the United States of America by a Dealer for the
retail sale of a Financed Vehicle in the ordinary course of such
Dealer's business, has been fully and properly executed by the parties
thereto and has been purchased by CPS (or, with respect to the Samco
Receivables, Samco) in connection with the sale of Financed Vehicles by
the Dealers, (2) has created a valid, subsisting, and enforceable first
priority perfected security interest in favor of CPS (or, with respect
to the Samco Receivables, Samco) in the Financed Vehicle, which
security interest has been assigned by CPS (or, with respect to the
Samco Receivables, Samco) to the Seller, which in
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turn has assigned such security interest to the Trustee, (3) contains
customary and enforceable provisions such that the rights and remedies
of the holder or assignee thereof shall be adequate for realization
against the collateral of the benefits of the security, (4) provides
for level monthly payments that fully amortize the Amount Financed over
the original term (except for the last payment, which may be different
from the level payment) and yield interest at the Annual Percentage
Rate, (5) has an Annual Percentage Rate of not less than 11.26%, (6)
that is a Rule of 78's Receivable provides for, in the event that such
contract is prepaid, a prepayment that fully pays the Principal Balance
and includes a full month's interest, in the month of prepayment, at
the Annual Percentage Rate, (7) is a Rule of 78's Receivable or a
Simple Interest Receivable, and (8) was originated by a Dealer and was
sold by the Dealer without any fraud or misrepresentation on the part
of such Dealer.
(B) Approximately 90.41% of the aggregate Principal Balance of
the Receivables, constituting 92.53% of the number of contracts, as of
the Cutoff Date, represents financing of used automobiles, light
trucks, vans or minivans; the remainder of the Receivables represent
financing of new automobiles, light trucks, vans or minivans;
approximately 18.59% of the aggregate Principal Balance of the
Receivables as of the Cutoff Date were originated in the State of
California; approximately 48.42% of the aggregate Principal Balance of
the Receivables as of the Cutoff Date were originated under the CPS
alpha program; approximately 9.45% of the aggregate Principal Balance
of the Receivables as of the Cutoff Date were originated under the CPS
delta program; approximately 9.94% of the aggregate Principal Balance
of the Receivables as of the Cutoff Date were originated under the CPS
first time buyer program; approximately 32.18% of the aggregate
Principal Balance of the Receivables were originated under the CPS
standard program; the remaining 0.01% of the aggregate Principal
Balance of the Receivables as of the Cutoff Date were acquired by CPS
from unaffiliated parties; approximately 4.04% of the aggregate
Principal Balance of the Receivables are Samco Receivables; no
Receivable shall have a payment that is more than 30 days overdue as of
the Cutoff Date; 31.86% of the aggregate Principal Balance of the
Receivables are Rule of 78's Receivables and 68.14% of the aggregate
Principal Balance of the Receivables are Simple Interest Receivables;
each Receivable shall have a final scheduled payment due no later than
August 31, 2002; each Receivable has an original term to maturity of
not more than 60 months and a weighted average original term to
maturity of 57 months and a remaining term to maturity of not more than
60 months and a weighted average remaining term to maturity of
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56 months; and each Receivable was originated on or before the Cutoff
Date.
(ii) Schedule of Receivables. The information with respect to
the Receivables set forth in Schedule A to this Agreement is true and
correct in all material respects as of the close of business on the
Cutoff Date, and no selection procedures adverse to the Noteholders
have been utilized in selecting the Receivables.
(iii) Compliance with Law. Each Receivable, the sale of the
Financed Vehicle and the sale of any physical damage, credit life and
credit accident and health insurance and any extended service contracts
complied at the time the related Receivable was originated or made and
at the execution of this Agreement complies in all material respects
with all requirements of applicable Federal, State, and local laws, and
regulations thereunder including, without limitation, usury laws, the
Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the
Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the
Federal Trade Commission Act, the 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) No Government Obligor. None of the Receivables are due
from the United States of America or any State or from any agency,
department, or instrumentality of the United States of America or any
State.
(v) Security Interest in Financed Vehicle. Immediately
subsequent to the sale, assignment and transfer thereof to the Trust,
each Receivable shall be secured by a validly perfected first priority
security interest in the Financed Vehicle in favor of the Trust as
secured party, and such security interest is prior to all other liens
upon and security interests in such Financed Vehicle which now exist or
may hereafter arise or be created (except, as to priority, for any tax
liens or mechanics' liens which may arise after the Closing Date).
(vi) Receivables in Force. No Receivable has been satisfied,
subordinated or rescinded, nor has any Financed Vehicle been released
from the lien granted by the related Receivable in whole or in part.
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(vii) No Waiver. No provision of a Receivable has been waived.
(viii) No Amendments. No Receivable has been amended, except
as such Receivable may have been amended to grant extensions which
shall not have numbered more than (a) one extension of one calendar
month in any calendar year or (b) three such extensions in the
aggregate.
(ix) No Defenses. No right of rescission, setoff, counterclaim
or defense exists or has been asserted or threatened with respect to
any Receivable. The operation of the terms of any Receivable or the
exercise of any right thereunder will not render such Receivable
unenforceable in whole or in part or subject to any such right of
rescission, setoff, counterclaim, or defense.
(x) No Liens. As of the Cutoff Date there are no liens or
claims existing or which have been filed for work, labor, storage or
materials relating to a Financed Vehicle that shall be liens prior to,
or equal or coordinate with, the security interest in the Financed
Vehicle granted by the Receivable.
(xi) No Default; Repossession. Except for payment
delinquencies continuing for a period of not more than thirty days as
of the Cutoff Date, no default, breach, violation or event permitting
acceleration under the terms of any Receivable has occurred; and no
continuing condition that with notice or the lapse of time would
constitute a default, breach, violation or event permitting
acceleration under the terms of any Receivable has arisen; and the
Seller shall not waive and has not waived any of the foregoing; and no
Financed Vehicle shall have been repossessed as of the Cutoff Date.
(xii) Insurance; Other. (A) Each Obligor has obtained
insurance covering the Financed Vehicle as of the execution of the
Receivable insuring against loss and damage due to fire, theft,
transportation, collision and other risks generally covered by
comprehensive and collision coverage, and each Receivable requires the
Obligor to obtain and maintain such insurance naming CPS (or, with
respect to the Samco Receivables, Samco) and its successors and assigns
as an additional insured, (B) each Receivable that finances the cost of
premiums for credit life and credit accident and health insurance is
covered by an insurance policy or certificate of insurance naming CPS
(or with respect to the Samco Receivables, Samco) as policyholder
(creditor) under each such insurance policy and certificate of
insurance and (C) as to each Receivable that finances the cost of an
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extended service contract, the respective Financed Vehicle which
secures the Receivable is covered by an extended service contract.
(xiii) Title. It is the intention of the Seller that the
transfer and assignment herein contemplated constitute a sale of the
Receivables from the Seller to the Trust and that the beneficial
interest in and title to such Receivables not be part of the Seller's
estate in the event of the filing of a bankruptcy petition by or
against the Seller under any bankruptcy law. No Receivable has been
sold, transferred, assigned, or pledged by the Seller to any Person
other than the Trust. Immediately prior to the transfer and assignment
herein contemplated, the Seller had good and marketable title to each
Receivable and was the sole owner thereof, free and clear of all liens,
claims, encumbrances, security interests, and rights of others, and,
immediately upon the transfer thereof, the Trust for the benefit of the
Noteholders and the Note Insurer shall have good and marketable title
to each such Receivable and will be the sole owner thereof, free and
clear of all liens, encumbrances, security interests, and rights of
others, and the transfer has been perfected under the UCC.
(xiv) Lawful Assignment. No Receivable has been originated in,
or is subject to the laws of, any jurisdiction under which the sale,
transfer, and assignment of such Receivable under this Agreement or
pursuant to transfers of the Securities shall be unlawful, void, or
voidable. The Seller has not entered into any agreement with any
account debtor that prohibits, restricts or conditions the assignment
of any portion of the Receivables.
(xv) All Filings Made. All filings (including, without
limitation, UCC filings) necessary in any jurisdiction to give the
Trust a first priority perfected ownership interest in the Receivables
and the proceeds thereof and the other Conveyed Property have been
made, taken or performed.
(xvi) Receivable File; One Original. CPS has delivered to the
Trustee a complete Receivable File with respect to each Receivable.
There is only one original executed copy of each Receivable.
(xvii) Chattel Paper. Each Receivable constitutes "chattel
paper" under the UCC.
(xviii) Title Documents. (A) If the Receivable was originated
in a State in which notation of a security interest on the title
document of the related Financed
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Vehicle is required or permitted to perfect such security interest, the
title document of the related Financed Vehicle for such Receivable
shows, or if a new or replacement title document is being applied for
with respect to such Financed Vehicle the title document (or, with
respect to Receivables originated in the State of Michigan, all other
evidence of ownership with respect to such Financed Vehicle) will be
received within 180 days and will show, CPS (or, with respect to the
Samco Receivables, Samco) named as the original secured party under the
related Receivable as the holder of a first priority security interest
in such Financed Vehicle, and (B) if the Receivable was originated in a
State in which the filing of a financing statement under the UCC is
required to perfect a security interest in motor vehicles, such filings
or recordings have been duly made and show CPS (or, with respect to the
Samco Receivables, Samco) named as the original secured party under the
related Receivable, and in either case, the Trust has the same rights
as such secured party has or would have (if such secured party were
still the owner of the Receivable) against all parties claiming an
interest in such Financed Vehicle. With respect to each Receivable for
which the title document of the related Financed Vehicle has not yet
been returned from the Registrar of Titles, CPS has received written
evidence from the related Dealer that such title document showing CPS
(or, with respect to the Samco Receivables, Samco) as first lienholder
has been applied for.
(xix) Valid and Binding Obligation of Obligor. Each Receivable
is the legal, valid and binding obligation of the Obligor thereunder
and is enforceable in accordance with its terms, except only as such
enforcement may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally, and all
parties to such contract had full legal capacity to execute and deliver
such contract and all other documents related thereto and to grant the
security interest purported to be granted thereby.
(xx) Tax Liens. As of the Cutoff Date, there is no lien
against the related Financed Vehicle for delinquent taxes.
(xxi) Characteristics of Obligors. As of the date of each
Obligor's application for the loan from which the related Receivable
arises, such Obligor (a) did not have any material past due credit
obligations or any personal or real property repossessed or wages
garnished within one year prior to the date of such application, unless
such amounts have been repaid or discharged through bankruptcy, (b) was
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not the subject of any Federal, State or other bankruptcy, insolvency
or similar proceeding pending on the date of application that is not
discharged, (c) had not been the subject of more than one Federal,
State or other bankruptcy, insolvency or similar proceeding, and (d)
was domiciled in the United States.
(xxii) Origination Date. Each Receivable has an origination
date on or after April 10, 1995.
(xxiii) Maturity of Receivables. Each Receivable has an
original term to maturity of not less than [ ] months and not more than
60 months; the weighted average original term to maturity of the
Receivables is 57 months as of the Cutoff Date; the remaining term to
maturity of each Receivable was 60 months or less as of the Cutoff
Date; the weighted average remaining term to maturity of the
Receivables was 56 months as of the Cutoff Date.
(xxiv) Scheduled Payments. Each Receivable had an original
principal balance of not less than $2,197 nor more than $28,752 had an
outstanding principal balance as of the Cutoff Date of not less than
$2,197 nor more than $28,752 and has a first Scheduled Payment due on
or prior to October 11, 1997.
(xxv) Origination of Receivables. Based on the billing address
of the Obligors and the Principal Balances as of the Cutoff Date,
approximately 18.59% of the aggregate Principal Balance of the
Receivables represents Receivables that were originated in California,
approximately 8.07% of the aggregate Principal Balance of the
Receivables represents Receivables that were originated in Louisiana,
approximately 7.69% of the aggregate Principal Balance of the
Receivables represents Receivables that were originated in Texas,
approximately 7.25% of the aggregate Principal Balance of the
Receivables represents Receivables that were originated in Pennsylvania
and the remaining 58.40% of the aggregate Principal Balance of the
Receivables represents Receivables that were originated in other
States.
(xxvi) Post-Office Box. On or prior to the next billing period
after the Cutoff Date, CPS will notify each Obligor to make payments
with respect to its respective Receivables after the Cutoff Date
directly to the Post-Office Box, and will provide each Obligor with a
monthly statement in order to enable such Obligors to make payments
directly to the Post-Office Box.
(xxvii) Location of Receivable Files. A complete Receivable
File with respect to each Receivable has been or
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prior to the Closing Date will be delivered to the Trustee at the
location listed in Schedule B.
(xxviii) Casualty. No Financed Vehicle has suffered a
Casualty.
(xxix) Principal Balance/Number of Contracts. As of the Cutoff
Date, the total aggregate principal balance of the Receivables was
$122,915,183. The Receivables are evidenced by 9,826 Contracts.
(xxx) Full Amount Advanced. The full amount of each Receivable
has been advanced to each Obligor, and there are no requirements for
future advances thereunder. The Obligor with respect to the Receivable
does not have any option under the Receivable to borrow from any person
additional funds secured by the Financed Vehicle.
SECTION 3.2. Repurchase upon Breach.
(a) The Seller, the Servicer, the Note Insurer, the Trustee or (upon
actual knowledge of a Responsible Officer thereof) the Owner Trustee, as the
case may be, shall inform the other parties to this Agreement promptly, in
writing, upon the discovery of any breach of the Seller's representations and
warranties made pursuant to Section 3.1 (without regard to any limitations
therein as to the Seller's knowledge). Unless the breach shall have been cured
by the last day of the second Collection Period following the discovery thereof
by the Trustee or the Note Insurer or receipt by the Trustee, the Owner Trustee
and the Note Insurer of notice from the Seller or the Servicer of such breach,
CPS shall repurchase any Receivable if the value of such Receivable is
materially and adversely affected by the breach as of the last day of such
second Collection Period (or, at CPS's option, the last day of the first
Collection Period following the discovery) and, in the event that the breach
relates to a characteristic of the Receivables in the aggregate, and if the
interests of the Trust, the Noteholders or the Certificateholders are materially
and adversely affected by such breach, unless the breach shall have been cured
by the last day of such second Collection Period, CPS shall purchase such
aggregate Principal Balance of Receivables, such that following such purchase
such representation shall be true and correct with respect to the remainder of
the Receivables in the aggregate. In consideration of the purchase of the
Receivable, CPS shall remit the Purchase Amount, in the manner specified in
Section 5.6. For purposes of this Section, the Purchase Amount of a Receivable
which is not consistent with the warranty pursuant to Section 3.1(i)(A)(4) or
(A)(5) shall include such additional amount as shall be necessary to provide the
full amount of interest as contemplated therein. The sole remedy of the Issuer,
the Owner Trustee, the Trustee,
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the Securityholders or the Note Insurer with respect to a breach of
representations and warranties pursuant to Section 3.1 shall be to enforce CPS's
obligation to purchase such Receivables pursuant to the CPS Purchase Agreement;
provided, however, that CPS shall indemnify the Trustee, the Owner Trustee, the
Standby Servicer, the Collateral Agent, the Note Insurer, the Trust and the
Securityholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third party claims
arising out of the events or facts giving rise to such breach. Upon receipt of
the Purchase Amount and written instructions from the Servicer, the Trustee
shall release to CPS or its designee the related Receivables File and shall
execute and deliver all reasonable instruments of transfer or assignment,
without recourse, as are prepared by the Seller and delivered to the Trustee and
necessary to vest in CPS or such designee title to the Receivable including a
Trustee's Certificate in the form of Exhibit F-1. If it is determined that
consummation of the transactions contemplated by this Agreement and the other
transaction documents referenced in this Agreement, the servicing and operation
of the Trust pursuant to this Agreement and such other documents, or the
ownership of a Note or Certificate by a Holder constitutes a violation of the
prohibited transaction rules of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or the Internal Revenue Code of 1986, as amended
(the "Code") or any successor statutes of similar impact, together with the
regulations thereunder, to which no statutory exception or administrative
exemption applies, such violation shall not be treated as a breach of the
Seller's representations and warranties made pursuant to Section 3.1 if not
otherwise such a breach.
(b) Pursuant to Section 2.1 of this Agreement, the Seller conveyed to
the Trust all of the Seller's right, title and interest in its rights and
benefits, but none of its obligations or burdens, under the Purchase Agreements
including the Seller's rights under the Purchase Agreements and the delivery
requirements, representations and warranties and the cure or repurchase
obligations of CPS under the CPS Purchase Agreement. The Seller hereby
represents and warrants to the Trust that such assignment is valid, enforceable
and effective to permit the Trust to enforce such obligations of CPS under the
CPS Purchase Agreement.
SECTION 3.3. Custody of Receivables Files.
(a) In connection with the sale, transfer and assignment of the
Receivables and the other Conveyed Property to the Trust pursuant to this
Agreement the Trustee shall act as custodian of the following documents or
instruments in its possession which
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shall be delivered to the Trustee on or before the Closing Date (with respect to
each Receivable):
(i) The fully executed original of the Receivable (together
with any agreements modifying the Receivable, including without
limitation any extension agreements);
(ii) The original certificate of title in the name of CPS (or,
with respect to the Samco Receivables, Samco) or such documents that
CPS shall keep on file, in accordance with its customary procedures,
evidencing the security interest of CPS (or, with respect to the Samco
Receivables, Samco) in the Financed Vehicle or, if not yet received, a
copy of the application therefor showing CPS (or, with respect to the
Samco Receivables, Samco) as secured party.
(b) Upon payment in full of any Receivable, the Servicer will notify
the Trustee pursuant to a certificate of an officer of the Servicer (which
certificate shall include a statement to the effect that all amounts received in
connection with such payments which are required to be deposited in the
Collection Account pursuant to Section 4.1 have been so deposited) and shall
request delivery of the Receivable and Receivable File to the Servicer.
SECTION 3.4. Acceptance of Receivable Files by Trustee. The Trustee
acknowledges receipt of files which the Seller has represented are the
Receivable Files. The Trustee has reviewed the Receivable Files and has
determined that it has received a file for each Receivable identified in
Schedule A to this Agreement. The Trustee declares that it holds and will
continue to hold such files and any amendments, replacements or supplements
thereto and all other Trust Assets as Trustee in trust for the use and benefit
of all present and future Securityholders. The Trustee agrees to review each
file delivered to it no later than 45 days after the Closing Date or applicable
Subsequent Transfer Date to determine whether such Receivable Files contain the
documents referred to in Section 3.3(i) and (ii). If the Trustee has found or
finds that a file for a Receivable has not been received, or that a file is
unrelated to the Receivables identified in Schedule A to this Agreement or that
any of the documents referred to in Section 3.3(i) or (ii) are not contained in
a Receivable File, the Trustee shall inform CPS, the Seller, the Owner Trustee
and the Note Insurer promptly, in writing, of the failure to receive a file with
respect to such Receivable (or of the failure of any of the aforementioned
documents to be included in the Receivable File) or shall return to CPS as the
Seller's designee any file unrelated to a Receivable identified in Schedule A to
this Agreement (it being understood that the Trustee's obligation to review the
contents of any Receivable File shall be limited as
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set forth in the preceding sentence). Unless such defect with respect to such
Receivable File shall have been cured by the last day of the second Collection
Period following discovery thereof by the Trustee, CPS shall repurchase any such
Receivable as of such last day. In consideration of the purchase of the
Receivable, CPS shall remit the Purchase Amount, in the manner specified in
Section 5.6. The sole remedy of the Trustee, the Trust, or the Securityholders
with respect to a breach pursuant to this Section 3.4 shall be to require CPS to
purchase the applicable Receivables pursuant to this Section 3.4. Upon receipt
of the Purchase Amount and written instructions from the Servicer, the Trustee
shall release to CPS or its designee the related Receivable File and shall
execute and deliver all reasonable instruments of transfer or assignment,
without recourse, as are prepared by CPS and delivered to the Trustee and are
necessary to vest in CPS or such designee title to the Receivable including a
Trustee's Certificate in the form of Exhibit F-1. The Trustee shall make a list
of Receivables for which an application for a certificate of title but not an
original certificate of title or, with respect to Receivables originated in the
State of Michigan, a "Form RD108" stamped by the Department of Motor Vehicles,
is included in the Receivable File as of the date of its review of the
Receivable Files and deliver a copy of such list to the Servicer, the Owner
Trustee and the Note Insurer. On the date which is 180 days following the
Closing Date (or applicable Subsequent Transfer Date) or the next succeeding
Business Day, the Trustee shall inform CPS and the other parties to this
Agreement and the Note Insurer of any Receivable for which the related
Receivable File on such date does not include an original certificate of title
or, with respect to Financed Vehicles in the State of Michigan, for which the
related Receivable File on such date does not include a "Form RD108" stamped by
the Department of Motor Vehicles, and CPS shall repurchase any such Receivable
as of the last day of the current Collection Period.
SECTION 3.5. Access to Receivable Files. The Trustee shall permit the
Servicer and the Note Insurer access to the Receivable Files at all reasonable
times during the Trustee's normal business hours. The Trustee shall, within two
Business Days of the request of the Servicer, the Owner Trustee or the Note
Insurer, execute such documents and instruments as are prepared by the Servicer,
the Owner Trustee or the Note Insurer and delivered to the Trustee, as the
Servicer, the Owner Trustee or the Note Insurer deems necessary to permit the
Servicer, in accordance with its customary servicing procedures, to enforce the
Receivable on behalf of the Trust and any related insurance policies covering
the Obligor, the Receivable or Financed Vehicle so long as such execution in the
Trustee's sole discretion does not conflict with this Agreement and will not
cause it undue risk or liability. The Trustee shall not be obligated to release
any
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document from any Receivable File unless it receives a trust receipt signed by a
Servicing Officer in the form of Exhibit C hereto (the "Trust Receipt"). Such
Trust Receipt shall obligate the Servicer to return such document(s) to the
Trustee when the need therefor no longer exists unless the Receivable shall be
liquidated, in which case, upon receipt of a certificate of a Servicing Officer
substantially in the form of Exhibit D hereto to the effect that all amounts
required to be deposited in the Collection Account with respect to such
Receivable have been so deposited, the Trust Receipt shall be released by the
Trustee to the Servicer.
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.1. Duties of the Servicer. The Servicer, as agent for the
Trust, the Securityholders and the Note Insurer (to the extent provided herein)
shall manage, service, administer and make collections on the Receivables with
reasonable care, using that degree of skill and attention customary and usual
for institutions which service motor vehicle retail installment contracts
similar to the Receivables and, to the extent more exacting, that the Servicer
exercises with respect to all comparable automotive receivables that it services
for itself or others. The Servicer's duties shall include collection and posting
of all payments, responding to inquiries of Obligors on such Receivables,
investigating delinquencies, sending payment statements to Obligors, reporting
tax information to Obligors, accounting for collections, furnishing monthly and
annual statements to the Trustee, the Owner Trustee and the Note Insurer with
respect to distributions. Without limiting the generality of the foregoing, and
subject to the servicing standards set forth in this Agreement, the Servicer is
authorized and empowered by the Trust to execute and deliver, on behalf of
itself, the Trust or the Securityholders, any and all instruments of
satisfaction or cancellation, or partial or full release or discharge, and all
other comparable instruments, with respect to such Receivables or to the
Financed Vehicles securing such Receivables and/or the certificates of title or,
with respect to Financed Vehicles in the State of Michigan, other evidence of
ownership with respect to such Financed Vehicles. If the Servicer shall commence
a legal proceeding to enforce a Receivable, the Trust shall thereupon be deemed
to have automatically assigned, solely for the purpose of collection, such
Receivable to the Servicer. If in any enforcement suit or legal proceeding it
shall be held that the Servicer may not enforce a Receivable on the ground that
it shall not be a real party in interest or a holder entitled to enforce such
Receivable, the Trust shall, at the Servicer's expense and
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direction, take steps to enforce such Receivable, including bringing suit in its
name or the name of the Securityholders. The Servicer shall prepare and furnish,
and the Trustee and the Owner Trustee shall execute, any powers of attorney and
other documents reasonably necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties hereunder.
SECTION 4.2. Collection of Receivable Payments; Modifications of
Receivables; Lockbox Agreements.
(a) Consistent with the standards, policies and procedures required by
this Agreement, the Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Receivables as and
when the same shall become due and shall follow such collection procedures as it
follows with respect to all comparable automotive receivables that it services
for itself or others; provided, however, that the Servicer shall notify each
Obligor to make all payments with respect to the Receivables to the Post-Office
Box. The Servicer will provide each Obligor with a monthly statement in order to
notify such Obligors to make payments directly to the Post-Office Box. The
Servicer shall allocate collections between principal and interest in accordance
with the customary servicing procedures it follows with respect to all
comparable automotive receivables that it services for itself or others and in
accordance with the terms of this Agreement. Except as provided below, the
Servicer, for so long as CPS is the Servicer, may grant extensions on a
Receivable; provided, however, that the Servicer may not grant more than one
extension per calendar year with respect to a Receivable or grant an extension
with respect to a Receivable for more than one calendar month or grant more than
three extensions in the aggregate with respect to a Receivable without the prior
written consent of the Note Insurer and provided, further, that if the Servicer
extends the date for final payment by the Obligor of any Receivable beyond the
last day of the penultimate Collection Period preceding the Final Scheduled
Payment Date, it shall promptly purchase the Receivable from the Trust in
accordance with the terms of Section 4.7 hereof (and for purposes thereof, the
Receivable shall be deemed to be materially and adversely affected by such
breach). If the Servicer is not CPS, the Servicer may not make any extension on
a Receivable without the prior written consent of the Note Insurer. The Servicer
may in its discretion waive any late payment charge or any other fees that may
be collected in the ordinary course of servicing a Receivable. Notwithstanding
anything to the contrary contained herein, the Servicer shall not agree to any
alteration of the interest rate on any Receivable or of the amount of any
Scheduled Payment on Receivables.
(b) The Trustee shall establish the Lockbox Account in the name of the
Trustee for the benefit of the Securityholders and
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the Note Insurer. Pursuant to the Lockbox Agreement, the Trustee has authorized
the Servicer to direct dispositions of funds on deposit in the Lockbox Account
to the Collection Account (but not to any other account), and no other Person,
save the Lockbox Processor and the Trustee, has authority to direct disposition
of funds on deposit in the Lockbox Account. The Trustee shall have no liability
or responsibility with respect to the Lockbox Processor's directions or
activities as set forth in the preceding sentence. The Lockbox Account shall be
established pursuant to and maintained in accordance with the Lockbox Agreement
and shall be a demand deposit account initially established and maintained with
Bank of America, or at the request of the Note Insurer (unless an Insurer
Default shall have occurred and be continuing) an Eligible Account satisfying
clause (i) of the definition thereof; provided, however, that the Trustee shall
give the Servicer prior written notice of any change made at the request of the
Note Insurer in the location of the Lockbox Account. The Trustee shall establish
and maintain the Post-Office Box at a United States Post Office Branch in the
name of the Trustee for the benefit of the Securityholders and the Note Insurer.
(c) Notwithstanding any Lockbox Agreement, or any of the provisions of
this Agreement relating to the Lockbox Agreement, the Servicer shall remain
obligated and liable to the Trust, the Trustee and Securityholders for servicing
and administering the Receivables and the other Conveyed Property in accordance
with the provisions of this Agreement without diminution of such obligation or
liability by virtue thereof.
(d) In the event the Servicer shall for any reason no longer be acting
as such, the Standby Servicer or a successor Servicer shall thereupon assume all
of the rights and obligations of the outgoing Servicer under the Lockbox
Agreement. In such event, the successor Servicer shall be deemed to have assumed
all of the outgoing Servicer's interest therein and to have replaced the
outgoing Servicer as a party to the Lockbox Agreement to the same extent as if
such Lockbox Agreement had been assigned to the successor Servicer, except that
the outgoing Servicer shall not thereby be relieved of any liability or
obligations on the part of the outgoing Servicer to the Lockbox Bank under such
Lockbox Agreement. The outgoing Servicer shall, upon request of the Trustee, but
at the expense of the outgoing Servicer, deliver to the successor Servicer all
documents and records relating to the Lockbox Agreement and an accounting of
amounts collected and held by the Lockbox Bank and otherwise use its best
efforts to effect the orderly and efficient transfer of any Lockbox Agreement to
the successor Servicer. In the event that the Note Insurer (so long as an
Insurer Default shall not have occurred and be continuing) or Holders of Class A
Notes evidencing more than 50% of the outstanding principal balance of the Class
A Notes (if an
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Insurer Default shall have occurred and be continuing) shall elect to change the
identity of the Lockbox Bank, the Servicer, at its expense, shall cause the
Lockbox Bank to deliver, at the direction of the Note Insurer (so long as an
Insurer Default shall not have occurred and be continuing) or Holders of Class A
Notes evidencing more than 50% of the outstanding principal balance of the Class
A Notes (if an Insurer Default shall have occurred and be continuing) to the
Trustee or a successor Lockbox Bank, all documents and records relating to the
Receivables and all amounts held (or thereafter received) by the Lockbox Bank
(together with an accounting of such amounts) and shall otherwise use its best
efforts to effect the orderly and efficient transfer of the Lockbox
arrangements.
(e) On each Business Day, pursuant to the Lockbox Agreement, the
Lockbox Processor will transfer any payments from Obligors received in the
Post-Office Box to the Lockbox Account. Within two Business Days of receipt of
funds into the Lockbox Account, the Servicer shall cause the Lockbox Bank to
transfer funds from the Lockbox Account to the Collection Account. In addition,
the Servicer shall remit all payments by or on behalf of the Obligors received
by the Servicer with respect to the Receivables (other than Purchased
Receivables), and all Liquidation Proceeds no later than the Business Day
following receipt directly (without deposit into any intervening account) into
the Lockbox Account or the Collection Account.
SECTION 4.3. Realization Upon Receivables. On behalf of the Trust, the
Securityholders and the Note Insurer, the Servicer shall use its best efforts,
consistent with the servicing procedures set forth herein, to repossess or
otherwise convert the ownership of the Financed Vehicle securing any Receivable
as to which the Servicer shall have determined eventual payment in full is
unlikely. The Servicer shall commence efforts to repossess or otherwise convert
the ownership of a Financed Vehicle on or prior to the date that an Obligor has
failed to make more than 90% of a Scheduled Payment thereon in excess of $10 for
120 days or more; provided, however, that the Servicer may elect not to commence
such efforts within such time period if in its good faith judgment it determines
either that it would be impracticable to do so or that the proceeds ultimately
recoverable with respect to such Receivable would be increased by forbearance.
The Servicer shall follow such customary and usual practices and procedures as
it shall deem necessary or advisable in its servicing of automotive receivables,
consistent with the standards of care set forth in Section 4.2, which may
include reasonable efforts to realize upon any recourse to Dealers and selling
the Financed Vehicle at public or private sale. The foregoing shall be subject
to the provision that, in any case in which the Financed Vehicle shall have
suffered damage, the Servicer shall not expend funds in connection with the
repair or
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the repossession of such Financed Vehicle unless it shall determine in its
discretion that such repair and/or repossession will increase the proceeds
ultimately recoverable with respect to such Receivable by an amount greater than
the amount of such expenses.
SECTION 4.4. Insurance.
(a) The Servicer, in accordance with the servicing procedures and
standards set forth herein, shall require that (i) each Obligor shall have
obtained insurance covering the Financed Vehicle, as of the date of the
execution of the Receivable, insuring against loss and damage due to fire,
theft, transportation, collision and other risks generally covered by
comprehensive and collision coverage and each Receivable requires the Obligor to
maintain such physical loss and damage insurance naming CPS (or, with respect to
the Samco Receivables, Samco) and its successors and assigns as an additional
insured, (ii) each Receivable that finances the cost of premiums for credit life
and credit accident and health insurance is covered by an insurance policy or
certificate naming CPS (or, with respect to the Samco Receivables, Samco) as
policyholder (creditor) and (iii) as to each Receivable that finances the cost
of an extended service contract, the respective Financed Vehicle which secures
the Receivable is covered by an extended service contract.
(b) To the extent applicable, the Servicer shall not take any action
which would result in noncoverage under any of the insurance policies referred
to in Section 4.4(a) which, but for the actions of the Servicer, would have been
covered thereunder. The Servicer, on behalf of the Trust, shall take such
reasonable action as shall be necessary to permit recovery under any of the
foregoing insurance policies. Any amounts collected by the Servicer under any of
the foregoing insurance policies shall be deposited in the Collection Account
pursuant to Section 5.2.
SECTION 4.5. Maintenance of Security Interests in Vehicles.
(a) Consistent with the policies and procedures required by this
Agreement, the Servicer shall take such steps on behalf of the Trust as are
necessary to maintain perfection of the security interest created by each
Receivable in the related Financed Vehicle, including but not limited to
obtaining the execution by the Obligors and the recording, registering, filing,
rerecording, re-filing, re-recording, re-registering and refiling of all
security agreements, financing statements and continuation statements or
instruments as are necessary to maintain the security interest granted by the
Obligors under the respective Receivables. The Trustee hereby authorizes the
Servicer, and the Servicer agrees, to take any and all steps necessary to
re-perfect or continue the perfection of such security interest on
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behalf of the Trust as necessary because of the relocation of a Financed Vehicle
or for any other reason. In the event that the assignment of a Receivable to the
Trust is insufficient, without a notation on the related Financed Vehicle's
certificate of title, or without fulfilling any additional administrative
requirements under the laws of the state in which the Financed Vehicle is
located, to perfect a security interest in the related Financed Vehicle in favor
of the Trust, the Servicer hereby agrees that CPS's designation as the secured
party on the certificate of title is in its capacity as Servicer as agent of the
Trust.
(b) Upon the occurrence of an Insurance Agreement Event of Default, the
Note Insurer may (so long as an Insurer Default shall not have occurred and be
continuing) instruct the Trustee and the Servicer to take or cause to be taken,
or, if an Insurer Default shall have occurred, upon the occurrence of a Servicer
Termination Event, the Trustee and the Servicer shall take or cause to be taken
such action as may, in the opinion of counsel to the Trustee, which opinion
shall not be an expense of the Trustee, be necessary to perfect or re-perfect
the security interests in the Financed Vehicles securing the Receivables in the
name of the Trust by amending the title documents of such Financed Vehicles or
by such other reasonable means as may, in the opinion of counsel to the Trustee,
which opinion shall not be an expense of the Trustee, be necessary or prudent.
