EXHIBIT INDEX
1.1 -- Form of Underwriting Agreement.
4.1 -- Form of Trust Agreement, and certain other related agreements
as Exhibits thereto.
4.2 -- Form of Indenture, 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 Sale and Servicing Agreement.
10.2 -- Form of CPS Purchase Agreement
10.3 -- Form of Samco Purchase Agreement
10.4 -- Form of Link 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.
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EXHIBIT 1.1
FORM OF
UNDERWRITING
AGREEMENT
CPS AUTO RECEIVABLES TRUST 199[ ]-[ ] [$
] [ %] Class [A-1] Asset Backed Notes [$ ]
[ %] Class [A-2] Asset Backed Notes
UNDERWRITING AGREEMENT
[Date]
[Underwriter]
[ ]
[ ]
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 sell to you in your capacity as the Underwriter
(the "Underwriter"), [$ ] aggregate principal amount of CPS Auto Receivables
Trust 199[ ]-[ ] [ %] Asset Backed Notes, Class A-1 (the "Class A-1 Notes"), [$
] aggregate principal amount of [ %] Asset Backed Notes, Class A-2 (the "Class
A-2 Notes"), [identify additional classes of Notes, if any] and, together with
the Class A-1 Notes, the "Notes"). The Notes will be issued by CPS Auto
Receivables Trust 199[ ]-[ ] (the "Trust") pursuant to the Indenture (the
"Indenture"), dated as of [ ], among the Trust and [ ], as trustee (the
"Trustee"). The assets of the Trust will include, among other things, a pool of
retail installment sale contracts and all rights and obligations thereunder (the
"Receivables"), all payments received thereon 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, and the right of the Company to receive certain insurance proceeds and
certain other property, all as more specifically described in the Sale and
Servicing Agreement, dated as of [ ], among the Trust, CPS, as servicer (in such
capacity, the "Servicer"), the Company, as Seller and Norwest Bank Minnesota,
National Association, as trustee. The Company and CPS will also undertake to
cause the Note Insurer to issue the Policy for the benefit of the Noteholders.
The Class A-1 Notes will be issued in an aggregate principal amount of
[$ ] and will bear interest at an annual rate equal to [ %] (the "Class A-1
Interest Rate"). The Class A-2 Notes will be issued in an aggregate principal
amount of [$ ] and will bear interest at an annual rate equal to [ %] (the
"Class A-2 Interest Rate"). [Describe additional classes of Notes, if any.] The
aggregate principal amount of the Notes will equal [ %] of the aggregate
principal balance of the Receivables as of the Cutoff Date. Calculations of
interest for each class of Notes will be in accordance with the provisions of
the Sale and Servicing Agreement.
The Certificates will be issued in an aggregate principal amount of [$
] which is equal to [ %] of the aggregate principal balance of the Receivables
as of the Cutoff Date. The Certificates will not be underwritten by the
Underwriter pursuant to this Agreement.
To the extent not otherwise defined herein, capitalized terms used
herein shall have the meanings assigned to such terms in the Indenture or, if
not defined therein, in the Sale and Servicing Agreement.
As the Underwriter, you have advised the Company that (a) you are
authorized to enter into this Agreement and (b) you are willing to purchase the
aggregate principal amount of each class of Notes set forth 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, CPS, SAMCO
AND LINC.
The Company (with respect to the Company), CPS (with respect to CPS,
the Company, Samco and Linc), Samco (with respect to Samco), and Linc (with
respect to Linc), and both the Company and CPS in all other instances, each
represents and warrants to, and agrees with the Underwriter, as of the date
hereof and as of the Issuance, that:
(a) CPS has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (File No. 333-25301),
including a Base Prospectus, for registration of the offering and sale of the
Notes 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 and has become and remains effective. CPS has complied, and is in
compliance, with the conditions for the use of a Registration Statement on Form
S-3. The offering of the Notes is a Delayed Offering and, although the Base
Prospectus may not include all the information with respect to the Notes and the
offering thereof required by the 1933 Act and the 1933 Act Regulations to be
included in the Final Prospectus, the Base Prospectus includes all such
information required by the 1933 Act and the 1933 Act Regulations to be included
therein as of the Effective Date. The Company will hereafter file with the
Commission pursuant to Rules 415 and 424(b), a final supplement to the Base
Prospectus relating to the Notes and the offering
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thereof. As filed, such final supplement shall include all required information
with respect to the Notes and, except to the extent the Underwriter shall agree
in writing to any modification thereof, shall be in all substantive respects in
the form furnished to the Underwriter prior to the Execution Time or, to the
extent not completed at the Execution Time, shall be in such form with only such
specific additional information and other changes (beyond that contained in the
Base Prospectus and any Preliminary Final Prospectus) as the Company has advised
the Underwriter, prior to the Execution Time, will be included or made therein.
(b) On the Effective Date, the Registration Statement did, 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 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 date thereof,
the date of any filing pursuant to Rule 424(b) and 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 none of CPS, the Company, Samco or Linc makes any 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 the Underwriter specifically
for inclusion in the Registration Statement or the Final Prospectus (or any
supplement or amendment thereto) or the information regarding the Note Insurer
in or incorporated by reference in the Final Prospectus under the headings "The
Insurer" and "Incorporation of Certain Documents by Reference".
(c) The terms which follow, when used in this Agreement, shall have the
meanings indicated.
"Base Prospectus" shall mean the prospectus referred to in
Section 1(a) hereof contained in the Registration Statement at the
Effective Date.
"Delayed Offering" shall mean the offering of the Notes
pursuant to Rule 415 which does not commence promptly after the
effective date of the Registration Statement, with the result that only
information required pursuant to Rule 415 need be included in such
Registration Statement at the effective date thereof with respect to
the Notes.
"Effective Date" shall mean each date prior to the Execution
Time that the Registration Statement and any post-effective
amendment(s) thereto became effective and each date on and after the
date hereof on which a document incorporated by reference in the
Registration Statement is filed by the Company.
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"Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto.
"Final Prospectus" shall mean the prospectus supplement
relating to the Notes that is first filed pursuant to Rule 424(b) under
the 1933 Act after the Execution Time, together with the Base
Prospectus 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.
"Preliminary Final Prospectus" shall mean any preliminary
prospectus supplement to the Base Prospectus which describes the Notes
and the offering thereof and is used prior to filing of the Final
Prospectus.
"Prospectus" shall mean, collectively, the Base Prospectus,
any Preliminary Final Prospectus and the Final Prospectus.
"Registration Statement" shall mean (i) the Registration
Statement referred to in Section 1(a) hereof, including all documents
incorporated therein by reference, exhibits, financial statements and
notes thereto and related schedules and other statistical and financial
data and information included therein, as amended at the Execution
Time; (ii) in the event any post-effective amendment thereto becomes
effective prior to the Closing Date, such Registration Statement as so
amended; and (iii) in the event any Rule 462(b) Registration Statement
becomes effective prior to the Closing Date, such Registration
Statement as so modified by the Rule 462(b) Registration Statement,
from and after the effectiveness thereof. Such term shall include any
Rule 430A Information deemed to be included therein at the Effective
Date as provided by Rule 430A.
"Rule 415", "Rule 424", "Rule 430A" and "Regulation S-K" refer
to such rules or regulation under the 1933 Act.
"Rule 430A Information" means information with respect to the
Notes and the offering thereof permitted to be omitted from the
Registration Statement when it became effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" means the Registration
Statement filed pursuant to Rule 462(b) under the 1933 Act relating to
the offering covered by the Registration Statement (File No.
333-25301).
