EXHIBIT INDEX
1.1 --Form of Underwriting Agreement.
4.1 --Form of Pooling and Servicing Agreement, and certain other related
agreements as Exhibits thereto.
5.1 --Opinion of Mayer, Brown & Platt with respect to legality.
8.1 --Opinion of Mayer, Brown & Platt with respect to tax matters.
10.1 --Form of CPS Purchase Agreement.
10.2 --Form of Affiliated Originator Purchase Agreement.
23.1 --Consent of Mayer, Brown & Platt (included in its opinions filed
as Exhibit 5.1 and Exhibit 8.1).
24.1 --Powers of Attorney.
II-7
CPS AUTO GRANTOR TRUST 199[ ]-[ ]
$[ ] (approximate) [ %]
Class A Pass-Through Certificates
UNDERWRITING AGREEMENT
[ ], 199[ ]
[Underwriter[s]]
[Address[es]]
Ladies and Gentlemen:
CPS Receivables Corp. (the "Company"), a California corporation and
wholly-owned subsidiary of Consumer Portfolio Services, Inc., a California
corporation ("CPS"), proposes to issue and sell to you in your capacities as the
Underwriters (the "Underwriters"), [$ ] aggregate principal amount of CPS Auto
Grantor Trust 199[ ]-[ ] [ %] Asset-Backed Certificates, Class A (the
"Certificates"). The Certificates will be issued by CPS Auto Grantor Trust 199[
]-[ ](the "Trust") pursuant to the Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement") dated as of [ ] [ ], 199[ ] among the Company, CPS, as
servicer (in such capacity, the "Servicer") and Norwest Bank Minnesota, National
Association, as trustee (the "Trustee"). Pursuant to the Pooling and Servicing
Agreement, the Trust will also issue approximately [$ ] (based on the expected
aggregate principal balance of the Cutoff Date) aggregate principal amount of
CPS Auto Grantor Trust 199[ ]-[ ] [ %] Asset-Backed Certificates, Class B (the
"Class B Certificates") which are not being offered pursuant to the Registration
Statement (as defined below) and are not the subject of this Agreement. The
Certificates will evidence, in the aggregate, beneficial ownership of an
undivided 95% interest in the Trust (other than interest received by the Trust
in excess of the Class A Pass-Through Rate). The Class B Certificates will
evidence, in the aggregate, beneficial ownership of an undivided 5% interest in
the Trust (other than interest received by the Trust in excess of the Class B
Pass-Through Rate). The assets of the Trust will include, among other things, a
pool of retail installment sale contracts and all rights and obligations
thereunder (collectively, the "Receivables"), with respect to Rule of 78's
Receivables, all payments due thereunder after [ ], 199[ ] (the "Cutoff Date"),
with respect to Simple Interest Receivables, all payments received thereunder
after the Cutoff Date, security interests in the new and used automobiles, light
trucks, vans and minivans securing the Receivables, certain bank accounts and
the proceeds thereof, the Policy (for the benefit of the Class A
Certificateholders only) and the right of the Company to receive certain
insurance proceeds and certain other property, all as more specifically
described in the Pooling and Servicing Agreement.
The Certificates will be issued in an aggregate principal amount of [$
] which is equal to 95% of the aggregate principal balance of the Receivables as
of the Cutoff Date. The Certificates will bear interest at an annual rate equal
to [ ]% (the "Class A Pass-Through Rate")
-2-
in accordance with the provisions of the Pooling and Servicing Agreement. The
Class B Certificates will be issued in an aggregate principal amount of [$ ]
which is equal to 5% of the aggregate principal balance of the Receivables as of
the Cutoff Date. The Class B Certificates will bear interest at an annual rate
equal to [ %] (the "Class B Pass-Through Rate") in accordance with the
provisions of the Pooling and Servicing Agreement.
To the extent not otherwise defined herein, capitalized terms used
herein shall have the meanings assigned to such terms in the Pooling and
Servicing Agreement.
As the Underwriters, each of you have advised the Company that (a) you
are authorized to enter into this Agreement and (b) each of you is willing,
acting severally and not jointly, to purchase the aggregate principal amount of
the Certificates set forth opposite your respective names in Schedule I hereto.
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company, with respect to the Company, CPS, with respect to CPS,
Samco, with respect to Samco, Linc, with respect to Linc 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. [ ]), including a
Base Prospectus, for registration of the offering and sale of the Certificates
under the Securities Act of 1933, as amended (the "1933 Act"), and the rules and
regulations (the "1933 Act Regulations") of the Commission thereunder which
conforms with the requirements of the 1933 Act and the 1933 Act Regulations. CPS
has complied with the conditions for the use of a Registration Statement on Form
S-3. CPS may have filed with the Commission one or more amendments to such
Registration Statement, and may have used a Preliminary Final Prospectus, each
of which has been previously furnished to each of the Underwriters. The offering
of the Certificates is a Delayed Offering and, although the Base Prospectus may
not include all the information with respect to the Certificates and the
offering thereof required by the 1933 Act and the 1933 Act Regulations to be
included in the Final Prospectus, the Base Prospectus includes all such
information required by the 1933 Act and the 1933 Act Regulations to be included
therein as of the Effective Date. The Company will hereafter file with the
Commission pursuant to Rules 415 and 424(b), a final supplement to the Base
Prospectus relating to the Certificates and the offering thereof. As filed, such
final supplement shall include all required information with respect to the
Certificates and, except to the extent the Underwriters shall agree in writing
to any modification thereof, shall be in all substantive respects in the form
furnished to each of the Underwriters prior to the Execution Time or, to the
extent not completed at the Execution Time, shall be in such form with only such
specific additional information and other changes (beyond that
-3-
contained in the Base Prospectus and any Preliminary Final Prospectus) as the
Company has advised each of the Underwriters, prior to the Execution Time, will
be included or made therein.
(b) On the Effective Date, the Registration Statement did or will, and
when the Final Prospectus is first filed (if required) in accordance with Rule
424(b) and on the Closing Date (as defined below), the Final Prospectus (as
supplemented and amended as of the Closing Date) will, comply in all material
respects with the applicable requirements of the 1933 Act, the 1933 Act
Regulations, the Securities Exchange Act of 1934, as amended (the "1934 Act"),
and the rules and regulations thereunder (the "1934 Act Regulations"); on the
Effective Date, the Registration Statement did not or will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date, the Final Prospectus, if not filed
pursuant to Rule 424(b), did not or will not, and on the date of any filing
pursuant to Rule 424(b) and on the Closing Date, the Final Prospectus (as
supplemented and amended in the case of the Closing Date) will not, include any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading; provided, however, that
each of CPS and the Company makes no representations or warranties as to the
information contained in or omitted from the Registration 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 Certificate Insurer set forth under
the heading "THE CERTIFICATE INSURER" in or incorporated by reference in the
Preliminary Final Prospectus and the Final Prospectus.
(c) The terms which follow, when used in this Agreement, shall have the
meanings indicated.
"Base Prospectus" shall mean the prospectus referred to in
Section 1(a) hereof contained in the Registration Statement at the
Effective Date.
"Delayed Offering" shall mean the offering of the Certificates
pursuant to Rule 415 which does not commence promptly after the
effective date of the Registration Statement, with the result that only
information required pursuant to Rule 415 need be included in such
Registration Statement at the effective date thereof with respect to
the Certificates.
"Effective Date" shall mean each date that the Registration
Statement and any post-effective amendment(s) thereto became or become
effective and each date after the date hereof on which a document
incorporated by reference in the Registration Statement is filed by the
Company.
-4-
"Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto.
"Final Prospectus" shall mean the prospectus supplement
relating to the Certificates that is first filed pursuant to Rule
424(b) under the 1933 Act after the Execution Time, together with the
Base Prospectus.
"Preliminary Final Prospectus" shall mean any preliminary
prospectus supplement to the Base Prospectus which describes the
Certificates and the offering thereof and is used prior to filing of
the Final Prospectus.
"Prospectus" shall mean, collectively, the Base Prospectus,
any Preliminary Final Prospectus and the Final Prospectus.
"Registration Statement" shall mean (i) the Registration
Statement referred to in Section 1(a) hereof, including all documents
incorporated therein by reference, exhibits, financial statements and
notes thereto and related schedules and other statistical and financial
data and information included therein, as amended at the Execution Time
(or, if not effective at the Execution Time, in the form in which it
shall become effective); (ii) in the event any post-effective amendment
thereto becomes effective prior to the Closing Date, such Registration
Statement as so amended; and (iii) in the event any Rule 462(b)
Registration Statement becomes effective prior to the Closing Date,
such Registration Statement as so modified by the Rule 462(b)
Registration Statement, from and after the effectiveness thereof. Such
term shall include any Rule 430A Information deemed to be included
therein at the Effective Date as provided by Rule 430A.
"Rule "415", "Rule 424", "Rule "430A" and "Regulation S-K"
refer to such rules or regulation under the 1933 Act.
"Rule 430A Information" means information with respect to the
Certificates and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" means a Registration
Statement filed pursuant to Rule 462(b) under the 1933 Act relating to
the offering covered by the Registration Statement (File No. [ ]).
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
-5-
Prospectus shall be deemed to refer to and include the filing of any document
under the 1934 Act after the Effective Date of the Registration Statement or the
issue date of the Base Prospectus, any Preliminary Final Prospectus or the Final
Prospectus, as the case may be, deemed to be incorporated therein by reference.
(d) Each of the Company and CPS is a corporation duly organized,
validly existing and in good standing under the laws of the State of California
and is duly qualified to transact business as a foreign corporation in each
jurisdiction in which it is required to be so qualified and in which the failure
to so qualify, taken in the aggregate, would have a material adverse effect on
it.
(e) 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.
(f) Linc Acceptance Company LLC ("Linc") is a limited liability company
duly formed, validly existing and in good standing under the laws of Delaware
and is duly qualified to transact business as a foreign entity 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, 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, Samco or Linc
or the Company's or CPS's or Samco's or Linc's ability to perform its
obligations under this Agreement or the Pooling and Servicing Agreement or any
of the other Basic Documents (as defined below), other than as set forth or
incorporated by reference in the Registration Statement or as set forth in the
Final Prospectus.
(h) Except for the registration of the Certificates under the 1933 Act
and such consents, approvals, authorizations, registrations or qualifications as
may be required under the 1934 Act and applicable State securities or Blue Sky
laws in connection with the purchase and distribution of the Certificates by the
Underwriters or the filing requirements of Rule 430A or Rule 424(b) under the
1933 Act, no consent, approval, authorization or order of or declaration or
filing with any governmental authority is required for the issuance or sale of
the Certificates or the consummation of the other transactions contemplated by
this Agreement or the Pooling and Servicing Agreement or any of the other Basic
Documents, except such as have been duly made or obtained or as will be duly
made or obtained on or before the Closing Date.
(i) The Commission has not issued an order preventing or suspending the
use of any Prospectus relating to the proposed offering of the Certificates, nor
instituted proceedings for
-6-
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.
(j) The documents (other than the financial statements of the
Certificate Insurer, as to which no representation is made by CPS or the
Company) which are incorporated by reference in the Registration Statement and
the Final Prospectus or from which information is so incorporated by reference,
as of the dates they were filed with the Commission, complied in all material
respects with the requirements of the 1933 Act, the 1933 Act Regulations, the
1934 Act and the 1934 Act Regulations, as applicable, and any documents so filed
and incorporated by reference subsequent to the Effective Date shall, when they
are filed with the Commission, conform in all material respects with the
requirements of the 1934 Act and the 1934 Act Regulations.
(k) Each of the Company, CPS, Samco and Linc 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, Samco and Linc 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, Samco's or Linc's business with Cuba or with any person or
affiliate located in Cuba changes in any material way, each of the Company, CPS,
Samco and Linc, as the case may be, will provide the Department notice of such
business or change, as appropriate, in a form acceptable to the Department.
(l) All representations and warranties of the Company, CPS, Samco and
Linc contained in each of the Basic Documents, including this Agreement, will be
true and correct in all material respects as of the Closing Date and are hereby
incorporated by reference as if each such representation and warranty were
specifically made herein.
(m) Each of the Company, CPS, Samco and Linc has full power and
authority (corporate and other) to enter into and perform its obligations under
this Agreement, the Pooling and Servicing Agreement, the CPS Purchase Agreement,
the Samco Purchase Agreement, the Linc 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.
(n) On or before the Closing Date, the direction by the Company to the
Trustee to authenticate the Certificates will have been duly authorized by the
Company, the Certificates will have been duly executed and delivered by the
Company and, when authenticated by the Trustee in accordance with the Pooling
and Servicing Agreement and delivered and paid for pursuant to this Agreement,
will be duly issued and will entitle the holder thereof to the benefits
-7-
and security afforded by the Pooling and Servicing Agreement, subject as to the
enforcement of remedies (x) to applicable bankruptcy, insolvency,
reorganization, moratorium, and other similar laws affecting creditors' rights
generally and (y) to general principles of equity (regardless of whether the
enforcement of such remedies is considered in a proceeding in equity or at law).
(o) This Agreement and each Basic Document to which the Company, CPS,
Samco or Linc is a party has been duly authorized, executed and delivered by
each of the Company, CPS, Samco and Linc, as applicable, and constitutes a valid
and binding agreement of each of the Company, CPS, Samco and Linc, as
applicable, enforceable against the Company, CPS, Samco and Linc 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.
(p) None of the Company, CPS, Samco or Linc is in breach or violation
of its Articles of Incorporation, Charter or Certificate of Formation, as
applicable, or its By-Laws or Limited Liability Company Agreement, as
applicable, or in default in the performance or observance of any credit or
security agreement or other agreement or instrument to which it is a party or by
which it or its properties may be bound, or in violation of any applicable law,
statute, regulation, order or ordinance of any governmental body having
jurisdiction over it, which breach or violation would have a material adverse
effect on the ability of the Company, CPS, Samco or Linc to perform its
obligations under any of the Basic Documents or the Certificates.
(q) The issuance and delivery of the Certificates, the consummation of
any other of the transactions contemplated herein or in the Pooling and
Servicing Agreement or in any of the other Basic Documents or the fulfillment of
the terms of this Agreement or the Pooling and Servicing Agreement or any of the
other Basic Documents, subject to the registration of the Certificates under the
1933 Act and such consents, approvals, authorizations, registrations or
qualifications as may be required under the 1934 Act and applicable State
securities or Blue Sky laws in connection with the purchase and distribution of
the Certificates by the Underwriters or the filing requirements of Rule 430A or
Rule 424(b) under the 1933 Act, do not and will not conflict with or violate any
term or provision of the Articles of Incorporation or By-Laws of the Company or
CPS 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 or as otherwise permitted under the
Pooling and Servicing Agreement) pursuant to the terms of any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or CPS 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,
-8-
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.
(r) Any taxes, fees and other governmental charges due on or prior to
the Closing Date (including, without limitation, sales taxes) in connection with
the execution, delivery and issuance of this Agreement, the Pooling and
Servicing Agreement, the other Basic Documents and the Certificates have been or
will have been paid at or prior to the Closing Date.
(s) The Receivables are chattel paper as defined in the Uniform
Commercial Code as in effect in the State of California.
(t) Under generally accepted accounting principles, CPS will report its
transfer of the CPS Receivables to the Company pursuant to the CPS Purchase
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, Linc will report its transfer of the Linc
Receivables to the Company pursuant to the Linc Purchase Agreement as a sale of
the Linc Receivables and the Company will report its transfer of the Receivables
to the Trust pursuant to the Pooling and Servicing Agreement as a sale of the
Receivables. Each of CPS and the Company has been advised by KPMG Peat Marwick
LLP, Certified Public Accountants, that the transfers pursuant to the CPS
Purchase Agreement, the Samco Purchase Agreement and the Linc 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).
(u) Pursuant to the CPS Purchase Agreement, the Samco Purchase
Agreement and the Linc Purchase Agreement, CPS, Samco and Linc 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 Assets"), 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
Assets. The assignment of the Receivables and the other Trust Assets, including
all the proceeds thereof, to the Trust pursuant to the Pooling and Servicing
Agreement, vests in the Trust all interests which are purported to be conveyed
thereby, free and clear of any liens, security interests or encumbrances.
(v) 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") (i)
evidencing the transfer of the applicable CPS Receivables to the Company shall
have been filed in the Office of the Secretary of State of the State of
California, (ii) evidencing the transfer of the applicable Samco Receivables to
the Company shall have been filed in the Office of the Secretary of State of the
State of Texas, (iii) evidencing the transfer of the applicable Linc Receivables
to the Company shall have been filed in the Office of the Secretary of State of
the State of Connecticut, and (iv) evidencing the
-9-
transfer of the applicable Receivables from the Company to the Trust shall have
been filed in the Office of the Secretary of State of the State of California
and there shall be no unreleased statements affecting the Receivables filed in
such offices 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 Assets and the
proceeds thereof, will be perfected by virtue of the Financing Statements having
been filed in the office of the Secretary of State of the State of California.
If a court concludes that such transfer is not a sale, the Pooling and Servicing
Agreement and the transactions contemplated thereby constitute a grant by the
Company to the Trust of a valid security interest in the Receivables, the other
Trust Assets and the proceeds thereof, which security interest will be perfected
by virtue of the Financing Statements having been filed in the office of the
Secretary of State of the State of California. No filing or other action, other
than the filing of the Financing Statements in the offices of the Secretaries of
State of the States of California, Texas and Connecticut referred to above and
the execution and delivery of the Pooling and Servicing Agreement, is necessary
to perfect the interest or the security interest of the Trust in the Receivables
and the proceeds thereof against third parties.
(w) The Pooling and Servicing Agreement is not required to be qualified
under the Trust Indenture Act.
(x) None of the Company, CPS, Samco, Linc or the Trust is required to
be registered as an "investment company" under the Investment Company Act.
2. PURCHASE, SALE AND DELIVERY OF THE CERTIFICATES.
Subject to the terms and conditions and in reliance upon the
representations, warranties and covenants herein set forth, the Company agrees
to sell to each Underwriter, and each Underwriter agrees, severally and not
jointly, to purchase from the Company the initial principal amount of the
Certificates set forth opposite such Underwriter's name in Schedule I hereto, at
the purchase price specified in Schedule I.
The Company will deliver against payment of the purchase price the
Certificates in the form of one or more permanent global Certificates in
definitive form (the "Global Certificates") deposited with the Trustee as
custodian for The Depository Trust Company ("DTC") and registered in the name of
Cede & Co., as nominee for DTC. Interests in any Global Certificates will be
held only in book-entry form through DTC except in the limited circumstances
described in the Final Prospectus. Payment for the Certificates will be made by
the Underwriters by wire transfer of same day funds to an account previously
designated to the Underwriters by the Company at the offices of Mayer, Brown &
Platt, 1675 Broadway, New York, New York 10019, at 9:30 a.m. (New York time) on
[ ], 199[ ], or at such other time as is mutually agreed (such time being herein
referred to as the "Closing Date") against delivery of the Global Certificates
representing all of the Certificates. The Global Certificates will be made
available for inspection at the above office of Mayer, Brown & Platt at least 24
hours prior to the Closing Date.
-10-
As used herein, "business day" means a day on which the New York Stock
Exchange is open for trading and on which banks in New York, California and
Minnesota are open for business and are not permitted by law or executive order
to be closed.
3. OFFERING BY THE UNDERWRITERS.
The Company and CPS are advised by the Underwriters that they propose
to make a public offering of the Certificates, as set forth in the Final
Prospectus, from time to time as and when the Underwriters deem advisable after
the Registration Statement becomes effective. The Company agrees that the
Underwriters may, but are not obligated to, make a market in the Certificates
and that any such market making by an Underwriter may be discontinued at any
time in the sole discretion of such Underwriter.
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 Certificates, 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
Certificates, any amendment to the Registration Statement shall have been filed
or become effective; (iv) of any request by the Commission for any amendment of
the Registration Statement or supplement to the Final Prospectus or for any
other additional information; (v) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
institution of any proceeding for that purpose; and (vi) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Certificates for sale in any jurisdiction or the initiation of any
proceeding for such purpose. The Company will use its best efforts to prevent
the issuance of any such stop order or the suspension of any such qualification
and, if issued or suspended, to obtain as soon as possible the withdrawal
thereof.
-11-
(b) Prior to the filing thereof with the Commission, the Company will
submit to each of the Underwriters, for its approval after reasonable notice
thereof, such approval not to be unreasonably withheld or delayed, a copy of any
post-effective amendment to the Registration Statement, any Rule 462(b)
Registration Statement proposed to be filed or a copy of any document proposed
to be filed under the 1934 Act before the termination of the offering of the
Certificates by the Underwriters if such document would be deemed to be
incorporated by reference into the Registration Statement or Final Prospectus.
(c) The Company will deliver to, or upon the order of, the
Underwriters, from time to time, as many copies of any Preliminary Final
Prospectus as the Underwriters may reasonably request. The Company will deliver
to, or upon the order of, the Underwriters during the period when delivery of a
Final Prospectus is required under the 1933 Act, as many copies of the Final
Prospectus, or as thereafter amended or supplemented, as the Underwriters may
reasonably request. The Company will deliver to the Underwriters at or before
the Closing Date, two signed copies of the Registration Statement and all
amendments thereto including all exhibits filed therewith, and will deliver to
the Underwriters such number of copies of the Registration Statement (including
such number of copies of the exhibits filed therewith that may reasonably be
requested), including documents filed under the 1934 Act and deemed to be
incorporated by reference therein, and of all amendments thereto, as the
Underwriters may from time to time reasonably request.
(d) The Company will, and will cause the Trust to, comply with the 1933
Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations, so as
to permit the completion of the distribution of the Certificates as contemplated
in this Agreement and the Final Prospectus. If during the period in which a
prospectus is required by law to be delivered by an Underwriter or dealer in
connection with the sale of any Certificates, any event shall occur as a result
of which, in the judgment of the Company or in the reasonable opinion of the
Underwriters, it becomes necessary to amend or supplement the Final Prospectus
in order to make the statements therein, in the light of the circumstances
existing at the time the Final Prospectus is delivered to a purchaser, not
misleading, or, if it is necessary at any time to amend or supplement the Final
Prospectus to comply with any law or to file under the 1934 Act any document
which would be deemed to be incorporated by reference in the Registration
Statement to comply with the 1933 Act or the 1934 Act, the Company will promptly
notify each of the Underwriters and will promptly either (i) prepare and file,
or cause to be prepared and filed, with the Commission an appropriate amendment
to the Registration Statement or supplement to the Final Prospectus or (ii)
prepare and file, or cause to be prepared and filed, with the Commission (at the
expense of the Company) an appropriate filing under the 1934 Act which shall be
incorporated by reference in the Final Prospectus so that the Final Prospectus
as so amended or supplemented will not, in the light of the circumstances when
it is so delivered, be misleading, or so that the Final Prospectus will comply
with applicable law.