CPS hereby agrees to pay all expenses related to such perfection or reperfection
and to take all action necessary therefor. The Servicer hereby agrees to pay all
expenses related to such perfection or reperfection and to take all action
necessary therefor. In addition, prior to the occurrence of an Insurance
Agreement Event of Default, the Controlling Party may instruct the Trustee and
the Servicer to take or cause to be taken such action as may, in the opinion of
counsel to the Controlling Party, be necessary to perfect or re-perfect the
security interest in the Financed Vehicles underlying the Receivables in the
name of the Trust, including by amending the title documents of such Financed
Vehicles or by such other reasonable means as may, in the opinion of counsel to
the Controlling Party, be necessary or prudent; provided, however, that if the
Controlling Party requests (unless an Insurer Default shall have occurred and be
continuing) that the title documents be amended prior to the occurrence of an
Insurance Agreement Event of Default, the out-of-pocket expenses of the Servicer
or the Trustee in connection with such action shall be reimbursed to the
Servicer or the Trustee, as applicable, by the Controlling Party.
SECTION 4.6. Additional Covenants of Servicer. The Servicer shall not
release the Financed Vehicle securing each Receivable from the security interest
granted by such Receivable in whole or in part except in the event of payment in
full by the
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Obligor thereunder or repossession, nor shall the Servicer impair the rights of
the Securityholders in such Receivables, nor shall the Servicer amend a
Receivable, except that extensions may be granted in accordance with Section
4.2.
SECTION 4.7. Purchase of Receivables Upon Breach of Covenant. Upon
discovery by any of the Servicer, the Note Insurer, the Owner Trustee or the
Trustee of a breach of any of the covenants set forth in Section 4.2(a), 4.4,
4.5 or 4.6, the party discovering such breach shall give prompt written notice
to the others; provided, however, that the failure to give any such notice shall
not affect any obligation of the Servicer under this Section 4.7. Unless the
breach shall have been cured by the last day of the second Collection Period
following such discovery (or, at the Servicer's election, the last day of the
first following Collection Period), the Servicer shall purchase any Receivable
materially and adversely affected by such breach. In consideration of the
purchase of such Receivable, the Servicer shall remit the Purchase Amount in the
manner specified in Section 5.6. The sole remedy of the Trustee, the Trust, the
Owner Trustee, the Note Insurer or the Securityholders with respect to a breach
of Section 4.2(a), 4.4, 4.5 or 4.6 shall be to require the Servicer to
repurchase Receivables pursuant to this Section 4.7; provided, however, that the
Servicer shall indemnify the Trustee, the Standby Servicer, the Collateral
Agent, the Note Insurer, the Owner Trustee, the Trust and the Securityholders
against all costs, expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel, which may be asserted against or
incurred by any of them as a result of third party claims arising out of the
events or facts giving rise to such breach. If it is determined that the
management, administration and servicing of the Receivables and operation of the
Trust pursuant to this Agreement constitutes a violation of the prohibited
transaction rules of ERISA or the Code to which no statutory exception or
administrative exemption applies, such violation shall not be treated as a
breach of Section 4.2(a), 4.4, 4.5 or 4.6 if not otherwise such a breach.
SECTION 4.8. Servicing Fee. (a) The Servicing Fee for the initial
Payment Date shall be equal to the sum of (i) the product of (x) the percentage
equivalent of a fraction the numerator of which is the number days from the
Closing Date to but excluding the first Payment Date and the denominator of
which is 360, (y) 2.00% and (z) the Pool Balance as of the close of business on
the second preceding Collection Period plus (ii) the product of (x) the
percentage equivalent of a fraction the numerator of which is the number days
from the Closing Date to but excluding the first Payment Date and the
denominator of which is 360, (y) 0.08% and (z) the aggregate outstanding
principal amount of the Securities as of the close of business on the last day
of the second preceding Collection Period; provided, however, that with respect
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to the first Payment Date the Servicer will be entitled to receive a Servicing
Fee equal to the sum of (i) the product of one-twelfth times 2.0% of the
Original Pool Balance plus (ii) the product of one-twelfth times 0.08% of the
aggregate outstanding principal amount of the Securities as of the Closing Date.
The Servicing Fee shall also include all late fees, prepayment charges
including, in the case of a Rule of 78's Receivable that is prepaid in full, to
the extent not required by law to be remitted to the related Obligor, the
difference between the Principal Balance of such Rule of 78's Receivable (plus
accrued interest to the date of prepayment) and the principal balance of such
Receivable computed according to the "Rule of 78's", and other administrative
fees or similar charges allowed by applicable law with respect to Receivables,
collected (from whatever source) on the Receivables.
SECTION 4.9. Servicer's Certificate. By 10:00 a.m., Minneapolis time,
on each Determination Date, the Servicer shall deliver to the Trustee, the Owner
Trustee, the Note Insurer, the Rating Agencies and the Seller a Servicer's
Certificate containing all information necessary to make the distributions
pursuant to Section 5.7 (including, if required, withdrawals from the Spread
Account) for the Collection Period preceding the date of such Servicer's
Certificate and all information necessary for the Trustee to send statements to
the Securityholders and the Note Insurer pursuant to Sections 5.8(c) and 5.9(b).
Receivables to be purchased by the Servicer or to be purchased by CPS shall be
identified by the Servicer by account number with respect to such Receivable (as
specified in Schedule A).
SECTION 4.10. Annual Statement as to Compliance, Notice of Servicer
Termination Event.
(a) The Servicer shall deliver to the Owner Trustee, the Trustee, the
Standby Servicer, the Note Insurer and each Rating Agency, on or before July 31
of each year beginning July 31, 1998, an Officer's Certificate, dated as of
March 31 of such year, stating that (i) a review of the activities of the
Servicer during the preceding 12-month period (or, in the case of the first such
certificate, the period from the Cutoff Date to March 31, 1998) and of its
performance under this Agreement has been made under such officer's supervision
and (ii) to the best of such officer's knowledge, based on such review, the
Servicer has fulfilled all its obligations under this Agreement throughout such
year (or, in the case of the first such certificate, such shorter period), or,
if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof. The Trustee shall send a copy of such certificate and the report
referred to in Section 4.11 to the Rating Agencies. The Trustee
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shall forward a copy of such certificate as well as the report referred to in
Section 4.11 to each Securityholders.
(b) The Servicer shall deliver to the Owner Trustee, the Trustee, the
Standby Servicer, the Note Insurer, the Collateral Agent, and each Rating
Agency, promptly after having obtained knowledge thereof, but in no event later
than two (2) Business Days thereafter, written notice in an Officer's
Certificate of any event which with the giving of notice or lapse of time, or
both, would become a Servicer Termination Event under Section 10.1.
SECTION 4.11. Annual Independent Accountants' Report. The Servicer
shall cause a firm of nationally recognized independent certified public
accountants (the "Independent Accountants"), who may also render other services
to the Servicer or to the Seller, to deliver to the Trustee, the Owner Trustee,
the Standby Servicer, the Note Insurer and each Rating Agency, on or before July
31 of each year beginning July 31, 1998, a report dated as of March 31 of such
year (the "Accountants' Report") and reviewing the Servicer's activities during
the preceding 12-month period (or, in the case of the first such report, the
period from the Cutoff Date to March 31, 1998), addressed to the Board of
Directors of the Servicer, to the Owner Trustee, the Trustee, the Standby
Servicer and to the Note Insurer, to the effect that such firm has examined the
financial statements of the Servicer and issued its report therefor and that
such examination (1) was made in accordance with generally accepted auditing
standards, and accordingly included such tests of the accounting records and
such other auditing procedures as such firm considered necessary in the
circumstances; (2) included tests relating to auto loans serviced for others in
accordance with the requirements of the Uniform Single Audit Program for
Mortgage Bankers (the "Program"), to the extent the procedures in the Program
are applicable to the servicing obligations set forth in this Agreement; (3)
included an examination of the delinquency and loss statistics relating to the
Servicer's portfolio of automobile and light truck installment sales contracts;
and (4) except as described in the report, disclosed no exceptions or errors in
the records relating to automobile and light truck loans serviced for others
that, in the firm's opinion, paragraph four of the Program requires such firm to
report. The accountant's report shall further state that (1) a review in
accordance with agreed upon procedures was made of three randomly selected
Servicer Certificates; (2) except as disclosed in the report, no exceptions or
errors in the Servicer Certificates were found; and (3) the delinquency and loss
information, relating to the Receivables contained in the Servicer Certificates
were found to be accurate. In the event such firm requires the Trustee and/or
the Standby Servicer to agree to the procedures performed by such firm, the
Servicer shall direct the Trustee and/or the
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Standby Servicer, as applicable, in writing to so agree; it being understood and
agreed that the Trustee and/or the Standby Servicer will deliver such letter of
agreement in conclusive reliance upon the direction of the Servicer, and neither
the Trustee nor the Standby Servicer makes any independent inquiry or
investigation as to, and shall have no obligation or liability in respect of,
the sufficiency, validity or correctness of such procedures.
The Report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
SECTION 4.12. Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to representatives of the Trustee, the
Owner Trustee, the Standby Servicer and the Note Insurer reasonable access to
the documentation regarding the Receivables. In each case, such access shall be
afforded without charge but only upon reasonable request and during normal
business hours. Nothing in this Section shall derogate from the obligation of
the Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors, and the failure of the Servicer to provide access as
provided in this Section as a result of such obligation shall not constitute a
breach of this Section.
SECTION 4.13. Verification of Servicer's Certificate. (a) On or before
the fifth calendar day of each month, the Servicer will deliver to the Trustee
and the Standby Servicer a computer diskette (or other electronic transmission)
in a format acceptable to the Trustee and the Standby Servicer containing
information with respect to the Receivables as of the close of business on the
last day of the preceding Collection Period which information is necessary for
preparation of the Servicer's Certificate. The Standby Servicer shall use such
computer diskette (or other electronic transmission) to verify certain
information specified in Section 4.13(b) contained in the Servicer's Certificate
delivered by the Servicer, and the Standby Servicer shall notify the Servicer
and the Note Insurer of any discrepancies on or before the second Business Day
following the Determination Date. In the event that the Standby Servicer reports
any discrepancies, the Servicer and the Standby Servicer shall attempt to
reconcile such discrepancies prior to the second Business Day prior to the
related Payment Date, but in the absence of a reconciliation, the Servicer's
Certificate shall control for the purpose of calculations and distributions with
respect to the related Payment Date. In the event that the Standby Servicer and
the Servicer are unable to reconcile discrepancies with respect to a Servicer's
Certificate by the related Payment Date, the Servicer shall cause a firm of
independent certified public accountants, at the Servicer's
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expense, to audit the Servicer's Certificate and, prior to the fifth calendar
day of the following month, reconcile the discrepancies. The effect, if any, of
such reconciliation shall be reflected in the Servicer's Certificate for such
next succeeding Determination Date. Other than the duties specifically set forth
in this Agreement, the Standby Servicer shall have no obligations hereunder,
including, without limitation, to supervise, verify, monitor or administer the
performance of the Servicer. The Standby Servicer shall have no liability for
any actions taken or omitted by the Servicer. The duties and obligations of the
Standby Servicer shall be determined solely by the express provisions of this
Agreement and no implied covenants or obligations shall be read into this
Agreement against the Standby Servicer.
(b) The Standby Servicer shall review each Servicer's Certificate
delivered pursuant to Section 4.13(a) and shall:
(i) confirm that such Servicer's Certificate is complete on
its face;
(ii) load the computer diskette (which shall be in a format
acceptable to the Standby Servicer) received from the Servicer pursuant
to Section 4.13(a) hereof, confirm that such computer diskette is in a
readable form and calculate and confirm the Principal Balance of each
Receivable for the most recent Payment Date;
(iii) confirm that the Total Distribution Amount, the
Principal Distributable Amount, the Class A Noteholders' Principal
Distributable Amount, the Class A-1 Noteholders' Interest Distributable
Amount, the Class A-2 Noteholders' Interest Distributable Amount, the
Class B Noteholders' Interest Distributable Amount, the Class B
Noteholders' Principal Distributable Amount, the Certificateholders'
Interest Distributable Amount, the Certificateholders' Principal
Distributable Amount, the Standby Fee, the Servicing Fee, the Trustee
Fee, the amount on deposit in the Spread Account, and the Premium in
the Servicer's Certificate are accurate based solely on the
recalculation of the Servicer's Certificate; and
(iv) confirm the calculation of the performance tests set
forth in the Spread Account Agreement.
SECTION 4.14. Retention and Termination of Servicer. The Servicer
hereby covenants and agrees to act as such under this Agreement for an initial
term commencing on the Closing Date and ending on December 31, 1997, which term
shall be automatically extended by the Note Insurer for successive terms of
ninety (90) days each as specified in a writing delivered by the Note Insurer
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prior to the expiration of each current term to the Servicer and the Trustee
which provides that the Servicer will be automatically extended for a succeeding
ninety (90) day term unless an Event of Default shall have occurred and be
continuing, in which case the Note Insurer may extend the Servicer in its sole
discretion (or, at the discretion of the Note Insurer exercised pursuant to
revocable written standing instructions from time to time to the Servicer and
the Trustee, for any specified number of terms greater than one), until such
time as the Notes have been paid in full, all amounts due to the
Certificateholders have been paid and until the Termination of the Trust. Each
such notice (including each notice pursuant to standing instructions, which
shall be deemed delivered at successive ninety (90) day intervals for so long as
such instructions are in effect) (a "Servicer Extension Notice") shall be
delivered by the Note Insurer to the Trustee and the Servicer. The Servicer
hereby agrees that, upon its receipt of any such Servicer Extension Notice, the
Servicer shall become bound, for the duration of the term covered by such
Servicer Extension Notice, to continue as the Servicer subject to and in
accordance with the other provisions of this Agreement. If an Insurer Default
has occurred and is continuing, the term of the Servicer's appointment hereunder
shall be deemed to have been extended until such time, if any, as such Insurer
Default has been cured unless such appointment is terminated sooner in
accordance with the terms of this Agreement).
SECTION 4.15. Fidelity Bond. The Servicer shall maintain a fidelity
bond in such form and amount as is customary for entities acting as custodian of
funds and documents in respect of consumer contracts on behalf of institutional
investors.
ARTICLE V
TRUST ACCOUNTS; DISTRIBUTIONS;
STATEMENTS TO SECURITYHOLDERS
SECTION 5.1. Establishment of Trust Accounts.
(a) (i) The Trustee, on behalf of the Securityholders and the Note
Insurer, shall establish and maintain in its own name an Eligible Account (the
"Collection Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Trustee on behalf of the
Securityholders and the Note Insurer.
(ii) The Trustee, on behalf of the Noteholders, shall establish and
maintain in its own name an Eligible Account (the "Note Distribution Account"),
bearing a designation clearly indicating that the funds deposited therein are
held for the
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benefit of the Trustee on behalf of the Noteholders and the Note Insurer. The
Note Distribution Account shall initially be established with the Trustee.
(iii) The Trustee, on behalf of the Securityholders and the Note
Insurer, shall establish and maintain in its own name an Eligible Account (the
"Pre-Funding Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Trustee on behalf of the
Securityholders and the Note Insurer.
(b) Funds on deposit in the Collection Account, the Pre-Funding
Account, the Note Distribution Account and the Interest Reserve Account
(collectively, the "Trust Accounts") shall be invested by the Trustee (or any
custodian with respect to funds on deposit in any such account) in Eligible
Investments selected in writing by the Servicer (pursuant to standing
instructions or otherwise). All such Eligible Investments shall be held by or on
behalf of the Trustee for the benefit of the Noteholders and/or the
Certificateholders and the Note Insurer, as applicable. Other than as permitted
by the Rating Agencies and the Note Insurer, funds on deposit in any Account
shall be invested in Eligible Investments that will mature so that such funds
will be available at the close of business on the Business Day immediately
preceding the following Payment Date. Funds deposited in a Trust Account on the
day immediately preceding a Payment Date upon the maturity of any Eligible
Investments are not required to be invested overnight. All Eligible investments
will be held to maturity.
(c) All investment earnings of moneys deposited in the Trust Accounts
shall be deposited (or caused to be deposited) by the Trustee in the Collection
Account for distribution pursuant to Section 5.7(b), and any loss resulting from
such investments shall be charged to such account. The Servicer will not direct
the Trustee to make any investment of any funds held in any of the Trust
Accounts unless the security interest granted and perfected in such account will
continue to be perfected in such investment, in either case without any further
action by any Person, and, in connection with any direction to the Trustee to
make any such investment, if requested by the Trustee, the Servicer shall
deliver to the Trustee an Opinion of Counsel, acceptable to the Trustee, to such
effect.
(d) The Trustee shall not in any way be held liable by reason of any
insufficiency in any of the Trust Accounts resulting from any loss on any
Eligible Investment included therein except for losses attributable to the
Trustee's negligence or bad faith or its failure to make payments on such
Eligible Investments issued by the Trustee, in its commercial
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capacity as principal obligor and not as trustee, in accordance with their
terms.
(e) If (i) the Servicer shall have failed to give investment directions
for any funds on deposit in the Trust Accounts to the Trustee by 2:00 p.m.
Eastern Time (or such other time as may be agreed by the Issuer and Trustee) on
any Business Day; or (ii) a Default or Event of Default shall have occurred and
be continuing with respect to the Notes but the Notes shall not have been
declared due and payable, or, if such Notes shall have been declared due and
payable following an Event of Default, amounts collected or receivable from the
Trust Property are being applied as if there had not been such a declaration;
then the Trustee shall, to the fullest extent practicable, invest and reinvest
funds in the Trust Accounts in one or more Eligible Investments.
(f) The Trustee shall possess all right, title and interest in all
funds on deposit from time to time in the Trust Accounts and in all proceeds
thereof (including all Investment Earnings on the Collection Account) and all
such funds, investments, proceeds and income shall be part of the Owner Trust
Estate. Except as otherwise provided herein, the Trust Accounts shall be under
the sole dominion and control of the Trustee for the benefit of the Noteholders
and/or the Certificateholders, as the case may be, and the Note Insurer. If at
any time any of the Trust Accounts ceases to be an Eligible Account, the
Servicer with the consent of the Note Insurer shall within five Business Days
establish a new Trust Account as an Eligible Account and shall transfer any cash
and/or any investments to such new Trust Account. The Servicer shall promptly
notify the Rating Agencies and the Owner Trustee of any change in the location
of any of the aforementioned accounts. In connection with the foregoing, the
Servicer agrees that, in the event that any of the Trust Accounts are not
accounts with the Trustee, the Servicer shall notify the Trustee in writing
promptly upon any of such Trust Accounts ceasing to be an Eligible Account.
(i) With respect to the Trust Account Property, the Trustee agrees
that:
(A) any Trust Account Property that is held in deposit
accounts shall be held solely in the Eligible Accounts; and, except as
otherwise provided herein, each such Eligible Account shall be subject
to the exclusive custody and control of the Trustee, and the Trustee
shall have sole signature authority with respect thereto;
(B) any Trust Account Property that constitutes Physical
Property shall be delivered to the Trustee in accordance with paragraph
(a) of the definition of "Delivery" and shall be
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held, pending maturity or disposition, solely by the Trustee or a
financial intermediary (as such term is defined in Section 8-313(4) of
the UCC) acting solely for the Trustee;
(C) any Trust Account Property that is a book- entry security
held through the Federal Reserve System pursuant to Federal book-entry
regulations shall be delivered in accordance with paragraph (b) of the
definition of "Delivery" and shall be maintained by the Trustee,
pending maturity or disposition, through continued book-entry
registration of such Trust Account Property as described in such
paragraph; and
(D) any Trust Account Property that is an "uncertificated
security" under Article 8 of the UCC and that is not governed by clause
(C) above shall be delivered to the Trustee in accordance with
paragraph (c) of the definition of "Delivery" and shall be maintained
by the Trustee, pending maturity or disposition, through continued
registration of the Trustee's (or its nominees) ownership of such
security.
(g) The Servicer shall have the power, revocable by the Note Insurer
or, with the consent of the Note Insurer by the Trustee or by the Owner Trustee
with the consent of the Trustee, to instruct the Trustee to make withdrawals and
payments from the Trust Accounts for the purpose of permitting the Servicer and
the Trustee to carry out its respective duties hereunder.
SECTION 5.2. Interest Reserve Account.
(a) The Servicer shall cause the Trustee to establish and maintain an
Eligible Account (the "Interest Reserve Account") with the Trustee, bearing a
designation clearly indicating that the funds deposited therein are held in
trust for the benefit of the Noteholders, the Certificateholders and the Note
Insurer.
(b) On or prior to the Closing Date, the Seller shall deposit an amount
equal to the Interest Reserve Account Initial Deposit into the Interest Reserve
Account.
(c) On the Determination Date for each of the September, 1997 and
October, 1997 Payment Dates, to the extent that the Servicer's Certificate
indicates that the funds on deposit in the Interest Reserve Account are in
excess of the Requisite Reserve Amount for such Payment Date, the Trustee will
withdraw such excess from the Interest Reserve Account and deposit such amount
in the Collection Account for distribution pursuant to Section 5.7(b) on the
related Payment Date. Any amounts remaining in the Interest Reserve Account on
the Payment Date which immediately follows the end of the Funding Period after
taking into account the transfer pursuant to Section 5.7(a)(i) shall be remitted
by the Trustee to the Seller. Upon any such
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distribution to the Seller, the Noteholders, the Certificateholders and the Note
Insurer will have no further rights in, or claims to, such amounts.
SECTION 5.3. Certain Reimbursements to the Servicer. The Servicer will
be entitled to be reimbursed from amounts on deposit in the Collection Account
with respect to a Collection Period for amounts previously deposited in the
Collection Account but later determined by the Servicer to have resulted from
mistaken deposits or postings or checks returned for insufficient funds. The
amount to be reimbursed hereunder shall be paid to the Servicer on the related
Payment Date pursuant to Section 5.7(b)(i) upon certification by the Servicer of
such amounts and the provision of such information to the Trustee and the Note
Insurer as may be necessary in the opinion of the Note Insurer to verify the
accuracy of such certification. In the event that the Note Insurer has not
received evidence satisfactory to it of the Servicer's entitlement to
reimbursement pursuant to this Section, the Note Insurer shall (unless an
Insurer Default shall have occurred and be continuing) give the Trustee notice
to such effect, following receipt of which the Trustee shall not make a
distribution to the Servicer in respect of such amount pursuant to Section 5.7,
or if the Servicer prior thereto has been reimbursed pursuant to Section 5.7,
the Trustee shall withhold such amounts from amounts otherwise distributable to
the Servicer on the next succeeding Payment Date.
SECTION 5.4. Application of Collections. All collections for each
Collection Period shall be applied by the Servicer as follows:
With respect to each Receivable (other than a Purchased Receivable),
payments by or on behalf of the Obligor shall be applied, in the case of a Rule
of 78's Receivable, first, to the Scheduled Payment of such Rule of 78's
Receivable and, second, to any late fees accrued with respect to such Rule of
78's Receivable and, in the case of a Simple Interest Receivable, to interest
and principal in accordance with the Simple Interest Method.
SECTION 5.5. Withdrawals from Spread Account. (a) In the event that the
Servicer's Certificate with respect to any Determination Date shall state that
the Total Distribution Amount with respect to such Determination Date is
insufficient (taking into account the application of the Total Distribution
Amount to the payment required to be made on the related Payment Date pursuant
to Section 5.7(b)(vi)) to make the payments required to be made on the related
Payment Date pursuant to Section 5.7(b)(i), (ii), (iii), (iv), (v), (vii) or
(viii) (such deficiency being a "Deficiency Claim Amount"), then on the fourth
Business Day immediately preceding the related Payment Date, the
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Trustee shall deliver to the Collateral Agent, the Owner Trustee, the Note
Insurer, and the Servicer, by hand delivery, telex or facsimile transmission, a
written notice (a "Deficiency Notice") specifying the Deficiency Claim Amount
for such Payment Date. Such Deficiency Notice shall direct the Collateral Agent
to remit such Deficiency Claim Amount (to the extent of the funds available to
be distributed pursuant to the Spread Account Agreement) to the Trustee for
deposit in the Collection Account and distribution pursuant to Sections
5.7(b)(i), (ii), (iii), (iv), (v), (vii) and/or (viii), as applicable.
(b) Any Deficiency Notice shall be delivered by 10:00 a.m., New York
City time, on the fourth Business Day preceding such Payment Date. The amounts
distributed by the Collateral Agent to the Trustee pursuant to a Deficiency
Notice shall be deposited by the Trustee into the Collection Account pursuant to
Section 5.6.
(c) In the event that the Servicer's Certificate with respect to any
Determination Date shall state that the Total Distribution Amount with respect
to such Payment Date is insufficient to make the payments to the Note
Distribution Account required to be made on the related Payment Date pursuant to
Section 5.7(b)(vi) or (x) (such deficiency being a "Class B Deficiency"), then
on the fourth Business Day immediately preceding the related Payment Date, the
Trustee shall deliver to the Collateral Agent, the Owner Trustee and the
Servicer, by hand delivery, telex or facsimile transmission, a written notice
specifying the amount of the Class B Deficiency for such Payment Date. Such
notice shall direct the Collateral Agent to remit to the Trustee an amount equal
to such Class B Deficiency (but only to the extent that, pursuant to the Master
Spread Account Agreement, funds are required to be released from the Spread
Account to the Seller on the related Payment Date and are available for
application on account of such Class B Deficiency) for deposit into the
Collection Account and, subject to Section 5.5(e) below, distribution pursuant
to Section 5.7(b)(vi) and/or Section 5.7(b)(x), as applicable, and any funds so
remitted to the Trustee shall be deemed to have been released to the Seller and
paid to the Trustee at the direction of the Seller.
(d) In the event that the Servicer's Certificate with respect to any
Determination Date shall state that the Total Distribution Amount with respect
to such Payment Date is insufficient to make the payments to the Certificate
Distribution Account required to be made on the related Payment Date pursuant to
Section 5.7(b)(vi) or (x) or pursuant to Section 5.7(b)(xii) or (xiii)(such
deficiency being a "Certificate Deficiency"), then on the fourth Business Day
immediately preceding the related Payment Date, the Trustee shall deliver to the
Collateral Agent, the Owner Trustee and the Servicer, by hand delivery, telex or
facsimile transmission, a written notice specifying the amount of
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the Certificate Deficiency for such Payment Date. Such notice shall direct the
Collateral Agent to remit to the Trustee an amount equal to such Certificate
Deficiency (but only to the extent that, pursuant to the Master Spread Account
Agreement, funds are required to be released from the Spread Account to the
Seller on the related Payment Date and are available for application on account
of such Certificate Deficiency) for deposit into the Collection Account and,
subject to Section 5.5(e) below, distribution pursuant to (A) Section 5.7(b)(vi)
and/or Section 5.7(b)(x) or (B) Section 5.7(b)(xii) or (xiii), as applicable,
and any funds so remitted to the Trustee shall be deemed to have been released
to the Seller and paid to the Trustee at the direction of the Seller.
(e) Notwithstanding anything to the contrary contained in (c) or (d)
above, unless an Event of Default has occurred and is continuing, then amounts
received by the Trustee on account of a Class B Deficiency or Certificate
Deficiency shall be applied pro rata (on the basis of the Class B Deficiency and
Certificate Deficiency outstanding) to pay such Class B Deficiency and
Certificate Deficiency. If an Event of Default has occurred and is continuing,
then amounts received by the Trustee on account of a Class B Deficiency or
Certificate Deficiency shall be applied first to pay the outstanding Class B
Deficiency pursuant to Section 5.7(b)(vi) and/or (x) and second, to the extent
of any remaining funds, to pay the outstanding Certificate Deficiency pursuant
to Section 5.7(b)(xii) and/or (xiii).
SECTION 5.6. Additional Deposits.
(a) The Servicer or CPS, as the case may be, shall deposit or cause to
be deposited in the Collection Account the aggregate Purchase Amount with
respect to Purchased Receivables and the Servicer shall deposit or cause to be
deposited therein all amounts to be paid under Section 4.8(b) or 11.1. All such
deposits shall be made, in immediately available funds, on the Business Day
preceding the Determination Date. On or before the third Business Day preceding
each Payment Date, the Trustee shall remit to the Collection Account any amounts
delivered to the Trustee by the Collateral Agent pursuant to Section 5.5.
SECTION 5.7. Distributions.
(a) On each Payment Date, the Trustee shall (based solely on the
information contained in the Servicer's Certificate delivered on the related
Determination Date)cause to be made the following transfers and distributions in
the amounts set forth in the Servicer's Certificate for such Payment Date:
(i) During the Funding Period, from the Interest Reserve
Account to the Collection Account, in immediately
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available funds, the amount withdrawn from the Interest Reserve Account
pursuant to Section 5.2(c) with respect to such Payment Date; and
(ii) If such Payment Date is the Mandatory Redemption Date,
from the Pre-Funding Account to the Collection Account, in immediately
available funds, the Pre-Funded Amount after giving effect to the
purchase of Subsequent Receivables, if any, on the Mandatory Redemption
Date.
(b) On each Payment Date, the Trustee (based on the information
contained in the Servicer's Certificate delivered on the related Determination
Date) shall make the following distributions in the following order of priority:
(i) to the Servicer, from the Total Distribution Amount, the
Servicing Fee and all unpaid Servicing Fees from prior Collection
Periods; provided, however, that as long as CPS is the Servicer and
Norwest Bank Minnesota, National Association is the Standby Servicer,
the Trustee will first pay to the Standby Servicer out of the Servicing
Fee otherwise payable to CPS an amount equal to the Standby Fee;
(ii) in the event the Standby Servicer becomes the successor
Servicer, to the Standby Servicer from the Total Distribution Amount
(as such Total Distribution Amount has been reduced by payments
pursuant to clause (i) above), to the extent not previously paid by the
predecessor Servicer pursuant to the Sale and Servicing Agreement,
reasonable transition expenses (up to a maximum of $50,000 for all such
expenses) incurred in becoming successor Servicer;
(iii) to the Trustee and the Owner Trustee, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) and (ii) above), the fees payable
thereto for services pursuant to the Indenture and the Trust Agreement
(the "Trustee Fee") and reasonable out-of-pocket expenses thereof,
(including counsel fees and expenses) and all unpaid Trustee Fees and
all unpaid reasonable out-of-pocket expenses (including counsel fees
and expenses) from prior Collection Periods; provided, however, that
unless an Event of Default shall have occurred and be continuing,
expenses payable to the Trustee and the Owner Trustee pursuant to this
clause (iii) and expenses payable to the Collateral Agent pursuant to
clause (iv) below shall be limited to a total of $50,000 per annum;
(iv) to the Collateral Agent, from the Total Distribution
Amount (as such Total Distribution Amount has been reduced by payments
pursuant to clauses (i) through
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(iii) above), all fees and expenses payable to the Collateral Agent
with respect to such Payment Date;
(v) to the Note Distribution Account, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant Total to clauses (i) through (iv) above), the
Class A Noteholders' Interest Distributable Amount for such Payment
Date;
(vi) to the Note Distribution Account and, unless an Event of
Default has occurred and is continuing, the Certificate Distribution
Account, pro rata, from the Total Distribution Amount (as such Total
Distribution Amount has been reduced by payments pursuant to clauses
(i) through (v) above) the Class B Noteholders' Interest Distributable
Amount and, unless an Event of Default has occurred and in continuing,
the Certificateholders' Interest Distributable Amount, respectively,
for such Payment Date;
(vii) to the Note Distribution Account, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) through (vi) above), the Class A
Noteholders' Principal Distributable Amount plus, on the Mandatory
Redemption Date, the Class A Note Prepayment Amount for such Payment
Date;
(viii) to the Note Insurer, from the Total Distribution Amount
(as such Total Distribution Amount has been reduced by payments made
pursuant to clauses (i) through (vii) above), any amounts owing to the
Note Insurer under this Agreement and the Insurance Agreement and not
paid;
(ix) in the event any Person other than the Standby Servicer
becomes the successor Servicer, to such successor Servicer, from the
Total Distribution Amount (as such Total Distribution Amount has been
reduced by payments pursuant to clauses (i) through (viii) above) to
the extent not previously paid by the predecessor Servicer, reasonable
transition expenses (up to a maximum of $50,000 for all such expenses)
incurred in acting as successor Servicer;
(x) to the Note Distribution Account and, unless an Event of
Default has occurred and in continuing, the Certificate Distribution
Account, pro rata, from the Total Distribution Amount (as such Total
Distribution Amount has been reduced by payments pursuant to clauses
(i) through (ix) above), the Class B Noteholders' Principal
Distributable Amount and, unless an Event of Default has occurred and
is continuing, the Certificateholders'
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Principal Distributable Amount, respectively, for such Payment Date;
(xi) until the Target Payment Date, to the Note Distribution
Account, the remaining Total Distribution Amount, if any, for payment
to the holders of the then paying Class A Notes as a payment of
principal;
(xii) if an Event of Default shall have occurred and be
continuing, to the Certificate Distribution Account, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) through (xi) above), the
Certificateholders' Interest Distributable Amount;
(xiii) if an Event of Default shall have occurred and be
continuing, to the Certificate Distribution Account, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) through (xii) above), the
Certificateholders' Principal Distributable Amount; and
(xiv) after the Target Payment Date, to the Collateral Agent,
for deposit into the Spread Account, the remaining Total Distribution
Amount, if any;
provided, however, that, (A) following an acceleration of the Notes, (B) if an
Insurer Default shall have occurred and be continuing and an Event of Default
pursuant to Section 5.1(i), 5.1(ii), 5.1(iv), 5.1(v) or 5.1(vi) of the Indenture
shall have occurred and be continuing or (C) the receipt of Insolvency Proceeds
pursuant to Section 11.1(b), the Total Distribution Amount (including any such
Insolvency Proceeds) shall be paid to the Noteholders and the
Certificateholders, pursuant to Section 5.6(a) of the Indenture.
(c) In the event that the Collection Account is maintained with an
institution other than the Trustee, the Servicer shall instruct and cause such
institution to make all deposits and distributions pursuant to Section 5.7(b) on
the related Payment Date.
SECTION 5.8. Note Distribution Account.
(a) On each Payment Date, the Trustee shall distribute all amounts on
deposit in the Note Distribution Account to Noteholders in respect of the Notes
to the extent of amounts due and unpaid on the Notes for principal and interest
in the following amounts and in the following order of priority:
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(i) to the Holders of the Class A Notes the Class A Interest
Distributable Amount; provided that if there are not sufficient funds
in the Note Distribution Account to pay the entire amount then due on
each Class of Class A Notes, the amount in the Note Distribution
Account shall be applied to the payment of such interest on each Class
of Class A Notes pro rata on the basis of the amount of accrued and
unpaid interest due on each Class of Class A Notes;
(ii) to the Holders of the Class B Notes, the Class B
Noteholders' Interest Distributable Amount; provided that if there are
not sufficient funds remaining in the Note Distribution Account to pay
the entire Class B Interest Distributable Amount, the amount in the
Note Distribution Account shall be applied to the payment of such
interest on the Class B Notes pro rata on the basis of the amount of
accrued and unpaid interest due on the Class B Notes;
(iii) any amounts deposited in the Note Distribution Account
with respect to the Note Prepayment Amount, shall be distributed to the
Class A-1 Noteholders on account of the Class A-1 Prepayment Amount and
to the Class A-2 Noteholders on account of the Class A-2 Prepayment
Amount, pro rata, on the basis of the Class A-1 Prepayment Amount and
the Class A-2 Prepayment Amount;
(iv) to the Holders of the Class A-1 Notes, the Class A
Noteholders' Principal Distributable Amount until the outstanding
principal balance of the Class A-1 Notes is reduced to zero; and
(v) to the Holders of the Class A-2 Notes, the Class A
Noteholders' Principal Distributable Amount (as reduced by any
distribution on such Payment Date pursuant to (iv) above) until the
outstanding principal balance of the Class A-2 Notes is reduced to
zero; and
(vi) to the holders of the Class B Notes, the Class B
Noteholders' Principal Distributable Amount until the outstanding
principal amount of the Class B Notes is reduced to zero.