Any reference herein to the Registration Statement, the Base
Prospectus, any Preliminary Final Prospectus or the Final Prospectus shall be
deemed to refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 which were filed under the 1934 Act on or before
the Effective Date of the Registration Statement or the issue date of the Base
Prospectus, any Preliminary Final Prospectus or the Final Prospectus, as the
case may be;
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and any reference herein to the terms "amend", "amendment" or "supplement" with
respect to the Registration Statement, the Base Prospectus, any Preliminary
Final Prospectus or the Final Prospectus shall be deemed to refer to and include
the filing of any document under the 1934 Act after the Effective Date of the
Registration Statement or the issue date of the Base Prospectus, any Preliminary
Final Prospectus or the Final Prospectus, as the case may be, deemed to be
incorporated therein by reference.
(d) Each of the Company and CPS is a corporation duly organized,
validly existing and in good standing under the laws of the State of California
and is duly qualified to transact business as a foreign corporation in each
jurisdiction in which it is required to be so qualified and in which the failure
to so 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 effect 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 effect 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, business or properties, or results of operations of the
Company, CPS, Samco or Linc or the Company's or CPS's Samco's or Linc's ability
to perform its obligations under this Agreement, the Indenture, the Trust
Agreement or the Sale and Servicing Agreement or any of the other Basic
Documents (as defined below), other than as set forth or incorporated by
reference in the Registration Statement or as set forth in the Final Prospectus.
(h) Except for the registration of the Notes under the 1933 Act and
such consents, approvals, authorizations, registrations or qualifications as may
be required under the 1934 Act and applicable State securities or Blue Sky laws
in connection with the purchase and distribution of the Notes by the Underwriter
or the filing requirements of Rule 430A or Rule 424(b) under the 1933 Act, no
consent, approval, authorization or order of or declaration or filing with any
governmental authority is required for the issuance or sale of the Notes or the
consummation of the other transactions contemplated by this Agreement or the
Sale and Servicing Agreement or any of the other Basic Documents, except such as
have been duly made or obtained or as will be duly made or obtained on or before
the Closing Date.
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(i) The Commission has not issued an order preventing or suspending the
use of any Prospectus relating to the proposed offering of the Notes, nor
instituted proceedings for that purpose (and no proceedings for such purpose
are, to the knowledge of the Company or CPS, contemplated). No injunction,
restraining order or order of any nature by a federal or state court of
competent jurisdiction has, to the knowledge of the Company or CPS, been issued
which would prevent the issuance of the Notes. 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 conform to, the requirements of the 1933 Act and the 1933 Act Regulations.
(j) The documents (other than the financial statements of the Insurer,
as to which no representation is made by CPS or the Company) which are
incorporated by reference in the Registration Statement and the Final Prospectus
or from which information is so incorporated by reference, as of the dates
thereof and 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, Linc and Samco confirms as of the date
hereof that it is in compliance with all provisions of Section 1 of Laws of
Florida, Chapter 92-198, An Act Relating to Disclosure of doing Business with
Cuba, and each of the Company, CPS, Linc and Samco further agrees that if it
commences engaging in business with the government of Cuba or with any person or
affiliate located in Cuba after the date the Registration Statement became
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, Linc's or Samco's business with Cuba or with any person or affiliate
located in Cuba changes in any material way, each of the Company, CPS, Linc and
Samco, as the case may be, will provide the Department notice of such business
or change, as appropriate, in a form acceptable to the Department.
(l) All representations and warranties of the Company, CPS, Linc and
Samco contained in each of the Basic Documents, including this Agreement, will
be true and correct in all material respects when delivered and as of the
Closing Date and are hereby incorporated by reference as if each such
representation and warranty were specifically made herein.
(m) Each of the Company, CPS, Linc and Samco has full power and
authority (corporate and other) to enter into and perform its obligations under
this Agreement, the Indenture, the Trust Agreement, the Sale 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 and Lockbox
Processing Assumption Agreement (collectively, the "Basic Documents"), and to
consummate the transactions contemplated hereby and thereby.
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(n) On or before the Closing Date, the direction by the Company to the
Trustee to authenticate the Notes will have been duly authorized by the Company,
the Notes will have been duly executed and delivered by the Company and, when
authenticated by the Trustee in accordance with the Indenture and delivered and
paid for pursuant to this Agreement, will be duly issued and will entitle the
holder thereof to the benefits and security afforded by the Indenture.
(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, Linc and Samco, as applicable, and constitutes a valid
and binding agreement of each of the Company, CPS, Linc and Samco, as
applicable, enforceable against the Company, CPS, Linc and Samco in accordance
with its terms, subject as to the enforcement of remedies (x) to applicable
bankruptcy, insolvency, reorganization, moratorium, and other similar laws
affecting creditors' rights generally, (y) to general principles of equity
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law) and (z) with respect to rights of indemnity
under this Agreement, to limitations of public policy under applicable
securities laws.
(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 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 or CPS or Samco or Linc to perform its obligations under
any of the Basic Documents or the Notes.
(q) The issuance and delivery of the Notes, the consummation of any
other of the transactions contemplated herein or in the Indenture, the Trust
Agreement, the Sale and Servicing Agreement or in any of the other Basic
Documents or the fulfillment of the terms of this Agreement, the Indenture, the
Trust Agreement, or the Sale and Servicing Agreement or any of the other Basic
Documents, subject to the registration of the Notes under the 1933 Act and such
consents, approvals, authorizations, registrations or qualifications as may be
required under the 1934 Act and applicable State securities or Blue Sky laws in
connection with the purchase and distribution of the Notes by the Underwriter 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, Charter or Certificate of Formation, as applicable, or By-Laws or
Limited Liability Company Agreement of the Company, CPS, Samco or Linc, any
statute, order or regulation applicable to the Company, CPS, Samco or Linc of
any court, regulatory body, administrative agency or governmental body having
jurisdiction over the Company, CPS, Samco or Linc 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, CPS,
Samco or Linc (other than in favor of the Trustee, the Owner Trustee or as
otherwise permitted under the Indenture or
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the Sale and Servicing Agreement) pursuant to the terms of any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company, CPS, Samco or Linc is a party or by which the Company, CPS,
Samco or Linc may be bound or to which any of the property or assets of the
Company, CPS, Samco or Linc may be subject except for conflicts, violations,
breaches, accelerations and defaults which would not, individually or in the
aggregate, be materially adverse to the Company, CPS, Samco or Linc 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 Indenture, the Trust
Agreement, the Sale and Servicing Agreement, the other Basic Documents and the
Notes have been or will have been paid at or prior to the Closing Date.
(s) The CPS Receivables are chattel paper as defined in the Uniform
Commercial Code as in effect in the State of California, which is the State in
which the chief executive office of CPS is located. The Samco Receivables are
chattel paper as defined in the Uniform Commercial Code as in effect in the
State of Texas, which is the State in which the chief executive office of Samco
is located. The Linc Receivables are chattel paper as defined in the Uniform
Commercial Code as in effect in the State of Connecticut, which is the State in
which the chief executive office of Linc is located.
(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 Sale and Servicing Agreement as a sale of the
Receivables. Each of CPS and the Company has been advised by KPMG Peat Marwick,
Certified Public Accountants, that the transfers pursuant to the CPS Purchase
Agreement, the Samco Purchase Agreement, the Linc Purchase Agreement and the
Sale and Servicing 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 Property"). Immediately prior to the transfer of any CPS Receivables to
the Company, CPS will be the sole owner of all right, title and interest in, and
will have good and marketable title to, the CPS Receivables. Immediately prior
to the transfer of any Samco Receivables to the Company, Samco will be the sole
owner of all right, title and interest in, and
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will have good and marketable title to, the Samco Receivables. Immediately prior
to the transfer of any Linc Receivables to the Company, Linc will be the sole
owner of all right, title and interest in, and has good and marketable title to,
the Linc Receivables. The assignment of the Receivables, including all the other
Conveyed Property including the proceeds thereof, to the Company pursuant to the
Purchase Agreements, vests in the Company 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 will be the sole owner of all right, title and interest in, and has
good and marketable title to, the Receivables and the other Trust Property. The
assignment of the Receivables and the other Trust Property, including all the
proceeds thereof, to the Trust pursuant to the Sale and Servicing Agreement,
vests in the Trust all interests which are purported to be conveyed thereby,
free and clear of any liens, security interests or encumbrances.