(e) The Company will cooperate with the Underwriters in endeavoring to
qualify the Certificates for sale under the laws of such jurisdictions as the
Underwriters may designate and will maintain such qualifications in effect so
long as required for the distribution of the
-12-
Certificates, except that the Company will not be obligated to qualify the
Certificates in any jurisdiction in which such qualification would require the
Company to qualify to do business as a foreign corporation, file a general or
unlimited consent to service of process or subject itself to taxation in any
such jurisdiction to which it is not subject and will arrange for the
determination of the legality of the Certificates for purchase by institutional
investors. The Company will, from time to time, prepare and file such
statements, reports, and other documents as are or may be required to continue
such qualifications in effect for so long a period as the Underwriters may
reasonably request for distribution of the Certificates.
(f) The Company shall not invest, or otherwise use the proceeds
received by the Company from its sale of the Certificates in such a manner as
would require the Company, CPS or the Trust to register as an investment company
under the 1940 Act.
(g) Until the retirement of the Certificates, or until such time as the
Underwriters shall cease to maintain a secondary market in the Certificates,
whichever occurs first, the Company will deliver to each Underwriter the annual
statements of compliance and the annual independent certified public
accountant's reports furnished to the Trustee pursuant to the Pooling and
Servicing Agreement, as soon as such statements and reports are furnished to the
Trustee.
(h) The Company, CPS, Samco and Linc 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, Samco or Linc possess or can acquire without
unreasonable effort or expense, including any and all documentation requested in
connection with such Underwriter's due diligence efforts regarding information
in the Registration Statement and the Final Prospectus and in order to evidence
the accuracy or completeness of any of the conditions contained in this
Agreement; and all actions taken by the Company or CPS to authorize the sale of
the Certificates shall be reasonably satisfactory in form and substance to each
Underwriter.
(i) The Company will cause the Trust to make generally available to
Certificateholders as soon as practicable, but no later than sixteen months
after the Effective Date, an earnings statement of the Trust covering a period
of at least twelve consecutive months beginning after such Effective Date and
satisfying the provisions of Section 11(a) of the Act (including Rule 158
promulgated thereunder).
(j) So long as any of the Certificates are outstanding, the Company
will furnish to the Underwriters copies of all reports or other communications
(financial or otherwise) furnished or made available to Certificateholders, and
deliver to the Underwriters during such period, (i) as soon as they are
available, copies of any reports and financial statements filed by or on behalf
of the Trust or the Company with the Commission pursuant to the Securities
Exchange Act of 1934, as amended, and (ii) such additional information
concerning the business and financial condition of the Company and CPS as the
Underwriters may from time to time reasonably request.
-13-
(k) On or before the Closing Date, the Company, CPS, Samco and Linc
shall cause the respective computer records of the Company, CPS, Samco and Linc
relating to the Receivables to be marked to show the Trustee's absolute
ownership of the Receivables, and from and after the Closing Date none of the
Company, CPS, Samco or Linc shall take any action inconsistent with the
Trustee's ownership of such Receivables, other than as expressly permitted by
the Pooling and Servicing Agreement.
(l) To the extent, if any, that the ratings provided with respect to
the Certificates by either of the Rating Agencies is conditional upon the
furnishing of documents or the taking of any other actions by the Company, CPS,
Samco or Linc, CPS shall, or shall cause the Company, Samco or Linc to, furnish
such documents and take any such other actions.
(m) On the Closing Date, the Company and CPS shall cause the
Certificate Insurer to issue the Policy to the Trustee for the benefit of the
holders of the Certificates in form and substance satisfactory to each
Underwriter.
5. [RESERVED]
6. COSTS AND EXPENSES.
The Company and CPS will pay upon receipt of a written request therefor
all costs, expenses and fees incident to the performance of the obligations of
the Company 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 Certificates or in
contemplation of performing the Underwriters' obligations hereunder and
including, without limiting the generality of the foregoing, the following: (i)
accounting fees of the Company; (ii) the fees and disbursements of 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, this Agreement, the listing application in
respect of the Certificates, the Blue Sky Survey, if any, and any supplements or
amendments thereto; (iv) the filing fees of the Commission; (v) any fees charged
by the Rating Agencies for rating the Certificates; and (vi) the fees and
expenses of the Trustee, including the fees and disbursements of counsel for the
Trustee, in connection with the Certificates, the Pooling and Servicing
Agreement and the other Basic Documents to which the Trustee is a party and the
expenses, including the fees and disbursements of counsel for the Underwriters,
incurred in connection with the qualification of the Certificates under State
securities or Blue Sky laws. If this Agreement shall not be consummated because
the conditions in Section 7 hereof are not satisfied, or because this Agreement
is terminated by each of the Underwriters pursuant to Section 12 hereof (other
than on the basis of a default by the Underwriters pursuant to Section 10
hereof), or by reason of any failure, refusal or inability on the part of the
Company or CPS to perform any undertaking or satisfy any condition of this
Agreement or to comply with any of the terms hereof on its part to be performed,
unless such failure to satisfy said condition or to
-14-
comply with said terms be due to the default or omission of any Underwriter,
then the Company and CPS, jointly and severally, shall reimburse the
Underwriters for reasonable out-of-pocket expenses, including reasonable fees
and disbursements of counsel, reasonably incurred in connection with
investigating, marketing and proposing to market the Certificates or in
contemplation of performing their obligations hereunder upon receipt of a
written request therefor; but the Company shall not in any event be liable to
any of the Underwriters for damages on account of loss of anticipated profits
from the sale by them of the Certificates. Except to the extent expressly set
forth in this Section 6, the Underwriters shall each be responsible for their
own costs and expenses, including the fees and expenses of their counsel.
7. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase and pay for the
Certificates on the Closing Date are subject to the accuracy in all material
respects as of the Closing Date of the representations and warranties of the
Company, CPS, Samco and Linc contained herein, to the performance by the
Company, CPS, Samco and Linc 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
Certificates, if such determination occurred at or prior to 3:00 p.m. New York
City time on such date or (ii) 12:00 noon New York City time on the business day
following the day on which the public offering price of the Certificates was
determined, if such determination occurred after 3:00 p.m. New York City time on
such date; if filing of the Final Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b), the Final Prospectus, and any such supplement,
shall have been filed within the applicable time period prescribed for such
filing by Rule 424(b), and any request of the Commission for additional
information (to be included in the Registration Statement or otherwise) shall
have been disclosed to the Underwriters and complied with to their reasonable
satisfaction. No stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued and no
proceedings for that purpose shall have been taken or, to the knowledge of the
Company, shall be contemplated by the Commission and no injunction, restraining
order, or order of any nature by a Federal or state court of competent
jurisdiction shall have been issued as of the Closing Date which would prevent
the issuance of the Certificates.
(b) On or prior to the date of this Agreement and on or prior to the
Closing Date, each Underwriter shall have received a letter or letters, dated as
of [ ], 199[ ], 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
-15-
particularly the business or properties of the Company, CPS or any Affiliate of
the Company or CPS which, in the judgment of each Underwriter, materially
impairs the investment quality of the Certificates or the ability of CPS to act
as Servicer or (ii) any downgrading in the rating of any debt securities or
preferred stock of the Company, CPS or any Affiliate thereof by any "nationally
recognized statistical rating organization" (as defined for purposes of Rule
436(g) under the Securities Act), or any public announcement that any such
organization has under surveillance or review its rating of any debt securities
or preferred stock of the Company, CPS or any Affiliate thereof (other than an
announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading of such rating); (iii) any suspension or
limitation of trading in securities generally on the New York Stock Exchange, or
any setting of minimum prices for trading on such exchange, or any suspension of
trading of any securities of the Company or CPS or any Affiliate of the Company
or CPS on any exchange or in the over-the-counter market; (iv) any banking
moratorium declared by Federal, New York or California authorities; or (v) any
outbreak or escalation of major hostilities in which the United States is
involved, any declaration of war by Congress or any other substantial national
or international calamity, emergency or change in financial markets if, in the
judgment of each Underwriter, the effect of any such outbreak, escalation,
declaration, calamity, emergency or change makes it impractical or inadvisable
to proceed with completion of the private placement of the Certificates.
(d) The Company, CPS, Samco and Linc shall have furnished each
Underwriter with such number of conformed copies of such opinions, certificates,
letters and documents as it may reasonably request.
(e) On the Closing Date, each of the Basic Documents and the
Certificates shall have been duly authorized, executed and delivered by the
parties thereto, shall be in full force and effect and no default shall exist
thereunder, and the Trustee shall have received a fully executed copy thereof
or, with respect to the Certificates, a conformed copy thereof. The Basic
Documents and the Certificates shall be substantially in the forms heretofore
provided to each Underwriter.
(f) Each Underwriter shall have received a certificate of the Trustee,
as to the due authorization, execution and delivery of the Pooling and Servicing
Agreement by the Trustee.
(g) Each Underwriter shall have received evidence satisfactory to such
Underwriter that the Certificates have been rated "Aaa" by Moody's and "AAA" by
Standard & Poor's.
(h) Each Underwriter shall have received from Mayer, Brown & Platt,
special counsel for CPS, the Company, Samco (with respect to New York law) and
Linc (with respect to New York law), opinions dated the Closing Date, addressed
to such Underwriter, in a form satisfactory to such Underwriter.
-16-
(i) Each Underwriter shall have received from Pullman & Comley LLC,
special Connecticut counsel for Linc, opinions dated the Closing Date, addressed
to such Underwriter in a form satisfactory to such Underwriter.
(j) 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.
(k) Each Underwriter shall have received from Mayer, Brown & Platt, an
opinion dated the Closing Date, addressed to such Underwriter, with respect to
the validity of the Certificates and such other related matters as such
Underwriter shall require and the Company or CPS shall have furnished or caused
to be furnished to such counsel such documents as they may reasonably request
for the purpose of enabling them to pass upon such matters.
(l) 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.
(m) Each Underwriter shall have received from counsel to the
Certificate Insurer, which counsel shall be reasonably acceptable to such
Underwriter, an opinion addressed to such Underwriter, dated the Closing Date,
in form and substance satisfactory to such Underwriter and its counsel.
(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 Certificate Insurer relating to, among other things, the interest of the
Trustee in the Receivables and the other Trust Assets and the proceeds thereof
and certain monies due or to become due with respect thereto, certain bankruptcy
issues and certain matters with respect to the Certificates. Any such opinions
shall be addressed to each Underwriter or shall indicate that such Underwriter
may rely on such opinions as though they were addressed to such Underwriter, and
shall be dated the Closing Date.
(o) At the Closing Date, the Company, CPS, Samco and Linc shall have
furnished to each Underwriter a certificate, dated the Closing Date, of the
President or any Vice President of the Company, CPS, Samco or Linc, as the case
may be, in which each such officer shall state that: (i) the representations and
warranties of the Company, CPS, Samco or Linc, as applicable, in this Agreement
are true and correct on and as of the Closing Date; (ii) the Company, CPS, Samco
or Linc, 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, Samco or Linc, 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
-17-
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 and the Final Prospectus and, in his or her opinion, as of the
Effective Date of the Registration Statement, the statements contained in the
Registration Statement were true and correct, and as of the Closing Date the
Registration Statement and the Final Prospectus do not contain any untrue
statement of a material fact or omit to state a material fact with respect to
the Company, CPS, Samco or Linc 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, Samco or Linc which should have
been set forth in a supplement to or an amendment of the Final Prospectus which
has not been so set forth in such supplement or amendment; and (vi) subsequent
to the respective dates as of which information is given in the Registration
Statement and the Final Prospectus, there has been no material adverse change,
or any development with respect to the Company, CPS, Samco or Linc 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, Samco or
Linc except as contemplated by the Final Prospectus or as described in such
certificate.
(p) Each Underwriter shall have received evidence satisfactory to such
Underwriter that the Certificate Insurer shall have issued the Policy to the
Trustee for the benefit of the Certificateholders in form and substance
satisfactory to such Underwriter.
(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 the State of California reflecting
the sale and assignment of the interest of CPS in the CPS Receivables included
in the Receivables and the related other Trust Assets and the proceeds thereof
to the Company, (ii) the office of the Secretary of State of the State of Texas
reflecting the sale and assignment of the interest of Samco in the Samco
Receivables included in the Receivables and the related other Trust Assets and
the proceeds thereof to the Company, (iii) the office of the Secretary of State
of the State of Connecticut reflecting the sale and assignment of the interest
of Linc in the Linc Receivables included in the Receivables and the related
other Trust Assets and the proceeds thereof to the Company, and (iv) the office
of the Secretary of State of California reflecting the sale and assignment of
the interest of the Company in the Receivables and the related other Trust
Assets and the proceeds thereof to the Trustee.
(r) All proceedings in connection with the transactions contemplated by
this Agreement, the Pooling and Servicing Agreement and each of the other Basic
Documents and all documents incident hereto or thereto shall be satisfactory in
form and substance to each Underwriter.
(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.
-18-
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects reasonably satisfactory to the Underwriters and to Mayer,
Brown & Platt, counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 7
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Underwriters by notifying the Company of such termination in writing or by
telegram at or prior to the Closing Date. In such event, the Company and the
Underwriters shall not be under any obligation to each other (except to the
extent provided in Sections 6 and 9 hereof).
8. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company to sell and deliver the portion of the
Certificates required to be delivered as and when specified in this Agreement
are subject to the condition that, at the Closing Date, no stop order suspending
the effectiveness of the Registration Statement shall have been issued and in
effect or proceedings therefor initiated or threatened.
9. INDEMNIFICATION.
(a) The Company and CPS, jointly and severally, agree to indemnify and
hold harmless each Underwriter, its directors, officers, employees and agents
and each person, if any, who controls any Underwriter within the meaning of the
1933 Act or the 1934 Act, against any losses, claims, damages or liabilities to
which such Underwriter or any such other person may become subject under the
1933 Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Base Prospectus, any Preliminary
Final Prospectus, the Final Prospectus or any amendment or supplement thereto
(other than information contained therein under the heading "the Certificate
Insurer" and information incorporated by reference therein), or (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made; and will reimburse each
Underwriter and each such person within 30 days of presentation 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 Certificates, 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, 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
-19-
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, or
any amendment or supplement thereto, such indemnity agreement shall not inure to
the benefit of any Underwriter if such Underwriter failed to send or give a copy
of the Final Prospectus (as amended or supplemented, if the Company or CPS, as
the case may be, shall have furnished any amendment or supplement thereto to
such Underwriter, which corrected such untrue statement or omission that is the
basis of the loss, liability, claim, damage or expense for which indemnification
is sought) to the person asserting any such loss, liability, claim, damage or
expense at such time as the Final Prospectus, as so amended or supplemented, was
required under the 1933 Act to be delivered to such person.
(b) Each Underwriter, severally and not jointly, will indemnify and
hold harmless each of the Company and CPS, each of their directors, officers,
employees and agents and each person, if any, who controls the Company within
the meaning of the 1933 Act or the 1934 Act, to the same extent as the foregoing
indemnity from each of the Company and CPS to any Underwriter, its directors,
officers, employees and agents and each person who controls any such
Underwriter, but only with respect to untrue statements or omissions or alleged
untrue statements or omissions made in the Registration Statement, the Base
Prospectus, any Preliminary Final Prospectus, the Final Prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity with written
information furnished to the Company or CPS, as the case may be, by, through or
on behalf of such Underwriter specifically for use in the preparation of the
Registration Statement, the Base Prospectus, any Preliminary Final Prospectus,
the Final Prospectus or any amendment or supplement thereto. This indemnity
agreement will be in addition to any liability which such Underwriter may
otherwise have. 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.
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
-20-
the meaning of the 1933 Act or the 1934 Act against
any losses, claims, damages or liabilities to which
such person may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect
thereof) arise out of or are based upon (a) any
untrue statement or alleged untrue statement of any
material fact contained in the Computational
Materials (as defined below) provided by such
indemnifying Underwriter or (b) the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make
the statements therein not misleading in the light of
the circumstances in which they were made, not
misleading (except, in each case, to the extent that
such untrue statement or alleged untrue statement or
omission or alleged omission results from the failure
of the Company Provided Information to be accurate in
all material respects); and will reimburse each such
party within 30 days of written request therefor for
any legal or other expenses reasonably incurred by
such person in connection with investigating or
defending any such loss, claim, damage or liability,
action or proceeding or in responding to a subpoena
or governmental inquiry related thereto, whether or
not such person is a party to any action or
proceeding. The obligations of each Underwriter under
this subsection (ii) shall be in addition to any
other liability which such Underwriter may otherwise
have. For purposes hereof, the term "Computational
Materials" means information provided by an
Underwriter to a prospective purchaser of
Certificates, which information is not part of the
Prospectus. For purposes hereof, the term "Company
Provided Information" means the information contained
in the data tape delivered by CPS to the Underwriters
on or about [ ], 199[ ] 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 Certificates.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this Section 9, such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing. The failure to give such notice shall not
relieve the indemnifying party or parties from any liability which it or they
may have to the indemnified party for 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
-21-
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party and shall pay as
incurred the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel at its own expense. Notwithstanding the foregoing, the indemnifying
party shall pay as incurred (or within 30 days of presentation 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
Certificates. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company or CPS on the one hand and the Underwriters on
the other in connection with the statements or omissions which resulted
-22-
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 [Underwriter], on the one hand, and [Underwriter], on the other, shall be
deemed to be in the same proportion as the respective portions of the total
underwriting discounts and commissions received by each of them. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or the Underwriters on the other and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company, CPS and the Underwriters agree that it would not be just
and equitable if contributions pursuant to this Section 9(d) were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 9(d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
referred to above in this Section 9(d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim, subject to the limitations
set forth above. Notwithstanding the provisions of this Section 9(d), (i) no
Underwriter shall be required to contribute any amount in excess of the
underwriting discounts and commissions applicable to the Certificates purchased
by such Underwriter and (ii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this Section 9(d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) In any proceeding relating to the Registration Statement, the Base
Prospectus, any Preliminary Final Prospectus, the Final Prospectus, or any
supplement or amendment thereto, each party against whom contribution may be
sought under this Section 9 hereby consents to the jurisdiction of any court
having jurisdiction over any other contributing party, agrees that process
issuing from such court may be served upon 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
-23-
warranties of each of the Company and CPS set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Underwriter, the Company or CPS, their
respective directors, officers, employees or agents or any persons controlling
any Underwriter or the Company, (ii) acceptance of any Certificates and payment
thereof or hereunder, and (iii) any termination of this Agreement. A successor
to any Underwriter, the Company or CPS, their respective directors, officers,
employees or agents, or any person controlling any Underwriter, the Company or
CPS, shall be entitled to the benefits of the indemnity, contribution and
reimbursement agreements contained in this Section 9.
10. DEFAULT BY THE UNDERWRITERS.
If on the Closing Date, any Underwriter shall fail to purchase and pay
for all or any portion of the Certificates which such Underwriter has agreed to
purchase and pay for on such date (otherwise than by reason of any default on
the part of the Company, CPS, Samco or Linc), then the non-defaulting
Underwriter shall use reasonable efforts to procure within 36 hours thereafter
one or more additional Underwriters to purchase from the Company such amounts as
may be agreed upon and upon the terms set forth herein, the Certificates which
the defaulting Underwriter failed to purchase. If during such 36 hours the
non-defaulting Underwriter shall not have procured one or more additional
Underwriters to purchase the Certificates agreed to be purchased by the
defaulting Underwriter, then (a) if the aggregate amount of Certificates with
respect to which such default shall occur does not exceed 10% of the
Certificates covered hereby, the non-defaulting Underwriter shall be obligated
to purchase the Certificates which such defaulting Underwriter failed to
purchase, or (b) if the aggregate principal balance of Certificates with respect
to which such default shall occur exceeds 10% of the principal balance of
Certificates covered hereby, the Company or the non-defaulting Underwriter will
have the right, by written notice given within the next 36-hour period to the
parties to this Agreement, to terminate this Agreement without liability on the
part of the non-defaulting Underwriter or of the Company except to the extent
provided in Section 9 hereof. In the event of a default by such Underwriter, as
set forth in this Section 10, the Closing Date may be postponed for such period,
not exceeding seven days, as the non-defaulting Underwriter may determine in
order that the required changes in the Registration Statement or in the Final
Prospectus or in any other documents or arrangements may be effected. For
purposes of this Agreement, the term "Underwriter" includes any person
substituted for a defaulting Underwriter. Any action taken under this Section 10
shall not relieve the defaulting Underwriter 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:
-24-
if to the Underwriters, to each of the following addresses:
[Underwriter]
[Address]
Attention: [ ]
Fax: [( ) - ]
and
[Underwriter]
[Address]
Attention: [ ]
Fax: [( ) - ]
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;
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, the Company, Samco or Linc, 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'
-25-
reasonable judgment, make it impracticable to market the Certificates or to
enforce contracts for the sale of the Certificates, (iii) any suspension of
trading in securities generally on the New York Stock Exchange or the American
Stock Exchange or limitation on prices (other than limitations on hours or
numbers of days of trading) for securities on either such Exchange, (iv) the
enactment, publication, decree or other promulgation of any statute, regulation,
rule or order of any court or other governmental authority which in each of the
Underwriters' reasonable opinion materially and adversely affects or may
materially and adversely affect the business or operations of the Company, (v)
declaration of a banking moratorium by United States or New York State
authorities, (vi) any downgrading or the giving of notice of any intended or
potential downgrading in the rating of the Company's debt securities by any
"nationally recognized statistical rating organization" (as defined for purposes
of Rule 436(g) under the 1934 Act), (vii) the suspension of trading of the
Common Stock by the Commission on the New York Stock Exchange or (viii) the
taking of any action by any governmental body or agency in respect of its
monetary or fiscal affairs which in each of the Underwriters' reasonable opinion
has a material adverse effect on the securities markets in the United States; or
(b) as provided in Sections 7 and 10 of this Agreement.
13. SUCCESSORS.
This Agreement has been and is made solely for the benefit of the
Underwriters, CPS, the Company, Samco and Linc 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 Certificates 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 Certificates under this Agreement.
Each Underwriter agrees that, prior to the date which is one year and
one day after the payment in full of all securities issued by the Company or by
a trust for which the Company was the depositor, which securities were rated by
any nationally recognized statistical rating organization, it will not institute
against, or join any other person in instituting against, the Company any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or other proceedings under any Federal or state bankruptcy or similar law.
-26-
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, CPS, Samco and Linc 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.]