(b) The rights of the Class B Noteholders to receive distributions in
respect of the Class B Notes pursuant to Section 5.8(a)(ii) on a Payment Date
shall be and hereby are subordinated to the payment of the amounts distributable
pursuant to Section 5.8(a)(i). The rights of the Class B Noteholders to receive
distributions in respect of the Class B Notes pursuant to Section 5.8(a)(vi) on
a Payment Date shall be and hereby are subordinated to the payment of the
amounts distributable pursuant to Sections 5.8(a)(i) through (v). At such time
as the Class A Notes are paid in full and the Note Insurer has received payment
in full for all amounts owed to the Note Insurer, the Class B Noteholders
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shall be entitled to exercise all rights granted to the Class A Noteholders
under this Agreement to the extent that the exercise of such rights does not
conflict with the provisions of the Spread Account Agreement.
(c) On each Payment Date, the Trustee shall send to each Noteholder the
statement provided to the Trustee by the Servicer pursuant to Section 5.11
hereof on such Payment Date.
(d) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to a Noteholder, such tax shall reduce the
amount otherwise distributable to the Noteholder in accordance with this
Section. The Trustee is hereby authorized and directed to retain from amounts
otherwise distributable to the Noteholders sufficient funds for the payment of
any tax that is legally owed by the Trust (but such authorization shall not
prevent the Trustee from contesting any such tax in appropriate proceedings, and
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings). The amount of any withholding tax imposed with respect to a
Noteholder shall be treated as cash distributed to such Noteholder at the time
it is withheld by the Trust and remitted to the appropriate taxing authority.
If, after consultations with experienced counsel, the Trustee determines that
there is a reasonable likelihood that withholding tax is payable with respect to
a distribution (such as a distribution to a non-US Noteholder), the Trustee may
in its sole discretion withhold such amounts in accordance with this clause (d).
In the event that a Noteholder wishes to apply for a refund of any such
withholding tax, the Trustee shall reasonably cooperate with such Noteholder in
making such claim so long as such Noteholder agrees to reimburse the Trustee for
any out-of-pocket expenses incurred.
(e) Distributions required to be made to Noteholders on any Payment
Date shall be made to each Noteholder of record on the preceding Record Date
either by wire transfer, in immediately available funds, to the account of such
Holder at a bank or other entity having appropriate facilities therefor, if (i)
such Noteholder shall have provided to the Note Registrar appropriate written
instructions at least five Business Days prior to such Payment Date and such
Holder's Notes in the aggregate evidence a denomination of not less than
$1,000,000 or (ii) such Noteholder is the Seller, or an Affiliate thereof, or,
if not, by check mailed to such Noteholder at the address of such holder
appearing in the Note Register; provided, however, that, unless Definitive Notes
have been issued pursuant to Section 2.12 of the Indenture, with respect to
Notes registered on the Record Date in the name of the nominee of the Clearing
Agency (initially, such nominee to be Cede & Co.), distributions will be made by
wire transfer in immediately available funds to the account designated by such
nominee. Notwithstanding the foregoing, the final distribution
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in respect of any Note (whether on the Final Scheduled Payment Date or
otherwise) will be payable only upon presentation and surrender of such Note at
the office or agency maintained for that purpose by the Note Registrar pursuant
to Section 2.4 of the Indenture.
SECTION 5.9. [RESERVED]
SECTION 5.10. Pre-Funding Account.
(a) On the Closing Date, the Trustee will deposit, on behalf of the
Seller, in the Pre-Funding Account $27,084,817 from the proceeds of the sale of
the Notes and the Certificates. On each Subsequent Transfer Date, the Servicer
shall instruct the Trustee to withdraw from the Pre-Funding Account (i) an
amount equal to the Principal Balance of the Subsequent Receivables transferred
to the Issuer on such Subsequent Transfer Date and to distribute such amount to
or upon the order of the Seller upon satisfaction of the conditions set forth in
this Agreement with respect to such transfer and (ii) an amount equal to the
Subsequent Spread Account Deposit on such Subsequent Transfer Date upon
satisfaction of the conditions set forth in this Agreement with respect to such
transfer.
(b) If the Pre-Funded Amount has not been reduced to zero on the date
on which the Funding Period ends after giving effect to any reductions in the
Pre-Funded Amount on such date, the Servicer shall instruct the Trustee to
withdraw from the Pre-Funding Account on the Mandatory Redemption Date the
Pre-Funded Amount (exclusive of any Pre-Funding Earnings) and deposit an amount
equal to the Note Prepayment Amount in the Note Distribution Account and the
Certificate Prepayment Amount in the Certificate Distribution Account.
(c) All Pre-Funding Earnings will be deposited in the Collection
Account on each Payment Date and deemed to be part of the Total Distribution
Amount.
SECTION 5.11. Statements to Securityholders. On or prior to each
Payment Date, the Servicer shall provide to the Trustee and the Owner Trustee
(with a copy to the Note Insurer and the Rating Agencies) for the Trustee to
forward to each Noteholder of record, and the Owner Trustee to distribute to the
Certificateholders, a statement setting forth at least the following information
as to the Notes and the Certificates to the extent applicable:
(i) the amount of such distribution allocable to principal of
each Class of Notes and the Certificates;
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(ii) the amount of such distribution allocable to interest on
or with respect to each Class of Notes and the Certificates;
(iii) the amount of such distribution payable out of amounts
withdrawn from the Spread Account or pursuant to a claim on the Note
Policy;
(iv) the Pool Balance as of the close of business on the last
day of the preceding Collection Period;
(v) the aggregate outstanding principal amount of each Class
of Notes and the Certificates, the Note Pool Factor for each such Class
and the Certificate Pool Factor after giving effect to payments
allocated to principal reported under clause (i) above;
(vi) the amount of the Servicing Fee (inclusive of the Standby
Fee paid to the Standby Servicer) paid to the Servicer with respect to
the related Collection Period, and the amount of any unpaid Servicing
Fees (inclusive of the Standby Fee) and the change in such amount from
that of the prior Payment Date;
(vii) the Class A-1 Noteholders' Interest Carryover Shortfall,
the Class A-2 Noteholders' Interest Carryover Shortfall, the Class B
Noteholders' Interest Carryover Shortfall, the Certificateholders'
Interest Carryover Shortfall, the Class A Noteholders' Principal
Carryover Shortfall, the Class B Noteholders' Principal Carryover
Shortfall and the Certificateholders' Principal Carryover Shortfall;
(viii) the number of Receivables and the aggregate gross
amount scheduled to be paid thereon, including unearned finance and
other charges, for which the related Obligors are delinquent in making
scheduled payments between 31 and 59 days and 60 days or more;
(ix) the amount of the aggregate Realized Losses, if any, for
the second preceding Collection Period;
(x) the number and the aggregate Purchase Amounts for
Receivables, if any, that were repurchased in such period and summary
information as to losses and delinquencies with respect to the
Receivables;
(xi) for Payment Dates during the Funding Period (if any), the
remaining Pre-Funded Amount;
(xii) for the final Subsequent Transfer Date, the amount of
any remaining Pre-Funded Amount that has not been used to fund the
purchase of Subsequent Receivables; and
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(xiii) the cumulative amount of Realized Losses, since the
Initial Cutoff Date to the last day of the related Collection Period.
Each amount set forth pursuant to paragraph (i), (ii), (iii), (vi), (vii), (x)
and (xi) above shall be expressed as a dollar amount per $1,000 of the initial
principal balance of the Notes (or Class thereof) or Certificates, as
applicable.
ARTICLE VI
THE NOTE POLICY
SECTION 6.1. Claims Under Note Policy.
(a) In the event that the Trustee has delivered a Deficiency Notice
with respect to any Determination Date pursuant to Section 5.5 hereof, the
Trustee shall on the related Draw Date determine the Note Policy Claim Amount
for the related Payment Date. If the Note Policy Claim Amount for such Payment
Date is greater than zero, the Trustee shall furnish to the Note Insurer no
later than 12:00 noon New York City time on the related Draw Date a completed
Notice of Claim (as defined in (b) below) in the amount of the Note Policy Claim
Amount. Amounts paid by the Note Insurer pursuant to a claim submitted under
this Section 6.1. shall be deposited by the Trustee into the Note Distribution
Account for payment to Noteholders on the related Payment Date.
(b) Any notice delivered by the Trustee to the Note Insurer pursuant to
Section 6.1(a) shall specify the Note Policy Claim Amount claimed under the Note
Policy and shall constitute a "Notice of Claim" (as defined in the Note Policy)
under the Note Policy. In accordance with the provisions of the Note Policy, the
Note Insurer is required to pay to the Trustee the Note Policy Claim Amount
properly claimed thereunder by 12:00 noon, New York City time, on the later of
(i) the third Business Day (as defined in the Note Policy) following receipt on
a Business Day of the Notice of Claim, and (ii) the applicable Payment Date. Any
payment made by the Note Insurer under the Note Policy shall be applied solely
to the payment of the Notes, and for no other purpose.
(c) The Trustee shall (i) receive as attorney-in-fact of each Class A
Noteholder any Note Policy Claim Amount from the Note Insurer and (ii) deposit
the same in the Note Distribution Account for distribution to Class A
Noteholders. Any and all Note Policy Claim Amounts disbursed by the Trustee from
claims made under the Note Policy shall not be considered payment by the Trust
or from the Series 1997-3 Spread Account with respect to such Notes, and shall
not discharge the obligations of the Trust
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with respect thereto. The Insurer shall, to the extent it makes any payment with
respect to the Class A Notes, become subrogated to the rights of the recipients
of such payments to the extent of such payments. Subject to and conditioned upon
any payment with respect to the Class A Notes by or on behalf of the Note
Insurer, the Trustee and the Class A Noteholders shall assign to the Note
Insurer all rights to the payment of interest or principal with respect to the
Class A Notes which are then due for payment to the extent of all payments made
by the Note Insurer, and the Note Insurer may exercise any option, vote, right,
power or the like with respect to the Class A Notes to the extent that it has
made payment pursuant to the Note Policy. To evidence such subrogation, the Note
Registrar (as defined in the Indenture) shall note the Note Insurer's rights as
subrogee upon the register of Noteholders upon receipt from the Note Insurer of
proof of payment by the Note Insurer of any Noteholders' Interest Distributable
Amount or Noteholders' Principal Distributable Amount. The foregoing subrogation
shall in all cases be subject to the rights of the Class A Noteholders to
receive all Scheduled Payments (as defined in the Note Policy) in respect of the
Notes.
(d) The Trustee shall keep a complete and accurate record of all funds
deposited by the Note Insurer into the Note Distribution Account and the
allocation of such funds to payment of interest on and principal paid in respect
of any Class A Note. The Insurer shall have the right to inspect such records at
reasonable times upon one Business Day's prior notice to the Trustee.
(e) The Trustee shall be entitled to enforce on behalf of the Class A
Noteholders the obligations of the Note Insurer under the Note Policy.
Notwithstanding any other provision of this Agreement or any Basic Documents,
the Class A Noteholders are not entitled to make any claims under the Note
Policy or institute proceedings directly against the Note Insurer.
SECTION 6.2. Preference Claims.
(a) In the event that the Trustee has received a certified copy of an
order of the appropriate court that any Scheduled Payment (as defined in the
Note Policy) paid on a Class A Note has been avoided in whole or in part as a
preference payment under applicable bankruptcy law, the Trustee shall so notify
the Note Insurer, shall comply with the provisions of the Note Policy to obtain
payment by the Note Insurer of such avoided payment, and shall, at the time it
provides notice to the Note Insurer, notify Holders of the Class A Notes by mail
that, in the event that any Class A Noteholder's payment is so recoverable, such
Class A Noteholder will be entitled to payment pursuant to the terms of the Note
Policy. The Trustee shall furnish to the Note Insurer its records evidencing the
payments of principal of and
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interest on Class A Notes, if any, which have been made by the Trustee and
subsequently recovered from Class A Noteholders, and the dates on which such
payments were made. Pursuant to the terms of the Note Policy, the Note Insurer
will make such payment on behalf of the Class A Noteholder to the receiver,
conservator, debtor-in-possession or trustee in bankruptcy named in the order
(as defined in the Note Policy) and not to the Trustee or any Class A Noteholder
directly (unless a Class A Noteholder has previously paid such payment to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy, in which
case the Note Insurer will make such payment to the Trustee for distribution to
such Class A Noteholder upon proof of such payment reasonably satisfactory to
the Note Insurer).
(b) The Trustee shall promptly notify the Note Insurer of any
proceeding or the institution of any action (of which the Trustee has actual
knowledge) seeking the avoidance as a preferential transfer under applicable
bankruptcy, insolvency, receivership, rehabilitation or similar law (a
"Preference Claim") of any distribution made with respect to the Notes. Each
Holder, by its purchase of Notes, and the Trustee hereby agree that so long as
an Insurer Default shall not have occurred and be continuing, the Note Insurer
may at any time during the continuation of any proceeding relating to a
Preference Claim direct all matters relating to such Preference Claim including,
without limitation, (i) the direction of any appeal of any order relating to any
Preference Claim and (ii) the posting of any surety, supersedeas or performance
bond pending any such appeal at the expense of the Note Insurer, but subject to
reimbursement as provided in the Insurance Agreement. In addition, and without
limitation of the foregoing, as set forth in Section 6.1(c), the Note Insurer
shall be subrogated to, and each Noteholder and the Trustee hereby delegate and
assign, to the fullest extent permitted by law, the rights of the trustee and
each Noteholder in the conduct of any proceeding with respect to a Preference
Claim, including, without limitation, all rights of any party to an adversary
proceeding action with respect to any court order issued in connection with any
such Preference Claim.
SECTION 6.3. Surrender of Note Policy. The Trustee shall surrender the
Note Policy to the Note Insurer for cancellation upon the expiration of such
policy in accordance with the terms thereof.
ARTICLE VII
[Reserved]
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ARTICLE VIII
THE SELLER
SECTION 8.1. Representations of Seller. The Seller makes the following
representations on which the Note Insurer shall be deemed to have relied in
executing and delivering the Note Policy and on which the Issuer is deemed to
have relied in acquiring the Receivables. The representations speak as of the
execution and delivery of this Agreement and as of the Closing Date, in the case
of Initial Receivables, and as of the applicable Subsequent Transfer Date, in
the case of Subsequent Receivables, and shall survive the sale of the
Receivables to the Issuer and the pledge thereof to the Trustee pursuant to the
Indenture.
(a) Organization and Good Standing. The Seller has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of California, with power and authority to
own its properties and to conduct its business as such properties are
currently owned and such business is currently conducted, and had at
all relevant times, and now has, power, authority and legal right to
acquire, own and sell the Receivables and the other Conveyed Property
transferred to the Trust.
(b) Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business shall
require such qualifications.
(c) Power and Authority. The Seller has the power and
authority to execute and deliver this Agreement and the Basic Documents
to which it is a party and to carry out its terms and their terms,
respectively; the Seller has full power and authority to sell and
assign the Receivables and the Other Conveyed Property to be sold and
assigned to and deposited with the Trust by it and has duly authorized
such sale and assignment to the Trust by all necessary corporate
action; and the execution, delivery and performance of this Agreement
and the Basic Documents to which the Seller is a party have been duly
authorized by the Seller by all necessary corporate action.
(d) Valid Sale, Binding Obligations. This Agreement effects a
valid sale, transfer and assignment of the Receivables and the Other
Conveyed Property, enforceable against the Seller and creditors of and
purchasers from the Seller; and this Agreement and the Basic Documents
to which the Seller is a party, when duly executed and delivered,
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shall constitute legal, valid and binding obligations of the Seller
enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting the enforcement of creditors' rights
generally and by equitable limitations on the availability of specific
remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the Basic Documents and the
fulfillment of the terms of this Agreement and the Basic Documents
shall not conflict with, result in any breach of any of the terms and
provisions of or constitute (with or without notice, lapse of time or
both) a default under the certificate of incorporation or by-laws of
the Seller, or any indenture, agreement, mortgage, deed of trust or
other instrument to which the Seller is a party or by which it is
bound, or result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, other than the Basic
Documents, or violate any law, order, rule or regulation applicable to
the Seller of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Seller or any of its properties.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the Seller's knowledge, threatened against the Seller,
before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality having jurisdiction over the
Seller or its properties (A) asserting the invalidity of this
Agreement, the Securities or any of the Basic Documents, (B) seeking to
prevent the issuance of the Securities or the consummation of any of
the transactions contemplated by this Agreement or any of the Basic
Documents, (C) seeking any determination or ruling that might
materially and adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability of, this Agreement
or any of the Basic Documents, or (D) relating to the Seller and which
might adversely affect the federal or state income, excise, franchise
or similar tax attributes of the Securities.
(g) No Consents. No consent, approval, authorization or order
of or declaration or filing with any governmental authority is required
for the issuance or sale of the Securities or the consummation of the
other transactions
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contemplated by this Agreement, except such as have been duly made or
obtained.
(h) Tax Returns. The Seller has filed on a timely basis all
tax returns required to be filed by it and paid all taxes, to the
extent that such taxes have become due.
(i) Chief Executive Office. The chief executive office of the
Seller is at 2 Ada, Irvine, California 92618.
SECTION 8.2. [Reserved].
SECTION 8.3. Liability of Seller; Indemnities. The Seller shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement.
(a) The Seller shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Trust, the Note Insurer, the Standby Servicer and the
Trustee from and against any taxes that may at any time be asserted against any
such Person with respect to the transactions contemplated in this Agreement and
any of the Basic Documents (except any income taxes arising out of fees paid to
the Owner Trustee, the Trustee and the Note Insurer and except any taxes to
which the Owner Trustee, or the Trustee may otherwise be subject to), including
any sales, gross receipts, general corporation, tangible personal property,
privilege or license taxes (but, in the case of the Issuer, not including any
taxes asserted with respect to, federal or other income taxes arising out of
distributions on the Notes and the Certificates) and costs and expenses in
defending against the same.
(b) The Seller shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Trustee, the Note Insurer and the Securityholders from
and against any loss, liability or expense incurred by reason of (i) the
Seller's willful misfeasance, bad faith or negligence in the performance of its
duties under this Agreement, or by reason of reckless disregard of its
obligations and duties under this Agreement and (ii) the Seller's or the
Issuer's violation of Federal or state securities laws in connection with the
offering and sale of the Notes and the Certificates.
(c) The Seller shall indemnify, defend and hold harmless the Owner
Trustee, the Trustee, and the Standby Servicer and its officers, directors,
employees and agents from and against any and all costs, expenses, losses,
claims, damages and liabilities arising out of, or incurred in connection with
the acceptance or performance of the trusts and duties set forth herein and in
the Basic Documents except to the extent that such cost, expense, loss, claim,
damage or liability shall be due to the willful
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misfeasance, bad faith or negligence (except for errors in judgment) of the
Owner Trustee.
Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Trustee and the termination of this
Agreement or the Indenture or the Trust Agreement, as applicable, and shall
include reasonable fees and expenses of counsel and other expenses of
litigation. If the Seller shall have made any indemnity payments pursuant to
this Section and the Person to or on behalf of whom such payments are made
thereafter shall collect any of such amounts from others, such Person shall
promptly repay such amounts to the Seller, without interest.
SECTION 8.4. Merger or Consolidation of, or Assumption of the
Obligations of, Seller. Any Person (a) into which the Seller may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Seller shall be a party or (c) which may succeed to the properties and assets of
the Seller substantially as a whole, which Person in any of the foregoing cases
executes an agreement of assumption to perform every obligation of the Seller
under this Agreement, shall be the successor to the Seller hereunder without the
execution or filing of any document or any further act by any of the parties to
this Agreement; provided, however, that (i) the Seller shall have received the
written consent of the Note Insurer prior to entering into any such transaction,
(ii) immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 3.1 shall have been breached and no Servicer
Termination Event, and no event which, after notice or lapse of time, or both,
would become a Servicer Termination Event shall have happened and be continuing,
(iii) the Seller shall have delivered to the Owner Trustee, the Trustee and the
Note Insurer an Officers' Certificate and an Opinion of Counsel each stating
that such consolidation, merger or succession and such agreement of assumption
comply with this Section and that all conditions precedent, if any, provided for
in this Agreement relating to such transaction have been complied with, (iv) the
Rating Agency Condition shall have been satisfied with respect to such
transaction and (v) the Seller shall have delivered to the Owner Trustee, the
Trustee and the Note Insurer an Opinion of Counsel stating that, in the opinion
of such counsel, either (A) all financing statements and continuation statements
and amendments thereto have been executed and filed that are necessary fully to
preserve and protect the interest of the Owner Trustee and the Trustee,
respectively, in the Receivables and reciting the details of such filings or (B)
no such action shall be necessary to preserve and protect such interest.
Notwithstanding anything herein to the contrary, the execution of the foregoing
agreement of assumption and compliance with clauses (i), (ii), (iii), (iv)
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and (v) above shall be conditions to the consummation of the transactions
referred to in clauses (a), (b) or (c) above.
SECTION 8.5. Limitation on Liability of Seller and Others. The Seller
and any director or officer or employee or agent of the Seller may rely in good
faith on the advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
under any Basic Document. The Seller shall not be under any obligation to appear
in, prosecute or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
SECTION 8.6. Seller May Own Certificates or Notes. The Seller and any
Affiliate thereof may in its individual or any other capacity become the owner
or pledgee of Certificates or Notes with the same rights as it would have if it
were not the Seller or an Affiliate thereof, except as expressly provided herein
or in any Basic Document. Notes or Certificates so owned by the Seller or such
Affiliate shall have an equal and proportionate benefit under the provisions of
the Basic Documents, without preference, priority or distinction as among all of
the Notes or Certificates; provided, however, that any Notes owned by the Seller
or any Affiliate thereof, during the time such Notes are so owned by them, shall
be without voting rights for any purpose set forth in the Basic Documents and
the Notes shall not be entitled to the benefits of the Note Policy. The Seller
shall notify the Owner Trustee, the Trustee and the Note Insurer promptly after
it or any of its Affiliates become the owner of a Certificate or a Note.
ARTICLE IX
THE SERVICER
SECTION 9.1. Representations of Servicer. The Servicer makes the
following representations on which the Note Insurer shall be deemed to have
relied in executing and delivering the Note Policy and on which the Issuer is
deemed to have relied in acquiring the Receivables. The representations speak as
of the execution and delivery of this Agreement and as of the Closing Date, in
the case of the Initial Receivables, and as of the applicable Subsequent
Transfer Date, in the case of the Subsequent Receivables, and shall survive the
sale of the Receivables to the Issuer and the pledge thereof to the Trustee
pursuant to the Indenture.
(a) Organization and Good Standing. The Servicer has been duly
organized and is validly existing and in good standing under the laws
of its jurisdiction of organization,
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with power, authority and legal right to own its properties and to
conduct its business as such properties are currently owned and such
business is presently conducted, and had at all relevant times, and
shall have, power, authority and legal right to acquire, own and
service the Receivables;
(b) Due Qualification. The Servicer is duly qualified to do
business as a foreign corporation in good standing and has obtained all
necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business
(including the servicing of the Receivables as required by this
Agreement) requires or shall require such qualification;
(c) Power and Authority. The Servicer has the power and
authority to execute and deliver this Agreement and its Basic Documents
and to carry out its terms and their terms, respectively, and the
execution, delivery and performance of this Agreement and the
Servicer's Basic Documents have been duly authorized by the Servicer by
all necessary corporate action;
(d) Binding Obligation. This Agreement and the Basic Documents
to which the Servicer is a party shall constitute legal, valid and
binding obligations of the Servicer enforceable in accordance with
their respective terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, or other similar laws affecting
the enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies, regardless of
whether such enforceability is considered in a proceeding in equity or
at law;
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the Basic Documents to which to the
Servicer is a party, and the fulfillment of the terms of this Agreement
and the Basic Documents to which the Servicer is a party, shall not
conflict with, result in any breach of any of the terms and provisions
of, or constitute (with or without notice or lapse of time) a default
under, the articles of incorporation or bylaws of the Servicer, or any
indenture, agreement, mortgage, deed of trust or other instrument to
which the Servicer is a party or by which it is bound or any of its
properties are subject, or result in the creation or imposition of any
Lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument,
other than the Basic Documents, or violate any law, order, rule or
regulation applicable to the Servicer of any court or of any federal or
state regulatory body, administrative agency or other
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governmental instrumentality having jurisdiction over the Servicer or
any of its properties;
(f) No Proceedings. There are no proceedings or investigations
pending or, to the Servicer's knowledge, threatened against the
Servicer, before any court, regulatory body, administrative agency or
other tribunal or governmental instrumentality having jurisdiction over
the Servicer or its properties (A) asserting the invalidity of this
Agreement or any of the Basic Documents, (B) seeking to prevent the
issuance of the Securities or the consummation of any of the
transactions contemplated by this Agreement or any of the Basic
Documents, or (C) seeking any determination or ruling that might
materially and adversely affect the performance by the Servicer of its
obligations under, or the validity or enforceability of, this
Agreement, the Securities or any of the Basic Documents or (D) relating
to the Servicer and which might adversely affect the federal or state
income, excise, franchise or similar tax attributes of the Securities;
(g) No Consents. No consent, approval, authorization or order
of or declaration or filing with any governmental authority is required
for the issuance or sale of the Securities or the consummation of the
other transactions contemplated by this Agreement, except such as have
been duly made or obtained.
(h) Taxes. The Servicer has filed on a timely basis all tax
returns required to be filed by it and paid all taxes, to the extent
that such taxes have become due.
(i) Chief Executive Office. The Servicer hereby represents and
warrants to the Trustee that the Servicer's principal place of business
and chief executive office is, and for the four months preceding the
date of this Agreement has been, located at: 2 Ada, Irvine, California.
SECTION 9.2. Liability of Servicer; Indemnities.
(a) The Servicer (in its capacity as such) shall be liable hereunder
only to the extent of the obligations in this Agreement specifically undertaken
by the Servicer and the representations made by the Servicer.
(i) The Servicer shall defend, indemnify and hold harmless the
Trust, the Trustee, the Owner Trustee, the Standby Servicer, the Note Insurer,
and the Securityholders from and against any and all costs, expenses, losses,
damages, claims and liabilities, arising out of or resulting from the use,
ownership
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or operation by the Servicer or any Affiliate thereof of any Financed Vehicle;
(ii) The Servicer shall indemnify, defend and hold harmless
the Trust, the Trustee, the Owner Trustee, the Standby Servicer, the Note
Insurer, and the Securityholders from and against any taxes that may at any time
be asserted against any of such parties with respect to the transactions
contemplated in this Agreement, including, without limitation, any sales, gross
receipts, general corporation, tangible personal property, privilege or license
taxes (but not including any federal or other income taxes, including franchise
taxes asserted with respect to, and as of the date of, the sale of the
Receivables and the Other Conveyed Property to the Trust or the issuance and
original sale of the Securities) and costs and expenses in defending against the
same;
(iii) The Servicer shall indemnify, defend and hold harmless
the Trust, the Trustee, the Owner Trustee, the Standby Servicer, the Note
Insurer, their respective officers, directors, agents and employees and the
Securityholders from and against any and all costs, expenses, losses, claims,
damages, and liabilities to the extent that such cost, expense, loss, claim,
damage, or liability arose out of, or was imposed upon the Trust, the Trustee,
the Standby Servicer, the Note Insurer or the Securityholders through the
negligence, willful misfeasance or bad faith of the Servicer in the performance
of its duties under this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement.
(iv) The Servicer shall indemnify, defend, and hold harmless
the Trustee, the Owner Trustee, the Standby Servicer and the Collateral Agent
from and against all costs, expenses, losses, claims, damages, and liabilities
arising out of or incurred in connection with the acceptance or performance of
the trusts and duties herein contained, if any, except to the extent that such
cost, expense, loss, claim, damage or liability: (A) shall be due to the willful
misfeasance, bad faith, or negligence (except for errors in judgment) of the
Trustee, the Owner Trustee, the Standby Servicer or Collateral Agent, as
applicable or (B) relates to any tax other than the taxes with respect to which
the Servicer shall be required to indemnify the Trustee, the Standby Servicer or
the Collateral Agent.
(b) Notwithstanding the foregoing, the Servicer shall not be obligated
to defend, indemnify, and hold harmless any Securityholders for any losses,
claims, damages or liabilities incurred by any Securityholders arising out of
claims, complaints, actions and allegations relating to Section 406 of ERISA or
Section 4975 of the Code as a result of the purchase or holding of a Security by
such Securityholder with the assets of a
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plan subject to such provisions of ERISA or the Code or the servicing,
management and operation of the Trust.
(c) For purposes of this Section 9.2, in the event of the termination
of the rights and obligations of the Servicer (or any successor thereto pursuant
to Section 9.3) as Servicer pursuant to Section 10.1, or a resignation by such
Servicer pursuant to this Agreement, such Servicer shall be deemed to be the
Servicer pending appointment of a successor Servicer pursuant to Section 10.2.
The provisions of this Section 9.2(c) shall in no way affect the survival
pursuant to Section 9.2(d) of the indemnification by the Servicer provided by
Section 9.2(a).
(d) Indemnification under this Section 9.2 shall survive the
termination of this Agreement and any resignation or removal of CPS as Servicer
and shall include reasonable fees and expenses of counsel and expenses of
litigation. If the Servicer shall have made any indemnity payments pursuant to
this Section and the recipient thereafter collects any of such amounts from
others, the recipient shall promptly repay such amounts to the Servicer, without
interest.
SECTION 9.3. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer or Standby Servicer.
(a) CPS shall not merge or consolidate with any other person, convey,
transfer or lease substantially all its assets as an entirety to another Person,
or permit any other Person to become the successor to CPS's business unless,
after the merger, consolidation, conveyance, transfer, lease or succession, the
successor or surviving entity shall be capable of fulfilling the duties of CPS
contained in this Agreement and shall be acceptable to the Controlling Party,
and, if an Insurer Default shall have occurred and be continuing, shall be an
Eligible Servicer. Any corporation (i) into which CPS may be merged or
consolidated, (ii) resulting from any merger or consolidation to which CPS shall
be a party, (iii) which acquires by conveyance, transfer, or lease substantially
all of the assets of CPS, or (iv) succeeding to the business of CPS, in any of
the foregoing cases shall execute an agreement of assumption to perform every
obligation of CPS under this Agreement and, whether or not such assumption
agreement is executed, shall be the successor to CPS under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties to this Agreement, anything in this Agreement to the contrary
notwithstanding; provided, however, that nothing contained herein shall be
deemed to release CPS from any obligation. CPS shall provide notice of any
merger, consolidation or succession pursuant to this Section to the Owner
Trustee, the Trustee, the Securityholders, the Note Insurer and each Rating
Agency. Notwithstanding the foregoing, CPS shall not merge or consolidate
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with any other Person or permit any other Person to become a successor to CPS's
business, unless (x) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Section 9.1 shall have been breached
(for purposes hereof, such representations and warranties shall speak as of the
date of the consummation of such transaction) and no event that, after notice or
lapse of time, or both, would become an Insurance Agreement Event of Default
shall have occurred and be continuing, (y) CPS shall have delivered to the Owner
Trustee, the Trustee, the Rating Agencies and the Note Insurer an Officer's
Certificate and an Opinion of Counsel each stating that such consolidation,
merger or succession and such agreement of assumption comply with this Section
and that all conditions precedent, if any, provided for in this Agreement
relating to such transaction have been complied with, and (z) CPS shall have
delivered to the Owner Trustee, the Trustee, the Rating Agencies and the Note
Insurer an Opinion of Counsel, stating in the opinion of such counsel, either
(A) all financing statements and continuation statements and amendments thereto
have been executed and filed that are necessary to preserve and protect the
interest of the Trust in the Receivables and the Other Conveyed Property and
reciting the details of the filings or (B) no such action shall be necessary to
preserve and protect such interest.
(b) Any corporation (i) into which the Standby Servicer may be merged
or consolidated, (ii) resulting from any merger or consolidation to which the
Standby Servicer shall be a party, (iii) which acquires by conveyance, transfer
or lease substantially all of the assets of the Standby Servicer, or (iv)
succeeding to the business of the Standby Servicer, in any of the foregoing
cases shall execute an agreement of assumption to perform every obligation of
the Standby Servicer under this Agreement and, whether or not such assumption
agreement is executed, shall be the successor to the Standby Servicer under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties to this Agreement, anything in this Agreement to the
contrary notwithstanding; provided, however, that nothing contained herein shall
be deemed to release the Standby Servicer from any obligation.
SECTION 9.4. Limitation on Liability of Servicer, Standby Servicer and
Others.
Neither the Servicer, the Standby Servicer nor any of the directors or
officers or employees or agents of the Servicer or Standby Servicer shall be
under any liability to the Trust or the Securityholders, except as provided in
this Agreement, for any action taken or for refraining from the taking of any
action pursuant to this Agreement; provided, however, that this provision shall
not protect the Servicer, the Standby Servicer or
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any such person against any liability that would otherwise be imposed by reason
of a breach of this Agreement or willful misfeasance, bad faith or negligence in
the performance of duties. CPS, the Standby Servicer and any director, officer,
employee or agent of CPS or the Standby Servicer may rely in good faith on the
written advice of counsel or on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising under this
Agreement.
SECTION 9.5. Delegation of Duties. The Servicer may at any time
delegate duties under this Agreement to sub-contractors who are in the business
of servicing automotive receivables with the prior written consent of the
Controlling Party as determined pursuant to Section 13.15 and (unless an
Insurance Agreement Event of Default shall have occurred and be continuing or
Norwest Bank Minnesota, National Association shall then be the Servicer) the
Holders of Class B Notes evidencing more than 50% of the outstanding principal
balance of the Class B Notes; provided, however, that no such delegation or
sub-contracting of duties by the Servicer shall relieve the Servicer of its
responsibility with respect to such duties; and provided further, that the
consent of the Holders of the requisite percentage of the outstanding principal
balance of the Class B Notes shall not be unreasonably withheld or delayed and
shall be deemed to have been given unless, on or before the Objection Date (as
defined below), the Trustee shall have received Objection Notices (as defined
below) from Holders of Class B Notes representing more than 50% of the
outstanding principal balance of the Class B Notes. Upon written request of the
Servicer, the Trustee shall deliver to each Class B Noteholder of record as of
the most recent Record Date a notice (a "Delegation Notice") prepared by the
Servicer (i) specifying the duties the Servicer proposes to delegate, (ii)
identifying the sub-contractor to whom it proposes to delegate such duties and
(iii) informing such Class B Noteholder that if it wishes to object to the
proposed delegation of duties, it must deliver a written notice of objection
(specifying in reasonable detail the reasons for its objection; such notice of
objection an "Objection Notice") on or before the date specified in such
Delegation Notice (the "Objection Date"), which Objection Date shall be a date
which is not more than 10 Business Days after the date the Servicer delivers
such Delegation Notice to the Trustee.