(w) 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 CPS Receivables to the Company shall have been
filed in the Office of the Secretary of State of the State of California (the
"CPS Financing Statement"), (ii) evidencing the transfer of the Samco
Receivables to the Company shall have been filed in the Office of the Secretary
of State of the State of Texas (the "Samco Financing Statement"), (iii)
evidencing the transfer of the Linc Receivables to the Company shall have been
filed in the Office of the Secretary of State of the State of Connecticut (the
"Linc Financing Statement"), (iv) evidencing the transfer of the Receivables by
the Company to the Trust shall have been filed in the Office of the Secretary of
State of the State of California (the "Company Financing Statement"), and (v)
evidencing the pledge of the Receivables by the Trust to the Trustee shall have
been filed in the Office of the Secretary of State of the State of Delaware (the
"Trust Financing Statement") and there shall be no unreleased statements
affecting the Receivables filed in any such office other than the Financing
Statements.
(x) If a court concludes that (i) the transfer of the CPS Receivables
from CPS to the Company is a sale, then the interest of the Company in the CPS
Receivables and the proceeds thereof, will be perfected by virtue of the CPS
Financing Statement having been filed in the office of the Secretary of State of
the State of California, (ii) the transfer of the Samco Receivables from Samco
to the Company is a sale, then the interest of the Company in the Samco
Receivables and the proceeds thereof, will be perfected by virtue of the Samco
Financing Statement having been filed in the office of the Secretary of State of
the State of Texas or (iii) the transfer of the Linc Receivables from Linc to
the Company is a sale, then the interest of the Company in the Linc Receivables
and the proceeds thereof, will be perfected by virtue of the Linc Financing
Statement having been filed in the office of the Secretary of State of the State
of Connecticut.
(y) If a court concludes that (i) the transfer of the CPS Receivables
from CPS to the Company is not a sale, the CPS Purchase Agreement and the
transactions contemplated thereby
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constitute a grant by CPS to the Company of a valid security interest in the CPS
Receivables and the proceeds thereof, which security interest will be a first
priority perfected security interest by virtue of the CPS Financing Statement
having been filed in the office of the Secretary of State of the State of
California, (ii) the transfer of the Samco Receivables from Samco to the Company
is not a sale, the Samco Purchase Agreement and the transactions contemplated
thereby constitute a grant by Samco to the Company of a valid security interest
in the Samco Receivables and the proceeds thereof, which security interest will
be a first priority perfected security interest by virtue of the Samco Financing
Statement having been filed in the office of the Secretary of State of the State
of Texas and (iii) the transfer of the Linc Receivables from Linc to the Company
is not a sale, the Linc Purchase Agreement and the transactions contemplated
thereby constitute a grant by Linc to the Company of a valid security interest
in the Linc Receivables and the proceeds thereof, which security interest will
be a first priority perfected security interest by virtue of the Linc Financing
Statement having been filed in the office of the Secretary of State of the State
of Connecticut. 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 Purchase Agreements, is necessary to perfect the interest or the
security interest of the Company in the Receivables and the proceeds thereof
against third parties.
(z) If a court concludes that the transfer of the Receivables from the
Company to the Trust is a sale, then the interest of the Trust in the
Receivables, the other Trust Property and the proceeds thereof, will be a first
priority perfected security interest by virtue of the Company Financing
Statement having been filed in the office of the Secretary of State of the State
of California. If a court concludes that such transfer is not a sale, the Sale
and Servicing Agreement and the transactions contemplated thereby constitute a
grant by the Company to the Trust of a valid security interest in the
Receivables, the other Trust Property and the proceeds thereof, which security
interest will be a first priority perfected security interest by virtue of the
Company Financing Statement 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 Company Financing Statement in the office of the Secretary of
State of the State of California referred to above and the execution and
delivery of the Sale and Servicing Agreement, is necessary to perfect the
interest or the security interest of the Trust in the Receivables and the
proceeds thereof against third parties.
(aa) The security interest of the Trustee in the Receivables, the other
Trust Property and the proceeds thereof, will be a first priority perfected
security interest by virtue of the Trust Financing Statement having been filed
in the office of the Secretary of State of the State of Delaware. The Indenture
and the transactions contemplated thereby constitute a grant by the Trust to the
Trustee of a valid security interest in the Receivables, the other Trust
Property and the proceeds thereof, which security interest will be a first
priority perfected security interest by virtue of the Trust Financing Statement
having been filed in the office of the Secretary of State of the State of
Delaware. No filing or other action, other than the filing of the Trust
Financing Statement in the office of the Secretary of State of the State of
Delaware referred to above and
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the execution and delivery of the Indenture, is necessary to perfect the
security interest of the Trustee in the Receivables and the proceeds thereof
against third parties.
(bb) None of the Company, CPS, Samco, Linc, the Trustee or the Trust is
required to be registered as an "investment company" under the Investment
Company Act.
(cc) The Indenture has been duly qualified under the Trust Indenture
Act of 1939, as amended.
(dd) Except as disclosed in the Final Prospectus, there are no actions,
suits, proceedings or investigations pending or threatened against the Company,
CPS, Samco or Linc before any court, administrative agency or other tribunal
which would have a material adverse effect upon any of the Company, CPS, Samco
or Linc.
(ee) Each of the Company, CPS, Samco and Linc has all licenses, permits
and consents necessary to conduct its business as presently conducted and to
perform its obligations under this Agreement and the Basic Documents and none of
CPS, Samco, Linc or the Company has received notice of any pending or threatened
revocation thereof (except, in any case, to the extent that the failure to have
same is not reasonably likely to have a material adverse effect on the ability
of such party to so conduct its business or to perform its obligations under
this Agreement and the Basic Documents).
2. PURCHASE, SALE AND DELIVERY OF THE NOTES.
Subject to the terms and conditions and in reliance upon the
representations, warranties and covenants herein set forth, the Company agrees
to sell to the Underwriter, and the Underwriter agrees to purchase from the
Company, the initial principal amount of each class of the Notes as set forth in
Schedule I hereto, at the purchase price specified in Schedule I with respect to
each Class of Notes.
The Company will deliver against payment of the purchase price the
Notes in the form of one or more permanent global Notes in definitive form (the
"Global Notes") deposited with the Trustee as custodian for The Depository Trust
Company ("DTC") and registered in the name of Cede & Co., as nominee for DTC.
Interests in any Global Notes will be held only in book-entry form through DTC
except in the limited circumstances described in the Final Prospectus. Payment
for the Notes will be made by the Underwriter by wire transfer of same day funds
to an account previously designated to the Underwriter by the Company at the
offices of [ ], at 9:30 a.m. (New York time) on [ ], or at such other time as is
mutually agreed (such time being herein referred to as the "Closing Date")
against delivery of the Global Notes representing all of the Notes. The Notes
will be made available for inspection at the above office of [ ] at least 24
hours prior to the Closing Date.
-11-
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 UNDERWRITER.