-27-
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:
LINC ACCEPTANCE COMPANY LLC
By:
Name:
Title:
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written:
[UNDERWRITER]
By:
Name:
Title:
[UNDERWRITER]
By:
Name:
Title:
SCHEDULE I
Schedule of Underwriters
Portion of
Initial Principal
Amount of the
Certificates to
Underwriter be Purchased Purchase Price
----------------------
[Underwriter] [ %] [ ]
[Underwriter] [ %] [ ]
----------------------
Total [ %] [ ]
======================
EXHIBIT 4.1
[ ]
Seller
and
Consumer Portfolio Services, Inc.
Servicer
and
[ ]
Trustee [and Standby Servicer]
POOLING AND SERVICING AGREEMENT
Dated as of [ ]
$[ ]
CPS Auto Grantor Trust 199[ ]-[ ]
$[ ], [ ]% Class A Certificates
$[ ], [ ]% Class B Certificates
POOLING AND SERVICING AGREEMENT dated as of [ _______ ] (the
"Agreement") among [ ________ ], a [ ______ ], as seller (the "Seller"),
Consumer Portfolio Services, Inc., a California corporation ("CPS"), as servicer
(the "Servicer"), and [ ], a [ __________ ], as trustee [and standby servicer]
(the "Trustee" [and "Standby Servicer", respectively]).
WHEREAS the Seller has purchased a portfolio of receivables arising in
connection with motor vehicle retail installment sale contracts acquired by
Consumer Portfolio Services, Inc. [and Affiliated Originator],
In consideration of the premises and of the mutual agreements herein
contained, and other good and valuable consideration, the receipt of which is
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE I
Definitions
SECTION 1.1. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, whenever
capitalized shall have the following meanings:
"Affiliate" of any Person means any Person who directly or indirectly
controls, is controlled by, or is under direct or indirect common control with
such Person. For purposes of this definition of "Affiliate", the term "control"
(including the terms "controlling", "controlled by" and "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause a direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
["[Affiliated Originator]" means an Affiliate of CPS, other than Samco
and Linc, that has originated certain of the Receivables.
"[Affiliated Originator] Purchase Agreement" means the Purchase
Agreement, dated as of [ ], 19[ ] by and between [Affiliated Originator] 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 [Affiliated Originator] Receivables by the Seller from [Affiliated
Originator].
"[Affiliated Originator] Receivables" shall have the meaning specified
in the [Affiliated Originator] Purchase Agreement.]
"Aggregate Pass-Through Rate" means the sum of the Class A Pass-Through
Rate and the Class B Pass-Through Rate.
"Aggregate Prepayment Reduction Amount" means for any Distribution
Date, the sum of the Prepayment Reduction Amounts for all Simple Interest
Receivables which were paid in full during the related Collection Period.
"Agreement" means this Pooling and Servicing Agreement, as the same may
be amended and supplemented from time to time.
"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, 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 rate
of finance charges stated in the Receivable.
"Authenticating Agent" has the meaning assigned to such term in Section
6.2B.
"Basic Documents" means this Pooling and Servicing Agreement, the CPS
Purchase Agreement, the Samco Purchase Agreement, the Linc Purchase Agreement,
[the [Affiliated Originator] Purchase Agreement], the [Enhancement Agreement],
[the Spread Account Agreement] and [ ] thereto, [the Lock-Box Agreement] and
[the Servicing Assumption Agreement].
"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 [Credit Enhancer] is located shall be authorized or obligated by law,
executive order, or governmental decree to be closed.
"Casualty" means, with respect to a Financed Vehicle, the total loss or
destruction of such Financed Vehicle.
"Certificate" means any one of the certificates executed by the Trustee
on behalf of the Trust and authenticated by the Trustee in substantially the
form set forth in Exhibit A or Exhibit B hereto.
"Certificate Account" means the account designated as such, established
and maintained pursuant to Section 4.1.
"Certificate Balance" as of any day, means the sum of the Class A
Certificate Balance on such day and the Class B Certificate Balance on such day.
"Certificate Register" and "Certificate Registrar" mean, respectively,
the register maintained and the Certificate Registrar appointed pursuant to
Section 6.3.
"Certificateholder" or "Holder" means the Person in whose name a
Certificate shall be registered in the Certificate Register, except that so long
as any Certificates are outstanding, solely for the purposes of giving any
consent, waiver, request or demand pursuant to this Agreement, the interest
evidenced by any Certificate registered in the name of the Seller, CPS or the
Servicer, or any Affiliate of either of them, shall not be taken into account in
determining whether the requisite percentage necessary to effect any such
consent, waiver, request or demand shall have been obtained.
"Certificates" means the Class A Certificates and the Class B
Certificates.
"Class A Certificate" means any one of the [ ]% Class A Certificates,
executed by the Trustee on behalf of the Trust and authenticated by the Trustee
in substantially the form set forth in Exhibit A hereto.
"Class A Certificate Balance" shall equal, initially, the Class A
Percentage of the Original Pool Balance and, thereafter, shall equal the initial
Class A Certificate Balance, reduced by all amounts previously distributed to
Class A Certificateholders and allocable to principal.
-3-
"Class A Certificateholder" means the Person in whose name a Class A
Certificate shall be registered in the Certificate Register.
"Class A Distributable Amount" means, for any Distribution Date, an
amount equal to the sum of the Class A Principal Distributable Amount for such
Distribution Date and the Class A Interest Distributable Amount for such
Distribution Date.
"Class A Guaranteed Distribution Amount" means, with respect to each
Distribution Date, the sum of the Class A Interest Distributable Amount for such
Distribution Date and the Class A Principal Distributable Amount for such
Distribution Date, in each case in accordance with the original terms of the
Class A Certificates when issued and without regard to any amendment or
modification of the Certificates or the Agreement which has not been consented
to by the [Credit Enhancer]; provided, however, the Class A Guaranteed
Distribution Amount shall not include, nor shall coverage be provided under [the
Credit Enhancement] in respect of, any taxes, withholding or other charge
imposed with respect to any Class A Certificateholder by any governmental
authority.
"Class A Interest Carryover Shortfall" means, as of the close of
business on any Distribution Date on which an [Enhancement Default] is
continuing, the excess of the Class A Interest Distributable Amount for such
Distribution Date and any outstanding Class A Interest Carryover Shortfall from
the preceding Distribution Date, over the amount of interest that the Holders of
the Class A Certificates actually received on such current Distribution Date.
"Class A Interest Distributable Amount" means, for any Distribution
Date, an amount equal to thirty (30) days of interest at the Class A
Pass-Through Rate on the Class A Certificate Balance as of the close of business
on the last day of the related Collection Period (calculated on the basis of a
360-day year consisting of twelve 30-day months); provided, however, that on the
first Distribution Date, the Class A Interest Distributable Amount will equal
interest at the Class A Pass-Through Rate on the Class A Certificate Balance
from and including the Closing Date through and including [ ______ ].
-4-
"Class A Pass-Through Rate" means [ ]% per annum.
"Class A Percentage" shall be [ ] percent ([ ]%).
"Class A Pool Factor" means, as of a Distribution Date, a seven-digit
decimal figure equal to the Class A Certificate Balance as of the close of
business on such Distribution Date divided by the initial Class A Certificate
Balance. The Class A Pool Factor will be 1.0000000 as of the Closing Date;
thereafter, the Class A Pool Factor will decline to reflect reductions in the
Class A Certificate Balance.
"Class A Principal Carryover Shortfall" means, as of the close of any
Distribution Date on which an [Enhancement Default] is continuing, the excess of
the Class A Principal Distributable Amount and any outstanding Class A Principal
Carryover Shortfall from the preceding Distribution Date, over the amount of
principal that the Holders of the Class A Certificates actually received on such
current Distribution Date.
"Class A Principal Distributable Amount" means, with respect to any
Distribution Date other than the Final Scheduled Distribution Date, the sum of
(a) the Class A Percentage of the Principal Distributable Amount plus (b) [the
portion of the [Credit Enhancer] Optional Deposit pursuant to Section 4.11(ii),
if any, allocable to principal for such Distribution Date]. In addition, on the
Final Scheduled Distribution Date, the Class A Principal Distributable Amount
will equal the Class A Certificate Balance as of the Final Scheduled
Distribution Date.
-5-
"Class B Certificate" means any one of the [ ]% Class B Certificates,
executed by the Trustee on behalf of the Trust and authenticated by the Trustee
in substantially the form set forth in Exhibit B hereto.
"Class B Certificate Balance" shall equal, initially, the Class B
Percentage of the Original Pool Balance and, thereafter, shall equal the initial
Class B Certificate Balance, reduced by all amounts previously distributed to
Class B Certificateholders and allocable to principal.
"Class B Certificateholder" means the Person in whose name a Class B
Certificate shall be registered in the Certificate Register.
"Class B Deficiency" shall have the meaning specified in Section
4.7(c).
"Class B Distributable Amount" means, for any Distribution Date, the
sum of the Class B Principal Distributable Amount and the Class B Interest
Distributable Amount.
"Class B Interest Distributable Amount" means, for any Distribution
Date, an amount equal to thirty (30) days of interest at the Class B
Pass-Through Rate on the Class B Certificate Balance as of the close of business
on the last day of the related Collection Period (calculated on the basis of a
360-day year consisting of twelve 30-day months); provided, however, that on the
first Distribution Date, the Class B Interest Distributable Amount will equal
interest at the Class B Pass-Through Rate on the Class B Certificate Balance
from and including the Closing Date through and including [ ].
"Class B Interest Carryover Shortfall" means, as of the close of any
Distribution Date, the excess of the Class B Interest Distributable Amount for
such Distribution Date and any outstanding Class B Interest Carryover Shortfall
from the preceding Distribution Date, over the amount of interest that the
Holders of the Class B Certificates actually received pursuant to Section
4.6(c)(vi) on such current Distribution Date.
"Class B Pass-Through Rate" means [ ]% per annum.
-6-
"Class B Percentage" shall be [ ] percent ([ ]%).
"Class B Pool Factor" means, as of a Distribution Date, a seven-digit
decimal figure equal to the Class B Certificate Balance as of the close of
business on such Distribution Date divided by the initial Class B Certificate
Balance. The Class B Pool Factor will be 1.0000000 as of the Closing Date;
thereafter, the Class B Pool Factor will decline to reflect reductions in the
Class B Certificate Balance.
"Class B Principal Carryover Shortfall" means, as of the close of any
Distribution Date, the excess of the Class B Principal Distributable Amount and
any outstanding Class B Principal Carryover Shortfall from the preceding
Distribution Date, over the amount of principal that the Holders of the Class B
Certificates actually received.
"Class B Principal Distributable Amount" means, with respect to any
Distribution Date, the Class B Percentage of the Principal Distributable Amount.
In addition, on the Final Scheduled Distribution Date, the Class B Principal
Distributable Amount will equal the Class B Certificate Balance as of the Final
Scheduled Distribution Date.
"Closing Date" means [ ].
-7-
"Code" shall have the meaning specified in Section 2.6.
["Collateral Agent" means, the [Collateral Agent] named in the [Spread
Account Agreement], and any successor thereto pursuant to the terms of [the
Spread Account Agreement].]
"Collateral Agent Fee" means [ ].
"Collection Account" means the account designated as such, established
and maintained pursuant to Section 4.1.
"Collection Period" means each calendar month during the term of this
Agreement or, in the case of the initial Collection Period, the period from and
excluding the Cutoff Date to and including the last day of the month in which
the Cutoff Date occurred. Any amount stated "as of the close of business on the
last day of a Collection Period" shall give effect to the following calculations
as determined as of the end of the day on such last day: (1) all applications of
collections, (2) all current and previous Payaheads, (3) all applications of
Payahead Balances and (4) all distributions.
"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.
"Corporate Trust Office" means the office of the Trustee at which its
corporate trust business shall be administered, which office at the date of this
Agreement is located at [ ________ ].
"CPS" means Consumer Portfolio Services, Inc., a California corporation
and its successors.
"CPS Purchase Agreement" means the Purchase Agreement dated as of [ ],
19[ ] 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" shall have the meaning specified in the CPS Purchase
Agreement.
"Cram Down Loss" means, with respect to a Receivable, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the amount owed on a Receivable or otherwise modifying or restructuring
Scheduled Payments to be made on a Receivable, an amount equal to such reduction
in Principal Balance of such Receivable or the reduction in the net present
value (using as the discount rate the lower of the contract rate or the rate of
interest specified by the court in such order) of the Scheduled Payments as so
modified or restructured. A "Cram Down Loss" shall be deemed to have occurred on
the date such order is entered.
-8-
["[Credit Enhancer]" means [ ], a [ ] organized and created under the
laws of [ ], or its successors in interest.]
["Credit Enhancement" means [describe Credit Enhancement] issued by the
[Credit Enhancer] for the benefit of the Holders of the Class A Certificates
issued hereunder.]
["Credit Enhancement Account" means the segregated trust account
created by the Servicer under Section 4.1.]
"Cutoff Date" means [ ].
"Dealer" means, with respect to a Receivable, the seller of the related
Financed Vehicle, who originated and assigned such Receivable to CPS, Samco,
Linc or [Affiliated Originator], who in turn sold such Receivable to the Seller.
"Deficiency Claim Amount" shall have the meaning specified in Section
4.7(a).
"Deficiency Claim Date" means, with respect to any Distribution Date,
the fourth Business Day preceding such Distribution Date.
"Deficiency Notice" shall have the meaning specified in Section 4.7(a).
"Delivery" means, when used with respect to Transaction
Account Property:
(i) the perfection and priority of a security interest in such
Transaction Account Property which is governed by the law of a
jurisdiction which has adopted the 1978 Revision to Article 8 of the
UCC:
(a) with respect to bankers' acceptances, commercial
paper, negotiable certificates of deposit and other
obligations that constitute "instruments" within the meaning
of Section 9-105 (1) (i) of the UCC and are susceptible of
physical delivery, transfer thereof to the Trustee or its
nominee or custodian by physical delivery to the Trustee or
its nominee or custodian endorsed to, or registered in the
name of, the Trustee or its nominee or custodian or endorsed
in blank, and, with respect to a certificated security (as
defined in Section 8-102 of the UCC), transfer thereof (1) by
delivery of such certificated security endorsed to, or
registered in the name of, the Trustee or its nominee or
custodian or endorsed in blank to a financial intermediary (as
defined in Section 8-313 of the UCC) and the making by such
financial intermediary of entries on its books and records
identifying such certificated securities as belonging to the
Trustee or its nominee or custodian and the sending by such
financial intermediary of a confirmation of the purchase of
such certificated security by the Trustee or its nominee or
custodian, or (2) by delivery thereof to a "clearing
corporation" (as defined in Section 8-102 (3) of the UCC) and
the making by such clearing corporation of appropriate entries
on its books reducing the appropriate securities account of
the transferor and increasing the appropriate securities
account of a financial intermediary by the amount of such
certificated security, the identification by the clearing
corporation of the certificated securities for the sole and
exclusive account of the financial intermediary, the
maintenance of such certificated securities by such clearing
corporation or a "custodian bank" (as defined in Section
8-102(4) of the UCC) or the nominee of either subject to the
clearing corporation's exclusive control, the sending of a
confirmation by the financial intermediary of the purchase by
the Trustee or its nominee or custodian of such securities and
the making by such financial intermediary of entries on its
books and records identifying such certificated securities as
belonging to the Trustee or its nominee or custodian (all of
the foregoing, "Physical Property"), and, in any event, any
such Physical Property in registered form shall be in the name
of the Trustee or its nominee or custodian; and such
additional or alternative procedures as may hereafter become
appropriate to effect the complete transfer of ownership of
any such Transaction Account Property to the Trustee or its
nominee or custodian, consistent with changes in applicable
law or regulations or the interpretation thereof;
(b) with respect to any security issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or by the
Federal National Mortgage Association that is a book-entry
security held through the Federal Reserve System pursuant to
Federal book-entry regulations, the following procedures, all
in accordance with applicable law, including applicable
Federal regulations and Articles 8 and 9 of the UCC:
book-entry registration of such Transaction Account Property
to an appropriate book-entry account maintained with a Federal
Reserve Bank by a financial intermediary which is also a
"depository" pursuant to applicable Federal regulations and
issuance by such financial intermediary of a deposit advice or
other written confirmation of such book-entry registration to
the Trustee or its nominee or custodian of the purchase by the
Trustee or its nominee or custodian of such book-entry
securities; the making by such financial intermediary of
entries in its books and records identifying such book-entry
security held through the Federal Reserve System pursuant to
Federal book-entry regulations as belonging to the Trustee or
its nominee or custodian and indicating that such custodian
holds such Transaction Account Property solely as agent for
the Trustee or its nominee or custodian; and such additional
or alternative procedures as may hereafter become appropriate
to effect complete transfer of ownership of any such
Transaction Account Property to the Trustee or its nominee or
custodian, consistent with changes in applicable law or
regulations or the interpretation thereof; and
(c) with respect to any item of Transaction Account
Property that is an uncertificated security under Article 8 of
the UCC and that is not governed by clause (b) above,
registration on the books and records of the issuer thereof in
the name of the financial intermediary, the sending of a
confirmation by the financial intermediary of the purchase by
the Trustee or its nominee or custodian of such uncertificated
security, the making by such financial intermediary of entries
on its books and records identifying such uncertificated
certificates as belonging to the Trustee or its nominee or
custodian; or
(ii) the perfection and priority of a security interest in
such Transaction Account Property which is governed by the law of a
jurisdiction which has adopted the 1994 Revision to Article 8 of the
UCC:
(a) with respect to bankers' acceptances, commercial
paper, negotiable certificates of deposit and other
obligations that constitute "instruments" within the meaning
of Section 9-105(1)(i) of the UCC (other than certificated
securities) and are susceptible of physical delivery, transfer
thereof to the Trustee by physical delivery to the Trustee,
indorsed to, or registered in the name of, the Trustee or its
nominee or indorsed in blank and such additional or
alternative procedures as may hereafter become appropriate to
effect the complete transfer of ownership of any such
Transaction Account Property to the Trustee free and clear of
any adverse claims, consistent with changes in applicable law
or regulations or the interpretation thereof;
(b) with respect to a "certificated security" (as
defined in Section 8-102(a)(4) of the UCC), transfer thereof:
(1) by physical delivery of such
certificated security to the Trustee, provided that
if the certificated security is in registered form,
it shall be indorsed to, or registered in the name
of, the Trustee or indorsed in blank;
(2) by physical delivery of such
certificated security in registered form to a
"securities intermediary" (as defined in Section
8-102(a)(14) of the UCC) acting on behalf of the
Trustee if the certificated security has been
specially endorsed to the Trustee by an effective
endorsement;
(c) with respect to any security issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or by the
Federal National Mortgage Association that is a book-entry
security held through the Federal Reserve System pursuant to
Federal book entry regulations, the following procedures, all
in accordance with applicable law, including applicable
federal regulations and Articles 8 and 9 of the UCC:
book-entry registration of such property to an appropriate
book-entry account maintained with a Federal Reserve Bank by a
securities intermediary which is also a "depositary" pursuant
to applicable federal regulations and issuance by such
securities intermediary of a deposit advice or other written
confirmation of such book-entry registration to the Trustee of
the purchase by the securities intermediary on behalf of the
Trustee of such book-entry security; the making by such
securities intermediary of entries in its books and records
identifying such book-entry security held through the Federal
Reserve System pursuant to Federal book-entry regulations as
belonging to the Trustee and indicating that such securities
intermediary holds such book-entry security solely as agent
for the Trustee; and such additional or alternative procedures
as may hereafter become appropriate to effect complete
transfer of ownership of any such Transaction Account Property
to the Trustee free of any adverse claims, consistent with
changes in applicable law or regulations or the interpretation
thereof;
(d) with respect to any item of Transaction Account
Property that is an "uncertificated security" (as defined in
Section 8-102(a)(18) of the UCC) and that is not governed by
clause (c) above, transfer thereof:
(1)(A) by registration to the Trustee as the
registered owner thereof, on the books and records of
the issuer thereof.
(B) by another Person (not a securities
intermediary) either becomes the registered owner of
the uncertificated security on behalf of the Trustee,
or having become the registered owner acknowledges
that it holds for the Trustee.
(2) the issuer thereof has agreed that it
will comply with instructions originated by the
Trustee without further consent of the registered
owner thereof.
(e) with respect to a "security entitlement" (as
defined in Section 8-102(a)(17) of the UCC):
(1) if a securities intermediary (A)
indicates by book entry that a "financial asset" (as
defined in Section 8-102(a)(9) of the UCC) has been
credited to the Trustee's "securities account" (as
defined in Section 8-501(a) of the UCC), (B) receives
a financial asset (as so defined) from the Trustee or
acquires a financial asset for the Trustee, and in
either case, accepts it for credit to the Trustee's
securities account (as so defined), (C) becomes
obligated under other law, regulation or rule to
credit a financial asset to the Trustee's securities
account, or (D) has agreed that it will comply with
"entitlement orders" (as defined in Section
8-102(a)(8) of the UCC) originated by the Trustee,
without further consent by the "entitlement holder"
(as defined in Section 8-102(a)(7) of the UCC), of a
confirmation of the purchase and the making by such
securities intermediary of entries on its books and
records identifying as belonging to the Trustee of
(I) a specific certificated security in the
securities intermediary's possession, (II) a quantity
of securities that constitute or are part of a
fungible bulk of certificated securities in the
securities intermediary's possession, or (III) a
quantity of securities that constitute or are part of
a fungible bulk of securities shown on the account of
the securities intermediary on the books of another
securities intermediary; and
(f) in each case of delivery contemplated pursuant to
clause(a) through (e) of subsection (ii) hereof, the Trustee
shall make appropriate notations on its records, and shall
cause the same to be made on the records of its nominees,
indicating that such Transaction Account Property which
constitutes a security is held in trust pursuant to and as
provided in this Agreement.
"Depository" means the initial Depository, The Depository Trust
Company, the nominee of which is Cede & Co., as the registered Holder of the
denomination specified herein, and any permitted successor depository. The
Depository shall at all times be a "clearing corporation" as defined in Section
8-102(5) of the Uniform Commercial Code of the State of New York.
"Depository Agreement" means the DTC Letter of Representations dated
the Closing Date by and between the Depositor, the Trustee and the Depository
Trust Company.
"Determination Date" means the earlier of (i) the seventh Business Day
of each calendar month and (ii) the fifth Business Day preceding the related
Distribution Date.
"Distribution Date" means, for each Collection Period, the 15th day of
the following month, or if the 15th day is not a Business Day, the next
following Business Day, commencing [ ].
"Eligible Account" means (i) a segregated trust account that is
maintained with a depository institution acceptable to the [Credit Enhancer] (so
long as an [Enhancement 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 Ratings Group and "P-1" by Moody's Investors
Service, Inc. and (so long as an [Enhancement Default] shall not have occurred
and be continuing) acceptable to the [Credit Enhancer].