SECTION 9.6. Servicer and Standby Servicer Not to Resign. Subject to
the provisions of Section 9.3, neither the Servicer nor the Standby Servicer
shall resign from the obligations and duties imposed on it by this Agreement as
Servicer or Standby Servicer except upon a determination that by reason of a
change in legal requirements the performance of its duties under this Agreement
would cause it to be in violation of such legal requirements in a manner which
would have a material adverse effect on the Servicer or the Standby Servicer, as
the case may
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be, and the Note Insurer (so long as an Insurer Default shall not have occurred
and be continuing) or a Security Majority (if an Insurer Default shall have
occurred and be continuing) does not elect to waive the obligations of the
Servicer or the Standby Servicer, as the case may be, to perform the duties
which render it legally unable to act or to delegate those duties to another
Person. Any such determination permitting the resignation of the Servicer or
Standby Servicer shall be evidenced by an Opinion of Counsel to such effect
delivered and acceptable to the Trustee, the Owner Trustee and the Note Insurer
(unless an Insurer Default shall have occurred and be continuing). No
resignation of the Servicer shall become effective until, so long as no Insurer
Default shall have occurred and be continuing, the Standby Servicer or an entity
acceptable to the Note Insurer shall have assumed the responsibilities and
obligations of the Servicer or, if an Insurer Default shall have occurred and be
continuing, the Standby Servicer or a successor Servicer that is an Eligible
Servicer shall have assumed the responsibilities and obligations of the Standby
Servicer. No resignation of the Standby Servicer shall become effective until,
so long as no Insurer Default shall have occurred and be continuing, an entity
acceptable to the Security Insurer shall have assumed the responsibilities and
obligations of the Standby Servicer or, if an Insurer Default shall have
occurred and be continuing a Person that is an Eligible Servicer shall have
assumed the responsibilities and obligations of the Standby Servicer; provided,
however, that in the event a successor Standby Servicer is not appointed within
60 days after the Standby Servicer has given notice of its resignation and has
provided the Opinion of Counsel required by this Section 9.6, the Standby
Servicer may petition a court for its removal.
ARTICLE X
DEFAULT
SECTION 10.1. Servicer Termination Event. For purposes of this
Agreement, each of the following shall constitute a "Servicer Termination
Event":
(a) Any failure by the Servicer to deliver to the Trustee for
distribution to Securityholders any proceeds or payment required to be so
delivered under the terms of this Agreement that continues unremedied for a
period of two Business Days (one Business Day with respect to payment of
Purchase Amounts) after written notice is received by the Servicer from the
Trustee or the Note Insurer (unless an Insurer Default shall have occurred and
be continuing) or after discovery of such failure by a Responsible officer of
the Servicer;
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(b) Failure by the Servicer to deliver to the Trustee and the Note
Insurer (so long as an Insurer Default shall not have occurred and be
continuing), the Servicer's Certificate within five days after the date on which
such Servicer's Certificate is required to be delivered, or failure on the part
of the Servicer to observe its covenants and agreements set forth in Section
9.3(a);
(c) Failure on the part of the Servicer duly to observe or perform any
other covenants or agreements of the Servicer set forth in this Agreement, which
failure (i) materially and adversely affects the rights of Securityholders
(determined without regard to the availability of funds under the Policy), or of
the Note Insurer (unless an Insurer Default shall have occurred and be
continuing), and (ii) continues unremedied for a period of 30 days after the
date on which written notice of such failure, requiring the same to be remedied,
shall have been given (1) to the Servicer by the Trustee or the Note Insurer or
(2) to the Servicer and to the Trustee and the Note Insurer by the Holders of
Class A Notes evidencing not less than 25% of the outstanding principal balance
of the Class A Notes or, after the Class A Notes have been paid in full and all
outstanding Reimbursement Obligations and other amounts due to the Note Insurer
have been paid in full, by the Holders of Class B Notes evidencing not less than
25% of the outstanding principal balance of the Class B Notes;
(d) The entry of a decree or order by a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
conservator, receiver, or liquidator for the Servicer or the Seller (or, so long
as CPS is Servicer, any of the Servicer's Affiliates) in any bankruptcy,
insolvency, readjustment of debt, marshaling of assets and liabilities, or
similar proceedings, or for the winding up or liquidation of its affairs, and
the continuance of any such decree or order unstayed and in effect for a period
of 60 consecutive days; or
(e) The consent by the Servicer or the Seller (or, so long as CPS is
Servicer, any of the Servicer's Affiliates) to the appointment of a conservator,
trustee, receiver or liquidator in any bankruptcy, insolvency, readjustment of
debt, marshalling of assets and liabilities, or similar proceedings of or
relating to the Servicer or the Seller (or, so long as CPS is Servicer, any of
the Servicer's Affiliates) of or relating to substantially all of its property;
or the Servicer or the Seller (or, so long as CPS is Servicer, any of the
Servicer's Affiliates) or the Seller shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or
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(f) Any representation, warranty or statement of the Servicer made in
this Agreement or any certificate, report or other writing delivered pursuant
hereto shall prove to be incorrect in any material respect as of the time when
the same shall have been made, and the incorrectness of such representation,
warranty or statement has a material adverse effect on the Trust or the
Securityholders and, within 30 days after written notice thereof shall have been
given (1) to the Servicer by the Trustee or the Note Insurer or (2) to the
Servicer and to the Trustee and the Note Insurer by the Holders of Class A Notes
evidencing not less than 25% of the outstanding principal balance of the Class A
Notes or, after the Class A Notes have been paid in full and all outstanding
Reimbursement Obligations and other amounts due to the Note Insurer have been
paid in full, by the Holders of Class B Notes evidencing not less than 25% of
the outstanding principal balance of the Class B Notes, the circumstances or
condition in respect of which such representation, warranty or statement was
incorrect shall not have been eliminated or otherwise cured; or
(g) So long as an Insurer Default shall not have occurred and be
continuing, the Note Insurer shall not have delivered a Servicer Extension
Notice pursuant to Section 4.14; or
(h) So long as an Insurer Default shall not have occurred and be
continuing, an Insurance Agreement Event of Default or under any other Insurance
and Indemnity Agreement relating to any Series an Event of Default thereunder
shall have occurred; or
(i) A claim is made under the Note Policy.
SECTION 10.2. Consequences of a Servicer Termination Event. If a
Servicer Termination Event shall occur and be continuing, the Note Insurer (or,
if an Insurer Default shall have occurred and be continuing either the Trustee
or holders of Notes evidencing not less than 25% of the outstanding principal
amount of the Notes, or, if the Notes have been paid in full, holders of
Certificates evidencing not less than 25% of the outstanding principal amount of
the Certificates (to the extent it has knowledge thereof), by notice given in
writing to the Servicer (and to the Trustee if given by the Note Insurer or the
Securityholders) or by non-extension of the term of the Servicer as referred to
in Section 4.14 may terminate all of the rights and obligations of the Servicer
under this Agreement. The Servicer shall be entitled to its pro rata share of
the Servicing Fee for the number of days in the Collection Period prior to the
effective date of its termination. On or after the receipt by the Servicer of
such written notice or upon termination of the term of the Servicer, all
authority, power, obligations and responsibilities of the Servicer under this
Agreement, whether with respect to the Notes, the Certificates or the Other
Conveyed
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Property or otherwise, automatically shall pass to, be vested in and become
obligations and responsibilities of the Standby Servicer (or such other
successor Servicer appointed by the Controlling Party under Section 10.3);
provided, however, that the successor Servicer shall have no liability with
respect to any obligation which was required to be performed by the terminated
Servicer prior to the date that the successor Servicer becomes the Servicer or
any claim of a third party based on any alleged action or inaction of the
terminated Servicer. The successor Servicer is authorized and empowered by this
Agreement to execute and deliver, on behalf of the terminated Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement of the Receivables and the other Conveyed Property and related
documents to show the Trust as lienholder or secured party on the related Lien
Certificates, or otherwise. The terminated Servicer agrees to cooperate with the
successor Servicer in effecting the termination of the responsibilities and
rights of the terminated Servicer under this Agreement, including, without
limitation, the transfer to the successor Servicer for administration by it of
all cash amounts that shall at the time be held by the terminated Servicer for
deposit, or have been deposited by the terminated Servicer, in the Collection
Account or thereafter received with respect to the Receivables and the delivery
to the successor Servicer of all Receivable Files and a computer tape in
readable form as of the most recent Business Day containing all information
necessary to enable the successor Servicer or a successor Servicer to service
the Receivables and the Other Conveyed Property. All reasonable costs and
expenses (including attorneys' fees) incurred in connection with transferring
the Receivable Files to the successor Servicer and amending this Agreement to
reflect such succession as Servicer pursuant to this Section 10.1 shall be paid
by the predecessor Servicer upon presentation of reasonable documentation of
such costs and expenses. In addition, any successor Servicer shall be entitled
to payment from the immediate predecessor Servicer for reasonable transition
expenses incurred in connection with acting as successor Servicer, and to the
extent not so paid, such payment shall be made pursuant to Section 5.7(b)
hereof. Upon receipt of notice of the occurrence of Servicer Termination Event,
the Trustee shall give notice thereof to the Rating Agencies. If requested by
the Controlling Party, the successor Servicer shall terminate the Lockbox
Agreement and direct the Obligors to make all payments under the Receivables
directly to the successor Servicer (in which event the successor Servicer shall
process such payments in accordance with Section 4.2(e)), or to a lockbox
established by the successor Servicer at the direction of the Controlling Party,
at the successor Servicer's expense. The terminated Servicer shall grant the
Trustee, the successor
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Servicer and the Controlling Party reasonable access to the terminated
Servicer's premises at the terminated Servicer's expense.
SECTION 10.3. Appointment of Successor.
(a) On and after the time the Servicer receives a notice of termination
pursuant to Section 10.2, upon non-extension of the servicing term as referred
to in Section 4.14, or upon the resignation of the Servicer pursuant to Section
9.6, the predecessor Servicer shall continue to perform its functions as
Servicer under this Agreement, in the case of termination, only until the date
specified in such termination notice or, if no such date is specified in a
notice of termination, until receipt of such notice and, in the case of
expiration and non-renewal of the term of the Servicer upon the expiration of
such term, and, in the case of resignation, until the later of (x) the date 45
days from the delivery to the Trustee of written notice of such resignation (or
written confirmation of such notice) in accordance with the terms of this
Agreement and (y) the date upon which the predecessor Servicer shall become
unable to act as Servicer, as specified in the notice of resignation and
accompanying Opinion of Counsel. In the event of termination of the Servicer,
Norwest Bank Minnesota, National Association, as Standby Servicer, shall assume
the obligations of Servicer hereunder on the date specified in such written
notice (the "Assumption Date") pursuant to the Servicing Assumption Agreement
or, in the event that the Note Insurer shall have determined that a Person other
than the Standby Servicer shall be the successor Servicer in accordance with
Section 10.2, on the date of the execution of a written assumption agreement by
such Person to serve as successor Servicer. Notwithstanding the Standby
Servicer's assumption of, and its agreement to perform and observe, all duties,
responsibilities and obligations of CPS as Servicer under this Agreement arising
on and after the Assumption Date, the Standby Servicer shall not be deemed to
have assumed or to become liable for, or otherwise have any liability for, any
duties, responsibilities, obligations or liabilities of CPS or any predecessor
Servicer arising on or before the Assumption Date, whether provided for by the
terms of this Agreement, arising by operation of law or otherwise, including,
without limitation, any liability for, any duties, responsibilities, obligations
or liabilities of CPS or any predecessor Servicer arising on or before the
Assumption Date under Section 4.7 or 9.2 of this Agreement, regardless of when
the liability, duty, responsibility or obligation of CPS or any predecessor
Servicer therefore arose, whether provided by the terms of this Agreement,
arising by operation of law or otherwise. Notwithstanding the above, if the
Standby Servicer shall be legally unable or unwilling to act as Servicer, and an
Insurer Default shall have occurred and be continuing, the Standby Servicer, the
Trustee or
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a Security Majority may petition a court of competent jurisdiction to appoint
any Eligible Servicer as the successor to the Servicer. Pending appointment
pursuant to the preceding sentence, the Standby Servicer shall act as successor
Servicer unless it is legally unable to do so, in which event the outgoing
Servicer shall continue to act as Servicer until a successor has been appointed
and accepted such appointment. Subject to Section 9.6, no provision of this
Agreement shall be construed as relieving the Standby Servicer of its obligation
to succeed as successor Servicer upon the termination of the Servicer pursuant
to Section 10.2, the resignation of the Servicer pursuant to Section 9.6 or the
non-extension of the servicing term of the Servicer, as referred to in Section
4.14. If upon the termination of the Servicer pursuant to Section 10.2 or the
resignation of the Servicer pursuant to Section 9.6, the Controlling Party
appoints a successor Servicer other than the Standby Servicer, the Standby
Servicer shall not be relieved of its duties as Standby Servicer hereunder.
(b) Any successor Servicer shall be entitled to such compensation
(whether payable out of the Collection Account or otherwise) as the Servicer
would have been entitled to under this Agreement if the Servicer had not
resigned or been terminated hereunder.
SECTION 10.4. Notification to Noteholders and Certificateholders. Upon
any termination of, or appointment of a successor to, the Servicer, the Trustee
shall give prompt written notice thereof to each Securityholder, the Owner
Trustee and to the Rating Agencies.
SECTION 10.5. Waiver of Past Defaults. Subject to the approval of the
Note Insurer, the Holders of Class A Notes evidencing more than 50% of the
outstanding principal balance of the Class A Notes or, after the Class A Notes
have been paid in full, the Holders of Class B Notes evidencing more than 50% of
the outstanding principal balance of the Class B Notes or, after the Class B
Notes have been paid in full, the Holders of Certificates evidencing more than
50% of the outstanding principal balance of the Certificates, may on behalf of
all the Noteholders and Certificateholders, waive any default be the Servicer in
the performance of its obligations under this Agreement and the consequences
thereof (except a default in making any required deposits to or payments from
any of the Trust Accounts in accordance with the terms of this Agreement. Upon
any such waiver of a past default, such default shall cease to exist, and any
Servicer Termination Event arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereto.
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SECTION 10.6. Action Upon Certain Failures of the Servicer. In the
event that the Trustee shall have knowledge of any failure of the Servicer
specified in Section 10.1 which would give rise to a right of termination under
such Section upon the Servicer's failure to remedy the same after notice, the
Trustee shall give notice thereof to the Servicer and the Note Insurer. For all
purposes of this Agreement (including, without limitation, Section 6.2(b) and
this Section 10.6), the Trustee shall not be deemed to have knowledge of any
failure of the Servicer as specified in Section 10.1 unless notified thereof in
writing by the Servicer, the Note Insurer or by a Noteholder. The Trustee shall
be under no duty or obligation to investigate or inquire as to any potential
failure of the Servicer specified in Section 10.1.
ARTICLE XI
TERMINATION
SECTION 11.1. Optional Purchase of All Receivables.
(a) (i) On the last day of any Collection Period as of which the Pool
Balance shall be less than or equal to 15% of the Original Pool Balance, the
Servicer and the Seller each shall have the option to sell in a public auction
the Owner Trust Estate, other than the Trust Accounts (with the consent of the
Note Insurer, given or withheld in the Note Insurer's sole discretion, if such
sale would result in a claim on the Note Policy or would result in any amount
owing to the Note Insurer under the Insurance Agreement remaining unpaid);
provided, however, that the amount to be paid for such purchase (as set forth in
the following sentence) shall be sufficient to pay the full amount of principal,
premium, if any, and interest then due and payable on the Notes. The Servicer or
the Seller, as the case may be, shall direct the purchaser in any such auction
to deposit pursuant to Section 5.6 in the Collection Account an amount at least
equal to the aggregate Purchase Amount for the Receivables (including Liquidated
Receivables), plus the appraised value of any other property held by the Trust,
such value to be determined by an appraiser mutually agreed upon by the
Servicer, the Note Insurer and the Trustee, and such purchaser shall succeed to
all interests in and to the Trust.
(ii) On the last day of any Collection Period as of which the
Pool Balance shall be less than or equal to 10% of the Original Pool Balance,
the Servicer and the Seller each shall have the option to purchase the Owner
Trust Estate, other than the Trust Accounts (with the consent of the Note
Insurer if such purchase would result in a claim on the Note Policy or would
result in any amount owing to the Note Insurer under the
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Insurance Agreement remaining unpaid); provided, however, that the amount to be
paid for such purchase (as set forth in the following sentence) shall be
sufficient to pay the full amount of principal, premium, if any, and interest
then due and payable on the Securities. To exercise such option, the Servicer or
the Seller, as the case may be, shall deposit pursuant to Section 5.6 in the
Collection Account an amount equal to the aggregate Purchase Amount for the
Receivables (including Liquidated Receivables), plus the appraised value of any
other property held by the Trust, such value to be determined by an appraiser
mutually agreed upon by the Servicer, the Note Insurer and the Trustee, and
shall succeed to all interests in and to the Trust.
(b) Upon any sale of the assets of the Trust pursuant to Section 9.2 of
the Trust Agreement, the Servicer shall instruct the Trustee to deposit the
proceeds from such sale after all payments and reserves therefrom (including the
expenses of such sale) have been made (the "Insolvency Proceeds") in the
Collection Account.
(c) Notice of any termination of the Trust shall be given by the
Servicer, which notice shall include, among other things, the items specified in
Section 9.1(c) of the Trust Agreement, to the Owner Trustee, the Trustee, the
Note Insurer and the Rating Agencies as soon as practicable after the Servicer
has received notice thereof.
(d) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder and
the Owner Trustee will succeed to the rights of, and assume the obligations of,
the Trustee to this Agreement.
ARTICLE XII
ADMINISTRATIVE DUTIES OF THE SERVICER
SECTION 12.1. Administrative Duties.
(a) Duties with Respect to the Indenture. The Servicer shall perform
all its duties and the duties of the Issuer under the Indenture. In addition,
the Servicer shall consult with the Owner Trustee as the Servicer deems
appropriate regarding the duties of the Issuer under the Indenture. The Servicer
shall monitor the performance of the Issuer and shall advise the Owner Trustee
when action is necessary to comply with the Issuer's duties under the Indenture.
The Servicer shall prepare for execution by the Issuer or shall cause the
preparation by other appropriate Persons of all such documents, reports,
filings,
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instruments, certificates and opinions as it shall be the duty of the Issuer to
prepare, file or deliver pursuant to the Indenture. In furtherance of the
foregoing, the Servicer shall take all necessary action that is the duty of the
Issuer to take pursuant to the Indenture, including, without limitation,
pursuant to Sections 2.7, 3.5, 3.6, 3.7, 3.9, 3.10, 3.17, 5.1, 5.4, 7.3, 8.3,
9.2, 9.3, 11.1 and 11.15 of the Indenture.
(b) Duties with Respect to the Issuer.
(i) In addition to the duties of the Servicer set forth in
this Agreement or any of the Basic Documents, the Servicer shall perform such
calculations and shall prepare for execution by the Issuer or the Owner Trustee
or shall cause the preparation by other appropriate Persons of all such
documents, reports, filings, instruments, certificates and opinions as it shall
be the duty of the Issuer or the Owner Trustee to prepare, file or deliver
pursuant to this Agreement or any of the Basic Documents or under state and
federal tax and securities laws, and at the request of the Owner Trustee shall
take all appropriate action that it is the duty of the Issuer to take pursuant
to this Agreement or any of the Basic Documents, including, without limitation,
pursuant to Sections 2.6 and 2.11 of the Trust Agreement. In accordance with the
directions of the Issuer or the Owner Trustee, the Servicer shall administer,
perform or supervise the performance of such other activities in connection with
the Collateral (including the Basic Documents) as are not covered by any of the
foregoing provisions and as are expressly requested by the Issuer or the Owner
Trustee and are reasonably within the capability of the Servicer.
(ii) Notwithstanding anything in this Agreement or any of the
Basic Documents to the contrary, the servicer shall be responsible for promptly
notifying the Owner Trustee and the Trustee in the event that any withholding
tax is imposed on the Issuer's payments (or allocations of income) to an owner
(as defined in the Trust Agreement) as contemplated this Agreement. Any such
notice shall be in writing and specify the amount of any withholding tax
required to be withheld by the Owner Trustee or the Trustee pursuant to such
provision.
(iii) Notwithstanding anything in this Agreement or the Basic
Documents to the contrary, the Servicer shall be responsible for performance of
the duties of the Issuer or the Seller set forth in Section 5.1 of the Trust
Agreement with respect to, among other things, accounting and reports to owners
(as defined in the Trust Agreement); provided, however, that once prepared by
the Servicer the Owner Trustee shall retain responsibility for the distribution
of the Schedule K-1s necessary to enable each Certificateholder to prepare its
federal and state income tax returns.
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(iv) The Servicer shall perform the duties of the Servicer
specified in Section 10.2 of the Trust Agreement required to be performed in
connection with the resignation or removal of the Owner Trustee, and any other
duties expressly required to be performed by the Servicer under this Agreement
or any of the Basic Documents.
(v) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Servicer may enter into transactions with
or otherwise deal with any of its Affiliates; provided, however, that the terms
of any such transactions or dealings shall be in accordance with any directions
received from the Issuer and shall be, in the Servicer's opinion, no less
favorable to the Issuer in any material respect.
(c) Tax Matters. The Servicer shall prepare and file, on behalf of the
Seller, all tax returns, tax elections, financial statements and such annual or
other reports of the Issuer as are necessary for preparation of tax reports as
provided in Article V of the Trust Agreement, including without limitation forms
1099 and 1066. All tax returns will be signed by the Seller.
(d) Non-Ministerial Matters. With respect to matters that in the
reasonable judgment of the Servicer are non-ministerial, the Servicer shall not
take any action pursuant to this Article XII unless within a reasonable time
before the taking of such action, the Servicer shall have notified the Owner
Trustee and the Trustee of the proposed action and the Owner Trustee and, with
respect to items (i), (ii), (iii) and (iv) below, the Trustee shall not have
withheld consent or provided an alternative direction. For the purpose of the
preceding sentence, "non-ministerial matters" shall include:
(i) the amendment of or any supplement to the Indenture;
(ii) the initiation of any claim or lawsuit by the Issuer and
the compromise of any action, claim or lawsuit brought by or against
the Issuer (other than in connection with the collection of the
Receivables);
(iii) the amendment, change or modification of this Agreement
or any of the Basic Documents;
(iv) the appointment of successor Note Registrars, successor
Paying Agents and successor Trustees pursuant to the Indenture or the
appointment of Successor Servicers or the consent to the assignment by
the Note Registrar, Paying Agent or Trustee of its obligations under
the Indenture; and
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(v) the removal of the Trustee.
(e) Exceptions. Notwithstanding anything to the contrary in this
Agreement except as expressly provided herein or in the other Basic Documents,
the Servicer, in its capacity hereunder, shall not be obligated to, and shall
not, (1) make any payments to the Noteholders or Certificateholders under the
Basic Documents, (2) sell the Indenture Trust Property pursuant to Section 5.5
of the Indenture, (3) take any other action that the Issuer directs the Servicer
not to take on its behalf or (4) in connection with its duties hereunder assume
any indemnification obligation of any other Person.
(f) Limitation of Standby Servicer's Obligations. The Standby Servicer
or any successor Servicer shall not be responsible for any obligations or duties
of the servicer under Section 12.1.
SECTION 12.2. Records. The Servicer shall maintain appropriate books of
account and records relating to services performed under this Agreement, which
books of account and records shall be accessible for inspection by the Issuer at
any time during normal business hours.
SECTION 12.3. Additional Information to be Furnished to the Issuer. The
Servicer shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.1. Amendment.
(a) This Agreement may be amended from time to time by the parties
hereto, with the consent of the Trustee (which consent may not be unreasonably
withheld), with the prior written consent of the Note Insurer (so long as no
Insurer Default has occurred and is continuing) but without the consent of any
of the Noteholders or the Certificateholders, to cure any ambiguity, to correct
or supplement any provisions in this Agreement, to comply with any changes in
the Code, or to make any other provisions with respect to matters or questions
arising under this Agreement which shall not be inconsistent with the provisions
of this Agreement or the Insurance Agreement; provided, however, that such
action shall not, as evidenced by an Opinion of Counsel delivered to the Owner
Trustee and the Trustee, adversely affect in any material respect the interests
of any Noteholder or Certificateholder; provided further that if an Insurer
Default
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has occurred and is continuing, such action shall not materially adversely
affect the interests of the Note Insurer.
This Agreement may also be amended from time to time by the parties
hereto, with the consent of the Note Insurer, the consent of the Trustee, the
consent of the Holders of Class A Notes evidencing not less than a majority of
the outstanding principal amount of the Class A Notes, the consent of the
Holders of Class B Notes evidencing not less than a majority of the outstanding
principal amount of the Class B Notes and the consent of the Holders (as defined
in the Trust Agreement) of Certificates evidencing not less than a majority of
the Certificate Balance for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders or the Certificateholders;
provided, however, that no such amendment shall (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Receivables or distributions that shall be required to be made for
the benefit of the Noteholders or the Certificateholders or (b) reduce the
aforesaid percentage of the outstanding principal amount of each Class of Notes
or the Certificates, the Holders of which are required to consent to any such
amendment, without the consent of the Holders of all the outstanding Notes and
the Holders (as defined in the Trust Agreement) of all the outstanding
Certificates, of each Class affected thereby; provided further, that if an
Insurer Default has occurred and is continuing, such action shall not materially
adversely affect the interest of the Note Insurer.
Promptly after the execution of any such amendment or consent, the
Trustee shall furnish written notification of the substance of such amendment or
consent to each Securityholder and the Rating Agencies.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents (and any
other consents of Noteholders or Certificateholders provided for in this
Agreement) and of evidencing the authorization of any action by Noteholders or
Certificateholders shall be subject to such reasonable requirements as the
Trustee or the Owner Trustee, as applicable, may prescribe.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee and the Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or permitted
by this Agreement and the Opinion of Counsel referred to in Section 13.2(i)(1)
has been
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delivered. The Owner Trustee, the Standby Servicer and the Trustee may, but
shall not be obligated to, enter into any such amendment which affects the
Issuer's, the Owner Trustee's, the Standby Servicer's or the Trustee's, as
applicable, own rights, duties or immunities under this Agreement or otherwise.
(b) Notwithstanding anything to the contrary contained in Section
13.1(a) above, the provisions of the Agreement relating to (i) the Spread
Account Supplement, the Spread Account, the Specified Spread Account Requisite
Amount, a Trigger Event or any component definition of a Trigger Event and (ii)
any additional sources of funds which may be added to the Spread Account or uses
of funds on deposit in the Spread Account may be amended in any respect by the
Seller, the Servicer, the Note Insurer and the Collateral Agent (the consent of
which shall not be withheld or delayed with respect to any amendment that does
not adversely affect the Collateral Agent) without the consent of, or notice to,
the Noteholders or the Certificateholders.
SECTION 13.2. Protection of Title to Trust.
(a) The Seller or Servicer or both shall execute and file such
financing statements and cause to be executed and filed such continuation
statements, all in such manner and in such places as may be required by law
fully to preserve, maintain and protect the interest of the Issuer and the
interests of the Trustee in the Receivables and in the proceeds thereof. The
Seller shall deliver (or cause to be delivered) to the Note Insurer, the Owner
Trustee and the Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing.
(b) Neither the Seller nor the Servicer shall change its name, identity
or corporate structure in any manner that would, could or might make any
financing statement or continuation statement filed in accordance with paragraph
(a) above seriously misleading within the meaning of section 9-402(7) of the
UCC, unless it shall have given the Note Insurer, the Owner Trustee and the
Trustee at least five days' prior written notice thereof and shall have promptly
filed appropriate amendments to all previously filed financing statements or
continuation statements. Promptly upon such filing, the Seller or the Servicer,
as the case may be, shall deliver an Opinion of Counsel in form and substance
reasonably satisfactory to the Note Insurer, stating either (A) all financing
statements and continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Trust and the
Trustee in the Receivables, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given, or (B)
no such action shall be necessary to preserve and protect such interest.
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(c) Each of the Seller and the Servicer shall have an obligation to
give the Note Insurer, the Owner Trustee and the Trustee at least 60 days' prior
written notice of any relocation of its principal executive office if, a; a
result of such relocation, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall promptly file any such
amendment. The Servicer shall at all times maintain each office from which it
shall service Receivables, and its principal executive office, within the United
States of America.
(d) The servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection Account
in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables to the Issuer,
the Servicer's master computer records (including any backup archives) that
refer to a Receivable shall indicate clearly the interest of the Trust in such
Receivable and that such Receivable is owned by the Trust. Indication of the
Trust's interest in a Receivable shall be deleted from or modified on the
Servicer's computer systems when, and only when, the related Receivable shall
have been paid in full or repurchased.
(f) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender or other transferee, the
Servicer shall give to such prospective purchaser, lender or other transferee
computer tapes, records or printouts (including any restored from backup
archives) that, if they shall refer in any manner whatsoever to any Receivable,
shall indicate clearly that such Receivable has been sold and is owned by the
Trust.
(g) The Servicer shall permit the Trustee, the Standby Servicer and the
Note Insurer and its agents at any time during normal business hours to inspect,
audit, and make copies of and abstracts from the Servicer's records regarding
any Receivable.
(h) Upon request, the Servicer shall furnish to the Note Insurer, the
Owner Trustee or to the Trustee, within five Business Days, a list of all
Receivables (by contract number and name of Obligor) then held as part of the
Trust, together with a
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reconciliation of such list to the Schedule of Receivables and to each of the
Servicer's Certificates furnished before such request indicating removal of
Receivables from the Trust.
(i) The Servicer shall deliver to the Note Insurer, the Owner Trustee
and the Trustee:
(i) promptly after the execution and delivery of the Agreement
and, if required pursuant to Section 13.1, of each amendment, an
Opinion of Counsel stating that, in the opinion of such counsel, in
form and substance reasonably satisfactory to the Note Insurer, either
(A) all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the
interest of the Trust and the Trustee in the Receivables, and reciting
the details of such filings or referring to prior Opinions of Counsel
in which such details are given, or (B) no such action shall be
necessary to preserve and protect such interest; and
(ii) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Cutoff Date, an Opinion of Counsel, dated as of a date during
such 90-day period, stating that, in the opinion of such counsel,
either (A) all financing statements and continuation statements have
been executed and filed that are necessary fully to preserve and
protect the interest of the Trust and the Trustee in the Receivables,
and reciting the details of such filings or referring to prior Opinions
of Counsel in which such details are given, or (B) no such action shall
be necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (i) or (ii) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
SECTION 13.3. Notices. All demands, notices and communications upon or
to the Seller, the Servicer, the Owner Trustee, the Trustee or the Rating
Agencies under this Agreement shall be in writing, personally delivered, or
mailed by certified mail, return receipt requested, and shall be deemed to have
been duly given upon receipt (a) in the case of the Seller to CPS Receivables
Funding Corp., 2 Ada, Irvine, California 92618, (b) in the case of the Servicer
to Consumer Portfolio Services, Inc., 2 Ada, Irvine, California, Attention:
Chief Financial officer, (c) in the case of the Issuer or the Owner Trustee, at
the Corporate Trust Office of the Owner Trustee, (d) in the case of the Trustee
or the Collateral Agent, at the Corporate Trust Office, (e) in the case of the
Note Insurer, to 350 Park Avenue, New York, New York 10022 Attention: Senior
Vice President,
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Surveillance (Telecopy: (212) 339-3547); (f) in the case of Moody's, to Moody's
Investors Service, Inc., ABS Monitoring Department, 99 Church Street, New York,
New York 10007; and (g) in the case of Standard & Poor's, to Standard & Poor's
Ratings Group, 25 Broadway, 15th Floor, New York, New York 10004, Attention:
Asset Backed Surveillance Department. Any notice required or permitted to be
mailed to a Noteholder or Certificateholder shall be given by first class mail,
postage prepaid, at the address of such Holder as shown in the Certificate
Register or Note Register, as applicable. Any notice so mailed within the time
prescribed in the Agreement shall be conclusively presumed to have been duly
given, whether or not the Certificateholder or Noteholder shall receive such
notice.
SECTION 13.4. Assignment. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
permitted assigns. Notwithstanding anything to the contrary contained herein,
except as provided ln Sections 8.4 and 9.3 and as provided in the provisions of
this Agreement concerning the resignation of the Servicer, this Agreement may
not be assigned by the Seller or the Servicer without the prior written consent
of the Owner Trustee, the Trustee, the Standby Servicer, the Trustee and the
Note Insurer (or if an Insurer Default shall have occurred and be continuing the
Holders of Notes evidencing not less than 66% of the principal amount of the
outstanding Notes and the Holders of Certificates, the aggregate Certificate
Balance of which is not less than 66%.
SECTION 13.5. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the parties hereto and for the benefit
of the Owner Trustee and the Certificateholders (including the Seller), the
Trustee and the Noteholders, as third-party beneficiaries. The Insurer and its
successors and assigns shall be a third-party beneficiary to the provisions of
this Agreement, and shall be entitled to rely upon and directly enforce such
provisions of this Agreement so long as no Insurer Default shall have occurred
and be continuing. Except as expressly stated otherwise, any right of the Note
Insurer to direct, appoint, consent to, approve of, or take any action under
this Agreement, shall be a right exercised by the Note Insurer in its sole and
absolute discretion. The Insurer may disclaim any of its rights and powers under
this Agreement (but not its duties and obligations under the Note Policy) upon
delivery of a written notice to the Owner Trustee. Nothing in this Agreement,
whether express or implied, shall be construed to give to any other Person any
legal or equitable right, remedy or claim in the Owner Trust Estate or under or
in respect of this Agreement or any covenants, conditions or provisions
contained herein.
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SECTION 13.6. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 13.7. Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 13.8. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 13.9. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 13.10. Assignment to Trustee. The Seller hereby acknowledges
and consents to any mortgage, pledge, assignment and grant of a security
interest by the Issuer to the Trustee pursuant to the Indenture for the benefit
of the Noteholders of ail right, title and interest of the Issuer in, to and
under the Receivables and/or the assignment of any or all of the Issuer's rights
and obligations hereunder to the Trustee.