(a) The Company and CPS are advised by the Underwriter that it proposes
to make a public offering of the Notes, as set forth in the Final Prospectus,
from time to time as and when the Underwriter deems advisable after the
Execution Time. The Company agrees that the Underwriter may, but is not
obligated to, make a market in the Notes and that any such market making by the
Underwriter may be discontinued at any time in the sole discretion of the
Underwriter.
(b) The Underwriter may prepare and provide to prospective investors
certain Computational Materials, ABS Term Sheets or Collateral Term Sheets in
connection with its offering of the Notes, subject to the following conditions:
(i) The Underwriter shall comply with the requirements of the
No-Action Letter of May 20, 1994 issued by the Commission to Kidder,
Peabody Acceptance Corporation I and certain affiliates, as made
applicable to other issuers and underwriters by the Commission in
response to the request of the Public Securities Association dated May
24, 1994 (collectively, the "Kidder/PSA Letter"), and the requirements
of the No-Action Letter of February 17, 1995 issued by the Commission
to the Public Securities Association (the "PSA Letter" and, together
with the Kidder/PSA Letter, the "No-Action Letters").
(ii) For purposes hereof, "Computational Materials" shall have
the meaning given such term in the No-Action Letters, but shall include
only those Computational Materials that have been prepared or delivered
to prospective investors by the Underwriter. For purposes hereof, "ABS
Term Sheets" and "Collateral Term Sheets" shall have the meanings given
such terms in the PSA Letter but shall include only those ABS Term
Sheets or Collateral Term Sheets that have been prepared or delivered
to prospective investors by the Underwriter.
(iii) The Underwriter shall provide to CPS any Computational
Materials, ABS Term Sheets or Collateral Term Sheets which are provided
to investors no later than the second Business Day preceding the date
such Computational Materials, ABS Term Sheets or Collateral Term Sheets
are required to be filed pursuant to the applicable No-Action Letters.
The Underwriter may provide copies of the foregoing in a consolidated
or aggregated form including all information required to be filed.
(iv) In the event that CPS, the Company or the Underwriter
discovers an error in the Computational Materials, ABS Term Sheets or
Collateral Term Sheets, the
-12-
Underwriter shall prepare corrected Computational Materials, ABS Term
Sheets or Collateral Term Sheets and deliver it to CPS for filing
pursuant to Section 4(n).
4. COVENANTS OF THE COMPANY AND CPS.
The Company, and CPS (if so stated), covenants and agrees with the
Underwriter that:
(a) CPS has caused the Registration Statement to become effective and,
as soon as reasonably practicable, shall prepare and timely file with the
Commission under Rule 424(b) a Final Prospectus. Prior to the termination of the
offering of the Notes neither CPS nor the Company will 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 CPS or the Company has furnished to
the Underwriter a copy for its review prior to filing and will not file any such
proposed amendment or supplement to which the Underwriter reasonably objects or
which is not in compliance with the 1933 Act Regulations. CPS or the Company
will promptly advise the Underwriter (i) when the Final Prospectus, and any
supplement thereto, shall have been filed with the Commission pursuant to Rule
424(b); (ii) when, prior to termination of the offering of the Notes, any
amendment to the Registration Statement shall have been filed or become
effective; (iii) 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; (iv) 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 (v) of the receipt by CPS or the Company of
any notification with respect to the suspension of the qualification of the
Notes for sale in any jurisdiction or the initiation of any proceeding for such
purpose. The Company will use its best efforts to prevent the issuance of any
such stop order or the suspension of any such qualification and, if issued or
suspended, to obtain as soon as possible the withdrawal thereof.
(b) Prior to the filing thereof with the Commission, the Company will
submit to the Underwriter, for its approval after reasonable notice thereof,
such approval not to be unreasonably withheld or delayed, a copy of any
post-effective amendment to the Registration Statement, any Rule 462(b)
Registration Statement proposed to be filed or a copy of any document proposed
to be filed under the 1934 Act before the termination of the offering of the
Notes by the Underwriter 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 Underwriter
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 Underwriter may reasonably request. The Company will
deliver to the Underwriter at or before the Closing Date 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 Underwriter may from time to time reasonably
request.
-13-
(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 Notes as contemplated in
this Agreement and the Final Prospectus. If during the period in which a
prospectus is required by law to be delivered by the Underwriter or dealer in
connection with the sale of any Notes, any event shall occur as a result of
which, in the judgment of the Company or in the reasonable opinion of the
Underwriter, 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 the
Underwriter and will promptly either (i) prepare and file, or cause to be
prepared and filed, with the Commission (at the expense of the Company) 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 Underwriter in endeavoring to
qualify the Notes for sale under the laws of such jurisdictions as the
Underwriter may designate and will maintain such qualifications in effect so
long as required for the distribution of the Notes, except that the Company will
not be obligated to qualify the Notes in any jurisdiction in which such
qualification would require the Company to qualify to do business as a foreign
corporation, file a general or unlimited consent to service of process or
subject itself to taxation in any such jurisdiction to which it is not subject.
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 Underwriter may reasonably request for
distribution of the Notes.
(f) The Company shall not invest, or otherwise use the proceeds
received by the Company from its sale of the Notes in such a manner as would
require the Company, CPS, the Trust or the Trustee to register as an investment
company under the 1940 Act.
(g) Until the retirement of the Notes, or until such time as the
Underwriter shall cease to maintain a secondary market in the Notes, whichever
occurs first, the Company will deliver to the Underwriter the annual statements
of compliance and the annual independent certified public accountant's reports
furnished to the Trustee pursuant to the Sale and Servicing Agreement, as soon
as such statements and reports are furnished to the Trustee.
(h) The Company, CPS, Linc and Samco shall, from the date hereof
through and including the Closing Date, furnish, or cause to be furnished, or
make available, or cause to be made available, to the Underwriter or its counsel
such additional documents and information
-14-
regarding each of them and their respective affairs as the Underwriter may from
time to time reasonably request and which the Company, CPS, Linc or Samco
possesses or can acquire without unreasonable effort or expense, including any
and all documentation requested in connection with the Underwriter's due
diligence efforts regarding information in the Registration Statement and the
Final Prospectus and in order to evidence the accuracy or completeness of any of
the conditions contained in this Agreement; and all actions taken by the Company
or CPS to authorize the sale of the Notes shall be reasonably satisfactory in
form and substance to the Underwriter.
(i) The Company will cause the Trust to make generally available to
Noteholders as soon as practicable, but no later than sixteen months after the
Effective Date, an earnings statement of the Trust covering a period of at least
twelve consecutive months beginning after such Effective Date and satisfying the
provisions of Section 11(a) of the Act (including Rule 158 promulgated
thereunder).
(j) So long as any of the Notes are outstanding, the Company will
furnish to the Underwriter copies of all reports or other communications
(financial or otherwise) furnished or made available to Noteholders, and deliver
to the Underwriter 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 1934 Act and (ii) such
additional information concerning the business and financial condition of the
Company, CPS, Samco and Linc as the Underwriter may from time to time reasonably
request.
(k) On or before the Closing Date, the Company, CPS, Linc and Samco
shall cause their respective computer records relating to the Receivables to be
marked to show the Trust's ownership of, and the Trustee's security interest in,
the Receivables, and from and after the Closing Date none of the Company, CPS,
Linc or Samco shall take any action inconsistent with the Trust's ownership of,
or the Trustee's security interest in, such Receivables, other than as expressly
permitted by the Sale and Servicing Agreement or any other Basic Document.
(l) To the extent, if any, that the ratings provided with respect to
the Notes by either of the Rating Agencies is conditional upon the furnishing of
documents or the taking of any other actions by the Company, CPS, Linc or Samco,
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 Note
Insurer to issue the Policy to the Trustee for the benefit of the holders of the
Notes in form and substance satisfactory to the Underwriter.