-9-
"Eligible Investments" mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully guaranteed as
to the full and timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit
of any depository institution or trust company incorporated under the
laws of the United States of America or any State thereof (or any
domestic branch of a foreign bank) and subject to supervision and
examination by Federal or State banking or depository institution
authorities; provided, however, that at the time of the investment or
contractual commitment to invest therein, the commercial paper or other
short-term unsecured debt obligations (other than such obligations the
rating of which is based on the credit of a Person other than such
depository institution or trust company) thereof shall be rated "A-1+"
by Standard & Poor's and "P-1" by Moody's;
(c) commercial paper that, at the time of the investment or
contractual commitment to invest therein, is rated "A-1+" by Standard &
Poor's and "P-1" by Moody's;
(d) bankers' acceptances issued by any depository institution
or trust company referred to in clause (b) above;
(e) repurchase obligations with respect to any security that
is a direct obligation of, or fully guaranteed as to the full and
timely payment by, the United States of America or any agency or
instrumentality thereof the obligations of which are backed by the full
faith and credit of the United States of America, in either case
entered into with (i) a depository institution or trust company (acting
as principal) described in clause (b) or (ii) a depository institution
or trust company whose commercial paper or other short term unsecured
debt obligations are rated "A-1+" by Standard & Poor's and "P-1" by
Moody's and long term unsecured debt obligations are rated "AAA" by
Standard & Poor's and "Aaa" by Moody's;
(f) with the prior written consent of the [Credit Enhancer],
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 [Credit
Enhancer], as evidenced by a writing to that effect, as may from time
to time be confirmed in writing to the Trustee by the [Credit
Enhancer].
-10-
Any Eligible Investments may be purchased by or through the Trustee or
any of its Affiliates.
["[Enhancement Agreement]" means the [Credit Enhancement Agreement]
among [ ] and the [Credit Enhancer], dated as of [ ].]
"[Enhancement Agreement] Event of Default" means an Event of Default as
defined in the [Enhancement Agreement].
"[Enhancement Default]" shall mean any one of the following events
shall have occurred and be continuing:
(i) the [Credit Enhancer] fails to make a payment required
under the [Credit Enhancement] in accordance with its terms;
(ii) the [Credit Enhancer] (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 or other competent
court or regulatory authority enters a final and nonappealable order,
judgment or decree (A) appointing a custodian, trustee, agent or
receiver for the [Credit Enhancer] 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 [Credit Enhancer] (or the
taking of possession of all or any material portion of the property of
the [Credit Enhancer]).
"ERISA" shall have the meaning specified in Section 2.6.
"Event of Default" means an event specified in Section 9.1.
"Final Scheduled Distribution Date" shall be the [ ], 200[ ]
Distribution Date.
"Financed Vehicle" means a new or used automobile, light truck, van or
minivan, together with all accessions thereto, securing an Obligor's
indebtedness under a Receivable.
"Insolvency Proceeding" shall have the meaning specified in Section
9.5(b).
-11-
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens, mechanics' liens, and any liens
that may attach to a Financed Vehicle by operation of law.
"Liquidated Receivable" means any Receivable (i) which has been
liquidated by the Servicer through the sale of the Financed Vehicle or (ii) for
which the related Financed Vehicle has been repossessed and [90] days have
elapsed since the date of such repossession or (iii) as to which an Obligor has
failed to make more than [90]% of a Scheduled Payment of more than [ten] dollars
for [120] or more days as of the end of a Collection Period or (iv) with respect
to which proceeds have been received which, in the Servicer's judgment,
constitute the final amounts recoverable in respect of such Receivable.
"Linc" means Linc Acceptance Company LLC and its successors.
"Linc Purchase Agreement" means the Purchase Agreement, dated as of
March 1, 1998 by and between Linc and the 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 Linc Receivables by the
Seller from Linc.
"Linc Receivables" shall have the meaning specified in the
Linc Purchase Agreement.
"Liquidation Proceeds" means all amounts realized with respect to a
Liquidated Receivable (other than amounts withdrawn from the Spread Account and
drawings under the Policy) net of (i) reasonable expenses incurred by the
Servicer in connection with the collection of such Receivable and the
repossession and disposition of the Financed Vehicle and (ii) amounts that are
required to be refunded to the Obligor on such Receivable; provided, however,
that the Liquidation Proceeds with respect to any Receivable shall in no event
be less than zero.
"Lock-Box Account" means the segregated account designated as such,
established and maintained pursuant to Section 4.1.
"Lock-Box Agreement" means the [lock-box agreement], dated the Closing
Date, among the Servicer, the Lock-Box Processor, CPS Receivables Corp. and the
Trustee, as amended, modified or supplemented from time to time, unless such
Agreement shall be terminated in accordance with its terms or the terms hereof,
in which event "Lock-Box Agreement" shall mean such other agreement, in form and
substance acceptable to the [Credit Enhancer], among the Servicer, the Lock-Box
Processor and the Trustee.
"Lock-Box Bank" means, as of any date, a depository institution named
by the Servicer and acceptable to the [Credit Enhancer] at which the Lock-Box
Account is established and maintained as of such date.
"Lock-Box Processor" means initially [ ], and thereafter, its
successors or any replacement Lock-Box Processor acceptable to the [Credit
Enhancer] under the Lock-Box Agreement.
-12-
"Moody's" means Moody's Investors Service, Inc., and any successors
thereof.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
related Financed Vehicle or any other Person who owes or may be liable for
payments under such Receivable.
"Officer's Certificate" means a certificate signed by the chairman of
the board, the president, any vice chairman of the board, any vice president,
the treasurer, the controller or any assistant treasurer, 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 Servicer, which counsel shall be reasonably
acceptable to the Trustee and (if such opinion or a copy thereof is required by
the provisions of this Agreement to be delivered to the [Credit Enhancer]) the
[Credit Enhancer] and which opinion shall be acceptable to the Trustee and (if
such opinion or a copy thereof is required by the provisions of this Agreement
to be delivered to the [Credit Enhancer]) the [Credit Enhancer] in form and
substance.
"Optional Purchase Percentage" means 10%.
"Original Class A Principal Balance" means the product of the Class A
Percentage and the Original Pool Balance.
"Original Class B Principal Balance" means the product of the Class B
Percentage and the Original Pool Balance.
"Original Pool Balance" means $[ ].
"Payahead" on a Rule of 78's Receivable means the amount, as of the
close of business on the last day of a Collection Period, determined in
accordance with Section 4.3 with respect to such Rule of 78's Receivable.
"Payahead Account" means the account designated as such, established
and maintained pursuant to Section 4.1. The Payahead Account shall be held by
the Trustee but shall be primarily for the benefit of the Obligors of Rule of
78's Receivables and shall not be part of the Trust.
"Payahead Balance" on a Rule of 78's Receivable means the sum, as of
the close of business on the last day of a Collection Period, of all Payaheads
made by or on behalf of the Obligor with respect to such Rule of 78's
Receivable, as reduced by applications of previous Payaheads with respect to
such Rule of 78's Receivable, pursuant to Sections 4.3 and 4.4.
"Paying Agent" has the meaning assigned to such term in Section 6.2A.
-13-
"Person" means any individual, corporation, limited liability company,
estate, partnership, joint venture, association, joint stock company, trust
(including any beneficiary thereof), unincorporated organization, or government
or any agency or political subdivision thereof.
"Policy" means [the policy issued by the Credit Enhancer].
"Policy Claim Amount" with respect to a Distribution Date, means [ ].
"Policy Payments Amount" means the segregated trust account created by
the Servicer under Section 4.1.
"Pool Balance" as of the close of business on the last day of a
Collection Period means the aggregate Principal Balance of the Receivables
(excluding Liquidated Receivables and Purchased Receivables).
"Post-Office Box" means the separate post-office box in the name of the
Trustee for the benefit of the Certificateholders and the [Credit Enhancer],
established and maintained pursuant to Section 4.1.
"Preference Claim" shall have the meaning specified in Section 9.5(b).
"Premium" has the meaning specified in the Premium Side Letter.
"Premium Side Letter" means the letter agreement among CPS, the Trustee
and the [Credit Enhancer] referring to payment of the Premium.
"Prepayment Reduction Amount" means with respect to any Simple Interest
Receivable which has been paid in full during any Collection Period, an amount
equal to one twelfth of the excess of (a) the product of (i) the Aggregate
Pass-Through Rate and (ii) the Principal Balance of such Simple Interest
Receivable as of the first day of such Collection Period over (b) the product of
(i) a fraction (A) the numerator of which is the number of days from and
including the first day of such Collection Period to but excluding the date on
which such Simple Interest Receivable is paid in full and (B) the denominator of
which is 30 and (ii) the Aggregate Pass-Through Rate and (iii) the Principal
Balance of such Simple Interest Receivable as of the first day of such
Collection Period.
"Principal Balance" of a Receivable, as of the close of business on the
last day of a Collection Period means the Amount Financed minus the sum of the
following amounts without duplication: (i) in the case of a Rule of 78's
Receivable, that portion of all Scheduled Payments actually received on or prior
to such day allocable to principal using the actuarial or constant yield method;
(ii) in the case of a Simple Interest Receivable, that portion of all Scheduled
Payments actually received on or prior to such day allocable to principal using
the Simple Interest Method; (iii) any payment of the Purchase Amount with
respect to the Receivable allocable to principal; (iv) any Cram Down Loss in
respect of such Receivable; and (v) any prepayment in full or any partial
prepayment applied to reduce the Principal Balance of the Receivable.
"Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of the following amounts: (i) the sum of (x) the
principal portion as calculated in accordance with Section 4.3 of all Scheduled
Payments received during the preceding Collection Period on Rule of 78's
Receivables (excluding Recoveries and any other amounts deposited into the
Payahead Account but including amounts transferred from the Payahead Account to
the Certificate Account to be applied to the principal portion of Scheduled
Payments) and (y) all payments of principal received on Simple Interest
Receivables during the preceding Collection Period; (ii) the principal portion
of all prepayments in full received during the preceding Collection Period
(including prepayments in full resulting from collections with respect to a
Receivable received during the preceding Collection Period plus the transfer of
the Payahead Balance with respect to such Receivable to the Certificate Account
pursuant to Section 4.6(a)(ii)) (without duplication of amounts included in
clause (i) above and clause (iv) below); (iii) the portion of the Purchase
Amount allocable to principal of each Receivable that became a Purchased
Receivable as of the last day of the preceding Collection Period and, at the
option of the Certificate Insurer, the Principal Balance of each Receivable that
was required to be but was not so purchased or repurchased (without duplication
of amounts referred to in clauses (i) and (ii) above); (iv) the Principal
Balance of each Receivable that first became a Liquidated Receivable during the
preceding Collection Period (without duplication of the amounts included in
clauses (i) and (ii) above); and (v) the aggregate amount of Cram Down Losses
with respect to the Receivables that have occurred during the preceding
Collection Period.
"Purchase Agreements" means the CPS Purchase Agreement, the Samco
Purchase Agreement, the Linc Purchase Agreement and [the [Affiliated Originator]
Purchase Agreement].
-14-
"Purchase Amount" means, with respect to a Receivable, the amount, as
of the close of business on the last day of a Collection Period, required to
prepay in full such Receivable under the terms thereof including interest
thereon to the end of the month of purchase.
"Purchased Receivable" means a Receivable purchased as of the close of
business on the last day of a Collection Period by the Servicer pursuant to
Section 3.7 or by CPS pursuant to Section 2.6 or Section 2.8.
"Rating Agency" means [ ___________ ] and any successors thereof. If
such organization or successor is no longer in existence, "Rating Agency" shall
be such nationally recognized statistical rating organization or other
comparable Person designated by the [Credit Enhancer] (so long as no
[Enhancement Default] shall have occurred and be continuing), notice of which
designation shall be given to the Trustee and the Servicer.
"Receivable" means each retail installment sale contract for a Financed
Vehicle which shall appear on Schedule A to this Agreement (which Schedule A may
be in the form of microfiche) and all rights and obligations thereunder except
for Receivables that shall have become Purchased Receivables.
"Receivable Files" means the documents specified in Section 2.7.
"Record Date" means the tenth day of the calendar month in which a
Distribution Date occurs.
"Recoveries" means, with respect to a Liquidated Receivable, the monies
collected from whatever source, during any Collection Period following the
Collection Period in which such Receivable became a Liquidated Receivable, net
of the reasonable costs of liquidation plus any amounts required by law to be
remitted to the Obligor.
["Reimbursement Obligations" means, with respect to each Distribution
Date, any amounts due to the [Credit Enhancer] under the terms hereof or under
the Enhancement Agreement and with respect to which the [Credit Enhancer] has
not been previously paid.]
"Requisite Amount" has the meaning specified in the [ ].
["Reserve Fund" means, the Reserve Fund established by the Seller
pursuant to the [Reserve Fund Agreement]. The Reserve Fund shall be held by the
[Reserve Fund Collateral Agent] and shall in no event be deemed part of the
Trust.]
-15-
["Reserve Fund Agreement" means the Reserve Fund Agreement dated as of
[ ], among [ ] and [the Reserve Fund Collateral Agent].
["Reserve Fund Collateral Agent" means [ ] acting as Reserve Fund
Collateral Agent under the [Reserve Fund Agreement].]
"Residual Certificate" shall have the meaning set forth in Section 6.1
hereof.
"Rule of 78's Receivable" means any Receivable under which the portion
of a payment allocable to earned interest (which may be referred to in the
related retail installment sale contract as an add-on finance charge) and the
portion allocable to the Amount Financed is determined according to the method
commonly referred to as the "Rule of 78's" method or the "sum of the months'
digits" method or any equivalent method.
"Samco" means Samco Acceptance Corp. and its successors.
"Samco Purchase Agreement" means the Purchase Agreement, dated as of [
], 19[ ] 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" shall have the meaning specified in the Samco
Purchase Agreement.
"Scheduled Payment" means, for any Collection Period for any
Receivable, the amount indicated in such Receivable as required to be paid by
the Obligor in such Collection Period (without giving effect to deferments of
payments pursuant to Section 3.2 or any rescheduling of payments in any
insolvency or similar proceedings).
"Seller" means CPS Receivables Corp., as the seller of the Receivables
under this Agreement, and each of its successors pursuant to Section 7.3.
"Securities Act" shall have the meaning specified in Section 6.3(b).
"Servicer" means CPS as the servicer of the Receivables which were
purchased by the Seller, and each successor to CPS (in the same capacity)
pursuant to Section 8.3(a) or 9.2.
"Servicer's Certificate" means a certificate completed and executed by
a Servicing Officer pursuant to Section 3.9, substantially in the form of
Exhibit E-2.
["Servicing Assumption Agreement" means the Servicing Assumption
Agreement, dated as of [ ], among CPS, [the Standby Servicer] and the Trustee,
as the same may be amended or supplemented in accordance with its terms.]
"Servicing Fee" means the fee payable to the Servicer for services
rendered during the respective Collection Period, determined pursuant to Section
3.8.
"Servicing Officer" means any person whose name appears on a list of
Servicing Officers delivered to the Trustee and the [Credit Enhancer], as the
same may be amended from time to time.
-16-
"Servicing Rate" shall be [ ]% per annum, payable monthly[, provided,
however, that if [the Standby Servicer] becomes the successor Servicer, the
"Servicing Rate" shall be equal to a percentage per annum determined pursuant to
[the Servicing Assumption Agreement] not to exceed [ ]% per annum].
"Simple Interest Method" means the method of allocating a fixed level
payment between principal and interest, pursuant to which the portion of such
payment that is allocated to interest is equal to the product of the APR
multiplied by the unpaid balance multiplied by the period of time (expressed as
a fraction of a year, based on the actual number of days in the calendar month
and the actual number of days in the calendar year) elapsed since the preceding
payment of interest was made and the remainder of such payment is allocable to
principal.
"Simple Interest Receivable" means any Receivable under which the
portion of a payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
["Spread Account" means, with respect to the Trust and similar trusts
to be established by the Seller, the Spread Account established and maintained
pursuant to the Spread Account Agreement. The Spread Account shall be held by
the [Collateral Agent] and shall in no event be deemed part of the Trust.]
["Spread Account Agreement" means the Master Spread Account Agreement
among [ ] and [the Collateral Agent], as amended and restated as of [ ], as the
same may be amended, supplemented or otherwise modified in accordance with the
terms thereof.
"Standard & Poor's" means Standard & Poor's Ratings Group, Inc. and any
successors thereof.
["Standby Fee" means the fee payable to [the Standby Servicer] so long
as CPS is the Servicer, on each Distribution Date in an amount equal to [ ].
["Standby Servicer" means [ ], in its capacity as Standby Servicer
pursuant to the terms of [the Servicing Assumption Agreement] or such other
Person as may have been appointed Standby Servicer pursuant to Section 9.2(c).]
"State" means any State of the United States of America, or the
District of Columbia.
-17-
"Total Distribution Amount" shall mean, for each Distribution Date, the
sum of the following amounts with respect to the preceding Collection Period:
(i) all collections on Receivables (including amounts transferred from the
Payahead Account to the Certificate Account pursuant to Section 4.6(a)(ii) but
excluding amounts deposited into the Payahead Account); (ii) Liquidation
Proceeds received during the Collection Period with respect to Receivables that
became Liquidated Receivables during the Collection Period in accordance with
the Servicer's customary servicing procedures; (iii) proceeds from Recoveries
with respect to Liquidated Receivables; (iv) the Purchase Amount of each
Receivable that became a Purchased Receivable as of the last day of the
Collection Period; and (v) [ ], and any earnings on investments of funds in the
Collection Account and the Payahead Account pursuant to Section 4.1(a).
"Transaction Account Property" means the Transaction Accounts, all
amounts and investments held from time to time in any Transaction Account
(whether in the form of deposit accounts, Physical Property, book-entry
securities, uncertificated securities or otherwise), and all proceeds of the
foregoing.
"Transaction Accounts" means the property set forth in item (vii) of
Section 2.2.
"Trigger Event" has the meaning specified in the Series
[ ] Supplement.
"Trust" means the trust created by this Agreement, the estate of which
shall consist of the Trust Assets.
"Trust Assets" means that property set forth in items (i) through
(viii) in Section 2.2 and [the Credit Enhancement] for the benefit of the Class
A Certificateholders.
"Trustee" means the Person acting as Trustee under this Agreement, its
successor in interest, and any successor trustee pursuant to Section 10.11.
"Trustee Fee" means the fee payable to the Trustee on each Distribution
Date in an amount equal to one-twelfth of [ ]% of the Certificate Balance on the
last day of the second preceding Collection Period; provided, however, that on
the first Distribution Date the Trustee will be entitled to receive an amount
equal to the product of (i) the percentage equivalent of a fraction the
numerator of which is the number days from the Closing Date to but excluding the
first Distribution Date and the denominator of which is 360, (ii) [ ]% and (iii)
the Certificate Balance as of the Closing Date.
"Trustee Officer" means any vice president, any assistant vice
president, any assistant secretary, any assistant treasurer, any trust officer,
or any other officer of the Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge of and familiarity with the
particular subject.
"Trustee's Certificate" means a certificate completed and executed for
the Trustee by a Trustee Officer pursuant to Section 10.2, substantially in the
form of, in the case of an assignment to CPS, Exhibit C-1 and in the case of an
assignment to the Servicer, Exhibit C-2.
-18-
"UCC" means the Uniform Commercial Code as in effect in the respective
jurisdiction.
SECTION 1.2. Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the term "including"
means "including without limitation."
SECTION 1.3. Section References. All section references shall be to
Sections in this Agreement.
SECTION 1.4. Limitation on Trust Fund Activities. Notwithstanding any
other provision in this Agreement to the contrary, the Trustee shall have no
power to vary the investment of the Certificateholders within the meaning of
Treasury Department Regulation ss. 301.7701-4(c) or to engage in business unless
the Trustee and the [Credit Enhancer] shall have received an Opinion of Counsel
that such activity shall not cause the Trust to be an association taxable as a
corporation for federal income tax purposes.
SECTION 1.5. Calculations. All calculations of the amount of interest
accrued on the Certificates and all calculations of the amount of the Servicing
Fee, the Collateral Agent Fee, the Standby Fee and the Trustee Fee shall be made
on the basis of a 360-day year consisting of twelve 30-day months. All
references to the Principal Balance of a Receivable as of the last day of a
Collection Period shall refer to the close of business on such day.
SECTION 1.6. Action by or Consent of Certificateholders. Whenever any
provision of this Agreement refers to action to be taken, or consented to, by
Certificateholders, such provision shall be deemed to refer to
Certificateholders of record as of the Record Date immediately preceding the
date on which such action is to be taken, or consent given, by
Certificateholders. Solely for the purposes of any action to be taken, or
consented to, by Certificateholders, any Certificate registered in the name of
the Seller, CPS, the Servicer or any Affiliate thereof shall be deemed not to be
outstanding and shall not be taken into account in determining whether the
requisite interest necessary to effect any such action or consent has been
obtained; provided, however, that, solely for the purpose of determining whether
the Trustee is entitled to rely upon any such action or consent, only
Certificates which the Trustee knows to be so owned shall be so disregarded.
-19-
SECTION 1.7. Material Adverse Effect. Whenever a determination is to be
made under this Agreement as to whether a given event, action, course of conduct
or set of facts or circumstances could or would have a material adverse effect
on the Trust or the Certificateholders (or any similar or analogous
determination), such determination shall be made without taking into account the
[Credit Enhancement].
ARTICLE II
The Trust and Trust Property
SECTION 2.1. Creation of Trust. Upon the execution of this Agreement by
the parties hereto, there is hereby created the CPS Auto Grantor Trust 199[ ]-[
].