SECTION 13.11. Nonpetition Covenants.
(a) Notwithstanding any prior termination of this Agreement, the
Servicer and the Seller shall not, prior to the date which is one year and one
day after the termination of this Agreement with respect to the Issuer,
acquiesce, petition or otherwise invoke or cause the Issuer to invoke the
process of any court or government authority for the purpose of commencing or
sustaining a case against the Issuer under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Issuer or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Issuer.
(b) Notwithstanding any prior termination of this Agreement, the
Servicer shall not, prior to the date that is one year and one day after the
termination of this Agreement with
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respect to the Seller, acquiesce to, petition or otherwise invoke or cause the
Seller to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Seller under any federal
or state bankruptcy, insolvency or similar law, appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator, or other similar
official of the Seller or any substantial part of its property, or ordering the
winding up or liquidation of the affairs of the Seller.
SECTION 13.12. Limitation of Liability of Owner Trustee and Trustee.
(a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by Bankers Trust (Delaware) not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Bankers Trust (Delaware) in its individual capacity or,
except as expressly provided in the Trust Agreement, as Owner Trustee have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Issuer hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto, as to all of which recourse shall be had
solely to the assets of the Issuer. For all purposes of this Agreement, in the
performance of its duties or obligations hereunder or in the performance of any
duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been executed and delivered by Norwest Bank Minnesota, National
Association, not in its individual capacity but solely as Trustee and Standby
Servicer and in no event shall Norwest Bank Minnesota, National Association,
have any liability for the representations, warranties, covenants, agreements or
other obligations of the Issuer hereunder or in any of the certificates, notices
or agreements delivered pursuant hereto, as to all of which recourse shall be
had solely to the assets of the Issuer.
(c) In no event shall Norwest Bank Minnesota, National Association, in
any of its capacities hereunder, be deemed to have assumed any duties of the
Owner Trustee under the Delaware Business Trust Statute, common law, or the
Trust Agreement.
SECTION 13.13. Independence of the Servicer. For all purposes of this
Agreement, the Servicer shall be an independent contractor and shall not be
subject to the supervision of the Issuer, the Trustee and Standby Servicer or
the Owner Trustee with respect to the manner in which it accomplishes the
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performance of its obligations hereunder. Unless expressly authorized by this
Agreement, the Servicer shall have no authority to act for or represent the
Issuer or the Owner Trustee in any way and shall not otherwise be deemed an
agent of the Issuer or the Owner Trustee.
SECTION 13.14. No Joint Venture. Nothing contained in this Agreement
(i) shall constitute the Servicer and either of the Issuer or the Owner Trustee
as members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
SECTION 13.15. Insurer as Controlling Party. Each Noteholder by
purchase of the Notes held by it acknowledges that the Trustee, as partial
consideration of the issuance of the Note Policy, has agreed that the Note
Insurer shall have certain rights hereunder for so long as no Insurer Default
shall have occurred and be continuing. So long as an Insurer Default has
occurred and is continuing, any provision giving the Note Insurer the right to
direct, appoint or consent to, approve of, or take any action under this
Agreement shall be inoperative during the period of such Insurer Default and
such right shall instead vest in the Trustee acting at the direction of the
holders of Class A Notes evidencing, unless otherwise specified, more than 50%
of the principal balance of the Class A Notes. From and after such time as the
Class A Notes have been paid in full and all outstanding amounts due to the Note
Insurer have been paid in full, any provision giving the Note Insurer or the
Class A Noteholders the right to direct, appoint or consent to, approve of, or
take any action under this Agreement shall be inoperative and such right shall
instead vest in the Trustee acting at the direction of the Holders of Class B
Notes evidencing, unless otherwise specified, more than 50% of the principal
balance of the Class B Notes. From and after such time as the Class A Notes and
Class B Notes have been paid in full, any provision giving the Note Insurer or
the Class A Noteholders the right to direct, appoint or consent to, approve of,
or take any action under this Agreement shall be inoperative and such right
shall instead vest in the Trustee acting at the direction of the holders of
Certificates evidencing more than 50% of the principal balance of the
Certificates, unless otherwise specified. The Insurer may disclaim any of its
rights and powers under this Agreement (but not its duties and obligations under
the Policy) upon delivery of a written notice to the Trustee. The Insurer may
give or withhold any consent hereunder in its sole and absolute discretion.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective duly authorized officers as of
the day and the year first above written.
CPS AUTO RECEIVABLES
TRUST 1997-3
by
BANKERS TRUST (DELAWARE),
not in its individual
capacity, but solely as Owner
Trustee on behalf of the Trust
By ___________________________
Name:
Title:
CPS RECEIVABLES CORP., as Seller
By ___________________________
Name:
Title:
CONSUMER PORTFOLIO SERVICES, INC.,
as Servicer
By ___________________________
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
not in its individual
capacity, but solely as
Standby Servicer and Trustee,
By ___________________________
Name:
Title:
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SCHEDULE A
SCHEDULE OF RECEIVABLES
EXHIBIT A
SUBSEQUENT TRANSFER AGREEMENT
TRANSFER No. __ of Subsequent Receivables pursuant to a Sale and
Servicing Agreement, dated as of August 1, 1997, among THE CPS AUTO RECEIVABLES
TRUST 1997-3, a Delaware business trust (the "Issuer"), CPS RECEIVABLES CORP., a
California corporation (the "Seller"), CONSUMER PORTFOLIO SERVICES, INC. a
California corporation (the "Servicer"), and NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, a national banking association (the "Trustee").
W I T N E S S E T H:
WHEREAS pursuant to the Sale and Servicing Agreement, the Seller wishes
to convey the Subsequent Receivables to the Issuer; and
WHEREAS, the Issuer is willing to accept such conveyance subject to the
terms and conditions hereof.
NOW, THEREFORE, the Issuer, the Seller, the Servicer and the Trustee
hereby agree as follows:
SECTION 1. Defined Terms. Capitalized terms used herein shall have the
meanings ascribed to them in the Sale and Servicing Agreement unless otherwise
defined herein.
"Subsequent Cutoff Date" shall mean, with respect to the Subsequent
Receivables conveyed hereby, [ ], 1997.
"Subsequent Transfer Date" shall mean, with respect to the Subsequent
Receivables conveyed hereby, [ ], 1997.
SECTION 2. Schedule of Receivables. Annexed hereto is a supplement to
Schedule A to the Sale and Servicing Agreement listing the Receivables that
constitute the Subsequent Receivables to be conveyed pursuant to this Agreement
on the Subsequent Transfer Date.
SECTION 3. Conveyance of Subsequent Receivables. In consideration of
the Issuer's delivery to or upon the order of the Seller of $____________, the
Seller does hereby sell, transfer, assign, set over and otherwise convey to the
Issuer, without recourse (except as expressly provided in the Sale and Servicing
Agreement), all right, title and interest of the Seller in and to:
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(a) all right, title and interest of the Seller in and to the
Subsequent Receivables listed in Schedule A to this Subsequent Transfer
Agreement and, with respect to Subsequent Receivables which are Rule of
78's Receivables, all monies due or to become due thereon after the
Subsequent Cutoff Date (including Scheduled Payments due after the
Subsequent Cutoff Date (including principal prepayments relating to
such Scheduled Payments) but received by the Seller or CPS on or before
the Subsequent Cutoff Date) and, with respect to Subsequent Receivables
which are Simple Interest Receivables, all monies received thereunder
after the Subsequent Cutoff Date and all Liquidation Proceeds and
Recoveries received with respect to such Subsequent Receivables on or
after the Subsequent Cutoff Date;
(b) all right, title and interest of the Seller in and to the
security interests in the Financed Vehicles granted by Obligors
pursuant to the Subsequent Receivables and any other interest of the
Seller in such Financed Vehicles, including, without limitation, the
certificates of title or, with respect to such Financed Vehicles in the
State of Michigan, all other evidence of ownership with respect to such
Financed Vehicles;
(c) all right, title and interest of the Seller in and to any
proceeds from claims on any physical damage, credit life and credit
accident and health insurance policies or certificates relating to the
Financed Vehicles or the Obligors;
(d) all right, title and interest of the Seller in and to the
Subsequent Purchase Agreements, including a direct right to cause CPS
to purchase Receivables from the Trust under certain circumstances;
(e) all right, title and interest of the Seller in and to
refunds for the costs of extended service contracts with respect to
Financed Vehicles securing Subsequent Receivables, refunds of unearned
premiums with respect to credit life and credit accident and health
insurance policies or certificates covering an Obligor or Financed
Vehicle or his or her obligations with respect to a Financed Vehicle
and any recourse to Dealers for any of the foregoing;
(f) the Receivable File related to each Subsequent Receivable;
(g) the proceeds of any and all of the foregoing.
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It is the intention of the Seller that the transfer and assignment
contemplated by this Agreement shall constitute a sale of the Subsequent
Receivables and Other Conveyed Property from the Seller to the Issuer and the
beneficial interest in and title to the Subsequent Receivables and the Other
Conveyed Property shall not be part of the Seller's estate in the event of the
filing of a bankruptcy petition by or against the Seller under any bankruptcy
law. In the event that, notwithstanding the intent of the Seller, the transfer
and assignment contemplated hereby is held not to be a sale, this Agreement
shall constitute a grant of a security interest in the property referred to in
this Section 3 for the benefit of the Securityholders and the Note Insurer.
SECTION 4. Representations and Warranties of the Seller. The Seller
hereby represents and warrants to the Issuer as of the date of this Agreement
and as of the Subsequent Transfer Date that:
(a) Organization and Good Standing. The Seller has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of California, with power and authority to
own its properties and to conduct its business as such properties are
currently owned and such business is currently conducted, and had at
all relevant times, and now has, power, authority and legal right to
acquire, own and sell the Subsequent Receivables and the Other Conveyed
Property transferred to the Trust.
(b) Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business shall
require such qualifications.
(c) Power and Authority. The Seller has the power and
authority to execute and deliver this Agreement and the Basic Documents
to which it is a party and to carry out its terms and their terms,
respectively; the Seller has full power and authority to sell and
assign the Subsequent Receivables and the Other Conveyed Property to be
sold and assigned to and deposited with the Trust by it and has duly
authorized such sale and assignment to the Trust by all necessary
corporate action; and the execution, delivery and performance of this
Agreement and the Basic Documents to which the Seller is a party have
been duly authorized by the Seller by all necessary corporate action.
(d) Valid Sale, Binding Obligations. This Agreement effects a
valid sale, transfer and assignment of the Subsequent Receivables and
the Other Conveyed Property,
A-3
enforceable against the Seller and creditors of and purchasers from the
Seller; and this Agreement and the Basic Documents to which the Seller
is a party, when duly executed and delivered, shall constitute legal,
valid and binding obligations of the Seller enforceable in accordance
with their respective terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting
the enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies, regardless of
whether such enforceability is considered in a proceeding in equity or
at law.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the Basic Documents and the
fulfillment of the terms of this Agreement and the Basic Documents
shall not conflict with, result in any breach of any of the terms and
provisions of or constitute (with or without notice, lapse of time or
both) a default under the certificate of incorporation or by-laws of
the Seller, or any indenture, agreement, mortgage, deed of trust or
other instrument to which the Seller is a party or by which it is
bound, or result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, other than the Basic
Documents, or violate any law, order, rule or regulation applicable to
the Seller of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Seller or any of its properties.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the Seller's knowledge, threatened against the Seller,
before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality having jurisdiction over the
Seller or its properties (A) asserting the invalidity of this
Agreement, the Securities or any of the Basic Documents, (B) seeking to
prevent the consummation of any of the transactions contemplated by
this Agreement or any of the Basic Documents, (C) seeking any
determination or ruling that might materially and adversely affect the
performance by the Seller of its obligations under, or the validity or
enforceability of, this Agreement or any of the Basic Documents, or (D)
relating to the Seller and which might adversely affect the federal or
state income, excise, franchise or similar tax attributes of the
Securities.
(g) No Consents. No consent, approval, authorization or order
of or declaration or filing with any governmental
A-4
authority is required for the issuance or sale of the Securities or the
consummation of the other transactions contemplated by this Agreement,
except such as have been duly made or obtained.
(h) Tax Returns. The Seller has filed on a timely basis all
tax returns required to be filed by it and paid all taxes, to the
extent that such taxes have become due.
(i) Chief Executive Office. The chief executive office of the
Seller is at 2 Ada, Irvine, California 92618.
(j) Principal Balance. The aggregate Principal Balance of the
Subsequent Receivables listed on the supplement to Schedule A annexed
hereto and conveyed to the Issuer pursuant to this Agreement as of the
Subsequent Cutoff Date is $____________.
SECTION 5. Conditions Precedent. The obligation of the Issuer to
acquire the Receivables hereunder is subject to the satisfaction, on or prior to
the Subsequent Transfer Date, of the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Seller in Section 4 of this
Agreement and in Section 3.1 of the Sale and Servicing Agreement shall
be true and correct as of the date of this Agreement and as of the
Subsequent Transfer Date.
(b) Sale and Servicing Agreement Conditions. Each of the
conditions set forth in Section 2.2(b) of the Sale and Servicing
Agreement shall have been satisfied.
(c) Additional Information. The Seller shall have delivered to
the Issuer such information as was reasonably requested by the Issuer
to satisfy itself as to (i) the accuracy of the representations and
warranties set forth in Section 4 of this Agreement and in Section 3.1
of the Sale and Servicing Agreement and (ii) the satisfaction of the
conditions set forth in this Section 5.
SECTION 6. Ratification of Agreement. As supplemented by this
Agreement, the Sale and Servicing Agreement is in all respects ratified and
confirmed and the Sale and Servicing Agreement as so supplemented by this
Agreement shall be read, taken and construed as one and the same instrument.
SECTION 7. Counterparts. This Agreement may be executed in two or more
counterparts (and by different parties in separate
A-5
counterparts), each of which shall be an original but all of which together
shall constitute one and the same instrument.
SECTION 8. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
A-6
IN WITNESS WHEREOF, the Issuer, the Seller and the Servicer have caused this
Agreement to be duly executed and delivered by their respective duly authorized
officers as of day and the year first above written.
CPS AUTO RECEIVABLES
TRUST 1997-3
by BANKERS TRUST (DELAWARE),
not in its individual
capacity, but solely as Owner
Trustee on behalf of the Trust
by ___________________________
Name:
Title:
CPS RECEIVABLES CORP., Seller
by ___________________________
Name:
Title:
CONSUMER PORTFOLIO SERVICES, INC.,
Servicer
by ___________________________
Name:
Title:
Acknowledged and Accepted:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual
capacity, but solely as
Trustee
by ___________________________
Name:
Title:
A-7
EXHIBIT B
SERVICER'S CERTIFICATE
EXHIBIT C
FORM OF TRUST RECEIPT
EXHIBIT D
FORM OF SERVICING OFFICER'S CERTIFICATE
EXHIBIT E
FORM OF MONTHLY SECURITYHOLDER STATEMENT
EXHIBIT F
FORM OF TRUSTEE'S CERTIFICATE
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions................................................1
SECTION 1.2. Other Definitional Provisions.............................28
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.1. Conveyance of Initial Receivables.........................29
SECTION 2.2. Conveyance of Subsequent Receivables......................31
SECTION 2.3. Further Encumbrance of Trust Property.....................34
ARTICLE III
THE RECEIVABLES
SECTION 3.1. Representations and Warranties of Seller..................35
SECTION 3.2. Repurchase upon Breach....................................42
SECTION 3.3. Custody of Receivables Files..............................43
SECTION 3.4. Acceptance of Receivable Files by Trustee.................44
SECTION 3.5. Access to Receivable Files................................45
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.1. Duties of the Servicer....................................46
SECTION 4.2. Collection of Receivable Payments;
Modifications of Receivables; Lockbox
Agreements.............................................47
SECTION 4.3. Realization Upon Receivables..............................49
SECTION 4.4. Insurance.................................................50
SECTION 4.5. Maintenance of Security Interests in
Vehicles...............................................50
SECTION 4.6. Additional Covenants of Servicer..........................51
SECTION 4.7. Purchase of Receivables Upon Breach of
Covenant...............................................52
SECTION 4.8. Servicing Fee.............................................52
SECTION 4.9. Servicer's Certificate....................................53
SECTION 4.10. Annual Statement as to Compliance, Notice
of Servicer Termination Event..........................53
SECTION 4.11. Annual Independent Accountants' Report....................54
SECTION 4.12. Access to Certain Documentation and
Information Regarding Receivables......................55
SECTION 4.13. Verification of Servicer's Certificate....................55
SECTION 4.14. Retention and Termination of Servicer.....................56
TABLE OF CONTENTS
(continued)
Page
SECTION 4.15. Fidelity Bond.............................................57
ARTICLE V
TRUST ACCOUNTS; DISTRIBUTIONS;
STATEMENTS TO SECURITYHOLDERS
SECTION 5.1. Establishment of Trust Accounts...........................57
SECTION 5.2. Interest Reserve Account..................................60
SECTION 5.3. Certain Reimbursements to the Servicer....................61
SECTION 5.4. Application of Collections................................61
SECTION 5.5. Withdrawals from Spread Account...........................61
SECTION 5.6. Additional Deposits.......................................63
SECTION 5.7. Distributions.............................................63
SECTION 5.8. Note Distribution Account.................................66
SECTION 5.9. [RESERVED]................................................69
SECTION 5.10. Pre-Funding Account.......................................69
SECTION 5.11. Statements to Securityholders.............................69
ARTICLE VI
THE NOTE POLICY
SECTION 6.1. Claims Under Note Policy..................................71
SECTION 6.2. Preference Claims.........................................72
SECTION 6.3. Surrender of Note Policy..................................73
ARTICLE VII
[Reserved]
ARTICLE VIII
THE SELLER
SECTION 8.1. Representations of Seller.................................74
(a) Organization and Good Standing.....................74
(b) Due Qualification..................................74
(c) Power and Authority................................74
(d) Valid Sale, Binding Obligations....................74
(e) No Violation.......................................75
(f) No Proceedings.....................................75
(g) No Consents........................................75
(h) Tax Returns........................................76
(i) Chief Executive Office.............................76
SECTION 8.2. [Reserved]................................................76
SECTION 8.3. Liability of Seller; Indemnities..........................76
TABLE OF CONTENTS
(continued)
Page
SECTION 8.4. Merger or Consolidation of, or Assumption
of the Obligations of, Seller..........................77
SECTION 8.5. Limitation on Liability of Seller and
Others.................................................78
SECTION 8.6. Seller May Own Certificates or Notes......................78
ARTICLE IX
THE SERVICER
SECTION 9.1. Representations of Servicer...............................78
(a) Organization and Good Standing.....................78
(b) Due Qualification..................................79
(c) Power and Authority................................79
(d) Binding Obligation.................................79
(e) No Violation.......................................79
(f) No Proceedings.....................................80
(g) No Consents........................................80
(h) Taxes..............................................80
(i) Chief Executive Office.............................80
SECTION 9.2. Liability of Servicer; Indemnities........................80
SECTION 9.3. Merger or Consolidation of, or Assumption
of the Obligations of, the Servicer or
Standby Servicer.......................................82
SECTION 9.4. Limitation on Liability of Servicer,
Standby Servicer and Others............................83
SECTION 9.5. Delegation of Duties......................................84
SECTION 9.6. Servicer and Standby Servicer Not to Resign...............84
ARTICLE X
DEFAULT
SECTION 10.1. Servicer Termination Event................................85
SECTION 10.2. Consequences of a Servicer Termination
Event..................................................87
SECTION 10.3. Appointment of Successor..................................89
SECTION 10.4. Notification to Noteholders and
Certificateholders.....................................90
SECTION 10.5. Waiver of Past Defaults...................................90
SECTION 10.6. Action Upon Certain Failures of the
Servicer...............................................91
TABLE OF CONTENTS
(continued)
Page
ARTICLE XI
TERMINATION
SECTION 11.1. Optional Purchase of All Receivables......................91
ARTICLE XII
ADMINISTRATIVE DUTIES OF THE SERVICER
SECTION 12.1. Administrative Duties.....................................92
(a) Duties with Respect to the Indenture...............92
(b) Duties with Respect to the Issuer..................93
(c) Tax Matters........................................94
(d) Non-Ministerial Matters............................94
(e) Exceptions.........................................95
(f) Limitation of Standby Servicer's
Obligations.....................................95
SECTION 12.2. Records...................................................95
SECTION 12.3. Additional Information to be Furnished to
the Issuer.............................................95
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.1. Amendment.................................................95
SECTION 13.2. Protection of Title to Trust..............................97
SECTION 13.3. Notices...................................................99
SECTION 13.4. Assignment...............................................100
SECTION 13.5. Limitations on Rights of Others..........................100
SECTION 13.6. Severability.............................................101
SECTION 13.7. Separate Counterparts....................................101
SECTION 13.8. Headings.................................................101
SECTION 13.9. Governing Law............................................101
SECTION 13.10. Assignment to Trustee....................................101
SECTION 13.11. Nonpetition Covenants....................................101
SECTION 13.12. Limitation of Liability of Owner Trustee
and Trustee...........................................102
SECTION 13.13. Independence of the Servicer.............................102
SECTION 13.14. No Joint Venture.........................................103
SECTION 13.15. Insurer as Controlling Party.............................103
TABLE OF CONTENTS
(continued)
Page
SCHEDULES
Schedule A - Schedule of Receivables
EXHIBITS
Exhibit A - Form of Subsequent Transfer Agreement
Exhibit B - Form of Servicer's Certificate
Exhibit C - Form of Trust Receipt
Exhibit D - Form of Servicing Officer's Certificate
Exhibit E - Form of Monthly Securityholder Statement
Exhibit F - Form of Trustee's Certificate
Exhibit 10.2
Receivables and Purchase Agreement
[EXECUTION COPY]
ASSIGNMENT
For value received, in accordance with the Purchase Agreement dated as
of August 1, 1997 between the undersigned (the "Seller") and CPS Receivables
Corp. (the "Purchaser") (the "CPS 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 Initial
Sale and Servicing Agreement), all right, title and interest of the Seller in
and to (i) the CPS Receivables listed in the Schedule of CPS 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) the security interests in the Financed Vehicles granted by
Obligors pursuant to the Initial CPS Receivables and any other interest of the
Seller in such 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 such Financed Vehicles;
(iii) any proceeds from claims on any physical damage, credit life and credit
accident and health insurance policies or certificates relating to the Financed
Vehicles securing the Initial CPS Receivables; (iv) refunds for the costs of
extended service contracts with respect to Financed Vehicles securing the
Initial CPS Receivables, refunds of unearned premiums with respect to credit
life and credit accident and health insurance policies or certificates covering
an Obligor or Financed Vehicle or his or her obligations with respect to a
Financed Vehicle related to an Initial CPS Receivable and any recourse to
Dealers for any of the foregoing; (v) the Receivable File related to each
Initial CPS 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 Initial CPS
Receivables, the related 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 CPS
Purchase Agreement and is to be governed by the CPS Purchase Agreement.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the CPS 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 LAW
PRINCIPLES.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed as of August 19, 1997.
CONSUMER PORTFOLIO SERVICES, INC.
By:
Name:
Title:
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[EXECUTION COPY]
PURCHASE AGREEMENT dated as of this August 1, 1997, by and between
CONSUMER PORTFOLIO SERVICES, INC., a California corporation (the "Seller"),
having its principal executive office at 2 Ada, Irvine, California 92618, and
CPS RECEIVABLES CORP., a California corporation (the "Purchaser"), having its
principal executive office at 2 Ada, Irvine, California 92618.
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 CPS Receivables (as hereinafter defined), are to be sold
by the Seller to the Purchaser, which CPS Receivables together with the Samco
Receivables will be transferred by the Purchaser, pursuant to the Sale and
Servicing Agreement (as hereinafter defined), to CPS Auto Receivables Trust
1997-3 to be created thereunder, which Trust will issue notes under the
Indenture (as hereinafter defined) representing indebtedness of the Trust (the
"Class A Notes" and the "Class B Notes" and, together with the Class A Notes,
the "Notes") and certificates under the Trust Agreement (as hereinafter defined)
representing beneficial interests in the Trust (the "Certificates" and, together
with the Notes, the "Securities").
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 Sale and Servicing Agreement and if not defined therein, shall have the
meanings set forth in the Indenture. 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):
"Agreements" means, collectively, this Purchase Agreement and each
Subsequent Purchase Agreement and the Assignments.
"Assignment" means the Initial Assignment and/or any Subsequent
Assignment.
"Base Prospectus" means the Prospectus dated August 11, 1997 with
respect to CPS Auto Receivables Trusts and any amendment or supplement thereto.
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"Certificate Purchase Agreement" means the Certificate Purchase
Agreement, dated August 19, 1997 among certain investors, CPS and the Purchaser
relating to the Certificates.
"Closing Date" means the Initial Closing Date and/or any Subsequent
Closing Date.
"CPS" means Consumer Portfolio Services, Inc., a California corporation
and its successors and assigns.
"CPS Receivables" means the Initial CPS Receivables and the Subsequent
CPS Receivables.
"Indenture" means the Indenture dated as of August 1, 1997, between CPS
Auto Receivables Trust 1997-3, as issuer, and Norwest Bank Minnesota, National
Association, as trustee.
"Initial Assignment" means the Initial CPS Assignment and/or the
Initial Samco Assignment.
"Initial Closing Date" means August 19, 1997.
"Initial CPS Assignment" means the assignment dated August 19, 1997, by
the Seller to the Purchaser, relating to the purchase of the CPS Receivables and
certain other property related thereto by the Purchaser from the Seller pursuant
to this Agreement, which shall be in substantially the form attached hereto as
Exhibit A.
"Initial CPS Receivables" means each retail installment sale contract
for a Financed Vehicle that appears on the Initial Schedule of CPS Receivables
and all rights thereunder.
"Initial Receivables" means an Initial Samco Receivable and/or an
Initial CPS Receivable.
"Initial Receivables Purchase Price" means $[ ].
"Initial Samco Assignment" means the assignment substantially in the
form of Exhibit A to the Samco Purchase Agreement.
"Initial Samco Receivable" means each retail installment sale contract
for a Financed Vehicle that appears on the Initial Schedule of Samco Receivables
and all rights thereunder.
"Initial Schedule of CPS Receivables" means the list of CPS Receivables
annexed hereto as Exhibit B.
"Initial Schedule of Samco Receivables" means the list of Initial Samco
Receivables annexed as Exhibit B to the Samco Purchase Agreement.
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"Initial Transferred CPS Property" shall have the meaning specified in
Section 2.1(a) hereof.
"Initial Transferred Property" shall have the meaning specified in
Section 2.1(a) hereof.
"Initial Transferred Samco Property" shall have the meaning specified
in the Samco Purchase Agreement.
"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, the Base
Prospectus and the Private Placement Memorandum.
"Private Placement Memorandum" means the Private Placement Memorandum,
dated August 15, 1997 relating to the private placement of the Class B Notes and
any amendment or supplement thereto.
"Prospectus Supplement" means the Prospectus Supplement dated August
15, 1997, relating to the public offering of the Class A Notes and any amendment
or supplement thereto.
"Purchase 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.
"Purchaser" means CPS Receivables Corp., a California corporation, and
its successors and assigns.
"Receivables" means, collectively, the CPS Receivables and the Samco
Receivables.
"Repurchase Event" shall have the meaning specified in Section 6.2
hereof.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
dated as of August 1, 1997, among CPS Auto Receivables Trust 1997-3, as issuer,
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.
"Samco" means Samco Acceptance Corp., a Delaware corporation, and its
successors and assigns.
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"Samco Purchase Agreement" means the Purchase Agreement dated as of
August 1, 1997, between Samco Acceptance Corp., as seller, and CPS Receivables
Corp., as purchaser, as such agreement may be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof.
"Samco Receivable" shall have the meaning specified in the Samco
Purchase Agreement.
"Schedule of CPS Receivables" means the list of Initial CPS Receivables
annexed hereto as Exhibit B as supplemented by each Schedule of Subsequent CPS
Receivables.
"Schedule of Receivables" means, collectively, the Schedule of CPS
Receivables and the Schedule of Samco Receivables.
"Schedule of Samco Receivables" means the list of Initial Samco
Receivables annexed as Exhibit B to the Samco Purchase Agreement as supplemented
by each Schedule of Subsequent Samco Receivables.
"Schedule of Subsequent CPS Receivables" means the schedule of all CPS
Receivables sold and transferred to the Purchaser pursuant to a Subsequent CPS
Purchase Agreement, which schedule shall be deemed to supplement the Schedule of
CPS Receivables and shall be attached to the related Subsequent Assignment (and
may be in the form of microfiche).
"Schedule of Subsequent Samco Receivables" means the schedule of all
Samco Receivables sold and transferred to the Purchaser pursuant to a Subsequent
Samco Purchase Agreement, which schedule shall be deemed to supplement the
Schedule of Samco Receivables and shall be attached to the related Subsequent
Assignment delivered under the Samco Purchase Agreement (and may be in the form
of microfiche).
"Seller" means Consumer Portfolio Services, Inc., a California
corporation, in its capacity as seller of the CPS Receivables and the other CPS
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.
"Subsequent Assignment" means an assignment substantially in the form
of Exhibit A to the form of Subsequent Purchase Agreement attached as Exhibit C
hereto.
"Subsequent Closing Date" means any day on which Subsequent CPS
Receivables or Subsequent Samco Receivables are sold to the Purchaser pursuant
to a Subsequent Purchase Agreement.
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"Subsequent CPS Purchase Agreement" means a subsequent purchase
agreement which shall be in substantially the form of Exhibit C to this Purchase
Agreement by which the Seller will transfer Subsequent CPS Receivables.
"Subsequent CPS Receivable" means each Receivable transferred to the
Purchaser pursuant to a Subsequent CPS Assignment which shall be listed on the
Schedule of Subsequent CPS Receivables attached to the related Subsequent
Assignment.
"Subsequent Purchase Agreement" means the Subsequent CPS Purchase
Agreement and/or the Subsequent Samco Purchase Agreement.
"Subsequent Receivables" means a Subsequent CPS Receivable and/or a
Subsequent Samco Receivable.
"Subsequent Samco Purchase Agreement" means a subsequent purchase
agreement which shall be in substantially the form of Exhibit C to the Samco
Purchase Agreement by which the Seller will transfer Subsequent Samco
Receivables.
"Subsequent Samco Receivable" shall have the meaning specified in the
Samco Purchase Agreement
"Subsequent Transferred CPS Property" shall have the meaning specified
in each Subsequent CPS Purchase Agreement.
"Subsequent Transferred Property" shall have the meaning specified in
Section 2.2(a).
"Transferred CPS Property" means the Initial Transferred CPS Property
and/or the Subsequent Transferred CPS Property.
"Transferred Property" means the Transferred CPS Property and the
Transferred Samco Property.
"Transferred Samco Property" shall have the meaning specified in the
Samco Purchase Agreement.
"Trust" means the CPS Auto Receivables Trust 1997-3 created by the
Trust Agreement.
"Trust Agreement" means the Trust Agreement dated as of August 14,
1997, between CPS Receivables Corp. and Bankers Trust (Delaware) as amended and
restated pursuant to an amendment dated as of August 19, 1997 between the same
parties.
"UCC" means the Uniform Commercial Code, as in effect from time to time
in the relevant jurisdictions.
-5-
"Underwriters" means PaineWebber Incorporated and Black Diamond
Securities, Inc.
"Underwriting Agreement" means the Underwriting Agreement, dated
August15, 1997, among the Underwriters, CPS, Samco and the Purchaser relating to
the Class A Notes and the Class B Notes.
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
2.1. Purchase and Sale of Receivables. On the Initial Closing Date,
subject to the terms and conditions of this Purchase 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 Purchase Agreement,
each Subsequent Purchase Agreement and the Sale and Servicing Agreement), all of
the Seller's right, title and interest in, to and under the Initial CPS
Receivables and the other Initial Transferred CPS Property relating thereto. The
conveyance to the Purchaser of the Initial CPS Receivables and other Initial
Transferred CPS Property relating thereto is intended as a sale free and clear
of all liens and it is intended that the Initial Transferred CPS 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 Initial Closing Date and
simultaneously with the transactions to be consummated pursuant to the Trust
Agreement, the Indenture and the Sale 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 and in the Sale and
Servicing Agreement), all right, title and interest of the Seller in and to (i)
the Initial CPS Receivables listed in the Initial Schedule of CPS 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 Initial
CPS Receivables; (ii) the security interests in the Financed Vehicles granted by
Obligors pursuant to the Initial CPS Receivables and any other interest of the
Seller in such 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 such Financed Vehicles;
(iii) any proceeds from claims on any physical damage, credit life and credit
accident and health insurance policies or certificates relating to the Financed
Vehicles securing the Initial CPS Receivables or the Obligors thereunder; (iv)
refunds for the costs of extended service contracts with respect to Financed
Vehicles securing the Initial CPS Receivables, refunds of unearned premiums with
respect to credit life and credit accident and health insurance policies or
certificates covering an Obligor under an Initial CPS Receivable or Financed
Vehicle securing an Initial CPS Receivable or his or her obligations with
respect
-6-
to a Financed Vehicle and any recourse to Dealers for any of the foregoing; (v)
the Receivable File related to each Initial CPS Receivable; and (vi) the
proceeds of any and all of the foregoing (collectively, the "Initial Transferred
CPS Property" and together with the Initial Transferred Samco Property, the
"Initial Transferred Property").
(b) Receivables Purchase Price. In consideration for the
Initial CPS Receivables and other Initial Transferred Property described in
Section 2.1(a), the Purchaser shall, on the Initial Closing Date, pay to the
Seller the Initial Receivables Purchase Price. An amount equal to $[ ] of the
Initial Receivables Purchase Price shall be paid to the Seller in cash. The
remaining $[ ] of the Initial Receivables Purchase Price shall be deemed paid
and returned to the Purchaser and be considered a contribution to capital. The
portion of the Initial Receivables Purchase Price to paid in cash be by federal
wire transfer (same day) funds.