(n) CPS shall file or cause to be filed with the Commission, in
accordance with the No-Action Letters, any Computational Materials, ABS Term
Sheets and Collateral Term Sheets provided that CPS has received such
Computational Materials, ABS Term Sheets and Collateral Term Sheets at least 2
Business Days prior to the time for filing same.
-15-
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 Underwriter for all reasonable out-of-pocket expenses, including
reasonable fees and disbursements of counsel, reasonably incurred in connection
with investigating, marketing and proposing to market the Notes or in
contemplation of performing the Underwriter's 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
Underwriter copies of the Registration Statement, the Final Prospectus, this
Agreement, the Basic Documents, the Computational Materials and the listing
application in respect of the Notes; (iv) the filing fees of the Commission; (v)
any fees charged by the Rating Agencies for rating the Notes; (vi) the fees and
expenses of the Trustee, the Owner Trustee, the Collateral Agent and the Lockbox
Processor, including the fees and disbursements of counsel for the Trustee, the
Owner Trustee, the Collateral Agent and the Lockbox Processor, in connection
with the Notes, the Sale and Servicing Agreement and the other Basic Documents
to which any of the foregoing, as applicable, is a party and the expenses,
including the fees and disbursements of counsel for the Underwriter incurred in
qualifying the Notes under State securities or Blue Sky laws; and (vii) the
initial payment of Premium under the Policy. If this Agreement shall not be
consummated because the conditions in Section 7 hereof are not satisfied, or
because this Agreement is terminated by the Underwriter pursuant to Section 12
hereof, or by reason of any failure, refusal or inability on the part of the
Company, CPS, Samco or Linc to perform any undertaking or satisfy any condition
of this Agreement or to comply with any of the terms hereof on its part to be
performed, unless such failure to satisfy said condition or to comply with said
terms shall be due to the default of the Underwriter, then the Company and CPS,
jointly and severally, shall reimburse the Underwriter for reasonable
out-of-pocket expenses, including reasonable fees and disbursements of counsel,
reasonably incurred in connection with investigating, marketing and proposing to
market the Notes or in contemplation of performing their obligations hereunder
upon receipt of a written request therefor; but the Company shall not in any
event be liable to the Underwriter for damages on account of loss of anticipated
profits from the sale of the Notes. Except to the extent expressly set forth in
this Section 6, the Underwriter shall be responsible for its own costs and
expenses, including the fees and expenses of its counsel.
7. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITER.
The obligations of the Underwriter to purchase and pay for the Notes on
the Closing Date are subject to the accuracy in all material respects as of the
Closing Date of the representations and warranties of the Company, CPS, Linc and
Samco contained herein, to the performance by the Company, CPS, Linc and Samco
of their respective covenants and obligations hereunder and to the following
additional conditions precedent:
-16-
(a) The Registration Statement shall be effective. The Final
Prospectus, and any such supplement, shall be 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 Underwriter and
complied with to its reasonable satisfaction. No stop order suspending the
effectiveness of the Registration Statement, as amended from time to time, shall
have been issued and no proceedings for that purpose shall have been taken or,
to the knowledge of the Company, shall be contemplated by the Commission and no
injunction, restraining order, or order of any nature by a Federal or state
court of competent jurisdiction shall have been issued as of the Closing Date
which would prevent the issuance of the Notes.
(b) The Underwriter shall have received a letter or letters, dated as
of the date of the Computational Materials, as of [ ], and as of the Closing
Date, respectively, of KPMG Peat Marwick LLP, Certified Public Accountants,
substantially in the form of the drafts to which the Underwriter has previously
agreed and otherwise in form and substance satisfactory to the Underwriter and
its counsel.
(c) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development involving a
prospective change, in or affecting particularly the business or properties or
financial position of the Company, CPS or any Affiliate of the Company or CPS
which, in the judgment of the Underwriter, materially impairs the investment
quality of the Notes or the ability of CPS to act as Servicer or (ii) any
downgrading in the rating of any debt securities or preferred stock of the
Company, CPS or any Affiliate thereof by any "nationally recognized statistical
rating organization" (as defined for purposes of Rule 436(g) under the
Securities Act), or any public announcement that any such organization has under
surveillance or review its rating of any debt securities or preferred stock of
the Company, CPS or any Affiliate thereof (other than an announcement with
positive implications of a 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 the Underwriter, the effect of any such outbreak, escalation,
declaration, calamity, emergency or change makes it impractical or inadvisable
to market the Notes on the terms and in the manner set forth in the Final
Prospectus.
(d) The Company, CPS, Linc and Samco shall have furnished the
Underwriter with such number of conformed copies of such opinions, certificates,
letters and documents as it may reasonably request.
-17-
(e) On the Closing Date, each of the Basic Documents, the Notes and the
Certificates shall have been duly authorized, executed and delivered by the
parties thereto, shall be in full force and effect and no default shall exist
thereunder, and the Trustee shall have received a fully executed copy thereof
or, with respect to the Notes, a conformed copy thereof. The Basic Documents,
the Notes and the Certificates shall be substantially in the forms heretofore
provided to the Underwriter.
(f) The Underwriter shall have received evidence satisfactory to the
Underwriter that the Class A-1 Notes have been rated [ ] and that the Class A-2
Notes have been rated [ ].
(g) The Underwriter shall have received from Mayer, Brown & Platt,
special counsel for CPS, Samco, Linc (with respect to New York law) and the
Company, opinions dated the Closing Date, addressed to the Underwriter, in a
form satisfactory to the Underwriter.
(h) The Underwriter shall have received from Pullman & Comley LLC,
special Connecticut counsel for Linc, opinions dated the Closing Date, addressed
to the Underwriter in a form satisfactory to the Underwriter.
(i) The Underwriter shall have received from Mayer, Brown & Platt,
special Federal tax counsel for the Company, an opinion dated the Closing Date,
addressed to the Underwriter, with respect to the status of the Trust for
federal income tax purposes.
(j) The Underwriter shall have received from Mayer, Brown & Platt, an
opinion dated the Closing Date, addressed to the Underwriter, with respect to
the validity of the Notes and such other related matters as the Underwriter
shall require and the Company or CPS shall have furnished or caused to be
furnished to such counsel such documents as they may reasonably request for the
purpose of enabling them to pass upon such matters.
(k) The Underwriter shall have received from counsel to the Trustee,
the Standby Servicer and the Collateral Agent (which counsel shall be reasonably
acceptable to the Underwriter), an opinion addressed to the Underwriter dated
the Closing Date, in form and substance satisfactory to the Underwriter and its
counsel.
(l) The Underwriter shall have received from counsel to the Owner
Trustee, which counsel shall be reasonably acceptable to the Underwriter, an
opinion addressed to the Underwriter, dated the Closing Date, in form and
substance satisfactory to the Underwriter and its counsel.
(m) The Underwriter shall have received from special Delaware counsel
to the Trust, which counsel shall be reasonably acceptable to the Underwriter,
an opinion addressed to the Underwriter, dated the Closing Date, in form and
substance satisfactory to the Underwriter and its counsel.
-18-
(n) The Underwriter shall have received from counsel to the Insurer,
which counsel shall be reasonably acceptable to the Underwriter, an opinion
addressed to the Underwriter, dated the Closing Date, in form and substance
satisfactory to the Underwriter and its counsel.
(o) At the Closing Date, the Underwriter shall have received any and
all opinions of counsel to the Company and CPS supplied to the Rating Agencies
and the Insurer relating to, among other things, the interest of the Trustee in
the Receivables and the other Trust Property and the proceeds thereof and
certain monies due or to become due with respect thereto, certain bankruptcy
issues and certain matters with respect to the Notes. Any such opinions shall be
addressed to the Underwriter or shall indicate that the Underwriter may rely on
such opinions as though they were addressed to the Underwriter, and shall be
dated the Closing Date.