SECTION 2.2. Conveyance of Receivables. In consideration of the
Trustee's delivery of Certificates in an aggregate principal amount equal to the
Original Pool Balance to or upon the written order of the Seller, the Seller
does hereby sell, transfer, assign, set over and otherwise convey to the
Trustee, in trust for the benefit of the Certificateholders, without recourse,
except as provided in Sections 2.5, 2.6 and 2.8 (subject to the obligations
herein):
(i) all right, title and interest of the Seller in and to the
Receivables listed in Schedule A hereto and, with respect to Rule of
78's Receivables, all monies due or to become due thereon after the
Cutoff Date (including Scheduled Payments due after the Cutoff Date
(including principal prepayments relating to such Scheduled Payments)
but received by the Seller or CPS before the Cutoff Date) and, with
respect to Simple Interest Receivables, all monies received thereunder
after the Cutoff Date and all Liquidation Proceeds and Recoveries
received with respect to such Receivables;
(ii) all right, title and interest of the Seller in and to the
security interests in the Financed Vehicles granted by Obligors
pursuant to the Receivables and any other interest of the Seller in
such Financed Vehicles, including, without limitation, the certificates
of title or, with respect to such Financed Vehicles in the State of
Michigan, all other evidence of ownership with respect to such Financed
Vehicles;
-20-
(iii) all right, title and interest of the Seller in and to
any proceeds from claims on any physical damage, credit life and credit
accident and health insurance policies or certificates relating to the
Financed Vehicles or the Obligors;
(iv) all right, title and interest of the Seller in and to the
Purchase Agreement, including a direct right to cause CPS to purchase
Receivables from the Trust under certain circumstances;
(v) all right, title and interest of the Seller in and to
refunds for the costs of extended service contracts with respect to
Financed Vehicles securing Receivables, refunds of unearned premiums
with respect to credit life and credit accident and health insurance
policies or certificates covering an Obligor or Financed Vehicle or
his or her obligations with respect to a Financed Vehicle and any
recourse to Dealers for any of the foregoing;
(vi) the Receivable File related to each Receivable;
(vii) all amounts and property from time to time held in or
credited to the Collection Account, the Lock-Box Account, [the Credit
Enhancement Account] or the Certificate Account; and
(viii) the proceeds of any and all of the foregoing.
In addition, the Seller shall cause [the Credit Enhancement] to be
issued to and delivered to the Trust for the benefit of the Certificateholders.
SECTION 2.3. Transfer Intended as Sale; Precautionary Security
Interest. The conveyance to the Trust of the property set forth in Section 2.2
above is intended as a sale free and clear of all Liens, and it is intended that
the property of the Trust shall not be part of the Seller's estate in the event
of the filing of a bankruptcy petition by or against the Seller under any
bankruptcy law. In the event, however, that notwithstanding the intent of CPS,
the Seller and the Trustee, the transfer under this Agreement is held not to be
a sale, this Agreement shall constitute a grant of a security interest in the
property described in Section 2.2 above, for the benefit of the
Certificateholders and the [Credit Enhancer] as their interests may appear
herein.
SECTION 2.4. Acceptance by Trustee. The Trustee does hereby accept all
consideration conveyed by the Seller pursuant to Section 2.2, and declares that
the Trustee shall hold such
-21-
consideration upon the trusts herein set forth for the benefit of all present
and future Certificateholders, subject to the terms and provisions of this
Agreement.
SECTION 2.5. Representations and Warranties of Seller. The Seller makes
the following representations and warranties as to the Receivables to the
[Credit Enhancer] and to the Trustee, on which the [Credit Enhancer] relies in
executing and delivering [the Credit Enhancement], and on which the Trustee on
behalf of itself and the Certificateholders relies in accepting the items
specified in Section 2.2 in trust and executing and authenticating the
Certificates. Such representations and warranties speak as of the Closing Date,
but shall survive the sale, transfer, and assignment of the Receivables to the
Trustee.
(i) Characteristics of Receivables. (A) Each Receivable (1)
has been originated in the United States of America by a Dealer for the
retail sale of a Financed Vehicle in the ordinary course of such
Dealer's business, has been fully and properly executed by the parties
thereto and has been purchased by CPS (or, with respect to the Samco
Receivables, Samco, with respect to the Linc Receivables, Linc, and
[with respect to the [Affiliated Originator] Receivables, [Affiliated
Originator]]) 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, with respect to the Linc Receivables,
Linc, and [with respect to the [Affiliated Originator] Receivables,
[Affiliated Originator]]) in the Financed Vehicle, which security
interest has been assigned by CPS (or, with respect to the Samco
Receivables, Samco, with respect to the Linc Receivables, Linc, and
[with respect to the [Affiliated Originator] Receivables, [Affiliated
Originator]]) to the Seller, which in turn has assigned such security
interest to the Trustee, (3) contains customary and enforceable
provisions such that the rights and remedies of the holder or assignee
thereof shall be adequate for realization against the collateral of the
benefits of the security, (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 [ ]%, (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 [ ]% of the aggregate Principal Balance of
the Receivables, constituting [ ]% 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;
-22-
approximately [ ]% of the aggregate Principal Balance of the
Receivables as of the Cutoff Date were originated under the CPS Alpha
Program; approximately [ ]% of the aggregate Principal Balance of the
Receivables as of the Cutoff Date were originated under the CPS Delta
Program; approximately [ ]% of the aggregate Principal Balance of the
Receivables were originated under the CPS First Time Buyer Program;
approximately [ ]% of the aggregate Principal Balance of the
Receivables were originated under the CPS Standard Program;
approximately [ ]% of the aggregate Principal Balance of the
Receivables were originated under the CPS Super Alpha Program;
approximately [ ]% of the aggregate Principal Balance of the
Receivables are Samco Receivables; approximately [ ]% of the aggregate
Principal Balance of the Receivables are Linc Receivables;
[approximately [ ]% of the aggregate Principal Balance of the
Receivables are [Affiliate Originator] Receivables; no Receivable shall
have a payment that is more than [30] days overdue as of the Cutoff
Date; [ ]% of the Receivables are Rule of 78's Receivables and [ ]% of
the Receivables are Simple Interest Receivables; each Receivable shall
have a final scheduled payment due no later than [ ], 200[ ]; each
Receivable has an original term to maturity not more than 60 months and
a weighted average remaining term to maturity of [ ] months; and each
Receivable was originated on or before the Cutoff Date.
(ii) Schedule of Receivables. The information with respect to
the Receivables set forth in Schedule A to this Agreement is true and
correct in all material respects as of the close of business on the
Cutoff Date, and no selection procedures adverse to the
Certificateholders have been utilized in selecting the Receivables.
(iii) Compliance with Law. Each Receivable, the sale of the
Financed Vehicle and the sale of any physical damage, credit life and
credit accident and health insurance and any extended warranties or
service contracts complied at the time the related Receivable was
originated or made and at the execution of 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.
-23-
(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.
(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. 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.
(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
-24-
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 that each Receivable requires
the Obligor to obtain and maintain such insurance naming CPS (or, with
respect to the Samco Receivables, Samco, with respect to the Linc
Receivables, Linc, and with respect to the [Affiliated Originator]
Receivables, [Affiliated Originator]) 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, with respect to the
Linc Receivables, Linc, and with respect to the [Affiliated Originator]
Receivables, [Affiliated Originator]) 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.
(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 Certificateholders and the [Credit Enhancer] 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 Certificates shall be unlawful, void, or
voidable. The Seller has not entered into any agreement
-25-
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 security interest on the title document
of the related Financed Vehicle is required or permitted to perfect
such security interest, the title document of the related Financed
Vehicle for such Receivable shows, or if a new or replacement title
document is being applied for with respect to such Financed Vehicle the
title document (or, with respect to Receivables originated in the State
of Michigan, a copy thereof) will be received within [180] days and
will show, CPS (or, with respect to the Samco Receivables, Samco, with
respect to the Linc Receivables, Linc, and with respect to the
[Affiliated Originator] Receivables, [Affiliated Originator]) 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,
with respect to the Linc Receivables, Linc, and with respect to the
[Affiliated Originator] Receivables, [Affiliated Originator]) 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 has not yet
been returned from the Registrar of Titles, CPS (or, with respect to
the Samco Receivables, Samco, with respect to the Linc Receivables,
Linc, and with respect to the [Affiliated Originator] Receivables,
[Affiliated Originator]) has received written evidence from the related
Dealer that such title document showing CPS 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
-26-
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 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. Each Receivable has an origination date on
or after [ ].
(xxiii) Maturity of Receivables. Each Receivable has an
original term to maturity of not more than 60 months; the weighted
average original term to maturity of the Receivables is [ ] months as
of the Cutoff Date; the remaining term to maturity of each Receivable
was [ ] months or less as of the Cutoff Date; the weighted average
remaining term to maturity of the Receivables was [ ] months as of the
Cutoff Date.
(xxiv) Scheduled Payments. Each Receivable had an original
principal balance of not less than $[ ] nor more than $[ ], has an
outstanding principal balance as of the Cutoff Date of not less than
$[ ] nor more than $[ ] and has a first Scheduled Payment due on or
prior to [ ].
(xxv) Origination of Receivables. Based on the billing
address of the Obligors and the Principal Balances as of the Cutoff
Date, approximately [ ]% of the Receivables were originated in
California, approximately [ ]% of the Receivables were originated in
Florida, approximately [ ]% of the Receivables were originated in
Pennsylvania, approximately [ ]% of the Receivables were originated in
Texas and the remaining [ ]% of the Receivables were originated in all
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.
-27-
(xxvii) Location of Receivable Files. A complete Receivable
File with respect to each Receivable has been or prior to the Closing
Date will be delivered to the Trustee at the location listed in
Schedule B.
(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 $[
]. The Receivables are evidenced by [ ] 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 2.6. Repurchase Upon Breach. (a) The Seller, the Servicer, the
[Credit Enhancer] or the Trustee, as the case may be, shall inform the other
parties to this Agreement and the [Credit Enhancer] promptly, in writing, upon
the discovery of any breach of the Seller's representations and warranties made
pursuant to Section 2.5 (without regard to any limitation therein as to the
Seller's knowledge). Unless the breach shall have been cured by the last day of
the second Collection Period following the discovery thereof by the Trustee or
the [Credit Enhancer] or receipt by the Trustee and the [Credit Enhancer] of
notice from the Seller or the Servicer of such breach, CPS shall repurchase any
Receivable if such Receivable is materially and adversely affected by the breach
as of the last day of such second Collection Period (or, at CPS's option, the
last day of the first Collection Period following the discovery) and, in the
event that the breach relates to a characteristic of the Receivables in the
aggregate, and if the Trust is materially and adversely affected by such breach,
unless the breach shall have been cured by such second Collection Period, CPS
shall purchase such aggregate Principal Balance of Receivables, such that
following such purchase such representation shall be true and correct with
respect to the remainder of the Receivables in the aggregate. In consideration
of the purchase of the Receivable, CPS shall remit the Purchase Amount, in the
manner specified in Section 4.5. For purposes of this Section, the Purchase
Amount of a Receivable which is not consistent with the warranty pursuant to
Section 2.5(i)(A)(4) or (A)(5) shall include such additional amount as shall be
necessary to provide the full amount of interest as contemplated therein. The
sole remedy of the Trustee, the Trust, the Certificateholders or the [Credit
Enhancer] with respect to a breach of representations and warranties pursuant to
Section 2.5 shall be to enforce CPS's obligation to purchase such Receivables
pursuant to the Purchase Agreement; provided, however, that CPS shall indemnify
the Trustee, [the Standby Servicer], the [Collateral Agent], the [Credit
Enhancer], the Trust and the Certificateholders against all costs, expenses,
losses, damages, claims and liabilities, including reasonable fees and expenses
of
-28-
counsel, which may be asserted against or incurred by any of them as a result of
third party claims arising out of the events or facts giving rise to such
breach. Upon receipt of the Purchase Amount and written instructions from the
Servicer, the Trustee shall release to CPS or its designee the related
Receivables File and shall execute and deliver all reasonable instruments of
transfer or assignment, without recourse, as are prepared by the Seller and
delivered to the Trustee and necessary to vest in CPS or such designee title to
the Receivable. If it is determined that consummation of the transactions
contemplated by this Agreement and the other transaction documents referenced in
this Agreement, the servicing and operation of the Trust pursuant to this
Agreement and such other documents, or the ownership of a Certificate by a
Holder constitutes a violation of the prohibited transaction rules of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or the
Internal Revenue Code of 1986, as amended ("Code") or any successor statutes of
similar impact, together with the regulations thereunder, to which no statutory
exception or administrative exemption applies, such violation shall not be
treated as a breach of the Seller's representations and warranties made pursuant
to Section 2.5 if not otherwise such a breach.
(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 2.7. Delivery of Receivable Files. On or prior to the Closing
Date, the Seller shall transfer and deliver to the Trustee at the offices
specified in Schedule B to this Agreement with respect to each Receivable the
following:
(i) The fully executed original of the Receivable (together
with any agreements modifying the Receivable, including without
limitation, any extension agreements).
(ii) The original certificate of title in the name of CPS (or,
with respect to the Samco Receivables, Samco, with respect to the Linc
Receivables, Linc, and with respect to the [Affiliated Originator]
Receivables, [Affiliated Originator]) 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, with respect to the Linc Receivables, Linc, and
with respect to the [Affiliated Originator] Receivables, [Affiliated
Originator]) 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, with respect to the Linc Receivables, Linc, and
with respect to the [Affiliated Originator] Receivables, [Affiliated
Originator]) as secured party.
The Servicer shall hold all other documents with respect to the Receivables as
custodian for the Trust.
SECTION 2.8. Acceptance of Receivable Files by Trustee. The Trustee
acknowledges receipt of files which the Seller has represented are the
Receivable Files. The Trustee has reviewed the Receivable Files and has
determined that it has received a file for each Receivable identified in
Schedule A to this Agreement. The Trustee declares that it holds and will
continue to hold such files and any amendments, replacements or supplements
thereto and all other Trust Assets as Trustee in trust for the use and benefit
of all present and future
-29-
Certificateholders. The Trustee agrees to review each file delivered to it no
later than [45] days after the Closing Date to determine whether such Receivable
Files contain the documents referred to in Section 2.7(i) and (ii). If the
Trustee has found or finds that a file for a Receivable has not been received,
or that a file is unrelated to the Receivables identified in Schedule A to this
Agreement or that any of the documents referred to in Section 2.7(i) or (ii) are
not contained in a Receivable File, the Trustee shall inform CPS, the Seller,
[the Standby Servicer] and the [Credit Enhancer] 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 set forth in the preceding sentence). Unless such defect with respect
to such Receivable File shall have been cured by the last day of the second
Collection Period following discovery thereof by the Trustee, CPS shall
repurchase any such Receivable as of such last day. In consideration of the
purchase of the Receivable, CPS shall remit the Purchase Amount, in the manner
specified in Section 4.5. The sole remedy of the Trustee, the Trust, or the
Certificateholders with respect to a breach pursuant to this Section 2.8 shall
be to require CPS to purchase the Receivables pursuant to this Section 2.8. Upon
receipt of the Purchase Amount and written instructions from the Servicer, the
Trustee shall release to CPS or its designee the related Receivables File and
shall execute and deliver all reasonable instruments of transfer or assignment,
without recourse, as are prepared by CPS and delivered to the Trustee and are
necessary to vest in CPS or such designee title to the Receivable. The Trustee
shall make a list of Receivables for which an application for a certificate of
title but not an original certificate of title or, with respect to Receivables
originated in the State of Michigan, a "Form RD108" stamped by the Department of
Motor Vehicles, is included in the Receivable File as of the date of its review
of the Receivable Files and deliver a copy of such list to the Servicer and the
[Credit Enhancer]. On the date which is [180] days following the Closing Date or
the next succeeding Business Day, the Trustee shall inform CPS and the other
parties to this Agreement and the [Credit Enhancer] 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.
-30-
SECTION 2.9. Access to Receivable Files. The Trustee shall permit the
Servicer, any Certificateholder and the [Credit Enhancer] access to the
Receivable Files at all reasonable times during the Trustee's normal business
hours; provided, however, that the Trustee shall provide such access to any
Certificateholder only (i) in such cases where the Trustee is required by
applicable statutes or regulations (whether applicable to the Trustee, the
Servicer or to such Certificateholder) to permit such Certificateholder to
review the Receivable Files or (ii) if an [Enhancement Default] shall have
occurred and be continuing. In addition, the Trustee shall provide such access
to any Certificateholder at all reasonable times during the Trustee's normal
business hours if an Event of Default shall have occurred and be continuing. In
each case, such access shall be afforded without charge but only upon reasonable
request. Each Certificateholder shall be deemed to have agreed by its acceptance
of a Certificate to use its best efforts to hold in confidence all Confidential
Information in accordance with its then customary procedures; provided that
nothing herein shall prevent any Certificateholder from delivering copies of any
financial statements and other documents whether or not constituting
Confidential Information, and disclosing other information, whether or not
Confidential Information, to (i) its directors, officers, employees, agents and
professional consultants, (ii) any other institutional investor that holds
Certificates, (iii) any prospective institutional investor transferee in
connection with the contemplated transfer of a Certificate or any part thereof
or participation therein who is subject to confidentiality arrangements at least
substantially similar hereto, (iv) any governmental authority, (v) the National
Association of Insurance Commissioners or any similar organization, (vi) any
nationally recognized rating agency in connection with the rating of the Class A
Certificates by such agency or (vii) any other Person to which such delivery or
disclosure may be necessary or appropriate (a) in compliance with any applicable
law, rule, regulation or order, (b) in response to any subpoena or other legal
process, (c) in connection with any litigation to which such Certificateholder
is a party, or (d) in order to protect or enforce such Person's investment in
any Certificate. The Trustee shall, within [two] Business Days of the request of
the Servicer or the [Credit Enhancer], execute such documents and instruments as
are prepared by the Servicer or the [Credit Enhancer] and delivered to the
Trustee, as the Servicer or the [Credit Enhancer] 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
-31-
document from any Receivable File unless it receives a trust receipt signed by a
Servicing Officer in the form of Exhibit E-1 hereto (the "Trust Receipt"). Such
Trust Receipt shall obligate the Servicer to return such document(s) to the
Trustee when the need therefor no longer exists unless the Receivable shall be
liquidated, in which case, upon receipt of a certificate of a Servicing Officer
substantially in the form of Exhibit E-2 hereto to the effect that all amounts
required to be deposited in the Collection Account with respect to such
Receivable have been so deposited, the Trust Receipt shall be released by the
Trustee to the Servicer.
ARTICLE III
Administration and Servicing of Receivables
SECTION 3.1. Duties of Servicer. The Servicer, as agent for the Trust,
the Certificateholders and the [Credit Enhancer] (to the extent provided herein)
shall manage, service, administer and make collections on the Receivables with
reasonable care, using that degree of skill and attention customary and usual
for institutions which service motor vehicle retail installment contracts
similar to the Receivables and, to the extent more exacting, that the Servicer
exercises with respect to all comparable automotive receivables that it services
for itself or others. The Servicer's duties shall include collection and posting
of all payments, responding to inquiries of Obligors on such Receivables,
investigating delinquencies, sending payment statements to Obligors, reporting
tax information to Obligors, accounting for collections, furnishing monthly and
annual statements to the Trustee and the [Credit Enhancer] with respect to
distributions. Without limiting the generality of the foregoing, and subject to
the servicing standards set forth in this Agreement, the Servicer is authorized
and empowered by the Trustee to execute and deliver, on behalf of itself, the
Trust, the Certificateholders or any of them, any and all instruments of
satisfaction or cancellation, or partial or full release or discharge, and all
other comparable instruments, with respect to such Receivables or to the
Financed Vehicles securing such Receivables and/or the certificates of title or,
with respect to Financed Vehicles in the State of Michigan, other evidence of
ownership with respect to such Financed Vehicles. If the Servicer shall commence
a legal proceeding to enforce a Receivable, the Trustee shall thereupon be
deemed to have automatically assigned, solely for the purpose of collection,
such Receivable to the Servicer. If in any enforcement suit or legal proceeding
it shall be held that the Servicer may not enforce a Receivable on the ground
that it shall not be a real party in interest or a holder entitled to enforce
such Receivable, the Trustee shall, at the Servicer's expense and
-32-
direction, take steps to enforce such Receivable, including bringing suit in its
name or the name of the Certificateholders. The Servicer shall prepare and
furnish to the Trustee and the Trustee shall execute, any powers of attorney and
other documents reasonably necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties hereunder.
SECTION 3.2. Collection and Allocation of Receivable Payments.
Consistent with the standards, policies and procedures required by this
Agreement, the Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Receivables as and when the
same shall become 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 [Credit Enhancer] and provided, further, that if the Servicer extends the
date for final payment by the Obligor of any Receivable beyond the last day of
the penultimate Collection Period preceding the Final Scheduled Distribution
Date, it shall promptly purchase the Receivable from the Trust in accordance
with the terms of Section 3.7 hereof (and for purposes thereof, the Receivable
shall be deemed to be materially and adversely affected by such breach). If the
Servicer is not CPS, the Servicer may not make any extension on a Receivable
without the prior written consent of the [Credit Enhancer]. The Servicer may in
its discretion waive any late payment charge or any other fees that may be
collected in the ordinary course of servicing a Receivable. Notwithstanding
anything to the contrary contained herein, the Servicer shall not agree (i) to
any alteration of the interest rate on any Receivable or of the amount of any
Scheduled Payment on Receivables, and (ii) shall not agree to any modification
that would result in a "deemed exchange" of a receivable under Section 1001 of
the Internal Revenue Code of 1986, as amended, or would constitute reinvestment
adversely affecting the status of the
-33-
Trust as not an association taxable as a corporation for Federal income tax
purposes.
SECTION 3.3. Realization Upon Receivables. On behalf of the Trust, the
Certificateholders and the [Credit Enhancer], the Servicer shall use its best
efforts, consistent with the servicing procedures set forth herein, to repossess
or otherwise convert the ownership of the Financed Vehicle securing any
Receivable as to which the Servicer shall have determined eventual payment in
full is unlikely. The Servicer shall commence efforts to repossess or otherwise
convert the ownership of a Financed Vehicle on or prior to the date that an
Obligor has failed to make more than 90% of a Scheduled Payment thereon in
excess of $10 for 120 days or more; provided, however, that the Servicer may
elect not to commence such efforts within such time period if in its good faith
judgment it determines either that it would be impracticable to do so or that
the proceeds ultimately recoverable with respect to such Receivable would be
increased by forbearance. The Servicer shall follow such customary and usual
practices and procedures as it shall deem necessary or advisable in its
servicing of automotive receivables, consistent with the standards of care set
forth in Section 3.2, which may include reasonable efforts to realize upon any
recourse to Dealers and selling the Financed Vehicle at public or private sale.
The foregoing shall be subject to the provision that, in any case in which the
Financed Vehicle shall have suffered damage, the Servicer shall not expend funds
in connection with the repair or the repossession of such Financed Vehicle
unless it shall determine in its discretion that such repair and/or repossession
will increase the proceeds ultimately recoverable with respect to such
Receivable by an amount greater than the amount of such expenses.