2.2. Purchase and Sale of Subsequent Receivables. On the related
Subsequent Closing Date, subject to the terms and conditions of the related
Subsequent CPS Purchase 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 Purchase Agreement, each Subsequent CPS Purchase
Agreement and the Sale and Servicing Agreement), all of the Seller's right,
title and interest in, to and under the Subsequent CPS Receivables and the other
Subsequent Transferred CPS Property relating thereto. The conveyance to the
Purchaser of the Subsequent CPS Receivables and other Subsequent Transferred CPS
Property relating thereto is intended as a sale free and clear of all liens and
it is intended that the Subsequent Transferred CPS 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 Subsequent Receivables. On the related
Subsequent Closing Date the Seller shall sell, transfer, assign, grant, set over
and otherwise convey to the Purchaser, without recourse (subject to the
obligations herein and in the Sale and Servicing Agreement), all right, title
and interest of the Seller in and to (i) the Subsequent CPS Receivables listed
in the related Schedule of Subsequent CPS Receivables and, with respect to Rule
of 78's Receivables, all monies due or to become due thereon after the related
Subsequent Cutoff Date (including Scheduled Payments due after the related
Subsequent Cutoff Date (including principal prepayments relating to such
Scheduled Payments) but received by the Seller on or before the related
Subsequent Cutoff Date) and, with respect to Simple Interest Receivables, all
monies received thereunder after the related Subsequent Cutoff Date and all
Liquidation Proceeds and Recoveries received with respect to such Subsequent CPS
Receivables; (ii) the security interests in the Financed Vehicles granted by
Obligors pursuant to the Subsequent CPS Receivables and any other interest of
the Seller in such 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)
any proceeds from claims on any physical damage, credit life and credit accident
and health insurance policies or certificates relating to the Financed
-7-
Vehicles securing the Subsequent CPS Receivables or the Obligors thereunder;
(iv) refunds for the costs of extended service contracts with respect to
Financed Vehicles securing the Subsequent CPS Receivables, refunds of unearned
premiums with respect to credit life and credit accident and health insurance
policies or certificates covering an Obligor or Financed Vehicle securing the
Subsequent CPS Receivables or his or her obligations with respect to such a
Financed Vehicle and any recourse to Dealers for any of the foregoing; (v) the
Receivable File related to each Subsequent CPS Receivable; and (vi) the proceeds
of any and all of the foregoing (collectively, the "Subsequent Transferred CPS
Property" and together with any Subsequent Transferred Samco Property, the
"Subsequent Transferred Property").
(b) The Seller shall transfer to the Issuer the Subsequent CPS
Receivables and the Subsequent Transferred CPS Property as described in
paragraph (a) above only upon the satisfaction of each of the following
conditions on or prior to the related Subsequent Closing Date:
(i) the Seller shall have provided the Trustee, the Owner
Trustee, the Credit Enhancer and the Rating Agencies with an Addition
Notice not later than five days prior to such Subsequent Closing Date
and shall have provided any information reasonably requested by any of
the foregoing with respect to the Subsequent CPS Receivables;
(ii) the Seller shall have delivered to the Owner Trustee and
the Trustee a duly executed Subsequent CPS Purchase Agreement,
substantially in the form of Exhibit C, which shall include supplements
to the Schedule of CPS Receivables, listing the Subsequent CPS
Receivables;
(iii) the Seller shall, to the extent required by Section 4.2
of the Sale and Servicing Agreement, have deposited in the Collection
Account all collections in respect of the Subsequent CPS Receivables;
(iv) as of each Subsequent Closing Date, (A) the Seller shall
not be insolvent and shall not become insolvent as a result of the
transfer of Subsequent CPS Receivables on such Subsequent Closing Date,
(B) the Seller shall not intend to incur or believe that it shall incur
debts that would be beyond its ability to pay as such debts mature, (C)
such transfer shall not have been made with actual intent to hinder,
delay or defraud any Person and (D) the assets of the Seller shall not
constitute unreasonably small capital to carry out its business as
conducted;
(v) the Funding Period shall not have terminated;
(vi) after giving effect to any transfer of Subsequent CPS
Receivables on a Subsequent Closing Date (and any Subsequent Samco
Receivables transferred to the Purchaser on such Subsequent Closing
Date), the Receivables shall meet the following criteria (based on the
characteristics of the Initial Receivables on the Initial Cutoff
-8-
Date and the Subsequent Receivables on the related Subsequent Cutoff
Dates): (a) the weighted average APR of such Receivables will not be
less than 1% below the weighted average APR of the Initial Receivables
on the Cutoff Date, (b) the weighted average remaining term of such
Receivables will be within a range of 55 to 60 months, (c) not more
than 95% of the aggregate principal balance of such Receivables will
represent financing of used Financed Vehicles, (d) no fewer than 45% of
the Subsequent Receivables will be originated under the CPA alpha
program, (e) no more than 13.5% of the Subsequent Receivables will be
originated under the CPS first time buyer program, and (f) no fewer
than 20% and no more than 40% of the Subsequent Receivables will be
originated under the CPS standard program, and the Trust, the Trustee,
the Owner Trustee and the Note Insurer shall have received written
confirmation from a firm of certified independent public accountants as
to the satisfaction of the criteria in clauses (a) through (f) above;
(vii) each of the representations and warranties made by the
Seller pursuant to Section 3.2 with respect to the Subsequent
Receivables to be transferred on such Subsequent Closing Date shall be
true and correct as of the related Subsequent Closing Date, and the
Seller shall have performed all obligations to be performed by it
hereunder on or prior to such Subsequent Closing Date;
(viii) the Seller shall, at its own expense, on or prior to
the Subsequent Closing Date indicate in its computer files that the
Subsequent Receivables identified in the Subsequent Purchase Agreement
have been sold to the Purchaser pursuant to the related Subsequent
Purchase Agreement and subsequently to the Trust pursuant to the Sale
and Servicing Agreement;
(ix) the Seller shall have taken any action required to
maintain the first priority perfected ownership interest of the Trust
in the Owner Trust Estate and the first priority perfected security
interest of the Trustee in the Collateral;
(x) no selection procedures adverse to the interests of the
Securityholders or the Credit Enhancer shall have been utilized in
selecting the Subsequent CPS Receivables;
(xi) the addition of any such Subsequent CPS Receivables shall
not result in a material adverse tax consequence to the Trust or the
Securityholders;
(xii) the Seller shall have delivered (A) to the Rating
Agencies and the Credit Enhancer an opinion of Counsel with respect to
the transfer of such Subsequent CPS Receivables substantially in the
form of the Opinion of Counsel delivered to the Rating Agencies and the
Credit Enhancer on the related Subsequent Closing Date and (B) to the
Trustee the opinion of Counsel required by Section 13.2(i)(1) of the
Sale and Servicing Agreement;
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(xiii) each Rating Agency shall have confirmed that the rating
on the Notes shall not be withdrawn or reduced as a result of the
transfer of such Subsequent CPS Receivables to the Trust;
(xiv) all conditions precedent specified in the Sale and
Servicing Agreement with respect to the transfer of such Subsequent CPS
Receivables to the Trust by the Purchaser shall have been satisfied;
and
(xv) the Seller shall have delivered to the Credit Enhancer
and the Trustee an Officers' Certificate confirming the satisfaction of
each condition precedent specified in this paragraph (b).
The Seller covenants that in the event any of the foregoing conditions
precedent are not satisfied with respect to any Subsequent Receivable on the
date required as specified above, the Seller will immediately repurchase such
Subsequent Receivable from the Trust, at a price equal to the Purchase Amount
thereof, in the manner specified in Section 6.2 of the Sale and Servicing
Agreement.
2.3. The Closing. The sale and purchase of the Initial CPS 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 Samco Purchase Agreement
pursuant to which Samco Acceptance Corp. will sell the Initial Samco Receivables
to CPS Receivables Corp., (b) the Sale and Servicing Agreement pursuant to which
the Purchaser will assign all of its right, title and interest in and to the
Initial Receivables and the other Initial Transferred Property to the Trust for
the benefit of the Securityholders, (c) the Trust Agreement pursuant to which
the Trust shall be formed and the Certificates issued, (d) the Indenture
pursuant to which the Trust will issue the Notes, (e) the Underwriting Agreement
pursuant to which the Trust shall sell the Class A Notes to the Underwriters and
(f) the Certificate Purchase Agreement pursuant to which the Purchaser shall
sell the 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
each Closing Date (which representations and warranties shall survive such
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
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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 the Agreements and to carry out its terms and
the execution, delivery and performance of the Agreements have been duly
authorized by the Purchaser by all necessary corporate action.
(d) Binding Obligation. The Agreements 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 the Agreements 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 properties
pursuant to the terms of any indenture, agreement, mortgage, deed of trust, or
other instrument (other than the Basic Documents); nor violate any law, order,
rule or regulation applicable to the 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 the Agreements or the Securities; (B) seeking to prevent the
issuance of the Securities or the consummation of any of the transactions
contemplated by the Agreements; (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, the Agreements or the
Securities; or (D) relating to the Purchaser and which might adversely affect
the Federal or State income, excise, franchise or similar tax attributes of the
Securities.
(g) No Consents. No consent, approval, authorization or order
of or declaration or filing with any governmental authority is required to be
obtained by the Purchaser for the issuance or sale of the Securities or the
consummation of the other
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transactions contemplated by the Agreements, the Trust Agreement, the Indenture
or the Sale 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
required by the Sale and Servicing Agreement) shall require such
qualifications.
(iii) Power and Authority. The Seller has the power and
authority to execute and deliver the Agreements and to carry out their
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 the Agreements
have been duly authorized by the Seller by all necessary corporate
action.
(iv) Valid Sale; Binding Obligation. This Purchase Agreement
effects a valid sale, transfer and assignment of the CPS Receivables
and the other Transferred CPS 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 the Agreements 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 the Basic Documents); nor violate any law,
order, rule or regulation applicable to the Seller of any court or of
any Federal
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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 the Agreements or the
Securities; (B) seeking to prevent the issuance of the Securities or
the consummation of any of the transactions contemplated by the
Agreements; (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, the Agreements
or the Securities; or (D) relating to the Seller and which might
adversely affect the Federal or State income, excise, franchise or
similar tax attributes of the Securities.
(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 Securities or the consummation
of the other transactions contemplated by the Agreements, the Trust
Agreement, the Indenture or the Sale 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 the
Agreements 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 CPS
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 CPS Receivables to the Purchaser.
(b) The Seller makes the following representations and
warranties as to the Receivables (including the Samco 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 with respect to each Receivable as of the
Initial Closing Date or Subsequent Closing Date on which such Receivable is
transferred to the Purchaser and 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 Sale and Servicing Agreement:
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(i) Origination Date. Each Receivable has an origination date
on or after April 10, 1995.
(ii) Principal Balance/Number of Contracts. As of the Cutoff
Date, the total aggregate principal balance of the Receivables was
$122,915,183. The Receivables are evidenced by 9,826 Contracts.
(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 57 months as of the Cutoff Date; the remaining term to
maturity of each Receivable was 60 months or less as of the Cutoff
Date; the weighted average remaining term to maturity of the
Receivables was 56 months as of the Cutoff Date.
(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 (or, with respect to the
Samco Receivables, Samco) in connection with the sale of Financed
Vehicles by the Dealers, (2) has created a valid, subsisting, and
enforceable first priority security interest in favor of the Seller
(or, with respect to the Samco Receivables, Samco) in the Financed
Vehicle, which security interest has been assigned by the Seller (or,
with respect to the Samco Receivables, Samco) 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 11.26%, (6) that is
a Rule of 78's Receivable provides for, in the event that such
Receivable 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.
(v) Approximately 90.41% of the aggregate Principal Balance of
the Receivables, constituting 92.53% of the number of Receivables, as
of the Cutoff Date, represents financing of used automobiles, light
trucks, vans or minivans; the remainder of the Receivables represent
financing of new automobiles, light trucks, vans or minivans;
approximately 18.59% of the aggregate Principal Balance of the
Receivables as of the Cutoff Date were originated in the State of
California; approximately 48.42% of the aggregate Principal Balance of
the Receivables as of the
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Cutoff Date were originated under the CPS alpha program; approximately
9.45% of the aggregate Principal Balance of the Receivables as of the
Cutoff Date were originated under the CPS delta program; approximately
9.94% of the aggregate Principal Balance of the Receivables as of the
Cutoff Date were originated under the CPS first time buyer program; and
approximately 32.18% of the aggregate Principal Balance of the
Receivables were originated under the CPS standard program; the
remaining 0.01% of the aggregate Principal Balance of the Receivables
were acquired by CPS from an unaffiliated party; approximately 4.04% of
the aggregate Principal Balance of the Receivables are Samco
Receivables; no Receivable shall have a payment that is more than 30
days overdue as of the Cutoff Date; 31.81% of the aggregate Principal
Balance of the Receivables are Rule of 78's Receivables and 68.14% of
the aggregate Principal Balance of the Receivables are Simple Interest
Receivables; each Receivable shall have a final scheduled payment due
no later than August 31, 2002; each Receivable has an original term to
maturity of not more than 60 months and an average original term to
maturity of 57 months and a remaining term to maturity of not more than
60 months and an average remaining term to maturity of 56 months; and
each Receivable was originated on or before the Cutoff Date.
(vi) Scheduled Payments. Each Receivable had an original
principal balance of not less than $2,197 nor more than $28,752, has an
outstanding principal balance as of the Cutoff Date of not less than
$1,182 and not more than $28,752 and has a first Scheduled Payment due
on or prior to October 11, 1997.
(vii) 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.
(viii) Origination of Receivables. Based on the billing
address of the Obligors and the Principal Balances as of the Cutoff
Date, approximately 18.59% of the Receivables were originated in
California, approximately 8.07% of the Receivables were originated in
Louisiana, approximately 7.69% of the Receivables were originated in
Texas, 7.25% of the Receivables were originated in Pennsylvania and the
remaining 58.40% of the Receivables were originated in all other
States.
(ix) Post-Office Box. On or prior to the next billing period
after the Cutoff Date, the Seller 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
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provide each Obligor with a monthly statement in order to enable such
Obligors to make payments directly to the Post-Office Box.
(x) Location of Receivable Files; One Original. 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 Sale and Servicing Agreement. There is only
one original executed copy of each Receivable.
(xi) Schedule of Receivables; Selection Procedures. The
information with respect to the Receivables set forth in the Schedule
of CPS Receivables and the Schedule of Samco 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 Securityholders
have been utilized in selecting the Receivables.
(xii) 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.
(xiii) 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.
(xiv) 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.
(xv) Security Interest in Financed Vehicle. Immediately prior
to the sale, assignment, and transfer thereof, each Receivable shall be
secured by a validly perfected first priority security interest in the
Financed Vehicle in favor of the Seller (or, with respect to the Samco
Receivables, Samco) 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).
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(xvi) 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.
(xvii) No Waiver. No provision of a Receivable has been
waived.
(xviii) 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.
(xix) 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.
(xx) 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.
(xxi) 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 neither
the Seller nor Samco shall waive and neither has waived any of the
foregoing; and no Financed Vehicle shall have been repossessed as of
the Cutoff Date.
(xxii) Insurance; Other. (A) Each Obligor has obtained
insurance covering the Financed Vehicle as of the execution of the
Receivable insuring against loss and damage due to fire, theft,
transportation, collision and other risks generally covered by
comprehensive and collision coverage and each Receivable requires the
Obligor to obtain and maintain such insurance naming the Seller (or,
with respect to the Samco Receivables, Samco) and its successors and
assigns as an additional insured, (B) each Receivable that finances the
cost of premiums for credit life and credit accident or health
insurance is covered by an insurance policy and certificate of
insurance naming the Seller (or, with respect to the Samco Receivables,
Samco) as policyholder (creditor) under each such insurance policy and
certificate of insurance and (C) as to each Receivable that finances
the cost of an extended service contract, the respective Financed
Vehicle which secures the Receivable is covered by an extended service
contract.
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(xxiii) Title. It is the intention of the Seller that the
transfer and assignment herein contemplated constitute a sale of the
CPS Receivables from the Seller to the Purchaser and that the
beneficial interest in and title to such CPS 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 CPS 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 CPS 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 CPS
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.
(xxiv) 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 the Samco Purchase Agreement shall be unlawful, void, or voidable.
Neither the Seller nor Samco has entered into any agreement with any
account debtor that prohibits, restricts or conditions the assignment
of any portion of the Receivables.
(xxv) 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 and the other Transferred CPS Property have been made,
taken or performed.
(xxvi) Chattel Paper. Each Receivable constitutes "chattel
paper" under the applicable 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 any Financed Vehicle for delinquent taxes.
(xxix) Title Documents. (A) If the Receivable was originated
in a State in which notation of a security interest on the title
document of the related Financed Vehicle is required or permitted to
perfect such security interest, the title
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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
Financed Vehicle) will be received within 180 days and will show, the
Seller (or, with respect to the Samco Receivables, Samco) named as the
original secured party under the related Receivable as the holder of a
first priority security interest in such Financed Vehicle, and (B) if
the Receivable was originated in a State in which the filing of a
financing statement under the UCC is required to perfect a security
interest in motor vehicles, such filings or recordings have been duly
made and show the Seller (or, with respect to the Samco Receivables,
Samco) 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, the Seller has received written
evidence from the related Dealer that such title document showing the
Seller (or, with respect to the Samco Receivables, Samco) as first
lienholder has been applied for.
(xxx) Casualty. No Financed Vehicle 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. No Obligor has any option
under a Receivable to borrow from any Person additional funds secured
by the related 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 CPS 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 Sale and
Servicing Agreement.
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ARTICLE IV
CONDITIONS
4.1. Conditions to Obligation of the Purchaser. On the applicable
Closing Date, the obligation of the Purchaser to purchase the CPS 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
related 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 such Closing Date.
(b) Computer Files Marked. The Seller shall, at its own
expense, on or prior to the Related Closing Date, indicate in its
computer files that the CPS Receivables have been sold to the Purchaser
pursuant to this Purchase Agreement and shall deliver to the Purchaser
the Schedule of CPS Receivables certified by the Chairman, 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 related Receivable Files to the Trustee at the
offices specified in Schedule B to the Pooling and Servicing Agreement
on or prior to the related Closing Date.
(d) Documents to be delivered by the Seller at the Closing.
(i) The Assignment. On each Closing Date, the Seller
will execute and deliver the applicable Assignment. The
Initial Assignment shall be substantially in the form of
Exhibit A hereto and any Subsequent Assignment shall be
substantially in the form of Exhibit A to the Form of
Subsequent Purchase Agreement attached as Exhibit C hereto.
(ii) Evidence of UCC-1 Filing. On or prior to the
related 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 CPS Receivables and the other
Transferred CPS 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 CPS 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 such Closing Date.
(iii) Evidence of UCC-2 Filing. On or prior to the
related Closing Date, the Seller shall cause to be recorded
and filed, at its own expense, appropriate UCC-2 termination
statements executed by General Electric Capital Corporation
("GECC") [and Redwood] 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
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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 such
Closing Date.
(iv) Other Documents. On or prior to the related
Closing Date, the Seller shall deliver such other documents as
the Purchaser may reasonably request.
(e) Other Transactions. The transactions contemplated by the
Trust Agreement, the Indenture, the Sale and Servicing Agreement, the
Samco Purchase Agreement, the Underwriting Agreement and the
Certificate Purchase Agreement shall be consummated on the Initial
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 CPS Receivables Purchase Price
as provided in Section 2.1(b). The Seller hereby directs the Purchaser
to wire $[ ] of the Initial 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 Initial 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 Sale and Servicing Agreement, the Sale 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
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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 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 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 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 CPS Receivable accurately and in sufficient detail to permit
the reader thereof to know at any time the status of such CPS 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 CPS
Receivables to the Purchaser, the Seller's master computer records (including
any back-up archives) that refer to a CPS Receivable shall indicate clearly the
interest of the Purchaser in such CPS Receivable and that such CPS Receivable is
owned by the Purchaser. Indication of the Purchaser's ownership of a CPS
Receivable shall be deleted from or modified on the Seller's computer systems
when, and only when, the CPS 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 CPS Receivables) to
any prospective purchaser, lender, or other transferee, the Seller shall give to
such prospective purchaser, lender, or other
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transferee computer tapes, records, or print-outs (including any restored from
back-up archives) that, if they shall refer in any manner whatsoever to any CPS
Receivable, shall indicate clearly that such CPS Receivable has been sold and is
owned by the Purchaser unless such CPS 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 CPS Receivables (by contract
number and name of Obligor) then owned by the Purchaser, together with a
reconciliation of such list to the Schedule of CPS Receivables.
5.2. Other Liens or Interests. Except for the conveyances hereunder and
pursuant to the Sale 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 the Receivables
against all claims of third parties claiming through or under the Seller (or,
with respect to the Samco Receivables, Samco).
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 CPS
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 Sale 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 3.4 of the Sale and Servicing
Agreement, that there has been a failure to deliver a file with respect to a
Receivable (including a Samco Receivable) or that a file is unrelated to the
Receivables identified in Schedule A to the Sale and Servicing Agreement or that
any of the documents referred to in Section 3.3 of the Sale 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 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 Sale and Servicing Agreement. The sole remedy
hereunder of the Trustee, the Trust or the Securityholders with respect to a
breach of this Section 5.5, shall be to require
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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 incurred in connection with the acceptance or performance of
the Seller's trusts and duties as Servicer under the Sale 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 5.6 shall include reasonable fees
and expenses of litigation and shall survive payment of the Notes and
Certificates. 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.
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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 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 Insurer and the
Securityholders, 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 (including any affected Samco 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 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 5.6 of the Sale 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)(5) or (iv)(a)(6) 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 Securityholders, the
Trust, the Insurer, the Trustee or the Purchaser against the Seller with respect
to any Repurchase Event shall be to
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enforce the Seller's obligation to repurchase such Receivables pursuant to this
Agreement; provided, however, that the Seller shall indemnify the Trustee, the
Insurer, the Trust and the Securityholders against all costs, expenses, losses,
damages, claims and liabilities, including reasonable fees and expenses of
counsel, which may be asserted against or incurred by any of them, as a result
of third party claims arising out of the events or facts giving rise to such
breach. Upon receipt of the Purchase Amount, 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 Sale and Servicing Agreement, the Indentures and the other
transaction documents referenced in such Agreement, servicing and operation of
the Trust pursuant to Trust Agreement and such other documents, or the ownership
of a Security 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.
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 CPS Receivables and
the other Transferred CPS Property from the Seller to the Purchaser and not a
financing secured by such assets; and the beneficial interest in and title to
the CPS Receivables and the other Transferred CPS 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 CPS Receivables and the other Transferred CPS 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 Securities 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 Sale and Servicing Agreement, sell the Receivables to the Trust and
assign its rights under this Purchase Agreement and the Samco Purchase Agreement
to the Trust, and that the representations and warranties contained in this
Agreement and the rights of the Purchaser under this Purchase Agreement,
including under Sections 6.2 and 6.4 hereof are intended to benefit such Trust
and the Securityholders. The Seller also acknowledges that the Trustee on
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behalf of the Securityholders 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 6.4
hereof. The Seller hereby consents to such sale and assignment.
6.6. Amendment. This Purchase 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 Insurer; provided, however, that (i) any such
amendment that materially adversely affects the rights of the Class A
Noteholders under the Sale and Servicing Agreement must be consented to by the
holders of Class A Notes representing 51% or more of the outstanding principal
amounts Class A Notes, (ii) any such amendment that materially adversely affects
the rights of the Class B Noteholders under the Sale and Servicing Agreement
must be consented to by the holders of Class B Notes representing 51% or more of
the outstanding principal amounts Class B Notes and (iii) any amendment that
materially adversely affects the rights of the Certificateholders under the Sale
and Servicing Agreement must be consented to by the holders of Certificates
representing 51% or more of the Certificate Balance.
6.7. Accountants' Letters. (a) KPMG Peat Marwick LLP 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 LLP 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 Agreement;
and (c) KPMG Peat Marwick LLP will deliver to the Purchaser a letter, dated the
initial 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 the Agreements 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 Purchase 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.
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6.10. Costs and Expenses. The Seller will pay all expenses incident to
the performance of its obligations under this Purchase 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
CPS Receivables and security interests in the Financed Vehicles and the
enforcement of any obligation of the Seller hereunder.
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 Purchase 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 CPS Receivables, under the Sale 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 Purchase Agreement. References in this
Purchase Agreement to Section names or numbers are to such Sections of this
Purchase Agreement.
6.14. Third Party Beneficiaries. The parties hereto hereby expressly
agree that each of the Trustee for the benefit of the Securityholders and the
Insurer shall be third party beneficiaries with respect to this Purchase
Agreement, provided, however, that no third party other than the Trustee for the
benefit of the Securityholders and the Credit Enhancer shall be deemed a third
party beneficiary of this Purchase Agreement.
6.15. Governing Law. THIS PURCHASE 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 Purchase 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 intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereby have caused this Purchase
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 August 1, 1997 between the undersigned (the "Seller") and CPS Receivables
Corp. (the "Purchaser") (the "CPS 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 Sale and
Servicing Agreement), all right, title and interest of the Seller in and to (i)
the Initial CPS Receivables listed in the Schedule of CPS 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) the security interests in the Financed Vehicles granted by
Obligors pursuant to the Initial CPS Receivables and any other interest of the
Seller in such 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 such Financed Vehicles;
(iii) any proceeds from claims on any physical damage, credit life and credit
accident and health insurance policies or certificates relating to the Financed
Vehicles securing the Initial CPS Receivables; (iv) refunds for the costs of
extended service contracts with respect to Financed Vehicles securing the
Initial CPS Receivables, refunds of unearned premiums with respect to credit
life and credit accident and health insurance policies or certificates covering
an Obligor or Financed Vehicle or his or her obligations with respect to a
Financed Vehicle related to an Initial CPS Receivable and any recourse to
Dealers for any of the foregoing; (v) the Receivable File related to each
Initial CPS 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 Initial CPS
Receivables, the related 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 CPS
Purchase Agreement and is to be governed by the CPS Purchase Agreement.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the CPS 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 LAW
PRINCIPLES.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed as of [ ].
A-1
CONSUMER PORTFOLIO SERVICES, INC.
By:
Name:
Title:
A-2
Exhibit B
Schedule of CPS Receivables
See Following Page
A-1
EXHIBIT C
FORM OF SUBSEQUENT PURCHASE AGREEMENT
THIS SUBSEQUENT PURCHASE AGREEMENT (the "Subsequent Agreement") is made
and entered into as of ___________, by and between CONSUMER PORTFOLIO SERVICES,
INC., a California corporation (the "Seller"), and CPS RECEIVABLES CORP., a
California corporation (together with its successors and assigns, the
"Purchaser").
W I T N E S S E T H:
WHEREAS, the Purchaser, as purchaser, has agreed to purchase from the
Seller, as seller, and the Seller, pursuant to the Receivables Purchase
Agreement (the "Receivables Purchase Agreement") dated as of August 1, 1997,
between the Purchaser and the Seller, is transferring to the Purchaser the
Subsequent CPS Receivables listed on the Schedule of Subsequent CPS Receivables
annexed hereto as Exhibit A (the "Subsequent CPS Receivables") and Subsequent
Transferred CPS Property.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter contained, and for other good and valuable consideration,
the receipt of which is acknowledged, the Purchaser and the Seller, intending to
be legally bound, hereby agree as follows:
Definitions
SECTION 1. Capitalized terms used herein without definition shall have
the respective meanings assigned to such terms in the CPS Purchase Agreement.
SECTION 2. Conveyance of Subsequent Receivables. For value received, in
accordance with the CPS Purchase Agreement, the Seller does hereby sell, assign,
transfer and otherwise convey unto the Purchaser, without recourse (but without
limitation of its obligations under the CPS Purchase Agreement), all right,
title and interest of the Seller in and to: (i) the Subsequent CPS Receivables
listed in the related Schedule of Subsequent CPS Receivables and, with respect
to Rule of 78's Receivables, all monies due or to become due thereon after the
related Subsequent Cutoff Date (including Scheduled Payments due after the
related Subsequent Cutoff Date (including principal prepayments relating to such
Scheduled Payments) but received by the Seller on or before the related
Subsequent Cutoff Date) and, with respect to Simple Interest Receivables, all
monies received thereunder after the related Subsequent Cutoff Date and all
Liquidation Proceeds and Recoveries received with respect to such Subsequent CPS
Receivables; (ii) the security interests in the Financed Vehicles granted by
Obligors pursuant to the Subsequent CPS Receivables and any other interest of
the Seller in such 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)
any proceeds from claims on any physical damage, credit
C-1
life and credit accident and health insurance policies or certificates relating
to the Financed Vehicles securing the Subsequent CPS Receivables or the Obligors
thereunder; (iv) refunds for the costs of extended service contracts with
respect to Financed Vehicles securing the Subsequent CPS Receivables, refunds of
unearned premiums with respect to credit life and credit accident and health
insurance policies or certificates covering an Obligor or Financed Vehicle
securing the Subsequent CPS Receivables or his or her obligations with respect
to such a Financed Vehicle and any recourse to Dealers for any of the foregoing;
(v) the Receivable File related to each Subsequent CPS Receivable; and (vi) the
proceeds of any and all of the foregoing (collectively, the "Subsequent
Transferred CPS Property" and together with any Subsequent Transferred Samco
Property, the "Subsequent Transferred Property").
SECTION 3. Consideration for Subsequent Transferred Property. In
consideration for the Subsequent CPS Receivables and other Subsequent
Transferred CPS Property, subject to the terms and conditions hereof, the
purchase price for the Subsequent CPS Receivables, in the amount of [$ ], shall
be paid by the Purchaser on the Subsequent Closing Date as follows: (i) $[ ] in
cash shall be paid to the Seller and (ii) $[ ] which shall be deemed paid and
returned to the Purchaser as a contribution to capital.
SECTION 4. Representations and Warranties of the Seller. This Agreement
is made pursuant to and upon the representations, warranties, covenants and
agreements on the part of the Seller contained in the CPS Purchase Agreement and
is to be governed by the CPS Purchase Agreement. All of such representations,
warranties, covenants and agreements are hereby incorporated herein and are in
full force and effect as though specifically set forth herein.
SECTION 5. Representations and Warranties of the Purchaser. This
Agreement is made pursuant to and upon the representations, warranties,
covenants and agreements on the part of the Purchaser contained in the CPS
Purchase Agreement and is to be governed by the CPS Purchase Agreement. All of
such representations, warranties, covenants and agreements are hereby
incorporated herein and are in full force and effect as though specifically set
forth herein.
C-2
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be
duly executed this __ day of _________, but effective as of the date and year
first written above.
CONSUMER PORTFOLIO SERVICES, INC.,
as Seller
By:
Name:
Title:
CPS RECEIVABLES CORP.,
as Purchaser
By:
Name:
Title:
C-3
EXHIBIT A TO SUBSEQUENT CPS PURCHASE AGREEMENT
FORM OF SUBSEQUENT CPS ASSIGNMENT
For value received, in accordance with the Purchase Agreement dated as
of August 1, 1997, as heretofore amended, supplemented or otherwise modified
(the "CPS Purchase Agreement"), among the undersigned, as Seller, and CPS
Receivables Corp. (the "Purchaser"), the undersigned does hereby transfer,
assign, grant, set over and otherwise convey to the Purchaser, without recourse
(subject to the obligations in the CPS Purchase Agreement and the Sale and
Servicing Agreement) all right, title and interest of the Seller in and to: (i)
the Subsequent CPS Receivables listed in the related Schedule of Subsequent CPS
Receivables and, with respect to Rule of 78's Receivables, all monies due or to
become due thereon after the related Subsequent Cutoff Date (including Scheduled
Payments due after the related Subsequent Cutoff Date (including principal
prepayments relating to such Scheduled Payments) but received by the Seller on
or before the related Subsequent Cutoff Date) and, with respect to Simple
Interest Receivables, all monies received thereunder after the related
Subsequent Cutoff Date and all Liquidation Proceeds and Recoveries received with
respect to such Subsequent CPS Receivables; (ii) the security interests in the
Financed Vehicles granted by Obligors pursuant to the Subsequent CPS Receivables
and any other interest of the Seller in such 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) any proceeds from claims on any physical damage, credit
life and credit accident and health insurance policies or certificates relating
to the Financed Vehicles securing the Subsequent CPS Receivables or the Obligors
thereunder; (iv) refunds for the costs of extended service contracts with
respect to Financed Vehicles securing the Subsequent CPS Receivables, refunds of
unearned premiums with respect to credit life and credit accident and health
insurance policies or certificates covering an Obligor or Financed Vehicle
securing the Subsequent CPS Receivables or his or her obligations with respect
to such a Financed Vehicle and any recourse to Dealers for any of the foregoing;
(v) the Receivable File related to each Subsequent CPS Receivable; and (vi) the
proceeds of any and all of the foregoing (collectively, the "Subsequent
Transferred CPS Property" and together with any Subsequent Transferred CPS
Property, the "Subsequent Transferred Property").
The foregoing assignment, transfer and conveyance 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 Subsequent CPS 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 each of the undersigned contained in
the CPS Purchase Agreement and is to be governed by the CPS Purchase Agreement.
C-4
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the CPS 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 principles of
conflicts of law.
IN WITNESS WHEREOF, the undersigned have caused this Assignment to be
duly executed as of [ ], 1997.
CONSUMER PORTFOLIO SERVICES, INC.
By:
Name:
Title:
C-5
Exhibit 10.3
Receivables Purchase Agreement
[EXECUTION COPY]
ASSIGNMENT
For value received, in accordance with the Purchase Agreement dated as
of August 1, 1997 between the undersigned (the "Seller") and Samco Acceptance
Corp. (the "Purchaser") (the "Samco Purchase Agreement"), the undersigned does
hereby sell, transfer, assign and otherwise convey unto the Purchaser, without
recourse (subject to the obligations in the Samco Purchase Agreement and the
Sale and Servicing Agreement), all right, title and interest of the Seller in
and to (i) the Initial Samco Receivables listed in the Schedule of Samco
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) the security interests in the Financed Vehicles granted
by Obligors pursuant to the Initial Samco Receivables and any other interest of
the Seller in such 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)
any proceeds from claims on any physical damage, credit life and credit accident
and health insurance policies or certificates relating to the Financed Vehicles
securing the Initial Samco Receivables; (iv) refunds for the costs of extended
service contracts with respect to Financed Vehicles securing the Initial Samco
Receivables, refunds of unearned premiums with respect to credit life and credit
accident and health insurance policies or certificates covering an Obligor or
Financed Vehicle securing the Initial Samco Receivables or his or her
obligations with respect to such a Financed Vehicle and any recourse to Dealers
for any of the foregoing; (v) the Receivable File related to each Initial Samco
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 Initial Samco 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 Samco
Purchase Agreement and is to be governed by the Samco Purchase Agreement.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Samco 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 LAW
PRINCIPLES.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed as of August 19, 1997.
SAMCO ACCEPTANCE CORP.
By:
Name:
Title:
-2-
[EXECUTION COPY]
PURCHASE AGREEMENT dated as of this August 1, 1997, by and between
SAMCO ACCEPTANCE CORP., a Delaware corporation (the "Seller"), having its
principal executive office at 8150 North Central Expressway, Suite 600, Lock-Box
39, Dallas, Texas, and CPS RECEIVABLES CORP., a California corporation (the
"Purchaser"), having its principal executive office at 2 Ada, Irvine, California
92618.