(p) At the Closing Date, the Company, CPS, Linc and Samco shall have
furnished to the Underwriter a certificate, dated the Closing Date, of the
President, the Chief Financial Officer or any Vice President of the Company,
CPS, Linc or Samco, as the case may be, in which each such officer shall state
that: (i) the representations and warranties of the Company, CPS, Linc or Samco,
as applicable, in this Agreement are true and correct on and as of the Closing
Date; (ii) the Company, CPS, Linc or Samco, as applicable, has complied with all
agreements and satisfied all conditions on its part required to be performed or
satisfied hereunder and under each of the other Basic Documents at or prior to
the Closing Date; (iii) the representations and warranties of the Company, CPS,
Linc or Samco, as applicable, in each of the Basic Documents are true and
correct as of the dates specified therein; (iv) with respect to the certificate
delivered by CPS, the Registration Statement has become effective under the 1933
Act and no stop order suspending the effectiveness of the Registration Statement
has been issued, and no proceedings for such purpose have been taken or are, to
his or her knowledge, contemplated by the Commission; (v) with respect to the
certificates delivered by CPS and the Company, he or she has carefully examined
the Registration Statement 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 and the statements contained in the Final
Prospectus 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,
Linc or Samco necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and since the
Effective Date of the Registration Statement, no event has occurred with respect
to the Company, CPS, Linc or Samco 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) with respect to the certificate
delivered by the Company and CPS, subsequent to the respective dates as of which
information is given in the Registration Statement and the Final Prospectus,
there has been no material adverse change, or any development with respect to
the Company, CPS, Linc or Samco which could reasonably be expected to result in
a material adverse change, in or affecting particularly the business or
properties of the Trust, the Company, CPS, Linc or Samco except as contemplated
by the Final Prospectus or as described in such certificate.
-19-
(q) The Underwriter shall have received evidence satisfactory to the
Underwriter that the Insurer shall have issued the Policy to the Trustee for the
benefit of the Noteholders in form and substance satisfactory to the
Underwriter.
(r) The 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 CPS Receivables and the related other Trust
Property 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 Samco Receivables and the related other Trust Property 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 Linc Receivables and
the related other Trust Property and the proceeds thereof to the Company, (iv)
the office of the Secretary of State of California reflecting the sale and
assignment of the Receivables and the related other Trust Property and the
proceeds thereof to the Trust and (v) the office of the Secretary of State of
Delaware reflecting the grant of a security interest by the Trust in the
Receivables and the related other Trust Property and the proceeds thereof to the
Trustee.
(s) All proceedings in connection with the transactions contemplated by
this Agreement, the Sale and Servicing Agreement and each of the other Basic
Documents and all documents incident hereto or thereto shall be satisfactory in
form and substance to the Underwriter.
(t) The Company shall have furnished to the Underwriter such further
certificates and documents confirming the representations and warranties,
covenants and conditions contained herein and related matters as the Underwriter
may reasonably have requested.
(u) The Underwriter shall have received a certificate of the Owner
Trustee regarding the execution of the Notes. The Underwriter shall have
received a certificate of the Trustee regarding the acceptance and
authentication of the Notes.
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 Underwriter and to counsel for
the Underwriter.
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 Underwriter hereunder may be terminated by the
Underwriter 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
Underwriter shall not be under any obligation to each other (except to the
extent provided in Sections 6 and 9 hereof).
-20-
8. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company to sell and deliver the portion of the
Notes required to be delivered as and when specified in this Agreement are
subject to the condition that, at the Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and in effect
or proceedings therefor initiated or threatened.
9. INDEMNIFICATION.
(a) (i) The Company and CPS, jointly and severally, agree to indemnify
and hold harmless the Underwriter, its directors, officers, employees and agents
and each person, if any, who controls the Underwriter within the meaning of the
1933 Act or the 1934 Act, against any losses, claims, damages or liabilities to
which the 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 (A)
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement, the Base Prospectus, the Final Prospectus, or any
amendment or supplement thereto (other than information contained therein under
the heading "the Insurer" and information incorporated by reference under such
heading), 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 under which they were made; and
will reimburse the Underwriter and each such person within 30 days of
presentation of a written request therefor for any legal or other expenses
reasonably incurred by the Underwriter in connection with investigating or
defending any such loss, claim, damage or liability, action or proceeding or in
responding to a subpoena or governmental inquiry related to the offering of the
Notes, whether or not the 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 the
Underwriter specifically for use therein; 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
any Computational Materials, ABS Term Sheets or Collateral Term Sheets, except
to the extent expressly provided in (ii) 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 the Underwriter if the 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
-21-
thereto to the 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.
(ii) The Company and CPS, jointly and severally, agree to
indemnify and hold harmless the Underwriter, its directors, officers, employees
and agents and each person, if any, who controls the Underwriter within the
meaning of the 1933 Act or the 1934 Act, to the same extent as the indemnity
from each of the Company and CPS contained in (i) above, 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, any ABS Term Sheet or any Collateral
Term Sheet provided by the 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 (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 of the Company and CPS under
this subsection (ii) shall be in addition to any other liability which such
party may otherwise have. "Company Provided Information" means the information
contained in the data tape delivered by CPS to the Underwriter on or about [ ]
containing information with respect to the Receivables as of the Cutoff Date.
(b) (i) The Underwriter will indemnify and hold harmless each of CPS,
Samco, Linc and the Company, each of their directors, officers, employees and
agents and each person, if any, who controls CPS, Samco, Linc or 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 the Underwriter, its
directors, officers, employees and agents and each person who controls the
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 the
Underwriter specifically for use therein. This indemnity agreement will be in
addition to any liability which the Underwriter may otherwise have. CPS, Samco,
Linc, the Company and the Underwriter acknowledge and agree that the only
information furnished or to be furnished by the Underwriter to the Company or
CPS 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 first
sentence of the fourth
-22-
paragraph on the front cover page and in the last paragraph on the front cover
page of the Final Prospectus concerning the terms of the offering by the
Underwriter (insofar as such information relates to the Underwriter), and the
information in the first and second sentences of the third paragraph under the
caption "Underwriting" in the Final Prospectus and in the second sentence of the
fourth paragraph under the caption "Underwriting" in the Final Prospectus.]
(ii) The Underwriter agrees to indemnify and hold harmless the
Company, CPS, Samco, Linc, the respective officers, directors, employees and
agents of any such party, and each person who controls the Company, CPS, Samco
or Linc within the meaning of the 1933 Act or the 1934 Act against any losses,
claims, damages or liabilities to which such person may become subject under the
1933 Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) arise out of or are based upon
(A) any untrue statement or alleged untrue statement of any material fact
contained in the Computational Materials, any ABS Term Sheet or any Collateral
Term Sheet distributed by the 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 (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 the Underwriter under
this subsection (ii) shall be in addition to any other liability which the
Underwriter may otherwise have.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this Section 9, such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing. The failure to give such notice shall not
relieve the indemnifying party or parties from any liability which it or they
may have to the indemnified party for indemnity or contribution or otherwise
than on account of the provisions of Section 9(a) or (b), except and only to the
extent such omission so to notify shall have materially prejudiced the
indemnifying party under Section 9(a) or (b). In case any such proceeding shall
be brought against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party and shall pay as
incurred the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel at its own expense. Notwithstanding the foregoing, the indemnifying
party shall pay as incurred (or within 30 days of 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
-23-
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 Underwriter 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 is 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 for 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, CPS,
Samco and Linc on the one hand and the Underwriter on the other hand from the
offering of the Notes. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company, CPS, Samco or Linc on the one hand
and the Underwriter on the other hand in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company, CPS,
Samco and Linc on the one hand and the Underwriter on the other hand 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 Underwriter (in each case
as set forth on the cover page of the Final Prospectus). The relative fault
shall be determined by
-24-
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, CPS, Samco or Linc on the one
hand or the Underwriter on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company, CPS, Samco, Linc and the Underwriter agree that it would
not be just and equitable if contributions pursuant to this Section 9(d) were
determined by pro rata allocation 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) the Underwriter shall not be required to contribute any amount in
excess of the underwriting discounts and commissions applicable to the Notes
purchased by the 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.