SECTION 3.4. Physical Damage Insurance; Other Insurance. (a) The
Servicer, in accordance with the servicing procedures and standards set forth
herein, shall require that (i) each Obligor shall have obtained insurance
covering the Financed Vehicle, as of the date of the execution of the
Receivable, insuring against loss and damage due to fire, theft, transportation,
collision and other risks generally covered by comprehensive and collision
coverage and each Receivable requires the Obligor to maintain such physical loss
and damage insurance naming CPS (or, with respect to the Samco Receivables,
Samco, with respect to the Linc Receivables, Linc, and with respect to the
[Affiliated Originator] Receivables, [Affiliated Originator]) 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, with respect to the Linc Receivables, Linc, and
with respect to the [Affiliated Originator] Receivables, [Affiliated
Originator]) 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.
-34-
(b) To the extent applicable, the Servicer shall not take any action
which would result in noncoverage under any of the insurance policies referred
to in Section 3.4(a) which, but for the actions of the Servicer, would have been
covered thereunder. The Servicer, on behalf of the Trustee, shall take such
reasonable action as shall be necessary to permit recovery under any of the
foregoing insurance policies. Any amounts collected by the Servicer under any of
the foregoing insurance policies shall be deposited in the Collection Account
pursuant to Section 4.2.
SECTION 3.5. Maintenance of Security Interests in Financed Vehicles.
(a) Consistent with the policies and procedures required by this Agreement, the
Servicer shall take such steps as are necessary to maintain perfection of the
security interest created by each Receivable in the related Financed Vehicle
including but not limited to obtaining the execution by the Obligors and the
recording, registering, filing, re-recording, re-registering and refiling of all
security agreements, financing statements and continuation statements or
instruments as are necessary to maintain the security interest granted by
Obligors under the respective Receivables. The Trustee hereby authorizes the
Servicer, and the Servicer agrees, to take any and all steps as are necessary to
re-perfect or continue the perfection of such security interest on behalf of the
Trust in the event of the relocation of a Financed Vehicle or for any other
reason. In the event that the assignment of a Receivable to the Trustee is
insufficient, without a notation on the related Financed Vehicle's certificate
of title, or without fulfilling any additional administrative requirements under
the laws of the state in which the Financed Vehicle is located, to perfect a
security interest in the related Financed Vehicle in favor of the Trustee, the
Servicer hereby agrees that CPS's designation as the secured party on such
certificate of title is in its capacity as Servicer as agent of the Trustee.
(b) Upon the occurrence of an [Enhancement Agreement] Event of Default,
the [Credit Enhancer] may (so long as an [Enhancement Default] shall not have
occurred and be continuing) instruct the Trustee and the Servicer to take or
cause to be taken, or, if an [Enhancement Default] shall have occurred, upon the
occurrence of an Event of Default, the Trustee and the Servicer shall take or
cause to be taken such action as may, in the opinion of counsel to the Trustee,
which opinion shall not be an expense of the Trustee, be necessary to perfect or
re-perfect the security interests in the Financed Vehicles securing the
Receivables in the name of the Trustee on behalf of the Trust by amending the
title documents of such Financed Vehicles or by such other reasonable means as
may, in the opinion of counsel to the [Credit Enhancer] or the Trustee (as
applicable), which opinion shall not be an expense of the Trustee, be necessary
or prudent. The Servicer hereby agrees to pay all expenses related to such
perfection or re-perfection and to take all action necessary therefor. In
addition, prior to the occurrence of an [Enhancement Agreement] Event of
Default, the [Credit Enhancer] may (unless an [Enhancement Default] shall have
occurred and be continuing) instruct the Trustee and the Servicer to take or
cause to be taken such action as may, in the opinion of counsel
-35-
to the [Credit Enhancer], be necessary to perfect or re-perfect the security
interest in the Financed Vehicles securing the Receivables in the name of the
Trustee on behalf of the Trust, including by amending the title documents of
such Financed Vehicles or by such other reasonable means as may, in the opinion
of counsel to the [Credit Enhancer], be necessary or prudent; provided, however,
that if the [Credit Enhancer] requests (unless an [Enhancement Default] shall
have occurred and be continuing) that the title documents be amended prior to
the occurrence of an [Enhancement 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 [Credit
Enhancer].
SECTION 3.6. Additional Covenants of Servicer. The Servicer shall not
release the Financed Vehicle securing each Receivable from the security interest
granted by such Receivable in whole or in part except in the event of payment in
full by the Obligor thereunder or repossession, nor shall the Servicer impair
the rights of the Certificateholders in such Receivables, nor shall the Servicer
amend a Receivable, except that extensions may be granted in accordance with
Section 3.2.
SECTION 3.7. Purchase of Receivables Upon Breach. The Servicer or the
Trustee shall inform the other party and the [Credit Enhancer] promptly, in
writing, upon the discovery of any breach of Section 3.2, 3.4, 3.5 or 3.6;
provided, however, that the failure to give such notice shall not affect any
obligation of the Servicer hereunder. Unless the breach shall have been cured by
the last day of the second Collection Period following such discovery (or, at
the Servicer's election, the last day of the first following Collection Period),
the Servicer shall purchase any Receivable materially and adversely affected by
such breach. In consideration of the purchase of such Receivable, the Servicer
shall remit the Purchase Amount in the manner specified in Section 4.5. The sole
remedy of the Trustee, the Trust, the [Credit Enhancer] or the
Certificateholders with respect to a breach of Section 3.2, 3.4, 3.5 or 3.6
shall be to require the Servicer to repurchase Receivables pursuant to this
Section 3.7; provided, however, that the Servicer, so long as the Servicer is
CPS, shall indemnify the Trustee, [the Standby Servicer], the [Collateral
Agent], the [Credit Enhancer], the Trust and the Certificateholders against all
costs, expenses, losses, damages, claims and liabilities, including reasonable
fees and expenses of counsel, which may be asserted against or incurred by any
of them as a result of third party claims arising out of the events or facts
giving rise to such breach. If it is determined that the management,
administration and servicing of the Receivables and operation of the Trust
pursuant to this Agreement constitutes a violation of the prohibited transaction
rules of ERISA or the Code to which no statutory exception or administrative
exemption applies, such
-36-
violation shall not be treated as a breach of Sections 3.2, 3.4, 3.5 or 3.6 if
not otherwise such a breach. The Seller shall have no obligation to repurchase
the Receivables upon a breach of Section 3.2, 3.4, 3.5 or 3.6. The Seller shall
have no liability for actions taken or omitted to be taken by the Servicer
pursuant to this Section 3.7.
SECTION 3.8. Servicing Fee. The Servicing Fee for each Distribution
Date shall be equal to the sum of (i) the result of one-twelfth times [ ]% of
the Pool Balance as of the close of business on the last day of the second
preceding Collection Period plus (ii) the result of one-twelfth times [ ]% of
the Certificate Balance as of the close of business on the last day of the
second preceding Collection Period; provided, however, that with respect to the
first Distribution Date the Servicer will be entitled to receive a Servicing Fee
equal to the sum of (i) the result of one-twelfth times [ ]% of the Original
Pool Balance plus (ii) the result of one-twelfth times [ ]% of the Certificate
Balance as of the Closing Date. The Servicing Fee shall also include all late
fees, prepayment charges including, in the case of a Rule of 78's Receivable
that is prepaid in full, to the extent not required by law to be remitted to the
related Obligor, the difference between the Principal Balance of such Rule of
78's Receivable (plus accrued interest to the date of prepayment) and the
principal balance of such Receivable computed according to the "Rule of 78's",
and other administrative fees or similar charges allowed by applicable law with
respect to Receivables, collected (from whatever source) on the Receivables.
SECTION 3.9. Servicer's Certificate. By 10:00 a.m., [ ] time, on each
Determination Date, the Servicer shall deliver to the Trustee, the [Credit
Enhancer], the Rating Agencies, a Servicer's Certificate containing all
information necessary to make the distributions pursuant to Section 4.6
(including, if required, withdrawals from or deposits to the Payahead Account
and withdrawals from the Spread Account) for the Collection Period preceding the
date of such Servicer's Certificate and all information necessary for the
Trustee to send statements to Certificateholders and the [Credit Enhancer]
pursuant to Section 4.8. Receivables to be purchased by the Servicer or to be
purchased by CPS shall be identified by the Servicer by account number with
respect to such Receivable (as specified in Schedule A).
SECTION 3.10. Annual Statement as to Compliance: Notice of Default. (a)
The Servicer shall deliver to the Trustee, the Standby Servicer and the [Credit
Enhancer], on or before July 31 of each year beginning [ ], 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 [ ]) 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
-37-
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof. The Trustee shall send a copy of such
certificate and the report referred to in Section 3.11 to the Rating Agencies.
The Trustee shall forward a copy of such certificate as well as the report
referred to in Section 3.11 to each Certificateholder.
(b) The Servicer shall deliver to the Trustee, the [Credit Enhancer]
and the Rating Agencies, promptly after having obtained knowledge thereof, but
in no event later than [2] Business Days thereafter, written notice in an
Officer's Certificate of any event which with the giving of notice or lapse of
time, or both, would become an Event of Default under Section 9.1.
The Seller shall deliver to the Trustee, the [Credit Enhancer] and the
Rating Agencies, promptly after having obtained knowledge thereof, but in no
event later than [5] Business Days thereafter, written notice in an Officer's
Certificate of any event which with the giving of notice or lapse of time, or
both, would become an Event of Default under clause (ii) of Section 9.1.
The Trustee shall deliver to each Certificateholder a copy of each
notice delivered to it by the Servicer or the Seller pursuant to this Section
3.10(b).
SECTION 3.11. Annual Independent Certified Public Accountant's Report.
The Servicer shall cause a firm of nationally recognized independent certified
public accountants, who may also render other services to the Servicer or to the
Seller, to deliver to the Trustee, the Certificateholders and the [Credit
Enhancer] on or before July 31 of each year beginning [ ], a report dated as of
March 31 of such year and reviewing the Servicer's activities during the
preceding 12-month period (or, in the case of the first such report, the period
from the Cutoff Date to [ ]), addressed to the Board of Directors of the
Servicer and to the Trustee and the [Credit Enhancer], 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
-38-
errors in the records relating to automobile and light truck loans serviced for
others that, in the firm's opinion, paragraph four of the Program requires such
firm to report. The accountant's report shall further state that (1) a review in
accordance with agreed upon procedures was made of three randomly selected
Servicer Certificates; (2) except as disclosed in the report, no exceptions or
errors in the Servicer Certificates were found; and (3) the delinquency and loss
information, relating to the Receivables contained in the Servicer Certificates
were found to be accurate. In the event such firm requires the Trustee and/or
the Standby Servicer to agree to the procedures performed by such firm, the
Servicer shall direct the Trustee and/or the Standby Servicer, as applicable, in
writing to so agree; it being understood and agreed that the Trustee and/or the
Standby Servicer will deliver such letter of agreement in conclusive reliance
upon the direction of the Servicer, and neither the Trustee nor the Standby
Servicer shall make, or have any obligations to make, any independent inquiry or
investigation as to, and shall have no obligation or liability in respect of,
the sufficiency, validity or correctness of such procedures.
The Report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
SECTION 3.12. Reserved.
SECTION 3.13. Servicer Expenses. The Servicer shall be required to pay
all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of independent accountants, taxes imposed on
the Servicer, and expenses incurred in connection with distributions and reports
to Certificateholders.
[SECTION 3.14. Retention and Termination of Servicer. The Servicer
hereby covenants and agrees to act as such under this Agreement for an initial
term commencing on the Closing Date and ending on [ ], which term shall be
extendible by the [Credit Enhancer] for successive quarterly terms ending on
each successive March 31, June 30, September 30 and December 31 (or, at the
discretion of [the Credit Enhancer] 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 all amounts due
the Certificateholders have been paid and until the termination of the Trust.
Each such notice (including each notice pursuant to standing instructions, which
shall be deemed delivered at the end of successive terms for so long as such
instructions are in effect) (a "Servicer Extension Notice") shall be delivered
by [the Credit Enhancer] to the Trustee and the Servicer. The Servicer hereby
agrees that, upon its receipt of any such Servicer Extension Notice, the
Servicer shall become bound, for the duration of the term covered by such
Servicer Extension Notice, to continue as the Servicer subject to and in
accordance with the other provisions of this Agreement. At such time as the
Class A Certificates have been paid in full and all outstanding Reimbursement
Obligations and other amounts owed to
-39-
[the Credit Enhancer] have been paid in full or an [Enhancement Default] has
occurred and is continuing, the term of the Servicer's appointment hereunder
shall be deemed to have been extended until the termination of the Trust or, in
the case of an [Enhancement Default], until such time, if any, as such Insurer
Default has been cured, unless such appointment is terminated sooner in
accordance with the terms of this Agreement. Until such time as an Insurer
Default shall have occurred and be continuing, the Trustee agrees that if as of
the fifteenth day prior to the last day of any term of the Servicer, the Trustee
shall not have received any Servicer Extension Notice from the Certificate
Insurer, the Trustee shall, within five days thereafter, give written notice of
such non-receipt to the Certificate Insurer.
SECTION 3.15. Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to representatives of the Trustee, the
Certificateholders and the [Credit Enhancer] reasonable access to documentation
and computer systems and information regarding the Receivables. The Servicer
shall provide such access to any Certificateholder only (i) in such cases where
the Servicer is required by applicable statutes or regulations (whether
applicable to the Servicer or to such Certificateholder) to permit such
Certificateholder to review such materials and (ii) if an [Enhancement Default]
shall have occurred and be continuing. In each case, such access shall be
afforded without charge but only upon reasonable request and during normal
business hours. Nothing in this Section 3.15 shall derogate from the obligation
of the Servicer to observe any applicable law prohibiting disclosure of
information regarding the Obligors, and the failure of the Servicer to provide
access as provided in this Section 3.15 as a result of such obligation shall not
constitute a breach of this Section 3.15.
SECTION 3.16. Verification of Servicer's Certificate. (a) On or before
the fifth calendar day of each month, the Servicer will deliver to the Trustee
and [the Standby Servicer] a computer diskette (or other electronic
transmission) in a format acceptable to the Trustee and [the Standby Servicer]
containing information with respect to the Receivables as of the close of
business on the last day of the preceding Collection Period which information is
necessary for preparation of the Servicer's Certificate. [The Standby Servicer]
shall use such computer diskette (or other electronic transmission) to verify
certain information specified in Section 3.16(b) contained in the Servicer's
Certificate delivered by the Servicer, and [the Standby Servicer] shall notify
the Servicer and the [Credit Enhancer] of any discrepancies on or before the
second Business Day following the Determination Date. In the event that [the
Standby Servicer] reports any discrepancies, the Servicer and [the Standby
Servicer] shall attempt to reconcile such discrepancies prior to the second
Business Day prior to the related Distribution Date, but in the absence of a
reconciliation, the Servicer's Certificate shall control for the purpose of
calculations and distributions with respect to the related Distribution Date. In
the event that [the Standby Servicer] and the Servicer are unable to reconcile
discrepancies with respect to a Servicer's Certificate by the related
Distribution Date, the Servicer shall cause a firm of independent certified
public accountants, at the Servicer's expense, to audit
-40-
the Servicer's Certificate and, prior to the fifth calendar day of the following
month, reconcile the discrepancies. The effect, if any, of such reconciliation
shall be reflected in the Servicer's Certificate for such next succeeding
Determination Date. Other than the duties specifically set forth in this
Agreement, [the Standby Servicer] shall have no obligations hereunder,
including, without limitation, to supervise, verify, monitor or administer the
performance of the Servicer. [The Standby Servicer] shall have no liability for
any actions taken or omitted by the Servicer. The duties and obligations of [the
Standby Servicer] shall be determined solely by the express provisions of this
Agreement and no implied covenants or obligations shall be read into this
Agreement against [the Standby Servicer].
(b) [the Standby Servicer] shall review each Servicer's Certificate
delivered pursuant to Section 3.16(a) and shall:
(i) confirm that such Servicer's Certificate is complete on
its face;
(ii) load the computer diskette (which shall be in a format
acceptable to [the Standby Servicer]) received from the Servicer
pursuant to Section 3.16(a) hereof, confirm that such computer diskette
is in a readable form and calculate and confirm the Principal Balance
of each Receivable for the most recent Distribution Date;
(iii) confirm that the Total Distribution Amount, the Class A
Distributable Amount, the Class A Principal Distributable Amount, the
Class A Interest Distributable Amount, the Class B Distributable
Amount, the Class B Interest Distributable Amount, the Class B
Principal Distributable Amount, the [Standby Fee], the Servicing Fee,
the Trustee Fee and the amount on deposit in the Spread Account in the
Servicer's Certificate are accurate based solely on the recalculation
of the Servicer's Certificate; and
(iv) confirm the calculation of the performance tests set
forth in the Spread Account Agreement.
SECTION 3.17. Fidelity Bond. The Servicer shall maintain a fidelity
bond in such form and amount as is customary for entities acting as custodian of
funds and documents in respect of consumer contracts on behalf of institutional
investors.
SECTION 3.18. Delegation of Duties. The Servicer may at any time
delegate duties under this Agreement to sub-contractors who are in the business
of servicing automotive receivables with the prior written consent of the
Controlling Party as determined
-41-
pursuant to Section 12.11 and (unless an [Enhancement Agreement Event of
Default] shall have occurred and be continuing or [ ] shall then be the
Servicer) the Holders of Class B Certificates evidencing more than [ ]% of the
Class B Certificate Balance; provided, however, that no such delegation or
sub-contracting of duties by the Servicer shall relieve the Servicer of its
responsibility with respect to such duties; and provided further, that the
consent of the Holders of the requisite percentage of the Class B Certificate
Balance shall not be unreasonably withheld or delayed and shall be deemed to
have been given unless, on or before the Objection Date, the Trustee shall have
received Objection Notices from Holders of Class B Certificates representing
more than [ ]% of the Class B Certificate Balance. Upon written request of the
Servicer, the Trustee shall deliver to each Class B Certificateholder of record
as of the most recent Record Date a notice (a "Delegation Notice") prepared by
the Servicer (i) specifying the duties the Servicer proposes to delegate, (ii)
identifying the sub-contractor to whom it proposes to delegate such duties and
(iii) informing such Class B Certificateholder that if it wishes to object to
the proposed delegation of duties, it must deliver a written notice of objection
(specifying in reasonable detail the reasons for its objection; such notice of
objection an "Objection Notice") on or before the date specified in such
Delegation Notice (the "Objection Date"), which Objection Date shall be a date
which is not more than [10] Business Days after the date the Servicer delivers
such Delegation Notice to the Trustee.
ARTICLE IV
Distributions, Spread Account;
Statements to Certificateholders
SECTION 4.1. Accounts; Post-Office Box. (a) The Trustee shall establish
the Lock-Box Account in the name of the Trustee for the benefit of the
Certificateholders and [Credit Enhancer], provided that pursuant to the Lock-Box
Agreement, the Lock-Box Processor and no other person, save the Trustee and
pursuant to the standing instructions of the Trustee, which instructions may
only be modified in writing signed by the Trustee, the Servicer has authority to
direct disposition of funds on deposit in the Lock-Box Account consistent with
the provisions of this Agreement and the Lock-Box Agreement. The Trustee shall
have no liability or responsibility with respect to the Lock-Box Processor's
directions or activities as set forth in the preceding sentence. The Lock-Box
Account shall be established pursuant to and maintained in accordance with the
Lock-Box Agreement and shall be a demand deposit account initially established
and maintained with Bank of America, or at the request of the [Credit Enhancer]
(unless an [Enhancement 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
-42-
written notice of any change made at the request of the [Credit Enhancer] in the
location of the Lock-Box Account. The Trustee shall establish and maintain the
Post-Office Box at a United States Post Office Branch in the name of the Trustee
for the benefit of the Certificateholders and the [Credit Enhancer].
In the event the Servicer shall for any reason no longer be acting as
such, [the Standby Servicer] or a successor Servicer shall thereupon assume all
of the rights and obligations of the outgoing Servicer under the Lock-Box
Agreement. In such event, the successor Servicer shall be deemed to have assumed
all of the outgoing Servicer's interest therein and to have replaced the
outgoing Servicer as a party to the Lock-Box Agreement to the same extent as if
such Lock-Box Agreement had been assigned to the successor Servicer, except that
the outgoing Servicer shall not thereby be relieved of any liability or
obligations on the part of the outgoing Servicer under such Lock-Box Agreement
and the successor Servicer shall not be liable for any obligations of the
outgoing Servicer arising out of a default by such outgoing Servicer. The
outgoing Servicer shall, upon request of the Trustee, but at the expense of the
outgoing Servicer, deliver to the successor Servicer all documents and records
relating to the Lock-Box Agreement and an accounting of amounts collected and
held by the Lock-Box Bank and otherwise use its best efforts to effect the
orderly and efficient transfer of any Lock-Box Agreement to the successor
Servicer. In the event that the [Credit Enhancer] (so long as an [Enhancement
Default] shall not have occurred and be continuing) or Holders of Certificates
evidencing more than [ ]% of the Class A Certificate Balance (if an [Enhancement
Default] shall have occurred and be continuing) shall elect to change the
identity of the Lock-Box Bank, the Servicer, at its expense, shall cause the
Lock-Box Bank to deliver, at the direction of the [Credit Enhancer] (so long as
an [Enhancement Default] shall not have occurred and be continuing) or Holders
of Certificates evidencing more than [ ]% of the Class A Certificate Balance (if
an [Enhancement Default] shall have occurred and be continuing) to the Trustee
or a successor Lock-Box Bank, all documents and records relating to the
Receivables and all amounts held (or thereafter received) by the Lock-Box Bank
(together with an accounting of such amounts) and shall otherwise use its best
efforts to effect the orderly and efficient transfer of the lock-box
arrangements.
In addition, the Trustee shall establish, with itself, the Collection
Account, [the Credit Enhancement Account], and the Certificate Account in the
name of the Trustee for the benefit of the Certificateholders. In addition, the
Trustee shall establish with itself the Payahead Account in the name of the
Trustee for the benefit of Obligors of Rule of 78's Receivables who make
payments thereon in excess of Scheduled Payments and applicable late fees and
for the benefit, to the extent of earnings on investments of funds in the
Payahead Account, of the Certificateholders. The Payahead Account shall not be
included
-43-
in the Trust. Any amounts held on deposit in the Payahead Account and any
investment earnings thereon are owned by, and will be taxable to, CPS
Receivables for federal income tax purposes. The Collection Account, [the Credit
Enhancement Account], the Certificate Account and the Payahead Account shall be
Eligible Accounts initially established with the Trustee; provided, however, if
any of such accounts shall cease to be an Eligible Account, the Servicer, with
the consent of the [Credit Enhancer], within 5 Business Days shall, cause such
accounts to be moved to an institution so that such account meets the definition
of Eligible Account. The Servicer shall promptly notify the Rating Agencies of
any change in the location of any of the aforementioned accounts.