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 Samco Receivables (as hereinafter defined), are to be sold
by the Seller to the Purchaser, which Samco Receivables together with the CPS
Receivables will be transferred by the Purchaser, pursuant to the Sale and
Servicing Agreement (as hereinafter defined), to CPS Auto Receivables Trust
1997-3 to be created thereunder, which Trust will issue notes under the
Indenture (as hereinafter defined) representing indebtedness of the Trust (the
"Class A Notes" and the "Class B Notes" and, together with the Class A Notes,
the "Notes") and certificates under the Trust Agreement (as hereinafter defined)
representing beneficial interests in the Trust (the "Certificates" and, together
with the Notes, the "Securities").
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 Purchase Agreement shall have the meaning set
forth in the Sale and Servicing Agreement and, if not defined therein, shall
have the meaning set forth in the Indenture. As used in this Purchase 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):
"Agreements" means, collectively, this Purchase Agreement and each
Subsequent Purchase Agreement and the Assignments.
"Assignment" means the Initial Assignment and/or any Subsequent
Assignment.
"Base Prospectus" means the Prospectus dated August 11, 1997 with
respect to CPS Auto Grantor Trusts and any amendment or supplement thereto.
"Certificate Purchase Agreement" means the Certificate Purchase
Agreement, dated August 17, 1997 among one or more investors, CPS Receivables
Corp. and the Purchaser relating to the Certificates.
"Closing Date" means the Initial Closing Date and/or each Subsequent
Closing Date.
"CPS" means Consumer Portfolio Services, Inc., a California
corporation, and its successors and assigns.
"CPS Initial Transferred Property" shall have the meaning specified in
the CPS Purchase Agreement
"CPS Purchase Agreement" means the purchase agreement dated as of
August 1, 1997 between Consumer Portfolio Services, Inc., as seller, and CPS
Receivables Corp., as purchaser, as such agreement may be amended, supplemented
or otherwise modified from time to time in accordance with the terms thereof.
"CPS Receivable" shall have the meaning specified in the CPS Purchase
Agreement.
"Indenture" means the Indenture dated as of August 1, 1997 between CPS
Auto Receivables Trust 1997-3, as issuer and Norwest Bank Minnesota, National
Association, as trustee.
"Initial Closing Date" means August 19, 1997.
"Initial CPS Receivables" shall have the meaning specified in the CPS
Purchase Agreement.
"Initial Receivables" means an Initial Samco Receivable and/or an
Initial CPS Receivable.
"Initial Samco Assignment" means the assignment dated August 19, 1997
by the Seller to the Purchaser, relating to the purchase of the Initial Samco
Receivables and certain other property related thereto by the Purchaser from the
Seller pursuant to this Purchase Agreement which shall be substantially in the
form of Exhibit A to this Purchase Agreement.
"Initial Samco Receivable" means each retail installment sale contract
for a Financed Vehicle that appears on the Initial Schedule of Samco Receivables
and all rights thereunder.
"Initial Schedule of CPS Receivables" means the list of CPS Receivables
annexed as Exhibit B to the CPS Purchase Agreement.
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"Initial Schedule of Samco Receivables" means the list of Initial Samco
Receivables annexed hereto as Exhibit B.
"Initial Transferred CPS Property" shall have the meaning specified in
the CPS Purchase Agreement.
"Initial Transferred Property" shall have the meaning specified in
Section 2.1(a) hereof.
"Initial Transferred Samco Property" shall have the meaning specified
in Section 2.1(a) hereof.
"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, the Base
Prospectus and the Private Placement Memorandum.
"Private Placement Memorandum" means the Private Placement Memorandum,
dated August 15, 1997, relating to the private placement of the Class B Notes
and the Certificates and any amendment or supplement thereto.
"Prospectus Supplement" means the Prospectus Supplement dated August
15, 1997, relating to the public offering of the Class A Notes and any amendment
or supplement thereto.
"Purchase 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.
"Purchaser" means CPS Receivables Corp., a California corporation, and
its successors and assigns.
"Receivable" shall have the meaning specified in the Pooling and
Servicing Agreement.
"Receivables Purchase Price" means $[ ].
"Repurchase Event" shall have the meaning specified in Section 6.2
hereof.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
dated as of August 1, 1997, among CPS Auto Receivables Trust 1997-3, 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
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agreement may be amended, supplemented or otherwise modified from time to time
in accordance with the terms thereof.
"Samco" means Samco Acceptance Corp., a Delaware corporation, and its
successors and assigns.
"Samco Assignments " means the Initial Assignment and any Subsequent
Assignment.
"Samco Purchase 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.
"Samco Receivables" means an Initial Samco Receivable and/or a
Subsequent Samco Receivable.
"Schedule of Receivables" means the Schedule of Samco Receivables
and/or the CPS Schedule of Receivables.
"Schedule of Samco Receivables" means the list of Initial Samco
Receivables annexed hereto as Exhibit B, as supplemented by each Schedule of
Subsequent Samco Receivables.
"Schedule of Subsequent Samco Receivables" means the schedule of all
motor vehicle retail financing agreements sold and transferred to the Purchaser
pursuant to a Subsequent Purchase Agreement, which schedule shall be deemed to
supplement the Schedule of Receivables and shall be attached to the related
Subsequent Assignment (and may be in the form of microfiche).
"Seller" means Samco Acceptance Corp., a Delaware corporation, in its
capacity as seller of the Samco Receivables and the other Transferred Samco
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.
"Subsequent Assignment" means an assignment substantially in the form
of Exhibit A to the form of Subsequent Purchase Agreement attached as Exhibit C
hereto.
"Subsequent Closing Date" means any day on which Subsequent Samco
Receivables are sold to the Purchaser pursuant to a Subsequent Purchase
Agreement.
"Subsequent Purchase Agreement" means a subsequent purchase agreement
which shall be in substantially the form of Exhibit C to this Purchase Agreement
by which the Seller will transfer Subsequent Samco Receivables.
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"Subsequent Receivables" means a Subsequent CPS Receivable and/or a
Subsequent Samco Receivable.
"Subsequent Samco Receivable" means each Receivable transferred to the
Purchaser pursuant to a Subsequent Samco Assignment which shall be listed on the
Schedule of Subsequent Receivables attached to the related Subsequent
Assignment.
"Subsequent Transferred Property" shall have the meaning specified in
Section 2.2(a).
"Subsequent Transferred Samco Property" shall have the meaning
specified in each Subsequent Purchase Agreement.
"Transferred Property" means the Transferred CPS Property and the
Transferred Samco Property.
"Transferred Samco Property" means the Initial Transferred Samco
Property and/or the Subsequent Transferred Samco Property.
"Trust" means the CPS Auto Receivables Trust 1997-3 created by the
Trust Agreement.
"Trust Agreement" means the Trust Agreement between CPS Receivables
Corp. and Bankers Trust (Delaware) dated as of August 14, 1997, as amended and
restated pursuant to an amendment dated August 19, 1997 between the same
parties.
"UCC" means the Uniform Commercial Code, as in effect from time to time
in the relevant jurisdictions.
"Underwriters" means PaineWebber Incorporated and Black Diamond
Securities, Inc.
"Underwriting Agreement" means the Underwriting Agreement, dated August
15, 1997, among the Underwriters, CPS, Samco and the Purchaser relating to the
Class A Notes.
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
2.1. Purchase and Sale of Receivables. On the Initial Closing Date,
subject to the terms and conditions of this Purchase 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 Purchase Agreement,
each Subsequent Purchase Agreement and the Sale and Servicing Agreement), all of
the Seller's right, title and interest in, to and under the Initial Samco
Receivables and the other Initial Transferred Samco Property relating thereto.
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The conveyance to the Purchaser of the Initial Samco Receivables and other
Initial Transferred Samco Property relating thereto is intended as a sale free
and clear of all liens and it is intended that the Initial Transferred Samco
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 Initial Receivables. On the Initial Closing
Date and simultaneously with the transactions to be consummated pursuant to the
Trust Agreement, the Indenture and the Sale 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 and in the Sale
and Servicing Agreement), all right, title and interest of the Seller in and to
(i) the Initial Samco Receivables listed in the Schedule of Samco 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 Initial
Samco Receivables; (ii) the security interests in the Financed Vehicles granted
by Obligors pursuant to the Samco Receivables and any other interest of the
Seller in such 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)
any proceeds from claims on any physical damage, credit life and credit accident
and health insurance policies or certificates relating to the Financed Vehicles
securing the Initial Samco Receivables or the Obligors thereunder; (iv) refunds
for the costs of extended service contracts with respect to Financed Vehicles
securing the Initial Samco Receivables, refunds of unearned premiums with
respect to credit life and credit accident and health insurance policies or
certificates covering an Obligor or Financed Vehicle securing the Initial Samco
Receivables or his or her obligations with respect to such a Financed Vehicle
and any recourse to Dealers for any of the foregoing; (v) the Receivable File
related to each Initial Samco Receivable; and (vi) the proceeds of any and all
of the foregoing (collectively, the "Initial Transferred Samco Property" and
together with the Initial Transferred CPS Property, the "Initial Transferred
Property").
(b) Receivables Purchase Price. In consideration for the
Initial Samco Receivables and other Initial Transferred Samco Property described
in Section 2.1(a), the Purchaser shall, on the Initial Closing Date, pay to the
Seller the Receivables Purchase Price by federal wire transfer (same day) funds.
2.2. Purchase and Sale of Subsequent Receivables. On the related
Subsequent Closing Date, subject to the terms and conditions of the related
Subsequent Purchase 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 Purchase Agreement, each Subsequent Purchase Agreement
and the Sale and Servicing Agreement), all of the Seller's right, title and
interest in, to and under the Subsequent Samco Receivables and the other
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Subsequent Transferred Samco Property relating thereto. The conveyance to the
Purchaser of the Subsequent Samco Receivables and other Subsequent Transferred
Samco Property relating thereto is intended as a sale free and clear of all
liens and it is intended that the Subsequent Transferred Samco 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 Subsequent Receivables. On the related
Subsequent Closing Date the Seller shall sell, transfer, assign, grant, set over
and otherwise convey to the Purchaser, without recourse (subject to the
obligations herein and in the Sale and Servicing Agreement), all right, title
and interest of the Seller in and to (i) the Subsequent Samco Receivables listed
in the related Schedule of Subsequent Samco Receivables and, with respect to
Rule of 78's Receivables, all monies due or to become due thereon after the
related Subsequent Cutoff Date (including Scheduled Payments due after the
related Subsequent Cutoff Date (including principal prepayments relating to such
Scheduled Payments) but received by the Seller on or before the related
Subsequent Cutoff Date) and, with respect to Simple Interest Receivables, all
monies received thereunder after the related Subsequent Cutoff Date and all
Liquidation Proceeds and Recoveries received with respect to such Subsequent
Samco Receivables; (ii) the security interests in the Financed Vehicles granted
by Obligors pursuant to the Subsequent Samco Receivables and any other interest
of the Seller in such 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)
any proceeds from claims on any physical damage, credit life and credit accident
and health insurance policies or certificates relating to the Financed Vehicles
securing the Subsequent Samco Receivables or the Obligors thereunder; (iv)
refunds for the costs of extended service contracts with respect to Financed
Vehicles securing the Subsequent Samco Receivables, refunds of unearned premiums
with respect to credit life and credit accident and health insurance policies or
certificates covering an Obligor or Financed Vehicle securing the Subsequent
Samco Receivables or his or her obligations with respect to such a Financed
Vehicle and any recourse to Dealers for any of the foregoing; (v) the Receivable
File related to each Subsequent Samco Receivable; and (vi) the proceeds of any
and all of the foregoing (collectively, the "Subsequent Transferred Samco
Property" and together with any Subsequent Transferred CPS Property, the
"Subsequent Transferred Property").
(b) The Seller shall transfer to the Issuer the Subsequent
Samco Receivables and the Subsequent Transferred Samco Property as described in
paragraph (a) above only upon the satisfaction of each of the following
conditions on or prior to the related Subsequent Closing Date:
(i) the Seller shall have provided the Trustee, the Owner
Trustee, the Credit Enhancer and the Rating Agencies with an Addition
Notice not later than five days prior to such Subsequent Closing Date
and shall have provided any information reasonably requested by any of
the foregoing with respect to the Subsequent Samco Receivables;
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(ii) the Seller shall have delivered to the Owner Trustee and
the Trustee a duly executed Subsequent Purchase Agreement,
substantially in the form of Exhibit C, which shall include supplements
to the Schedule of Samco Receivables, listing the Subsequent Samco
Receivables;
(iii) the Seller shall, to the extent required by Section 4.2
of the Sale and Servicing Agreement, have deposited in the Collection
Account all collections in respect of the Subsequent Samco Receivables;
(iv) as of each Subsequent Closing Date, (A) the Seller shall
not be insolvent and shall not become insolvent as a result of the
transfer of Subsequent Samco Receivables on such Subsequent Closing
Date, (B) the Seller shall not intend to incur or believe that it shall
incur debts that would be beyond its ability to pay as such debts
mature, (C) such transfer shall not have been made with actual intent
to hinder, delay or defraud any Person and (D) the assets of the Seller
shall not constitute unreasonably small capital to carry out its
business as conducted;
(v) the Funding Period shall not have terminated;
(vi) after giving effect to any transfer of Subsequent Samco
Receivables on a Subsequent Closing Date, the Samco Receivables shall
meet the following criteria (based on the characteristics of the
Initial Receivables on the Initial Cutoff Date and the Subsequent
Receivables on the related Subsequent Cutoff Dates): (a) the weighted
average APR of such Receivables will not be less than 1% below the
weighted average APR of the Initial Receivables on the Cutoff Date, (b)
the weighted average remaining term of such Receivables will be within
a range of 55-60 months, (c) not more than 95% of the aggregate
principal balance of such Receivables will represent financing of used
Financed Vehicles, (d) no fewer than 45% of the Subsequent Receivables
will be originated under the CPS alpha program, (e) no fewer than 13%
of the Subsequent Receivables will be originated under the CPS _______
program, (f) no more than 13.5% of the Subsequent Receivables will be
originated under the CPS first time buyer program, and (g) no fewer
than 20% and no more than 40% of the Subsequent Receivables will be
originated under the CPS standard program, and the Trust, the Trustee,
the Owner Trustee and the Note Insurer shall have received written
confirmation from a firm of certified independent public accountants as
to the satisfaction of the criteria in clauses (a) through (g) above;
(vii) each of the representations and warranties made by the
Seller pursuant to Section 3.2 with respect to the Subsequent Samco
Receivables to be transferred on such Subsequent Closing Date shall be
true and correct as of the related Subsequent Closing Date, and the
Seller shall have performed all obligations to be performed by it
hereunder on or prior to such Subsequent Closing Date;
-8-
(viii) the Seller shall, at its own expense, on or prior to
the Subsequent Closing Date indicate in its computer files that the
Subsequent Samco Receivables identified in the Subsequent Purchase
Agreement have been sold to the Purchaser pursuant to the related
Subsequent Purchase Agreement and subsequently to the Trust pursuant to
the Sale and Servicing Agreement;
(ix) the Seller shall have taken any action required to
maintain the first priority perfected ownership interest of the Trust
in the Owner Trust Estate and the first priority perfected security
interest of the Trustee in the Collateral;
(x) no selection procedures adverse to the interests of the
Securityholders or the Credit Enhancer shall have been utilized in
selecting the Subsequent Samco Receivables;
(xi) the addition of any such Subsequent Samco Receivables
shall not result in a material adverse tax consequence to the Trust or
the Securityholders;
(xii) the Seller shall have delivered (A) to the Rating
Agencies and the Credit Enhancer an opinion of Counsel with respect to
the transfer of such Subsequent Samco Receivables substantially in the
form of the Opinion of Counsel delivered to the Rating Agencies and the
Credit Enhancer on the related Closing Date and (B) to the Trustee the
opinion of Counsel required by Section 13.2(i)(1) of the Sale and
Servicing Agreement;
(xiii) each Rating Agency shall have confirmed that the rating
on the Notes shall not be withdrawn or reduced as a result of the
transfer of such Subsequent Samco Receivables to the Trust;
(xiv) all conditions precedent specified in the Sale and
Servicing Agreement with respect to the transfer of such Subsequent CPS
Receivables to the Trust by the Purchaser shall have been satisfied;
and
(xv) the Seller shall have delivered to the Credit Enhancer
and the Trustee an Officers' Certificate confirming the satisfaction of
each condition precedent specified in this paragraph (b).
The Seller covenants that in the event any of the foregoing conditions
precedent are not satisfied with respect to any Subsequent Receivable on the
date required as specified above, the Seller will immediately repurchase such
Subsequent Receivable from the Trust, at a price equal to the Purchase Amount
thereof, in the manner specified in Section 6.2 of the Sale and Servicing
Agreement.
2.3. The Closing. The sale and purchase of the Initial Samco
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
Initial Closing Date, simultaneously with the closings under: (a) the CPS
Purchase Agreement pursuant to which CPS will sell the Initial
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CPS Receivables to CPS Receivables Corp., (b) the Sale and Servicing Agreement
pursuant to which the Purchaser will assign all of its right, title and interest
in and to the Initial Receivables and the other Initial Transferred Property to
the Trust for the benefit of the Securityholders, (c) the Trust Agreement
pursuant to which the Trust shall be formed and the Certificates issued, (d) the
Indenture pursuant to which the Trust will issue the Notes, (e) the Underwriting
Agreement pursuant to which the Trust shall sell the Class A Notes and Class B
Notes to the Underwriters and (f) the Certificate Purchase Agreement pursuant to
which the Purchaser shall sell the 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
each Closing Date (which representations and warranties shall survive such
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 Samco
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 the Agreements and to carry out its terms and
the execution, delivery and performance of the Agreements has been duly
authorized by the Purchaser by all necessary corporate action.
(d) Binding Obligation. The Agreements 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 the Agreements 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
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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 indenture, agreement, mortgage, deed of trust, or other instrument
(other than the Basic Documents); nor violate any law, order, rule or regulation
applicable to the 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 the Agreements or the Securities; (B) seeking to prevent the
issuance of the Securities or the consummation of any of the transactions
contemplated by the Agreements; (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, the Agreements or the
Securities; or (D) relating to the Purchaser and which might adversely affect
the Federal or State income, excise, franchise or similar tax attributes of the
Securities.
(g) No Consents. No consent, approval, authorization or order
of or declaration or filing with any governmental authority is required to be
obtained by the Purchaser for the issuance or sale of the Securities or the
consummation of the other transactions contemplated by the Agreements, the Trust
Agreement, the Indenture or the Sale 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
each 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 Delaware, 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 Samco 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 of the Samco Receivables as required by the
Sale 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
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corporate action; and the execution, delivery and performance of the
Agreements 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 Initial Samco Receivables
and the other Initial Transferred Samco 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 the Agreements 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 the Basic Documents); 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 the Agreements or the
Securities; (B) seeking to prevent the issuance of the Securities or
the consummation of any of the transactions contemplated by the
Agreements; (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, the Agreements
or the Securities; or (D) relating to the Seller and which might
adversely affect the Federal or State income, excise, franchise or
similar tax attributes of the Securities.
(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 Securities or the consummation
of the other transactions contemplated by the Agreements, the Trust
Agreement, the Indenture or the Sale 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
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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
Initial Samco 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 Initial Samco Receivables to
the Purchaser.
(b) The Seller makes the following representations and
warranties as to the Samco Receivables and the other Transferred Samco Property
relating thereto on which the Purchaser relies in accepting the Samco
Receivables and the other Transferred Samco Property relating thereto. Such
representations and warranties speak with respect to each Samco Receivable as of
the Initial Closing Date or Subsequent Closing Date on which such Samco
Receivable is transferred to the Purchaser and shall survive the sale, transfer,
and assignment of the Samco Receivables and the other Transferred Samco Property
relating thereto to the Purchaser and the subsequent assignment and transfer
pursuant to the Sale and Servicing Agreement:
(i) Location of Receivable Files; One Original. A complete
Receivable File with respect to each Samco Receivable has been or prior
to the Closing Date will be delivered to the Trustee at the location
listed in Schedule B to the Sale and Servicing Agreement. There is only
one original executed copy of each Samco Receivable.
(ii) Schedule of Receivables; Selection Procedures. The
information with respect to the Samco Receivables set forth in the
Schedule of Samco Receivables as the same may be amended by subsequent
Schedules of Samco Receivables is true and correct in all material
respects as of the close of business on the related Cutoff Date, and no
selection procedures adverse to the Securityholders have been utilized
in selecting the Samco Receivables.
(iii) Security Interest in Financed Vehicle. Immediately prior
to the sale, assignment, and transfer thereof, each Samco Receivable
shall be secured by a validly perfected first security interest in the
related 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 each Closing Date).
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(iv) Samco Receivables in Force. No Samco Receivable has been
satisfied, subordinated or rescinded, nor has any Financed Vehicle been
released from the lien granted by the related Samco Receivable in whole
or in part.
(v) No Waiver. No provision of a Samco Receivable has been
waived.
(vi) No Amendments. No Samco Receivable has been amended,
except as such Samco 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.
(vii) 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 Initial Samco 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 Initial Samco Receivable has
arisen; and the Seller shall not waive and has not waived any of the
foregoing; and no Financed Vehicle securing a Initial Samco Receivable
shall have been repossessed as of the Cutoff Date.
(viii) Title. It is the intention of the Seller that the
transfer and assignment herein contemplated constitute a sale of the
Samco Receivables from the Seller to the Purchaser and that the
beneficial interest in and title to such Samco 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 Samco
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 related Closing Date. Immediately
prior to any transfer and assignment herein contemplated, the Seller
had good and marketable title to each Samco 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 Samco 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.
(ix) Lawful Assignment. No Samco Receivable has been
originated in, or is subject to the laws of, any jurisdiction under
which the sale, transfer, and assignment of such Samco Receivable under
the Agreements 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 Samco
Receivables.
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(x) 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 Samco
Receivables and the other Transferred Samco Property have been made,
taken or performed.
(xi) Casualty. No Financed Vehicle related to a Samco
Receivable has suffered a Casualty.
(xii) Obligation to Dealers or Others. The Purchaser and its
assignees will assume no obligation to Dealers or other originators or
holders of the Samco Receivables (including, but not limited to under
dealer reserves) as a result of the purchase of the Samco Receivables.
(xiii) Full Amount Advanced. The full amount of each Samco
Receivable has been advanced to each Obligor, and there are no
requirements for future advances thereunder. No Obligor with respect to
a Samco Receivable has any option under the Samco Receivable to borrow
from any Person additional funds secured by the related 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 Initial Samco Receivables pursuant to
this Agreement shall be "without recourse" to the Seller except for the
representations, warranties and covenants made by the Seller in this Purchase
Agreement.
ARTICLE IV
CONDITIONS
4.1. Conditions to Obligation of the Purchaser. On the applicable
Closing Date, the obligation of the Purchaser to purchase the Samco 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
related 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 such 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 Samco Receivables have been sold to the Purchaser
pursuant to the Agreements and shall deliver to the Purchaser the
Schedule of Samco Receivables certified by the Chairman, the President,
the Vice President or the Treasurer of the Seller to be true, correct
and complete.
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(c) Receivable Files Delivered. The Seller shall, at its own
expense, deliver the related Receivable Files to the Trustee at the
offices specified in Schedule B to the Sale and Servicing Agreement on
or prior to the related Closing Date.
(d) Documents to be delivered by the Seller on each Closing
Date.
(i) The Assignment. On each Closing Date, the Seller
will execute and deliver the applicable Assignment. The
Initial Assignment shall be substantially in the form of
Exhibit A hereto and any Subsequent Assignment shall be in the
form of Exhibit A to the form of Subsequent Purchase Agreement
attached as Exhibit C hereto.
(ii) Evidence of UCC-1 Filing. On or prior to the
related 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 Samco Receivables and the other
Transferred Samco 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 Samco 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 such Closing Date.
(iii) Other Documents. On or prior to the Closing
Date, the Seller shall deliver such other documents as the
Purchaser may reasonably request.
(e) Other Transactions. The transactions contemplated by the
Trust Agreement, the Indenture, the Sale and Servicing Agreement the
Initial CPS Purchase Agreement, the Underwriting Agreement and the
Certificate Purchase Agreement shall be consummated on the Initial
Closing Date.
4.2. Conditions to Obligation of the Seller. The obligation of the
Seller to sell the Samco Receivables to the Purchaser is subject to the
satisfaction of the following conditions on each Closing Date:
(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. The Purchaser will deliver to
the Seller the purchase price for the related Samco Receivables (on the
Initial Closing Date as provided in Section 2.1(b)). The Seller hereby
directs the Purchaser to wire such purchase price pursuant to wire
instructions to be delivered to the Purchaser on or prior to the
Closing Date.
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ARTICLE V
COVENANTS OF THE SELLER
The Seller agrees with the Purchaser as follows:
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 Samco Receivables and the
other Transferred Samco 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 Samco Receivables and the other
Transferred Samco Property. The Seller shall cause to be delivered 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 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 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 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) Maintenance of Computer Systems. The Seller shall maintain its
computer systems so that, from and after the time of sale to the Purchaser of
the Samco Receivables hereunder, the Seller's master computer records (including
any back-up archives) that refer to a Samco Receivable shall indicate clearly
the interest of the Purchaser in such
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Samco Receivable and that such Samco Receivable is owned by the Purchaser.
Indication of the Purchaser's ownership of a Samco Receivable shall be deleted
from or modified on the Seller's computer systems when, and only when, the Samco
Receivable shall have been paid in full or repurchased.
(d) 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 Samco 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-up archives) that, if they shall
refer in any manner whatsoever to any Samco Receivable, shall indicate clearly
that such Samco Receivable has been sold and is owned by the Purchaser unless
such Samco Receivable has been paid in full or repurchased.
(e) 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 Samco
Receivable.
(f) List of Receivables. Upon request, the Seller shall furnish to the
Purchaser, within five Business Days, a list of all Samco Receivables (by
contract number and name of Obligor) then owned by the Purchaser, together with
a reconciliation of such list to the Schedule of Samco Receivables.
5.2. Other Liens or Interests. Except for the conveyances hereunder and
pursuant to the Sale 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 the Samco
Receivables against all claims of third parties claiming through or under the
Seller.
5.3. Chief Executive Office. During the term of the Samco 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 Samco
Receivables.
5.5. Delivery of Receivable Files. On or prior to the Closing Date, the
Seller shall cause to be delivered to the Trustee at the location specified in
Schedule B to the Sale and Servicing Agreement the Receivables Files relating to
the Samco Receivables. The Seller shall have until the last day of the second
Collection Period following receipt of notification that there has been a
failure to deliver a file with respect to a Samco Receivable or that a file is
unrelated to the Receivables identified in Schedule A to the Sale and Servicing
Agreement
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or that any of the documents referred to in Section 3.3 of the Sale 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 respect to such
Receivable File shall have been cured by the last day of the second Collection
Period following discovery thereof by the Trustee and notice thereof to Samco,
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
Sale and Servicing Agreement. The sole remedy hereunder of the Trustee, the
Trust or the Securityholders 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 Samco 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 related to a Samco
Receivable.
(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 Agreements, or by reason of reckless disregard of the
Seller's obligations and duties under the Agreements.
Indemnification under this Section 5.6 shall include reasonable fees
and expenses of litigation and shall survive payment of the Notes and
Certificates. These indemnity obligations shall be in addition to any obligation
that the Seller may otherwise have.
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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 Trust.
ARTICLE VI
MISCELLANEOUS PROVISIONS
6.1. Obligations of Seller. The obligations of the Seller under the
Agreements shall not be affected by reason of any invalidity, illegality or
irregularity of any Samco Receivable.
6.2. Repurchase Events. The Seller hereby covenants and agrees with the
Purchaser for the benefit of the Purchaser, the Trustee, the Insurer and the
Securityholders, 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
Samco 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 discovery thereof by or notice to the Purchaser and the Seller of
such breach, the Seller shall repurchase any Samco Receivable if such Samco
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 Samco 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 Samco Receivables, such that
following such purchase such representation shall be true and correct with
respect to the remainder of the Samco 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 5.6 of the Sale and Servicing Agreement. The
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sole remedy hereunder of the Securityholders, the Trust, the 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 Samco Receivables
pursuant to this Agreement; provided, however, that the Seller shall indemnify
the Trustee, the Insurer, the Trust and the Securityholders against all costs,
expenses, losses, damages, claims and liabilities, including reasonable fees and
expenses of counsel, which may be asserted against or incurred by any of them,
as a result of third party claims arising out of the events or facts giving rise
to such breach. Upon receipt of the Purchase Amount, 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 Samco Receivable. Notwithstanding
the foregoing, if it is determined that consummation of the transactions
contemplated by the Sale 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
Security 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.
6.3. Seller's Assignment of Purchased Receivables. With respect to all
Samco Receivables repurchased by the Seller pursuant to the Agreements, 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 Samco Receivables, and all security and documents
relating thereto.
6.4. Conveyance as Sale of Receivables Not Financing. The parties
hereto intend that each conveyance under the Agreements be a sale of the Samco
Receivables and the other Transferred Samco Property from the Seller to the
Purchaser and not a financing secured by such assets; and the beneficial
interest in and title to the Samco Receivables and the other Transferred Samco
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 Texas) and applicable law,
and the Seller hereby grants to the Purchaser a first priority perfected
security interest in, to and under the Samco Receivables and the other
Transferred Samco 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 Securities 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 Sale and Servicing Agreement, sell the Receivables to the Trust and
assign its rights under this Purchase Agreement and the CPS Purchase Agreement
to the Trustee for the benefit of the Securityholders, and that the
representations and warranties contained in this Agreement and
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the rights of the Purchaser under this Purchase Agreement, including under
Sections 6.2 and 6.4 hereof are intended to benefit such Trust and the
Securityholders. The Seller also acknowledges that the Trustee on behalf of the
Securityholders 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 6.4 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 Insurer; provided, however, that (i) any such amendment
that materially adversely affects the rights of the Class A Noteholders under
the Sale and Servicing Agreement must be consented to by the holders of Class A
Notes representing 51% or more of the outstanding principal amount Class A
Notes, (ii) any such amendment that materially adversely affects the rights of
the Class B Noteholders under the Sale and Servicing Agreement must be consented
to by the holders of Class B Notes representing 51% or more of the outstanding
principal amount Class B Notes and (iii) any amendment that materially adversely
affects the rights of the Certificateholders under the Sale and Servicing
Agreement must be consented to by the holders of Certificates representing 51%
or more of the Certificate Balance.
6.7. Waivers. No failure or delay on the part of the Purchaser in
exercising any power, right or remedy under the Agreements 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.
6.8. 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.
6.9. Costs and Expenses. The Seller will pay all expenses incident to
the performance of its obligations under this Purchase Agreement.
6.10. 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 Purchase Agreement shall
remain in full force and effect and will survive each closing hereunder.
6.11. 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 Samco Receivables, under the Sale and Servicing Agreement or as
required by law.
-22-
6.12. Headings and Cross-References. The various headings in this
Purchase Agreement are included for convenience only and shall not affect the
meaning or interpretation of any provision of this Purchase Agreement.
References in this Purchase Agreement to Section names or numbers are to such
Sections of this Purchase Agreement.
6.13. Third Party Beneficiaries. The parties hereto hereby expressly
agree that each of the Trustee for the benefit of the Securityholders and the
Insurer shall be third party beneficiaries with respect to this Purchase
Agreement, provided, however, that no third party other than the Trustee for the
benefit of the Securityholders and the Insurer shall be deemed a third party
beneficiary of this Purchase Agreement.
6.14. Governing Law. THIS PURCHASE AGREEMENT AND THE ASSIGNMENTS 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.
6.15. 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 intentionally left blank.]
-23-
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:
SAMCO ACCEPTANCE CORP.
By:
Name:
Title:
-24-
Exhibit A
ASSIGNMENT
For value received, in accordance with the Purchase Agreement dated as
of August 1, 1997 between the undersigned (the "Seller") and CPS Receivables
Corp. (the "Purchaser") (the "Samco Purchase Agreement"), the undersigned does
hereby sell, transfer, assign and otherwise convey unto the Purchaser, without
recourse (subject to the obligations in the Samco Purchase Agreement and the
Pooling and Servicing Agreement), all right, title and interest of the Seller in
and to (i) the Initial Samco Receivables listed in the Schedule of Samco
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) the security interests in the Financed Vehicles granted
by Obligors pursuant to the Initial Samco Receivables and any other interest of
the Seller in such 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)
any proceeds from claims on any physical damage, credit life and credit accident
and health insurance policies or certificates relating to the Financed Vehicles
securing the Initial Samco Receivables; (iv) refunds for the costs of extended
service contracts with respect to Financed Vehicles securing the Initial Samco
Receivables, refunds of unearned premiums with respect to credit life and credit
accident and health insurance policies or certificates covering an Obligor or
Financed Vehicle securing the Initial Samco Receivables or his or her
obligations with respect to such a Financed Vehicle and any recourse to Dealers
for any of the foregoing; (v) the Receivable File related to each Initial Samco
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 Initial Samco 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 Samco
Purchase Agreement and is to be governed by the Samco Purchase Agreement.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Samco 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 LAW
PRINCIPLES.
-1-
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed as of ________.
SAMCO ACCEPTANCE CORP.
By:
Name:
Title:
-2-
Exhibit B
Schedule of Samco Receivables
See Following Page
-1-
EXHIBIT C
FORM OF SUBSEQUENT PURCHASE AGREEMENT
THIS SUBSEQUENT PURCHASE AGREEMENT (the "Subsequent Agreement") is made
and entered into as of by and between SAMCO ACCEPTANCE CORP., a Delaware
corporation (the "Seller"), and CPS RECEIVABLES CORP., a California corporation
(together with its successors and assigns, the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Purchaser, as purchaser, has agreed to purchase from the
Seller, as seller, and the Seller, pursuant to the Samco Purchase Agreement (the
"Samco Purchase Agreement") dated as of August 1, 1997, between the Purchaser
and the Seller, is transferring to the Purchaser the Subsequent Samco
Receivables listed on the Schedule of Subsequent Samco Receivables annexed
hereto as Exhibit A (the "Subsequent Samco Receivables") and Subsequent
Transferred Samco Property.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter contained, and for other good and valuable consideration,
the receipt of which is acknowledged, the Purchaser and the Seller, intending to
be legally bound, hereby agree as follows:
Definitions
SECTION 1. Capitalized terms used herein without definition shall have
the respective meanings assigned to such terms in the Samco Purchase Agreement.