(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
warranties of each of the Company, CPS, Samco and Linc 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 the Underwriter, the Company, CPS,
Samco, Linc, their respective directors, officers, employees or agents or any
persons controlling the Underwriter, CPS, Samco, Linc or the Company, (ii)
acceptance of any Notes and payment thereof or hereunder, and (iii) any
termination of this Agreement. A successor to the Underwriter, the Company,
Samco, Linc or CPS, their respective directors, officers, employees or agents,
or any person controlling the Underwriter, the Company, Samco, Linc or CPS,
shall be entitled to the benefits of the indemnity, contribution and
reimbursement agreements contained in this Section 9.
-25-
10. [RESERVED]
11. NOTICES.
All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered, telecopied or telegraphed
and confirmed as follows:
if to the Underwriter, to the following address:
[ ]
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;
-26-
if to CPS, at the following address:
Consumer Portfolio Services, Inc.
2 Ada
Irvine, California 92618
Attention: Charles Bradley, Jr.
Facsimile No.: (714) 753-6805
if to Samco, at the following address:
Samco Acceptance Corp.
8150 N. Central Expressway
Suite 600
Lock-Box 39
Dallas, Texas 75206
Attention: Alex B. Louis
Facsimile No.: (214) 691-2166
if to Linc, at the following address:
Linc Acceptance Company LLC
One Selleck Street
Norwalk, Connecticut 06855
Attention: Joe Gilbert
Facsimile No.: (203) 838-7390
12. TERMINATION.
This Agreement may be terminated by the Underwriter by notice to the
Company as follows:
(a) at any time prior to the Closing Date, if any of the following has
occurred: (i) since the respective dates as of which information is given in the
Registration Statement and the Final Prospectus, any material adverse change or
any development involving a prospective material adverse change in the business,
properties, results of operations, financial condition or business prospects of
CPS, Samco, Linc or the Company, whether or not arising in the ordinary course
of business, (ii) any outbreak or escalation of hostilities or declaration of
war or national emergency or other national or international calamity or crisis
or change in economic or political conditions if the effect of such outbreak,
escalation, declaration, emergency, calamity, crisis or change on the financial
markets of the United States would, in the Underwriter's reasonable judgment,
make it impracticable to market the Notes or to enforce contracts for the sale
of the Notes, (iii) any suspension of trading in securities generally on the New
York Stock Exchange or
-27-
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
the Underwriter's reasonable opinion materially and adversely affects or may
materially and adversely affect the business or operations of the Company or
CPS, (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 or CPS'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 the Underwriter's reasonable opinion has a
material adverse effect on the securities markets in the United States; or
(b) as provided in Section 7 of this Agreement.
13. SUCCESSORS.
This Agreement has been and is made solely for the benefit of the
Underwriter, CPS, Samco, Linc and the Company and their respective successors,
executors, administrators, heirs and assigns, and the respective affiliates,
officers, directors, employees, agents and controlling persons referred to
herein, and no other person will have any right or obligation hereunder. No
purchaser of any of the Notes from the 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 the Underwriter, the
Company or CPS, their respective directors, officers, employees or agents or any
controlling person of the Underwriter, the Company or CPS indemnified herein and
(c) delivery of and payment for the Notes under this Agreement.
The Underwriter agrees that, prior to the date which is one year and
one day after the payment in full of all securities issued by the Company or by
a trust for which the Company was the depositor, which securities were rated by
any nationally recognized statistical rating organization, it will not institute
against, or join any other person in instituting against, the Company any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or other proceedings under any Federal or state bankruptcy or similar law.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
-28-
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, the Underwriter, the Company, Samco, Linc and CPS irrevocably
waive all right of trial by jury in any action, proceeding or counterclaim
arising out of or in connection with this Agreement or any matter arising
hereunder.
This Agreement supersedes all prior agreements and understandings
relating to the subject matter hereof.
Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against whom enforcement of the change, waiver, discharge or
termination is sought.
The headings in this Agreement are for purposes of reference only and
shall not limit or otherwise affect the meaning hereof.
Any provision of this Agreement which is prohibited, unenforceable or
not authorized in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition, unenforceability or
non-authorization without invalidating the remaining provisions hereof or
affecting the validity, enforceability or legality of such provision in any
other jurisdiction.
[Rest of page intentionally left blank.]
-29-
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, CPS, Samco, Linc
and the Underwriter in accordance with its terms.
Very truly yours,
CPS RECEIVABLES CORP.
By:
Title:
CONSUMER PORTFOLIO SERVICES, INC.
By:
Title:
SAMCO ACCEPTANCE CORP.
By:
Title:
LINC ACCEPTANCE COMPANY LLC
By:
Title:
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written:
[UNDERWRITER]
By:
Title:
SCHEDULE I
Principal Amount Purchase
Class to be Purchased Price
- ----- --------------- -----
Total
Exhibit 4.1
FORM OF
TRUST AGREEMENT
TRUST AGREEMENT
Dated as of [ ]
between
CPS RECEIVABLES CORP., as Depositor
and
[ ], as
Owner Trustee
TABLE OF CONTENTS
Page
ARTICLE I.
Definitions
SECTION 1.1. Capitalized Terms............................................1
SECTION 1.2. Other Definitional Provisions................................3
ARTICLE II.
Organization
SECTION 2.1. Name.........................................................4
SECTION 2.2. Office.......................................................4
SECTION 2.3. Purposes and Powers..........................................4
SECTION 2.4. Appointment of Owner Trustee.................................5
SECTION 2.5. Initial Capital Contribution of Trust Estate.................5
SECTION 2.6. Declaration of Trust.........................................5
SECTION 2.7. Title to Trust Property......................................6
SECTION 2.8. Situs of Trust...............................................6
SECTION 2.9. Representations and Warranties of the Depositor..............6
SECTION 2.10. Federal Income Tax Allocations...............................7
SECTION 2.11. Covenants of the Depositor...................................8
SECTION 2.12. Covenants of the Certificateholders..........................9
ARTICLE III.
Certificates and Transfer of Interests
SECTION 3.1. Initial Ownership...........................................10
SECTION 3.2. The Certificates............................................10
SECTION 3.3. Authentication of Certificates..............................10
SECTION 3.4. Registration of Transfer and Exchange of Certificates.......11
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Certificates...........14
SECTION 3.6. Persons Deemed Certificateholders...........................14
SECTION 3.7. Access to List of Certificateholders' Names and
Addresses...................................................15
SECTION 3.8. Maintenance of Office or Agency.............................15
SECTION 3.9. ERISA Restrictions..........................................15
Page
ARTICLE IV.
Voting Rights and Other Actions
SECTION 4.1. Prior Notice to Holders with Respect to Certain
Matters.....................................................15
SECTION 4.2. Action by Certificateholders with Respect to Certain
Matters.....................................................16
SECTION 4.3. Action by Certificateholders with Respect to
Bankruptcy..................................................16
SECTION 4.4. Restrictions on Certificateholders' Power...................16
SECTION 4.5. Majority Control............................................17
SECTION 4.6. Rights of Insurer...........................................17
ARTICLE V.