All amounts held in the Collection Account and the Payahead Account
shall be invested by the Trustee at the written direction of the Servicer in
Eligible Investments in the name of the Trustee as trustee of the Trust and
shall mature no later than one Business Day immediately preceding the
Distribution Date next succeeding the date of such investment. Such written
direction shall certify that any such investment is authorized by this Section.
No investment may be sold prior to its maturity. Amounts in [the Credit
Enhancement Account] and the Certificate Account shall not be invested. The
amount of earnings on investments of funds in the Collection and Payahead
Accounts during the Collection Period related to each Distribution Date shall be
deposited into the Certificate Account, on each Distribution Date, and shall be
available for distribution pursuant to Section 4.6(c). The Servicer shall not
direct the Trustee to make any investment of any funds held in any of the
Transaction Accounts unless the security interest granted and perfected in such
Transaction Account will continue to be perfected in such investment, in any
case without any further action by any Person, and, in connection with any
direction to the Trustee to make any such investment, if requested by the
Trustee, the Servicer shall deliver to the Trustee an Opinion of Counsel,
acceptable to the Trustee, to such effect. For purposes of this paragraph, the
Trustee will take delivery of the Eligible Investments in accordance with
Schedule C.
(b) The Trustee shall not in any way be held liable by reason of any
insufficiency in any of the Transaction Accounts resulting from any loss on any
Eligible Investment included therein except for losses attributable to the
Trustee's negligence or bad faith or its failure in its commercial capacity as
principal obligor and not as Trustee to make payments on Eligible Investments
issued by the Trustee in such commercial capacity as principal obligor and not
as Trustee, in accordance with their terms.
(c) If the Servicer shall have failed to give investment directions for
any funds on deposit in any of the Transaction Accounts to the Trustee by 2:00
p.m. Eastern Time (or such other time as may be determined by the Trustee) on
any Business Day, then the Trustee shall, to the fullest extent practicable,
invest and reinvest funds in such Transaction Accounts in one or more Eligible
Investments.
(d) The Trustee shall on or prior to each Distribution Date (and prior
to the transfer from the Collection Account to the Certificate Account described
in Section 4.6(a)) transfer from the Collection Account to the Payahead Account
all Payaheads as described in Section 4.3 received by the Servicer during
theCollection Period.
SECTION 4.2. Collections. On each Business Day, pursuant to the
Lock-Box Agreement, the Lock-Box Processor will transfer any payments from
Obligors received in the Post-Office Box to the Lock-Box Account. Within [two]
Business Days of receipt of funds into the Lock-Box Account, the Servicer shall
cause the Lock-Box Bank to transfer funds from the Lock-Box Account to the
Collection Account. In addition, the Servicer shall remit all payments by or on
behalf of the Obligors received by the Servicer with respect to the Receivables
(other than Purchased Receivables), and all Liquidation Proceeds no later than
the Business Day following receipt directly (without deposit into any
intervening account) into the Lock-Box Account or the Collection Account.
SECTION 4.3. Application of Collections. All collections for each
Collection Period shall be applied by the Servicer as follows:
-44-
With respect to each Receivable (other than a Purchased Receivable),
payments by or on behalf of the Obligor shall be applied hereunder, in the case
of a Rule of 78's Receivable, first, to the Scheduled Payment of such Rule of
78's Receivable with the principal portion of the Scheduled Payment being
allocated on an actuarial basis, and, second, to any late fees accrued with
respect to such Rule of 78's Receivable and, in the case of a Simple Interest
Receivable, to interest and principal in accordance with the Simple Interest
Method. With respect to any Rule of 78's Receivable, any remaining excess shall
be added to the Payahead Balance, and shall be applied to prepay the Rule of
78's Receivable, but only if the sum of such excess and the previous Payahead
Balance shall be sufficient to prepay the Rule of 78's Receivable in full.
Otherwise, any such remaining excess payments with respect to a Rule of 78's
Receivable shall constitute a Payahead, and shall increase the Payahead Balance.
SECTION 4.4. Payaheads. As of the close of business on the last day of
each Collection Period, if the payments by or on behalf of the Obligor on a Rule
of 78's Receivable (other than a Purchased Receivable) shall be less than the
Scheduled Payment and accrued late fees with respect to such Receivable, the
Payahead Balance of an Obligor shall be applied by the Servicer to the extent of
the shortfall and such Payahead Balance shall be reduced accordingly.
SECTION 4.5. Additional Deposits. The Servicer or CPS, as the case may
be, shall deposit or cause to be deposited in the Collection Account the
aggregate Purchase Amount with respect to Purchased Receivables and the Servicer
shall deposit therein all amounts to be paid under Sections 3.7 and 11.2. All
such deposits shall be made, in immediately available funds, on the Business Day
preceding the Determination Date. On or before the third Business Day preceding
each Distribution Date, the Trustee shall remit to the Collection Account any
amounts delivered to the Trustee by the [Collateral Agent] pursuant to Section
4.7.
SECTION 4.6. Distributions; [Credit Enhancement Claims]. (a) On each
Distribution Date, the Trustee shall cause to be made the following transfers
and distributions based solely on the amounts set forth in the Servicer's
Certificate for the related Distribution Date:
(i) From the Collection Account to the Certificate Account, in
immediately available funds, those funds that were deposited in the
Collection Account, plus earnings on investments of funds in the
Collection Account pursuant to Section 4.1(a), for the Collection
Period related to such Distribution Date.
(ii) From the Payahead Account, to the Certificate Account, in
immediately available funds, the aggregate
-45-
previous Payaheads to be applied to Scheduled Payments on Rule of 78's
Receivables or prepayments for the related Collection Period pursuant
to Sections 4.3 and 4.4, plus earnings on investments of funds in the
Payahead Account, for the related Collection Period, pursuant to
Section 4.1 (a).
(b) Prior to each Distribution Date, the Servicer shall on the related
Determination Date calculate the Total Distribution Amount, the Class A
Distributable Amount, the Class A Interest Distributable Amount, the Class A
Principal Distributable Amount, the Class B Interest Distributable Amount and
the Class B Principal Distributable Amount, and, based on the Total Distribution
Amount, and the other distributions to be made on such Distribution Date,
determine the amount distributable to the Certificateholders of each class.
(c) On each Distribution Date, the Trustee (based on the information
contained in the Servicer's Certificate delivered on the related Determination
Date pursuant to Section 3.9) shall, subject to subsection (d) hereof, make the
following distributions in the following order of priority:
[(i) to the Servicer, from the Total Distribution Amount, any
amount deposited into the Collection Account pursuant to Section
4.7(a), and any amount deposited into the Collection Account pursuant
to Section 4.11(i) in respect of Servicing Fees, the Servicing Fee and
all unpaid Servicing Fees from prior Collection Periods; provided,
however, that as long as CPS is the Servicer and [ ], is [the Standby
Servicer], the Trustee shall first pay to [the Standby Servicer] out of
the Servicing Fee otherwise payable to CPS an amount equal to the
[Standby Fee];
(ii) in the event [the Standby Servicer] becomes the successor
Servicer, to [the Standby Servicer], from the Total Distribution Amount
(as such Total Distribution Amount has been reduced by payments
pursuant to clause (i) above) and any amount deposited into the
Collection Account pursuant to Section 4.7(a), to the extent not
previously paid by the predecessor Servicer pursuant to Section 9.2,
reasonable transition expenses (up to a maximum of $[ ]) incurred in
making the transition from Standby Servicer to successor Servicer;
(iii) to the Trustee, from the Total Distribution Amount (as
such Total Distribution Amount has been reduced by payments pursuant to
clauses (i) and (ii) above), any amount deposited into the Collection
Account pursuant to Section 4.7(a), and any amount deposited into the
Collection Account pursuant to Section 4.11(i) in respect of Trustee
Fees and reasonable out-of-pocket expenses of the Trustee,
-46-
the Trustee Fee and all reasonable out-of-pocket expenses (including
counsel fees and expenses) and all unpaid Trustee Fees and all unpaid
reasonable out-of-pocket expenses (including counsel fees and expenses)
from prior Collection Periods; provided, however, that unless an Event
of Default shall have occurred and be continuing, expenses payable to
the Trustee pursuant to this clause (iii) and expenses payable to the
[Collateral Agent] pursuant to clause (iv) below, shall be limited to
$[ ] per annum;
(iv) to the [Collateral Agent], from the Total Distribution
Amount (as such Total Distribution Amount has been reduced by payments
pursuant to clauses (i) through (iii) above), any amount deposited into
the Collection Account pursuant to Section 4.7(a), and any amount
deposited into the Collection Account pursuant to Section 4.11(i) in
respect of fees and expenses of the [Collateral Agent], all fees and
expenses payable to the [Collateral Agent] with respect to such
Distribution Date pursuant to the Spread Account Agreement;
(v) to the Class A Certificateholders, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) through (iv) above) and any amount
deposited into the Collection Account pursuant to Section 4.7(a) and
4.11(iii), an amount equal to the sum of (x) the Class A Interest
Distributable Amount, (y) any Class A Interest Carryover Shortfall and
(z) interest on such outstanding Class A Interest Carryover Shortfall,
to the extent permitted by law, at the Class A Pass-Through Rate from
such preceding Distribution Date through the current Distribution Date
(calculated on the basis of a 360-day year consisting of twelve 30-day
months) in each case as of the close of business on the preceding
Distribution Date;
(vi) to the Class B Certificateholders, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) through (v) above) and any amount
deposited into the Collection Account pursuant to Sections 4.7(c) and
(d), an amount equal to the sum of (x) the Class B Interest
Distributable Amount, (y) any Class B Interest Carryover Shortfall and
(z) interest on such outstanding Class B Interest Carryover Shortfall,
to the extent permitted by law, at the Class B Pass-Through Rate from
such preceding Distribution Date through the current Distribution Date
(calculated on the basis of a 360-day year consisting of twelve 30-day
months), in each case as of the close of business on the preceding
Distribution Date;
(vii) to the Class A Certificateholders, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) through (vi) above), any amount
deposited into the Collection Account pursuant to Section 4.7(a), and
any amount deposited into the Collection Account pursuant to Section
4.11(ii) or (iii), an amount equal to the sum of the Class A Principal
Distributable Amount and any Class A Principal Carryover Shortfall as
of the close of business on the preceding Distribution Date with
respect to each Distribution Date;
-47-
(viii) to the [Credit Enhancer], from the Total Distribution
Amount (as such Total Distribution Amount has been reduced by payments
made pursuant to clauses (i) through (vii) above), and any amount
deposited into the Collection Account pursuant to Section 4.7(a), an
amount equal to the Reimbursement Obligations;
(ix) to any successor Servicer, from the Total Distribution
Amount (as such Total Distribution Amount has been reduced by payments
pursuant to clauses (i) through (viii) above) and any amount deposited
into the Collection Account pursuant to Section 4.7(a), to the extent
not previously paid by the predecessor Servicer pursuant to Section
9.2, or in the case of [the Standby Servicer], pursuant to clause (ii)
above, reasonable transition expenses (up to a maximum of $[ ])
incurred in making the transition from Standby Servicer to successor
Servicer;
(x) to the Class B Certificateholders, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) through (ix) above) and any amount
deposited into the Collection Account pursuant to Sections 4.7(c) and
(d), an amount equal to the sum of the Class B Principal Distributable
Amount and any Class B Principal Carryover Shortfall as of the close of
the preceding Distribution Date; and
(xi) to the [Collateral Agent], for deposit into the Spread
Account, the remaining Total Distribution Amount, if any.]
(d) The rights of the Class B Certificateholders to receive
distributions in respect of the Class B Certificates pursuant to Section
4.6(c)(vi) on a Distribution Date shall be and hereby are subordinated to the
payment of the amounts distributable pursuant to Sections 4.6(c)(i) through (v)
except to the extent of monies deposited in the Collection Account from [the
Reserve Fund] pursuant to Section 4.7(d) hereof and [the Reserve Fund
Agreement]. The rights of the Class B Certificateholders to receive
distributions in respect of the Class B Certificates pursuant to Section
4.6(c)(x) on a Distribution Date shall be and hereby are subordinated to the
payment of the amounts distributable pursuant to Sections 4.6(c)(i) through (ix)
except to the extent of monies deposited in the Collection Account from [the
Reserve Fund] pursuant to Section 4.7(d) hereof and [the Reserve Fund
Agreement]. At such time as the Class A Certificates are paid in full and the
[Credit Enhancer] has received payment in full for all outstanding Reimbursement
Obligations and any other amounts owed to the [Credit Enhancer], the Class B
Certificateholders shall be entitled to exercise all rights granted to the Class
A Certificateholders under this
-48-
Agreement to the extent that the exercise of such rights does not conflict with
the provisions of the Spread Account Agreement. In no event shall the Class A
Certificateholders be entitled to any amounts deposited in the Collection
Account pursuant to Section 4.7(d) hereof and [the Reserve Fund Agreement].
(e) [mechanics for drawing on [the Credit Enhancement]]
(f) Subject to Section 11.1 respecting the final payment upon
retirement of each Certificate, the Servicer shall on each Distribution Date
instruct the Trustee to distribute to each Certificateholder of record on the
preceding Record Date either by wire transfer, in immediately available funds to
the account of such Holder at a bank or other entity having appropriate
facilities therefor, if such Certificateholder is the Depository and such
Holder's Certificates in the aggregate evidence an original principal balance of
at least $[1,000,000], and if such Certificateholder shall have provided to the
Trustee appropriate instructions prior to the Record Date for such Distribution
Date, or if not, by check mailed to such Certificateholder at the address of
such Holder appearing in the Certificate Register, the amounts to be distributed
to such Certificateholder pursuant to such Holder's Certificates.
[SECTION 4.7. Withdrawals from [Spread Account] and [Reserve Fund]. (a)
In the event that the Servicer's Certificate with respect to any Determination
Date shall state that the Total Distribution Amount with respect to such
Determination Date is insufficient (taking into account the application of the
Total Distribution Amount to the payment required to be made on the related
Distribution Date pursuant to Section 4.6(c)(vi)) to make the payments required
to be made on the related Distribution Date pursuant to Section 4.6(c)(i), (ii),
(iii), (iv), (v), (vii), (viii) or (ix) (such deficiency being a "Deficiency
Claim Amount"), then on the [ ] Business Day immediately preceding the related
Distribution Date, the Trustee shall deliver to the [Collateral Agent], [the
Credit Enhancer], and the Servicer, by hand delivery, telex or facsimile
transmission, a written notice (a "Deficiency Notice") specifying the Deficiency
Claim Amount for such Distribution Date. Such Deficiency Notice shall direct the
[Collateral Agent] to remit such Deficiency Claim Amount (to the extent of the
funds available to be distributed pursuant to [the Spread Account Agreement]) to
the Trustee for deposit in the Collection Account and distribution pursuant to
Sections 4.6(c)(i), (ii), (iii), (iv), (v), (vii), (viii) and/or (ix), as
applicable.
(b) Any Deficiency Notice shall be delivered by [ ], on the [ ]
Business Day preceding such Distribution Date. The amounts distributed by the
[Collateral Agent] to the Trustee pursuant to a Deficiency Notice shall be
deposited by the Trustee into the Collection Account pursuant to Section 4.5.
-49-
(c) In the event that the Servicer's Certificate with respect to any
Determination Date shall state that the Total Distribution Amount with respect
to such Determination Date is insufficient to make the payments required to be
made on the related Distribution Date pursuant to Section 4.6(c)(vi) or (x)
(such deficiency being a "Class B Deficiency"), then on the [ ] Business Day
immediately preceding the related Distribution Date, the Trustee shall deliver
to the [Collateral Agent] and the Servicer, by hand delivery, telex or facsimile
transmission, a written notice specifying the amount of the Class B Deficiency
for such Distribution Date. Such notice shall direct the [Collateral Agent] to
remit to the Trustee an amount equal to such Class B Deficiency (but only to the
extent that, pursuant to the Spread Account Agreement, funds are required to be
released from [the Spread Account] to the Seller on the related Distribution
Date) for deposit into the Collection Account and distribution pursuant to
Section 4.6(c)(vi) and/or Section 4.6(c)(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 there are insufficient funds to cure any Class B
Deficiency pursuant to subsection (c) above, the [Collateral Agent] shall
instruct the [Reserve Fund Collateral Agent] to withdraw an amount up to the
remaining Class B Deficiency from [the Reserve Fund] in accordance with the
terms of the [Reserve Fund Agreement] for deposit in the Collection Account and
distribution pursuant to Sections 4.6(c)(vi) and (x), as applicable.]
SECTION 4.8. Statements to Certificateholders; Tax Returns. (a) With
each distribution from the Certificate Account to the Certificateholders made on
a Distribution Date, the Servicer shall provide to the [Credit Enhancer] and to
the Trustee for the Trustee to forward to each Certificateholder of record a
statement (prepared by the Servicer) substantially in the form of Exhibit D
hereto setting forth at least the following information as to the Certificates
to the extent applicable:
(i) the amount of such distribution allocable to principal of
the Class A Certificates and the Class B Certificates, respectively;
(ii) the amount of such distribution allocable to interest on
the Class A Certificates and the Class B Certificates, respectively;
(iii) the Pool Balance, the Class A Pool Factor and the Class
B Pool Factor as of the close of business on the last day of the
preceding Collection Period;
-50-
(iv) the Class A Certificate Balance and the Class B
Certificate Balance as of the close of business on the last day of the
preceding Collection Period, after giving effect to payments allocated
to principal reported under (i) above;
(v) the amount of the Servicing Fee (inclusive of the [Standby
Fee] paid to [the Standby Servicer]) paid to the Servicer with respect
to the related Collection Period, the Class A Percentage of the
Servicing Fee (inclusive of the [Standby Fee]), the Class B Percentage
of the Servicing Fee (inclusive of the [Standby Fee]) and the amount of
any unpaid Servicing Fees (inclusive of the [Standby Fee]) and the
change in such amount from that of the prior Distribution Date;
(vi) the amount of the Class A Interest Carryover Shortfall,
if applicable, on such Distribution Date and the Class A Principal
Carryover Shortfall, if applicable, on such Distribution Date, and the
change in such amounts from the prior Distribution Date;
(vii) the amount of the Class B Interest Carryover Shortfall,
if applicable, on such Distribution Date and the amount of the Class B
Principal Carryover Shortfall, if applicable, on such Distribution
Date, and the change in such amounts from the prior Distribution Date;
(viii) the amount paid, if any, to Class A Certificateholders
from funds received under [the Credit Enhancement] for such
Distribution Date;
(ix) the amount distributable to the [Credit Enhancer] on such
Distribution Date;
(x) the aggregate amount in each of the Payahead Account, the
[Spread Account] and [the Reserve Fund] and the change in each such
amount from the preceding Distribution Date;
(xi) the number of Receivables and the aggregate gross amount
scheduled to be paid thereon, including unearned finance and other
charges, for which the related Obligors are delinquent in making
scheduled payments between [31 and 59 days and 60] days or more;
(xii) the number and the aggregate Purchase Amount of
Receivables that became Purchased Receivables during the related
Collection Period and summary information as to losses and
delinquencies with respect to the Receivables; and
-51-
(xiii) the cumulative amount of Liquidated Receivables net, of
Recoveries, since the Cutoff Date to the last day of the related
Collection Period.
Each amount set forth pursuant to subclauses (i), (ii), (v) and (vi) above shall
be expressed as a dollar amount per $1,000 of original principal balance of a
Certificate.
(b) Within thirty days after the end of each calendar year, the Trustee
shall, provided it has received the necessary information from the Servicer,
furnish to each Person who at any time during such calendar year was a
Certificateholder of record and received any payment thereon (a) a report
(prepared by the Servicer) as to the aggregate of amounts reported pursuant to
(i), (ii) and (v) of this Section 4.8 for such calendar year or applicable
portion thereof during which such person was a Certificateholder, and (b) such
information as may be reasonably requested by the Certificateholders or required
by the Code and regulations thereunder, to enable such Holders to prepare their
Federal and State income tax returns. The obligation of the Trustee set forth in
this paragraph shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Servicer pursuant
to any requirements of the Code.
(c) The Servicer, at its own expense, shall cause a firm of nationally
recognized accountants to prepare any tax returns required to be filed by the
Trust, and the Trustee shall execute and file such returns if requested to do so
by the Servicer. The Trustee upon request, will furnish the Servicer with all
such information known to the Trustee as may be reasonably required in
connection with the preparation of all tax returns of the Trust.
[SECTION 4.9. Credit Enhancement; Subrogation. (a) The Trustee shall
keep a complete and accurate record of the amount of payments made under [the
Credit Enhancement] in reduction of the Class A Certificate Balance and in
payment of the Class A Interest Distributable Amount and Class A Principal
Distributable Amount pursuant to [the Credit Enhancement]. The [Credit Enhancer]
shall have the right to inspect such records at reasonable times upon one
Business Day's prior notice to the Trustee.
(b) Subject to and conditioned upon payment of any interest or
principal with respect to the Class A Certificates by or on behalf of the
[Credit Enhancer], the Trustee on behalf of the Class A Certificateholders shall
assign, and the Class A Certificateholders, by reason of their acquisition and
holding of the Class A Certificates, are hereby deemed to have assigned to the
[Credit Enhancer] all rights to the payment of the Class A Interest
Distributable Amount and Class A Principal Distributable
-52-
Amount which are then due for payment to the extent of all payments
made by the [Credit Enhancer]. The [Credit Enhancer] (for so long as no
[Enhancement Default] shall have occurred and be continuing) may exercise any
option, vote, right, power or the like with respect to the Class A Certificates
to the extent it has made a principal payment pursuant under [the Credit
Enhancement]. The Trustee and the Class A Certificateholders, by reason of their
acquisition and holding of the Class A Certificates, agree that the [Credit
Enhancer] shall be subrogated to all of the rights to payment of the Class A
Certificateholders or in relation thereto to the extent that any payment of
principal or interest was made to such Class A Certificateholders with payments
made under [the Credit Enhancement] by the [Credit Enhancer] in accordance with
the provisions hereof.]
SECTION 4.10. Reliance on Information from the Servicer.
Notwithstanding anything to the contrary contained in this Agreement, all
distributions from any of the accounts described in this Article IV and any
transfer of amounts between such accounts shall be made by the Trustee in
reliance on information provided to the Trustee by the Servicer in writing,
whether by way of a Servicer's Certificate or otherwise and the Trustee shall be
fully protected in relying on such information from the Servicer.