SECTION 2. Conveyance of Subsequent Receivables. For value received, in
accordance with the Samco Purchase Agreement, the Seller does hereby sell,
assign, transfer and otherwise convey unto the Purchaser, without recourse (but
without limitation of its obligations under the Samco Purchase Agreement), all
right, title and interest of the Seller in and to: (i) the Subsequent Samco
Receivables listed in the related Schedule of Subsequent Samco Receivables and,
with respect to Rule of 78's Receivables, all monies due or to become due
thereon after the related Subsequent Cutoff Date (including Scheduled Payments
due after the related Subsequent Cutoff Date (including principal prepayments
relating to such Scheduled Payments) but received by the Seller on or before the
related Subsequent Cutoff Date) and, with respect to Simple Interest
Receivables, all monies received thereunder after the related Subsequent Cutoff
Date and all Liquidation Proceeds and Recoveries received with respect to such
Subsequent Samco Receivables; (ii) the security interests in the Financed
Vehicles granted by Obligors pursuant to the Subsequent Samco Receivables and
any other interest of the Seller in such 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) any proceeds from claims on
C-1
any physical damage, credit life and credit accident and health insurance
policies or certificates relating to the Financed Vehicles securing the
Subsequent Samco Receivables or the Obligors thereunder; (iv) refunds for the
costs of extended service contracts with respect to Financed Vehicles securing
the Subsequent Samco Receivables, refunds of unearned premiums with respect to
credit life and credit accident and health insurance policies or certificates
covering an Obligor or Financed Vehicle securing the Subsequent Samco
Receivables or his or her obligations with respect to such a Financed Vehicle
and any recourse to Dealers for any of the foregoing; (v) the Receivable File
related to each Subsequent Samco Receivable; and (vi) the proceeds of any and
all of the foregoing (collectively, the "Subsequent Transferred Samco Property"
and together with any Subsequent Transferred CPS Property, the "Subsequent
Transferred Property").
SECTION 3. Consideration for Subsequent Transferred Property. In
consideration for the Subsequent Samco Receivables and other Subsequent
Transferred Samco Property, subject to the terms and conditions hereof, the
purchase price for the Subsequent Samco Receivables, in the amount of
$_________, shall be paid by the Purchaser in cash to the Seller on the
Subsequent Closing Date.
SECTION 4. Representations and Warranties of the Seller. This Agreement
is made pursuant to and upon the representations, warranties, covenants and
agreements on the part of the Seller contained in the Samco Purchase Agreement
and is to be governed by the Samco Purchase Agreement. All of such
representations, warranties, covenants and agreements are hereby incorporated
herein and are in full force and effect as though specifically set forth herein.
SECTION 5. Representations and Warranties of the Purchaser. This
Agreement is made pursuant to and upon the representations, warranties,
covenants and agreements on the part of the Purchaser contained in the Samco
Purchase Agreement and is to be governed by the Samco Purchase Agreement. All of
such representations, warranties, covenants and agreements are hereby
incorporated herein and are in full force and effect as though specifically set
forth herein.
C-2
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be
duly executed this __ day of _________, but effective as of the date and year
first written above.
SAMCO ACCEPTANCE CORP., as Seller
By:
Name:
Title:
CPS RECEIVABLES CORP.,
as Purchaser
By:
Name:
Title:
C-3
EXHIBIT A TO SUBSEQUENT SAMCO PURCHASE AGREEMENT
FORM OF SUBSEQUENT SAMCO ASSIGNMENT
For value received, in accordance with the Purchase Agreement dated as
of August 1, 1997, as heretofore amended, supplemented or otherwise modified
(the "Samco Purchase Agreement"), among the undersigned, as Seller, and CPS
Receivables Corp. (the "Purchaser"), the undersigned does hereby transfer,
assign, grant, set over and otherwise convey to the Purchaser, without recourse
(subject to the obligations in the Samco Purchase Agreement and the Sale and
Servicing Agreement) all right, title and interest of the Seller in and to: (i)
the Subsequent Samco Receivables listed in the related Schedule of Subsequent
Samco Receivables and, with respect to Rule of 78's Receivables, all monies due
or to become due thereon after the related Subsequent Cutoff Date (including
Scheduled Payments due after the related Subsequent Cutoff Date (including
principal prepayments relating to such Scheduled Payments) but received by the
Seller on or before the related Subsequent Cutoff Date) and, with respect to
Simple Interest Receivables, all monies received thereunder after the related
Subsequent Cutoff Date and all Liquidation Proceeds and Recoveries received with
respect to such Subsequent Samco Receivables; (ii) the security interests in the
Financed Vehicles granted by Obligors pursuant to the Subsequent Samco
Receivables and any other interest of the Seller in such 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) any proceeds from claims on any physical
damage, credit life and credit accident and health insurance policies or
certificates relating to the Financed Vehicles securing the Subsequent Samco
Receivables or the Obligors thereunder; (iv) refunds for the costs of extended
service contracts with respect to Financed Vehicles securing the Subsequent
Samco Receivables, refunds of unearned premiums with respect to credit life and
credit accident and health insurance policies or certificates covering an
Obligor or Financed Vehicle securing the Subsequent Samco Receivables or his or
her obligations with respect to such a Financed Vehicle and any recourse to
Dealers for any of the foregoing; (v) the Receivable File related to each
Subsequent Samco Receivable; and (vi) the proceeds of any and all of the
foregoing (collectively, the "Subsequent Transferred Samco Property" and
together with any Subsequent Transferred CPS Property, the "Subsequent
Transferred Property").
The foregoing assignment, transfer and conveyance 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 Subsequent Samco 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 each of the undersigned contained in
the Samco Purchase Agreement and is to be governed by the Samco Purchase
Agreement.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Samco Purchase Agreement.
A-1
This Assignment shall be governed by and construed in accordance with
the internal laws of the State of New York, without regard to principles of
conflicts of law.
IN WITNESS WHEREOF, the undersigned have caused this Assignment to be
duly executed as of __________.
SAMCO ACCEPTANCE CORP.
By:
Name:
Title:
A-2
Exhibit 10.4
Subsequent Transfer Agreement
SUBSEQUENT TRANSFER AGREEMENT
TRANSFER No. 1 of Subsequent Receivables, dated as of September 11,
1997 pursuant to the Sale and Servicing Agreement, dated as of August 1, 1997,
among CPS AUTO RECEIVABLES TRUST 1997-3, a Delaware business trust (the
"Issuer"), CPS RECEIVABLES CORP., a California corporation (the "Seller"),
CONSUMER PORTFOLIO SERVICES, INC. a California corporation (the "Servicer"), and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking association
(the "Trustee").
W I T N E S S E T H:
WHEREAS pursuant to the Sale and Servicing Agreement, the Seller wishes
to convey the Subsequent Receivables to the Issuer; and
WHEREAS, the Issuer is willing to accept such conveyance subject to the
terms and conditions hereof.
NOW, THEREFORE, the Issuer, the Seller, the Servicer and the Trustee
hereby agree as follows:
SECTION 1. Defined Terms. Capitalized terms used herein shall have the
meanings ascribed to them in the Sale and Servicing Agreement unless otherwise
defined herein.
"Subsequent Cutoff Date" shall mean, with respect to the Subsequent
Receivables conveyed hereby, September 3, 1997.
"Subsequent Transfer Date" shall mean, with respect to the Subsequent
Receivables conveyed hereby, September 11, 1997.
SECTION 2. Schedule of Receivables. Annexed hereto is a supplement to
Schedule A to the Sale and Servicing Agreement listing the Receivables that
constitute the Subsequent Receivables to be conveyed pursuant to this Agreement
on the Subsequent Transfer Date.
SECTION 3. Conveyance of Subsequent Receivables. In consideration of
the Issuer's delivery to or upon the order of the Seller of $27,084,812, the
Seller does hereby sell, transfer, assign, set over and otherwise convey to the
Issuer, without recourse (except as expressly provided in the Sale and Servicing
Agreement), all right, title and interest of the Seller in and to:
(a) all right, title and interest of the Seller in and to the
Subsequent Receivables listed in Schedule A to this Transfer No. 1 and,
with respect to Subsequent Receivables which are Rule of 78's
Receivables, all monies due or to become due thereon
after the Subsequent Cutoff Date (including Scheduled Payments due
after the Subsequent Cutoff Date (including principal prepayments
relating to such Scheduled Payments) but received by the Seller or CPS
on or before the Subsequent Cutoff Date) and, with respect to
Subsequent Receivables which are Simple Interest Receivables, all
monies received thereunder after the Subsequent Cutoff Date and all
Liquidation Proceeds and Recoveries received with respect to such
Subsequent Receivables on or after the Subsequent Cutoff Date;
(b) all right, title and interest of the Seller in and to the
security interests in the Financed Vehicles granted by Obligors
pursuant to the Subsequent Receivables and any other interest of the
Seller in such Financed Vehicles, including, without limitation, the
certificates of title or, with respect to such Financed Vehicles in the
State of Michigan, all other evidence of ownership with respect to such
Financed Vehicles;
(c) all right, title and interest of the Seller in and to any
proceeds from claims on any physical damage, credit life and credit
accident and health insurance policies or certificates relating to the
Financed Vehicles or the Obligors;
(d) all right, title and interest of the Seller in and to the
Subsequent Purchase Agreements, including a direct right to cause CPS
to purchase Receivables from the Trust under certain circumstances;
(e) all right, title and interest of the Seller in and to
refunds for the costs of extended service contracts with respect to
Financed Vehicles securing Subsequent Receivables, refunds of unearned
premiums with respect to credit life and credit accident and health
insurance policies or certificates covering an Obligor or Financed
Vehicle or his or her obligations with respect to a Financed Vehicle
and any recourse to Dealers for any of the foregoing;
(f) the Receivable File related to each Subsequent Receivable;
(g) the proceeds of any and all of the foregoing.
It is the intention of the Seller that the transfer and assignment
contemplated by this Agreement shall constitute a sale of the Subsequent
Receivables and Other Conveyed Property from the Seller to the Issuer and the
beneficial interest in and title to the Subsequent Receivables and the Other
Conveyed Property shall not be part of the Seller's estate in the event of the
filing of a bankruptcy petition by or against the Seller under any bankruptcy
law. In the event that, notwithstanding the intent of the Seller, the transfer
and assignment contemplated hereby is held not to be a sale, this Agreement
shall constitute a grant of a security interest in the property referred to in
this Section 3 for the benefit of the Securityholders and the Note Insurer.
SECTION 4. Representations and Warranties of the Seller. The Seller
hereby represents and warrants to the Issuer as of the date of this Agreement
and as of the Subsequent Transfer Date that:
(a) Organization and Good Standing. The Seller has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of California, with power and authority to
own its properties and to conduct its business as such properties are
currently owned and such business is currently conducted, and had at
all relevant times, and now has, power, authority and legal right to
acquire, own and sell the Subsequent Receivables and the Other Conveyed
Property transferred to the Trust.
(b) Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business shall
require such qualifications.
(c) Power and Authority. The Seller has the power and
authority to execute and deliver this Agreement and the Basic Documents
to which it is a party and to carry out its terms and their terms,
respectively; the Seller has full power and authority to sell and
assign the Subsequent Receivables and the Other Conveyed Property to be
sold and assigned to and deposited with the Trust by it and has duly
authorized such sale and assignment to the Trust by all necessary
corporate action; and the execution, delivery and performance of this
Agreement and the Basic Documents to which the Seller is a party have
been duly authorized by the Seller by all necessary corporate action.
(d) Valid Sale, Binding Obligations. This Agreement effects a
valid sale, transfer and assignment of the Subsequent Receivables and
the Other Conveyed Property, enforceable against the Seller and
creditors of and purchasers from the Seller; and this Agreement and the
Basic Documents to which the Seller is a party, when duly executed and
delivered, shall constitute legal, valid and binding obligations of the
Seller enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting the enforcement of creditors' rights
generally and by equitable limitations on the availability of specific
remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the Basic Documents and the
fulfillment of the terms of this Agreement and the Basic Documents
shall not conflict with, result in any breach of any of the terms and
provisions of or constitute (with or without notice, lapse of time or
both) a default under the certificate of incorporation or by-laws of
the Seller, or any indenture, agreement, mortgage, deed of trust or
other instrument to which the Seller is a party or by which it is
bound, or result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, other than the Basic
Documents, or violate any law, order, rule or regulation applicable to
the Seller of any court or of any federal or state regulatory body,
administrative
agency or other governmental instrumentality having jurisdiction over
the Seller or any of its properties.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the Seller's knowledge, threatened against the Seller,
before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality having jurisdiction over the
Seller or its properties (A) asserting the invalidity of this
Agreement, the Securities or any of the Basic Documents, (B) seeking to
prevent the consummation of any of the transactions contemplated by
this Agreement or any of the Basic Documents, (C) seeking any
determination or ruling that might materially and adversely affect the
performance by the Seller of its obligations under, or the validity or
enforceability of, this Agreement or any of the Basic Documents, or (D)
relating to the Seller and which might adversely affect the federal or
state income, excise, franchise or similar tax attributes of the
Securities.
(g) No Consents. No consent, approval, authorization or order
of or declaration or filing with any governmental authority is required
for the issuance or sale of the Securities or the consummation of the
other transactions contemplated by this Agreement, except such as have
been duly made or obtained.
(h) Tax Returns. The Seller has filed on a timely basis all
tax returns required to be filed by it and paid all taxes, to the
extent that such taxes have become due.
(i) Chief Executive Office. The chief executive office of the
Seller is at 2 Ada, Irvine, California 92618.
(j) Principal Balance. The aggregate Principal Balance of the
Subsequent Receivables listed on the supplement to Schedule A annexed
hereto and conveyed to the Issuer pursuant to this Agreement as of the
Subsequent Cutoff Date is $27,084,812.
SECTION 5. Conditions Precedent. The obligation of the Issuer to
acquire the Subsequent Receivables hereunder is subject to the satisfaction, on
or prior to the Subsequent Transfer Date, of the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Seller in Section 4 of this
Agreement and in Section 3.1 of the Sale and Servicing Agreement shall
be true and correct as of the date of this Agreement and as of the
Subsequent Transfer Date.
(b) Sale and Servicing Agreement Conditions. Each of the
conditions set forth in Section 2.2(b) of the Sale and Servicing
Agreement shall have been satisfied.
(c) Additional Information. The Seller shall have delivered to
the Issuer such information as was reasonably requested by the Issuer
to satisfy itself as to (i) the accuracy of the representations and
warranties set forth in Section 4 of this Agreement and in Section 3.1
of the Sale and Servicing Agreement and (ii) the satisfaction of the
conditions set forth in this Section 5.
SECTION 6. Ratification of Agreement. As supplemented by this
Agreement, the Sale and Servicing Agreement is in all respects ratified and
confirmed and the Sale and Servicing Agreement as so supplemented by this
Agreement shall be read, taken and construed as one and the same instrument.
SECTION 7. Counterparts. This Agreement may be executed in two or more
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the same
instrument.
SECTION 8. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the Issuer, the Seller and the Servicer have caused
this Agreement to be duly executed and delivered by their respective duly
authorized officers as of day and the year first above written.
CPS AUTO RECEIVABLES
TRUST 1997-3
by BANKERS TRUST (DELAWARE),
not in its individual capacity, but solely as
Owner Trustee on behalf of the Trust
by ___________________________
Name:
Title:
CPS RECEIVABLES CORP., Seller
by ___________________________
Name:
Title:
CONSUMER PORTFOLIO SERVICES, INC.,
Servicer
by ___________________________
Name:
Title:
Acknowledged and Accepted:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual
capacity, but solely as
Trustee
by ___________________________
Name:
Title:
Exhibit 10.5
Subsequent Receivables Purchase Agreement
SUBSEQUENT CPS ASSIGNMENT
For value received, in accordance with the Subsequent Purchase
Agreement dated as of September 11, 1997, as heretofore amended, supplemented or
otherwise modified (the " Subsequent CPS Purchase Agreement"), among the
undersigned, as Seller, and CPS Receivables Corp. (the "Purchaser"), the
undersigned does hereby transfer, assign, grant, set over and otherwise convey
to the Purchaser, without recourse (subject to the obligations in the Subsequent
CPS Purchase Agreement and the Sale and Servicing Agreement) all right, title
and interest of the Seller in and to: (i) the Subsequent CPS Receivables listed
in the related Schedule of Subsequent CPS Receivables and, with respect to
Subsequent CPS Receivables which are Rule of 78's Receivables, all monies due or
to become due thereon after the related Subsequent Cutoff Date (including
Scheduled Payments due after the related Subsequent Cutoff Date (including
principal prepayments relating to such Scheduled Payments) but received by the
Seller on or before the related Subsequent Cutoff Date) and, with respect to
Subsequent CPS Receivables which are Simple Interest Receivables, all monies
received thereunder after the related Subsequent Cutoff Date and all Liquidation
Proceeds and Recoveries received with respect to such Subsequent CPS
Receivables; (ii) the security interests in the Financed Vehicles granted by
Obligors pursuant to the Subsequent CPS Receivables and any other interest of
the Seller in such 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)
any proceeds from claims on any physical damage, credit life and credit accident
and health insurance policies or certificates relating to the Financed Vehicles
securing the Subsequent CPS Receivables or the Obligors thereunder; (iv) refunds
for the costs of extended service contracts with respect to Financed Vehicles
securing the Subsequent CPS Receivables, refunds of unearned premiums with
respect to credit life and credit accident and health insurance policies or
certificates covering an Obligor or Financed Vehicle securing the Subsequent CPS
Receivables or his or her obligations with respect to such a Financed Vehicle
and any recourse to Dealers for any of the foregoing; (v) the Receivable File
related to each Subsequent CPS Receivable; and (vi) the proceeds of any and all
of the foregoing (collectively, the "Subsequent Transferred CPS Property" and
together with any Subsequent Transferred Samco Property, the "Subsequent
Transferred Property").
The foregoing assignment, transfer and conveyance 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 Subsequent CPS 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 each of the undersigned contained in
the Subsequent CPS Purchase Agreement and is to be governed by the Subsequent
CPS Purchase Agreement.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Subsequent CPS 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 principles of
conflicts of law.
IN WITNESS WHEREOF, the undersigned have caused this Assignment to be
duly executed as of September 11, 1997.
CONSUMER PORTFOLIO SERVICES, INC.
By:
Name:
Title:
SUBSEQUENT CPS PURCHASE AGREEMENT
THIS SUBSEQUENT PURCHASE AGREEMENT (the "Subsequent CPS Agreement") is
made and entered into as of September 11, 1997, by and between CONSUMER
PORTFOLIO SERVICES, INC., a California corporation (the "Seller"), and CPS
RECEIVABLES CORP., a California corporation (together with its successors and
assigns, the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Purchaser, as purchaser, has agreed to purchase from the
Seller, as seller, and the Seller, pursuant to the CPS Purchase Agreement (the
"CPS Purchase Agreement") dated as of August 1, 1997, between the Purchaser and
the Seller, is transferring to the Purchaser the Subsequent CPS Receivables
listed on the Schedule of Subsequent CPS Receivables annexed hereto as Exhibit A
(the "Subsequent CPS Receivables") and Subsequent Transferred CPS Property.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter contained, and for other good and valuable consideration,
the receipt of which is acknowledged, the Purchaser and the Seller, intending to
be legally bound, hereby agree as follows:
Definitions
SECTION 1. Capitalized terms used herein without definition shall have
the respective meanings assigned to such terms in the CPS Purchase Agreement.
SECTION 2. Conveyance of Subsequent Receivables. For value received, in
accordance with the CPS Purchase Agreement, the Seller does hereby sell, assign,
transfer and otherwise convey unto the Purchaser, without recourse (but without
limitation of its obligations under the CPS Purchase Agreement), all right,
title and interest of the Seller in and to: (i) the Subsequent CPS Receivables
listed in the related Schedule of Subsequent CPS Receivables and, with respect
to Subsequent CPS Receivables that are Rule of 78's Receivables, all monies due
or to become due thereon after the related Subsequent Cutoff Date (including
Scheduled Payments due after the related Subsequent Cutoff Date (including
principal prepayments relating to such Scheduled Payments) but received by the
Seller on or before the related Subsequent Cutoff Date) and, with respect to
Subsequent CPS Receivables that are Simple Interest Receivables, all monies
received thereunder after the related Subsequent Cutoff Date and all Liquidation
Proceeds and Recoveries received with respect to such Subsequent CPS
Receivables; (ii) the security interests in the Financed Vehicles granted by
Obligors pursuant to the Subsequent CPS Receivables and any other interest of
the Seller in such 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)
any proceeds from claims
on any physical damage, credit life and credit accident and health insurance
policies or certificates relating to the Financed Vehicles securing the
Subsequent CPS Receivables or the Obligors thereunder; (iv) refunds for the
costs of extended service contracts with respect to Financed Vehicles securing
the Subsequent CPS Receivables, refunds of unearned premiums with respect to
credit life and credit accident and health insurance policies or certificates
covering an Obligor or Financed Vehicle securing the Subsequent CPS Receivables
or his or her obligations with respect to such a Financed Vehicle and any
recourse to Dealers for any of the foregoing; (v) the Receivable File related to
each Subsequent CPS Receivable; and (vi) the proceeds of any and all of the
foregoing (collectively, the "Subsequent Transferred CPS Property" and together
with any Subsequent Transferred Samco Property, the "Subsequent Transferred
Property").
SECTION 3. Consideration for Subsequent Transferred CPS Property. In
consideration for the Subsequent CPS Receivables and other Subsequent
Transferred CPS Property, subject to the terms and conditions hereof, the
purchase price for the Subsequent CPS Receivables, in the amount of
$26,721,062.97, shall be paid by the Purchaser on the Subsequent Closing Date as
follows: (i) $25,773,094.55 in cash shall be paid to the Seller and (ii)
$947,968.42 which shall be deemed paid and returned to the Purchaser as a
contribution to capital.
SECTION 4. Representations and Warranties of the Seller. This Agreement
is made pursuant to and upon the representations, warranties, covenants and
agreements on the part of the Seller contained in the CPS Purchase Agreement and
is to be governed by the CPS Purchase Agreement. All of such representations,
warranties, covenants and agreements are hereby incorporated herein and are in
full force and effect as though specifically set forth herein.
SECTION 5. Representations and Warranties of the Purchaser. This
Agreement is made pursuant to and upon the representations, warranties,
covenants and agreements on the part of the Purchaser contained in the CPS
Purchase Agreement and is to be governed by the CPS Purchase Agreement. All of
such representations, warranties, covenants and agreements are hereby
incorporated herein and are in full force and effect as though specifically set
forth herein.
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be
duly executed this 11th day of September, but effective as of the date and year
first written above.
CONSUMER PORTFOLIO SERVICES, INC.,
as Seller
By:
Name:
Title:
CPS RECEIVABLES CORP.,
as Purchaser
By:
Name:
Title:
EXHIBIT A TO SUBSEQUENT CPS PURCHASE AGREEMENT
SUBSEQUENT CPS ASSIGNMENT
For value received, in accordance with the Subsequent Purchase
Agreement dated as of September 11, 1997, as heretofore amended, supplemented or
otherwise modified (the "Subsequent CPS Purchase Agreement"), among the
undersigned, as Seller, and CPS Receivables Corp. (the "Purchaser"), the
undersigned does hereby transfer, assign, grant, set over and otherwise convey
to the Purchaser, without recourse (subject to the obligations in the Subsequent
CPS Purchase Agreement and the Sale and Servicing Agreement) all right, title
and interest of the Seller in and to: (i) the Subsequent CPS Receivables listed
in the related Schedule of Subsequent CPS Receivables and, with respect to
Subsequent CPS Receivables which are Rule of 78's Receivables, all monies due or
to become due thereon after the related Subsequent Cutoff Date (including
Scheduled Payments due after the related Subsequent Cutoff Date (including
principal prepayments relating to such Scheduled Payments) but received by the
Seller on or before the related Subsequent Cutoff Date) and, with respect to
Subsequent CPS Receivables which are Simple Interest Receivables, all monies
received thereunder after the related Subsequent Cutoff Date and all Liquidation
Proceeds and Recoveries received with respect to such Subsequent CPS
Receivables; (ii) the security interests in the Financed Vehicles granted by
Obligors pursuant to the Subsequent CPS Receivables and any other interest of
the Seller in such 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)
any proceeds from claims on any physical damage, credit life and credit accident
and health insurance policies or certificates relating to the Financed Vehicles
securing the Subsequent CPS Receivables or the Obligors thereunder; (iv) refunds
for the costs of extended service contracts with respect to Financed Vehicles
securing the Subsequent CPS Receivables, refunds of unearned premiums with
respect to credit life and credit accident and health insurance policies or
certificates covering an Obligor or Financed Vehicle securing the Subsequent CPS
Receivables or his or her obligations with respect to such a Financed Vehicle
and any recourse to Dealers for any of the foregoing; (v) the Receivable File
related to each Subsequent CPS Receivable; and (vi) the proceeds of any and all
of the foregoing (collectively, the "Subsequent Transferred CPS Property" and
together with any Subsequent Transferred Samco Property, the "Subsequent
Transferred Property").
The foregoing assignment, transfer and conveyance 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 Subsequent CPS 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 each of the undersigned contained in
the Subsequent CPS Purchase Agreement and is to be governed by the Subsequent
CPS Purchase Agreement.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Subsequent CPS 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 principles of
conflicts of law.
IN WITNESS WHEREOF, the undersigned have caused this Assignment to be
duly executed as of September 11, 1997.
CONSUMER PORTFOLIO SERVICES, INC.
By:
Name:
Title:
Exhibit 10.6
Subsequent Receivables Purchase Agreement
SUBSEQUENT SAMCO ASSIGNMENT
For value received, in accordance with the Subsequent Purchase
Agreement dated as of September 11, 1997, as heretofore amended, supplemented or
otherwise modified (the "Subsequent Samco Purchase Agreement"), among the
undersigned, as Seller, and CPS Receivables Corp. (the "Purchaser"), the
undersigned does hereby transfer, assign, grant, set over and otherwise convey
to the Purchaser, without recourse (subject to the obligations in the Subsequent
Samco Purchase Agreement and the Sale and Servicing Agreement) all right, title
and interest of the Seller in and to: (i) the Subsequent Samco Receivables
listed in the related Schedule of Subsequent Samco Receivables and, with respect
to Subsequent CPS Receivables which are Rule of 78's Receivables, all monies due
or to become due thereon after the related Subsequent Cutoff Date (including
Scheduled Payments due after the related Subsequent Cutoff Date (including
principal prepayments relating to such Scheduled Payments) but received by the
Seller on or before the related Subsequent Cutoff Date) and, with respect to
Subsequent CPS Receivables which are Simple Interest Receivables, all monies
received thereunder after the related Subsequent Cutoff Date and all Liquidation
Proceeds and Recoveries received with respect to such Subsequent Samco
Receivables; (ii) the security interests in the Financed Vehicles granted by
Obligors pursuant to the Subsequent Samco Receivables and any other interest of
the Seller in such 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)
any proceeds from claims on any physical damage, credit life and credit accident
and health insurance policies or certificates relating to the Financed Vehicles
securing the Subsequent Samco Receivables or the Obligors thereunder; (iv)
refunds for the costs of extended service contracts with respect to Financed
Vehicles securing the Subsequent Samco Receivables, refunds of unearned premiums
with respect to credit life and credit accident and health insurance policies or
certificates covering an Obligor or Financed Vehicle securing the Subsequent
Samco Receivables or his or her obligations with respect to such a Financed
Vehicle and any recourse to Dealers for any of the foregoing; (v) the Receivable
File related to each Subsequent Samco Receivable; and (vi) the proceeds of any
and all of the foregoing (collectively, the "Subsequent Transferred Samco
Property" and together with any Subsequent Transferred CPS Property, the
"Subsequent Transferred Property").
The foregoing assignment, transfer and conveyance 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 Subsequent Samco 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 each of the undersigned contained in
the Subsequent Samco Purchase Agreement and is to be governed by the Subsequent
Samco Purchase Agreement.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Subsequent Samco 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 principles of
conflicts of law.
IN WITNESS WHEREOF, the undersigned have caused this Assignment to be
duly executed as of September 11, 1997.
SAMCO ACCEPTANCE CORP.
By:
Name:
Title:
SUBSEQUENT SAMCO PURCHASE AGREEMENT
THIS SUBSEQUENT PURCHASE AGREEMENT (the "Subsequent Samco Agreement")
is made and entered into as of September 11, 1997 by and between SAMCO
ACCEPTANCE CORP., a Delaware corporation (the "Seller"), and CPS RECEIVABLES
CORP., a California corporation (together with its successors and assigns, the
"Purchaser").
W I T N E S S E T H:
WHEREAS, the Purchaser, as purchaser, has agreed to purchase from the
Seller, as seller, and the Seller, pursuant to the Samco Purchase Agreement (the
"Samco Purchase Agreement") dated as of August 1, 1997, between the Purchaser
and the Seller, is transferring to the Purchaser the Subsequent Samco
Receivables listed on the Schedule of Subsequent Samco Receivables annexed
hereto as Exhibit A (the "Subsequent Samco Receivables") and Subsequent
Transferred Samco Property.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter contained, and for other good and valuable consideration,
the receipt of which is acknowledged, the Purchaser and the Seller, intending to
be legally bound, hereby agree as follows:
Definitions
SECTION 1. Capitalized terms used herein without definition shall have
the respective meanings assigned to such terms in the Samco Purchase Agreement.
SECTION 2. Conveyance of Subsequent Receivables. For value received, in
accordance with the Samco Purchase Agreement, the Seller does hereby sell,
assign, transfer and otherwise convey unto the Purchaser, without recourse (but
without limitation of its obligations under the Samco Purchase Agreement), all
right, title and interest of the Seller in and to: (i) the Subsequent Samco
Receivables listed in the related Schedule of Subsequent Samco Receivables and,
with respect to Subsequent CPS Receivables which are Rule of 78's Receivables,
all monies due or to become due thereon after the related Subsequent Cutoff Date
(including Scheduled Payments due after the related Subsequent Cutoff Date
(including principal prepayments relating to such Scheduled Payments) but
received by the Seller on or before the related Subsequent Cutoff Date) and,
with respect to Subsequent CPS Receivables which are Simple Interest
Receivables, all monies received thereunder after the related Subsequent Cutoff
Date and all Liquidation Proceeds and Recoveries received with respect to such
Subsequent Samco Receivables; (ii) the security interests in the Financed
Vehicles granted by Obligors pursuant to the Subsequent Samco Receivables and
any other interest of the Seller in such 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) any proceeds from claims on any physical damage, credit life and
credit accident and health insurance policies or certificates relating to the
Financed Vehicles securing the Subsequent Samco Receivables or the Obligors
thereunder; (iv) refunds
for the costs of extended service contracts with respect to Financed Vehicles
securing the Subsequent Samco Receivables, refunds of unearned premiums with
respect to credit life and credit accident and health insurance policies or
certificates covering an Obligor or Financed Vehicle securing the Subsequent
Samco Receivables or his or her obligations with respect to such a Financed
Vehicle and any recourse to Dealers for any of the foregoing; (v) the Receivable
File related to each Subsequent Samco Receivable; and (vi) the proceeds of any
and all of the foregoing (collectively, the "Subsequent Transferred Samco
Property" and together with any Subsequent Transferred CPS Property, the
"Subsequent Transferred Property").
SECTION 3. Consideration for Subsequent Transferred Samco Property. In
consideration for the Subsequent Samco Receivables and other Subsequent
Transferred Samco Property, subject to the terms and conditions hereof, the
purchase price for the Subsequent Samco Receivables, in the amount of
$363,749.03, shall be paid by the Purchaser in cash to the Seller on the
Subsequent Closing Date.
SECTION 4. Representations and Warranties of the Seller. This Agreement
is made pursuant to and upon the representations, warranties, covenants and
agreements on the part of the Seller contained in the Samco Purchase Agreement
and is to be governed by the Samco Purchase Agreement. All of such
representations, warranties, covenants and agreements are hereby incorporated
herein and are in full force and effect as though specifically set forth herein.
SECTION 5. Representations and Warranties of the Purchaser. This
Agreement is made pursuant to and upon the representations, warranties,
covenants and agreements on the part of the Purchaser contained in the Samco
Purchase Agreement and is to be governed by the Samco Purchase Agreement. All of
such representations, warranties, covenants and agreements are hereby
incorporated herein and are in full force and effect as though specifically set
forth herein.
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be
duly executed this 11th day of September, but effective as of the date and year
first written above.
SAMCO ACCEPTANCE CORP., as Seller
By:
Name:
Title:
CPS RECEIVABLES CORP.,
as Purchaser
By:
Name:
Title:
EXHIBIT A TO SUBSEQUENT SAMCO PURCHASE AGREEMENT
FORM OF SUBSEQUENT SAMCO ASSIGNMENT
For value received, in accordance with the Subsequent Purchase
Agreement dated as of September 11, 1997, as heretofore amended, supplemented or
otherwise modified (the "Subsequent Samco Purchase Agreement"), among the
undersigned, as Seller, and CPS Receivables Corp. (the "Purchaser"), the
undersigned does hereby transfer, assign, grant, set over and otherwise convey
to the Purchaser, without recourse (subject to the obligations in the Subsequent
Samco Purchase Agreement and the Sale and Servicing Agreement) all right, title
and interest of the Seller in and to: (i) the Subsequent Samco Receivables
listed in the related Schedule of Subsequent Samco Receivables and, with respect
to Subsequent CPS Receivables which are Rule of 78's Receivables, all monies due
or to become due thereon after the related Subsequent Cutoff Date (including
Scheduled Payments due after the related Subsequent Cutoff Date (including
principal prepayments relating to such Scheduled Payments) but received by the
Seller on or before the related Subsequent Cutoff Date) and, with respect to
Subsequent CPS Receivables which are Simple Interest Receivables, all monies
received thereunder after the related Subsequent Cutoff Date and all Liquidation
Proceeds and Recoveries received with respect to such Subsequent Samco
Receivables; (ii) the security interests in the Financed Vehicles granted by
Obligors pursuant to the Subsequent Samco Receivables and any other interest of
the Seller in such 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)
any proceeds from claims on any physical damage, credit life and credit accident
and health insurance policies or certificates relating to the Financed Vehicles
securing the Subsequent Samco Receivables or the Obligors thereunder; (iv)
refunds for the costs of extended service contracts with respect to Financed
Vehicles securing the Subsequent Samco Receivables, refunds of unearned premiums
with respect to credit life and credit accident and health insurance policies or
certificates covering an Obligor or Financed Vehicle securing the Subsequent
Samco Receivables or his or her obligations with respect to such a Financed
Vehicle and any recourse to Dealers for any of the foregoing; (v) the Receivable
File related to each Subsequent Samco Receivable; and (vi) the proceeds of any
and all of the foregoing (collectively, the "Subsequent Transferred Samco
Property" and together with any Subsequent Transferred CPS Property, the
"Subsequent Transferred Property").
The foregoing assignment, transfer and conveyance 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 Subsequent Samco 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 each of the undersigned contained in
the Subsequent Samco Purchase Agreement and is to be governed by the Subsequent
Samco Purchase Agreement.
A-1
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Subsequent Samco 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 principles of
conflicts of law.
IN WITNESS WHEREOF, the undersigned have caused this Assignment to be
duly executed as of September 11, 1997.
SAMCO ACCEPTANCE CORP.
By:
Name:
Title:
A-2