SECTION 4.11. [Optional Deposits by the [Credit Enhancer]. The [Credit
Enhancer] shall at any time, and from time to time, with respect to a
Distribution Date, have the option (but shall not be required, except as
provided in Section 4.6(e)) to deliver amounts to the Trustee for deposit into
the Collection Account for any of the following purposes: (i) to provide funds
in respect of the payment of fees or expenses of any provider of services to the
Trust with respect to such Distribution Date, (ii) to distribute as a component
of the Class A Principal Distributable Amount to the extent that the Class A
Certificate Balance as of the Determination Date preceding such Distribution
Date exceeds the Class A Percentage of the Pool Balance as of such Determination
Date, or (iii) to include such amount as part of the Total Distribution Amount
for such Distribution Date to the extent that without such amount a draw would
be required to be made on the Policy.
If the [Credit Enhancer] waives the satisfaction of any of the events
that might trigger an event of default under the [Enhancement Agreement] and so
notifies the Trustee in writing pursuant to Section 5.02(d) of the [Enhancement
Agreement], the Trustee shall notify [the applicable Rating Agency] of such
waiver].
ARTICLE V
Reserved.
ARTICLE VI
The Certificates
SECTION 6.1. The Certificates. The Trustee shall, upon written order or
request signed in the name of the Seller by one of its officers authorized to do
so and delivered to an Trustee Officer, execute on behalf of the Trust,
authenticate and deliver the Certificates to or upon the order of the Seller in
the aggregate principal amount and denominations as set forth in such written
order or request. The Class A Certificates shall be issuable in minimum
denominations of [$1,000] and integral multiples thereof. The Class B
Certificates shall be issuable in minimum denominations of [$1,000] and integral
multiples thereof; provided , however, that one Class A Certificate and one
Class B Certificate respectively, may be issued in a denomination that
represents the residual amount of the Original Class A Principal Balance and the
original Class B Principal Balance, respectively (each, a "Residual
Certificate"). Upon initial issuance, the Class A Certificates and the Class B
Certificates shall be substantially in the form of Exhibit A and
-53-
Exhibit B, respectively, in an aggregate amount equal to the Original Class A
Principal Balance and the Original Class B Principal Balance, respectively. The
Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of a Trustee Officer. 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, notwithstanding that
such individuals shall have ceased to be so authorized prior to the
authentication and delivery of such Certificates or did not hold such offices at
the date of such Certificates.
[SECTION 6.2A. Appointment of Paying Agent. The Trustee may act as or
appoint one or more paying agents (each, a "Paying Agent"). The Paying Agent
shall make distributions to Certificateholders from amounts delivered by the
Trustee to the Paying Agent from amounts on deposit in the Certificate Account
pursuant to Article IV. Either the Trustee or the [Credit Enhancer] may remove
the Paying Agent if such Person determines in its sole discretion that the
Paying Agent shall have failed to perform its obligations under this Agreement
in any material respect. The Paying Agent shall initially be the Trustee. A
co-paying agent may be chosen by the Trustee. Any co-paying agent or any
successor Paying Agent shall be permitted to resign as Paying Agent, co-paying
agent or successor Paying Agent, as the case may be, upon 30 days' written
notice to the Trustee, the Seller and the [Credit Enhancer]. In the event that
the Trustee, any co-paying agent or any successor Paying Agent shall no longer
be the Paying Agent, co-paying agent or successor Paying Agent, as the case may
be, the Trustee, with the [Credit Enhancer]'s reasonable consent, shall appoint
a successor to act as Paying Agent or co-paying agent. The Trustee shall cause
each Paying Agent and each successor Paying Agent or any additional Paying Agent
appointed by the Trustee (other than the Trustee, which hereby agrees) to
execute and deliver to the Trustee an instrument in which such Paying Agent,
successor Paying Agent or additional Paying Agent shall agree with the Trustee
that, as Paying Agent, such Paying Agent, successor Paying Agent or additional
Paying Agent will hold all sums, if any, held by it for payment to the
Certificateholders in trust for the benefit of the Certificateholders entitled
thereto in an Eligible Account (which may be maintained with such Paying Agent)
until such sums shall be paid to such Certificateholders and shall promptly
notify the Trustee of any default in making such payment. The Paying Agent shall
return all unclaimed funds to the Trustee and upon removal of a Paying Agent
shall also return all funds in its possession to the Trustee. The provisions of
Sections 10.4 and 10.5 shall apply to each Paying Agent in its role as Paying
Agent. The fees of any Paying Agent or co-paying agent shall be
-54-
paid by the Trustee. Each Paying Agent and co-paying agent must be acceptable to
the Seller.]
[SECTION 6.2B. Authenticating Agent. (a) The Trustee may appoint one or
more authenticating agents with respect to the Certificates which shall be
authorized to act on behalf of the Trustee in authenticating the Certificates in
connection with the issuance, delivery, registration of transfer, exchange or
repayment of the Certificates (the "Authenticating Agent"). Whenever reference
is made in this Agreement to the authentication of Certificates by the Trustee
or the Trustee's certificate of authentication, such reference shall be deemed
to include authentication by an Authenticating Agent and a certificate of
authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent must be acceptable to the Seller and the [Credit
Enhancer]. The Trustee is hereby appointed as the initial Authenticating Agent.
(b) Any institution succeeding to the corporate agency business of an
Authenticating Agent shall continue to be an Authenticating Agent without the
execution or filing of any paper or any further act on the part of the Trustee
or such Authenticating Agent.
(c) Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the Seller. The Trustee may at any
time terminate the agency of an Authenticating Agent by giving notice of
termination to such Authenticating Agent and to the Seller. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time an
Authenticating Agent shall cease to be acceptable to the Trustee or the Seller
or the [Credit Enhancer], the Trustee may appoint a successor Authenticating
Agent. Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its
predecessor hereunder with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless acceptable to the Trustee, the Seller and the [Credit Enhancer].
[(d) The Trustee agrees to pay to each Authenticating Agent from its
own funds from time to time reasonable compensation for its services under this
Section 6.2B.
(e) The provisions of Sections 10.4 and 10.5 shall be applicable to any
Authenticating Agent.
(f) Pursuant to an appointment made under this Section 6.2B, the
Certificates may have endorsed thereon, in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication in substantially the
following form:
-55-
This is one of the Certificates described in the Pooling and Servicing
Agreement.
[ ]
as Authenticating Agent for the Trustee,
By
Authorized Signatory]]
SECTION 6.2. Authentication of Certificates. The Trustee shall cause
the Certificates to be executed on behalf of the Trust, authenticated, and
delivered to or upon the written order of the Seller, signed by its chairman of
the board, its president, or any vice president, without further corporate
action by the Seller, in authorized denominations, pursuant to this Agreement.
No Certificate shall entitle its Holder to any benefit under this Agreement, or
shall be valid for any purpose, unless there shall appear on such Certificate a
certificate of authentication substantially in the form set forth in Exhibit A
or Exhibit B hereto or in Section 6.2B, as the case may be, executed by the
Trustee Officer by manual signature; such authentication shall constitute
conclusive evidence that such Certificate shall have been duly authenticated and
delivered hereunder. All Certificates issued on the Closing Date shall be dated
the Closing Date. All Certificates issued upon transfer or exchange thereafter
shall be dated the date of their authentication.
SECTION 6.3. Registration of Transfer and Exchange of Certificates. (a)
The Certificate Registrar shall keep or cause to be kept, at the office or
agency maintained pursuant to Section 6.7, a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, the Trustee shall
provide for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Trustee shall be the initial Certificate
Registrar.
[(b) No transfer of a Class B Certificate shall be made unless (i) the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and any applicable State securities laws are complied with,
(ii) such transfer is exempt from the registration requirements under said
Securities Act and laws or (iii) such transfer is made to a Person who the
transferor reasonably believes is a "qualified institutional buyer" (as defined
in Rule 144A of the Securities Act) that is purchasing such Class B Certificate
for its own account or the account of a qualified institutional buyer to whom
notice is given that the transfer is being made in reliance on said Rule 144A.
In the event that a transfer is to be made in reliance upon clause (ii) above,
the Class B Certificateholder desiring to effect such transfer and such Class B
Certificateholder's prospective transferee must each (x) certify in writing to
the Trustee the facts surrounding such transfer and (y) provide the Trustee with
a written opinion of counsel in form and substance satisfactory to the Seller
and the Trustee that such transfer may be made pursuant to an exemption from the
Securities Act or laws, which Opinion of Counsel shall not be an expense of the
Seller or the Trustee. In the event that a transfer is to be made in reliance
upon clause (iii) above, the prospective transferee shall have furnished to the
Trustee and the Seller a Transferee Certificate, signed by such transferee, in
the form of Exhibit F. Neither the Seller nor the Trustee is under any
obligation to register the Class B Certificates under said Securities Act or any
other securities law. The Certificate Registrar may request and shall receive in
connection with any transfer signature guarantees satisfactory to it in its sole
discretion.
In no event shall a Class B Certificate be transferred to an employee
benefit plan, trust annuity or account subject to ERISA or a plan described in
Section 4975(e)(1) of the Code (any such plan, trust or account including any
Keogh (HR-10) plans, individual retirement accounts or annuities and other
employee benefit plans subject to Section 406 of ERISA or Section 4975 of the
Code being referred to in this Section 6.3 as an "Employee Plan"), a trustee of
any Employee Plan, or an entity, account or other pooled investment fund the
underlying assets of which include or are deemed to include Employee Plan assets
by reason of an Employee Plan's investment in the entity, account or other
pooled investment fund. The foregoing restriction on sale or transfer to an
employee benefit plan shall not apply to prevent the initial issuance or sale or
subsequent transfer of the Class B Certificates to an insurance company,
insurance service, or insurance organization qualified to do business in a State
that purchases Class B Certificates with funds held in one or more of its
general accounts which is eligible for the exemptive relief afforded under
Section III of Prohibited Transaction Class Exemption 95-60. The Seller, CPS,
the Servicer, the Trustee, the Certificate Insurer and the Standby Servicer
shall not be responsible for confirming or otherwise investigating whether a
proposed purchaser is an employee benefit plan, trust or account subject to
ERISA, or described in Section 4975(e)(1) of the Code.
(c) Each Holder of Class B Certificates, by virtue of the acquisition
and holding thereof, will be deemed to have represented and agreed as follows:
(i) It is a qualified institutional buyer as defined in Rule
144A or an institutional accredited investor as defined in Regulation D
promulgated under the Securities Act and is acquiring the Class B
Certificates for its own institutional account or for the account of a
qualified institutional buyer or an institutional accredited investor
for the purpose of investment and not with a view to or for sale in
connection with any distribution thereof, subject nevertheless to any
requirement of law that the disposition of the Purchaser's property
shall at all times be and remain within its control.
(ii) It understands that the Class B Certificates have been
offered in a transaction not involving any public offering within the
meaning of the Securities Act, and that, if in the future it decides to
resell, pledge or otherwise transfer any Class B Certificates, such
Class B Certificates may be resold, pledged or transferred only (a) to
a person whom the transferor reasonably believes is a qualified
institutional buyer (as defined in Rule 144A under the Securities Act)
that purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A, (b) pursuant to an
effective registration statement under the Securities Act or (c) in
reliance on another exemption under the Securities Act.
(iii) It understands that the Class B Certificates will bear a
legend substantially to the following effect:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES THAT THIS SECURITY MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON WHOM THE
TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT, PURCHASING
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER
IS BEING MADE IN RELIANCE ON RULE 144A, AND SUBJECT TO THE RECEIPT BY
THE TRUSTEE AND THE SELLER OF A CERTIFICATION OF THE TRANSFEREE, (2)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR (3) IN RELIANCE ON ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND SUBJECT TO THE RECEIPT BY THE
TRUSTEE OF A CERTIFICATION OF THE TRANSFEREE (SATISFACTORY TO THE
TRUSTEE) AND AN OPINION OF COUNSEL (SATISFACTORY TO THE TRUSTEE AND THE
SELLER) TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND IN COMPLIANCE
WITH THE TRANSFER REQUIREMENTS SET FORTH IN SECTION 6.3 OF THE
AGREEMENT.
IN NO EVENT SHALL THIS CLASS B CERTIFICATE BE TRANSFERRED TO
AN EMPLOYEE BENEFIT PLAN, TRUST ANNUITY OR ACCOUNT SUBJECT TO ERISA OR
A PLAN DESCRIBED IN SECTION 4975(E)(1) OF THE CODE, (ANY SUCH PLAN,
TRUST OR ACCOUNT BEING REFERRED TO AS AN "EMPLOYEE PLAN"), A TRUSTEE OF
ANY EMPLOYEE PLAN, OR AN ENTITY, ACCOUNT OR OTHER POOLED INVESTMENT
FUND THE UNDERLYING ASSETS OF WHICH INCLUDE OR ARE DEEMED TO INCLUDE
EMPLOYEE PLAN ASSETS BY REASON OF AN EMPLOYEE PLAN'S INVESTMENT IN THE
ENTITY, ACCOUNT OR OTHER POOLED INVESTMENT FUND. INCLUDED WITHIN THE
DEFINITION OF "EMPLOYEE PLANS" ARE, WITHOUT LIMITATION, KEOGH (HR-10)
PLANS, IRA'S (INDIVIDUAL RETIREMENT ACCOUNTS OR ANNUITIES) AND OTHER
EMPLOYEE BENEFIT PLANS, SUBJECT TO SECTION 406 OF ERISA OR SECTION 4975
OF THE CODE. THE FOREGOING RESTRICTION ON SALE OR TRANSFER TO AN
EMPLOYEE BENEFIT PLAN SHALL NOT APPLY TO PREVENT THE INITIAL ISSUANCE
OR SALE OR SUBSEQUENT TRANSFER OF THIS CLASS B CERTIFICATE TO AN
INSURANCE COMPANY, INSURANCE SERVICE, OR INSURANCE ORGANIZATION THAT IS
QUALIFIED TO DO BUSINESS IN A STATE IF SUCH INSURANCE COMPANY PURCHASES
THIS CLASS B CERTIFICATE WITH FUNDS HELD IN ONE OR MORE OF ITS GENERAL
ACCOUNTS WHICH IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AFFORDED UNDER
SECTION III OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60.
(iv) It has not acquired the Class B Certificates with the
assets of an Employee Plan, other than an insurance company, insurance
service or insurance organization qualified to do business in a State,
which represents that the source of funds from which its investment is
to be made is an "insurance company general account" of such buyer (as
such term is defined) under Section V of The United States Department
of Labor's Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60")), and as of the date of the purchase of the Certificates, such
buyer satisfies all of the requirements for relief under Section I and
IV of PTCE 95- 60.]
(d) Upon surrender for registration of transfer of any Certificate at
the Corporate Trust Office, the Trustee shall execute, authenticate and the
Trustee shall deliver, in the name of the designated transferee or transferees,
one or more new Certificates in authorized denominations of a like aggregate
amount dated the date of authentication. At the option of a Holder, Certificates
may be exchanged for other Certificates in authorized denominations of a like
aggregate amount upon surrender of the Certificates to be exchanged at the
Corporate Trust Office.
-56-
(e) Every Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Trustee and the Certificate Registrar duly executed by
the Holder or his attorney duly authorized in writing. Each Certificate
surrendered for registration of transfer and exchange shall be canceled and
subsequently disposed of by the Trustee in accordance with its customary
procedures.
(f) No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
SECTION 6.4. Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate shall be surrendered to the Certificate Registrar, or
if the Certificate Registrar shall receive evidence to its satisfaction of the
destruction, loss, or theft of any Certificate and (b) there shall be delivered
to the Certificate Registrar, the Trustee and the [Credit Enhancer] such
security or indemnity as may be required by them to save each of them harmless,
then in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, the Trustee on behalf of the Trust shall execute,
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor and
denomination. If after the delivery of such new Certificate, a bona fide
purchaser of the original Certificate in lieu of which such new Certificate was
issued presents for payment such original Certificate, the Certificate Insurer
and the Trustee shall be entitled to recover such new Certificate from the
Person to whom it was delivered or any Person taking therefrom, except a bona
fide purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expenses incurred
by the Certificate Insurer or the Trustee or any agent of either of them in
connection therewith. In connection with the issuance of any new Certificate
under this Section 6.4, the Trustee and the Certificate Registrar may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection therewith. Any duplicate Certificate issued
pursuant to this Section 6.4 shall constitute conclusive evidence of ownership
in the Trust, as if originally issued, whether or not the lost, stolen, or
destroyed Certificate shall be found at any time.
SECTION 6.5. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Trustee or the Certificate
Registrar may treat the Person in whose name any Certificate shall be registered
as the owner of such Certificate for the purpose of receiving distributions
pursuant to Section 4.6 and for all other purposes whatsoever, and neither the
Trustee nor the Certificate Registrar shall be bound by any notice to the
contrary.
SECTION 6.6. Access to List of Certificateholders' Names and Addresses.
The Trustee shall furnish or cause to be furnished to the Servicer or the
[Credit Enhancer], at the expense of the Trust, within 15 days after receipt by
the Trustee of a request therefor from the Servicer or the [Credit Enhancer],
-57-
as the case may be, in writing, a list of the names and addresses of the
Certificateholders as of the most recent Record Date. If three or more Class A
Certificateholders, or one or more Holders of Class A Certificates evidencing
not less than [ ]% of the Class A Certificate Balance apply in writing to the
Trustee, and such application states that the applicants desire to communicate
with other Certificateholders with respect to their rights under this Agreement
or under the Certificates and such application shall be accompanied by a copy of
the communication that such applicants propose to transmit, then the Trustee
shall, within [five] Business Days after the receipt for such application,
afford such applicants access during normal business hours to the current list
of Certificateholders. Each Holder, by receiving and holding a Certificate,
shall be deemed to have agreed to hold none of the Servicer, the [Credit
Enhancer] or the Trustee accountable by reason of the disclosure of its name and
address, regardless of the source from which such information was derived.
SECTION 6.7. Maintenance of Office or Agency. The Trustee shall
maintain in [ ], an office or offices or agency or agencies where Certificates
may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Trustee in respect of the Certificates and this
Agreement may be served. The Trustee initially designates its office located at
[ ], as its office for such purposes. The Trustee shall give prompt written
notice to the Servicer and to Certificateholders of any change in the location
of the Certificate Register or any such office or agency.
SECTION 6.8. Book-Entry Certificates. The Certificates, upon original
issuance (except for the Residual Certificate), will be issued in the form of
typewritten Certificates representing the Book-Entry Certificates, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Seller. The Certificates delivered to the Depository Trust
Company shall initially be registered on the Certificate Register in the name of
CEDE & Co., the nominee of the initial Clearing Agency, and no Certificate Owner
will receive a definitive certificate representing such Certificate Owner's
interest in the Certificates, except as provided in Section 6.10. Unless and
until definitive, fully registered Certificates (the "Definitive Certificates")
have been issued to Certificate Owners pursuant to Section 6.10;
(i) the provisions of this Section 6.8 shall be in full force
and effect;
(ii) the Seller, the Servicer, the Certificate Registrar, and
the Trustee may deal with the Clearing Agency for all purposes
(including the making of distributions on
-58-
the Certificates) as the authorized representative of the Certificate
Owners;
(iii) to the extent that the provisions of this Section 6.8
conflict with any other provisions of this Agreement, the provisions of
this Section 6.8 shall control;
(iv) the rights of Certificate Owners shall be exercised only
through the Clearing Agency and shall be limited to those established
by law and agreements between such Certificate Owners and the Clearing
Agency and/or the Clearing Agency Participants. Pursuant to the
Depository Agreement, unless and until Definitive Certificates are
issued pursuant to Section 6.10, the initial Clearing Agency will make
book-entry transfers among the Clearing Agency Participants and receive
and transmit distributions of principal and interest on the
Certificates to such Clearing Agency Participants; and
(v) whenever this Agreement requires or permits actions to be
taken based upon instructions or directions of Holders of Certificates
evidencing a specified percentage of the Class A Principal Balance or
Class B Principal Balance, as the case may be, the Clearing Agency
shall be deemed to represent such percentage only to the extent that it
has received instructions to such effect from Certificate Owners and/or
Clearing Agency Participants owning or representing, respectively, such
required percentage of the beneficial interest in Certificates and has
delivered such instructions to the Trustee.
(vi) each such Certificate registered in the name of the
Depository's nominee and shall bear the following legend:
"Unless this Certificate is presented by an
authorized representative of The Depository Trust Company, a
New York corporation ("DTC"), to the Trustee or its agent for
registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or
in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co.
or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has an
interest herein."
SECTION 6.9. Notices to Clearing Agency. Whenever notice or other
communication to the Certificateholders is required under this Agreement, other
than to the Holder of the Residual Certificate, unless and until Definitive
Certificates shall have been issued to Certificate Owners pursuant to Section
6.10, the Trustee and the Servicer shall give all such notices and
communications specified herein to be given to Holders of the Certificates to
the Clearing Agency.
SECTION 6.10. Definitive Certificates. If (i) (A) the Seller advises
the Trustee in writing that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities under the Depository Agreement and (B)
the Trustee or the Seller is unable to locate a qualified successor, (ii) the
Seller at its option, advises the Trustee in writing that it elects to terminate
the book-entry system through the Clearing Agency, or (iii) after the occurrence
of an Event of Default, the Clearing Agency at the direction of Certificate
Owners representing beneficial interests aggregating not less than [ ]% of the
Class A Certificate Balance, advises the Trustee in writing that a
-59-
continuation of a book-entry system through the Clearing Agency is no longer in
the best interests of the Certificate Owners, than the Trustee shall notify the
Clearing Agency and request that the Clearing Agency notify all Certificate
Owners of the occurrence of any such event and of the availability of Definitive
Certificates to Certificate Owners requesting the same. Upon surrender to the
Trustee of the Certificates by the Clearing Agency, accompanied by registration
instructions from the Clearing Agency for registration, the Trustee shall issue
the Definitive Certificates and deliver such Definitive Certificates in
accordance with the instructions of the Clearing Agency. None of the Seller, the
Certificate Registrar nor the Trustee shall be liable for any delay in delivery
of such instructions andy may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of Definitive Certificates, the
Trustee shall be protected in relying on, such instructions. Upon the issuance
of Definitive Certificates, the Trustee shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder. The Trustee shall not
be liable if the Trustee or the Seller is unable to locate a qualified successor
Clearing Agency.
ARTICLE VII
The Seller
SECTION 7.1. Representations of Seller. The Seller makes the following
representations to the [Credit Enhancer] and the Trustee, on which the [Credit
Enhancer] relied in executing and delivering [the Credit Enhancement] and on
which the Trustee on behalf of itself and the Certificateholders relied in
accepting the Receivables in trust and executing and authenticating the
Certificates. The representations speak as of the execution and delivery of this
Agreement and shall survive the sale of the Receivables to the Trustee.
(i) Organization and Good Standing. The Seller has been duly
organized and is validly existing as a [ ] in good standing under the
laws of [ ], with power and authority to execute, deliver and perform
its obligations under this Agreement.
(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
-60-