Certain Duties
SECTION 5.1. Accounting and Records to the Noteholders,
Certificateholders, the Internal Revenue Service and
Others......................................................18
SECTION 5.2. Signature on Returns; Tax Matters Partner...................18
ARTICLE VI.
Authority and Duties of Owner Trustee
SECTION 6.1. General Authority...........................................19
SECTION 6.2. General Duties..............................................19
SECTION 6.3. Action upon Instruction.....................................19
SECTION 6.4. No Duties Except as Specified in this Agreement or in
Instructions................................................20
SECTION 6.5. No Action Except under Basic Documents or
Instructions................................................21
SECTION 6.6. Restrictions................................................21
Page
ARTICLE VII.
Concerning the Owner Trustee
SECTION 7.1. Acceptance of Trusts and Duties.............................21
SECTION 7.2. Furnishing of Documents.....................................22
SECTION 7.3. Representations and Warranties..............................23
SECTION 7.4. Reliance; Advice of Counsel.................................23
SECTION 7.5. Not Acting in Individual Capacity...........................23
SECTION 7.6. Owner Trustee Not Liable for Certificates or
Receivables.................................................24
SECTION 7.7. Owner Trustee May Own Certificates and Notes................24
SECTION 7.8. Payments from Owner Trust Estate............................24
SECTION 7.9. Doing Business in other Jurisdictions.......................24
ARTICLE VIII.
Compensation of Owner Trustee
SECTION 8.1. Owner Trustee's Fees and Expenses...........................25
SECTION 8.2. Indemnification.............................................25
SECTION 8.3. Payments to the Owner Trustee...............................25
SECTION 8.4. Non-recourse Obligations....................................26
ARTICLE IX.
Termination of Trust Agreement
SECTION 9.1. Termination of Trust Agreement..............................26
ARTICLE X.
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.1. Eligibility Requirements for Owner Trustee..................27
SECTION 10.2. Resignation or Removal of Owner Trustee.....................28
SECTION 10.3. Successor Owner Trustee.....................................28
SECTION 10.4. Merger or Consolidation of Owner Trustee....................29
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee...............29
Page
ARTICLE XI.
Miscellaneous
SECTION 11.1. Supplements and Amendments..................................31
SECTION 11.2. No Legal Title to Owner Trust Estate in
Certificateholders..........................................32
SECTION 11.3. Limitations on Rights of Others.............................32
SECTION 11.4. Notices.....................................................32
SECTION 11.5. Severability................................................33
SECTION 11.6. Separate Counterparts.......................................33
SECTION 11.7. Assignments; Insurer........................................33
SECTION 11.8. No Petition.................................................33
SECTION 11.9. No Recourse.................................................34
SECTION 11.10. Headings....................................................34
SECTION 11.11. GOVERNING LAW...............................................34
SECTION 11.12. Servicer....................................................34
EXHIBITS
Exhibit A Form of Certificate
Exhibit B Form of Certificate of Trust
Exhibit C Form of Transferee Certificate
TRUST AGREEMENT dated as of [ ] between CPS RECEIVABLES CORP., a
California corporation (the "Depositor") [ ] as Owner Trustee.
W I T N E S S E T H
In consideration of the foregoing, other good and valuable
considerations, and the mutual terms and covenants contained herein, the parties
hereto agree as follows:
ARTICLE I.
Definitions
SECTION 1.1. Capitalized Terms. Terms not defined in this Agreement
shall have the meaning set forth in the Sale and Servicing Agreement and if not
defined therein, shall have the meanings set forth in the Indenture. For all
purposes of this Agreement, the following terms shall have the meanings set
forth below:
"Agreement" shall mean this Trust Agreement, as the same may be amended
or supplemented from time to time.
"Basic Documents" shall mean this Agreement, the Certificate of Trust,
the Sale and Servicing Agreement, the Purchase Agreements, the Spread Account
Agreement, the Spread Account Agreement Supplement, the Insurance Agreement, the
Indenture, the Lockbox Agreement, the Underwriting Agreement and the other
documents and certificates delivered in connection therewith.
"Benefit Plan" shall have the meaning assigned to such term in Section
3.10.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code ss.ss. 3801 et. seq. as the same may be amended from
time to time.
"Certificate" means a trust certificate evidencing the beneficial
interest of a Certificateholder in the Trust, substantially in the form of
Exhibit A attached hereto.
"Certificate Balance" means, as of any date of determination, the Pool
Balance as of such date minus the outstanding principal balance of the Notes as
of such date.
"Certificate of Trust" shall mean the Certificate of Trust in the form
of Exhibit B to be filed for the Trust pursuant to Section 3810(a) of the
Business Trust Statute.
"Certificate Register" and "Certificate Registrar" shall mean the
register mentioned and the registrar appointed pursuant to Section 3.4.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and Treasury Regulations promulgated thereunder.
"Corporate Trust Office" shall mean, with respect to the Owner Trustee,
the principal corporate trust office of the Owner Trustee located at [ ], or at
such other address as the Owner Trustee may designate by notice to the
Certificateholders and the Depositor, or the principal corporate trust office of
any successor Owner Trustee (the address of which the successor owner trustee
will notify the Certificateholders and the Depositor).
"Depositor" shall mean CPS Receivables Corp. in its capacity as
Depositor hereunder.
"ERISA" shall have the meaning assigned to such term in Section 3.10.
"Expenses" shall have the meaning assigned to such term in Section 8.2.
"Holder" or "Certificateholder" shall mean the Person in whose name a
Certificate is registered on the Certificate Register.
"Indemnified Parties" shall have the meaning assigned to such term in
Section 8.2.
"Indenture" shall mean the Indenture dated as of [ ], among the Trust
and [ ], as Trustee, as the same may be amended and supplemented from time to
time.
"Initial Certificate Balance" means [$ ].
"Instructing Party" shall have the meaning assigned to such term in
Section 6.3(a).
"Insurer" shall mean Financial Security Assurance Inc., or its
successor in interest.
"Owner Trust Estate" shall mean all right, title and interest of the
Trust in and to the property and rights assigned to the Trust pursuant to
Article II of the Sale and Servicing Agreement, all funds on deposit from time
to time in the Trust Accounts and all other property of the Trust from time to
time, including any rights of the Owner Trustee and the Trust pursuant to the
Sale and Servicing Agreement and the Spread Account Agreement.
"Owner Trustee" shall mean [ ], not in its individual capacity but
solely as owner trustee under this Agreement, and any successor Owner Trustee
hereunder.
"Paying Agent" shall mean [ ].
"Record Date" shall mean with respect to any Payment Date, the close of
business on the 10th day of the calendar month of such Payment Date.
2
"Responsible Officer" when used with respect to the Owner Trustee, any
officer (or agent acting under a power of attorney) who is responsible for
administering the transactions contemplated by this Trust Agreement and also,
with respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement among the Trust, the Depositor, Consumer Portfolio Services, Inc. and
the Trustee, dated as of [ ] as the same may be amended and supplemented from
time to time.
"Secretary of State" shall mean the Secretary of State of the State of
Delaware.
"Spread Account" shall mean the Spread Account established and
maintained pursuant to the Spread Account Agreement.
"Spread Account Agreement" shall mean the Master Spread Account
Agreement, amended and restated as of [ ], among the Depositor, the Insurer, and
the Trustee, as the same may be amended, supplemented or otherwise modified in
accordance with the terms thereof.
"Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" shall mean the trust established by this Agreement.
"Trustee" means the Person acting as Trustee under the Indenture, its
successors in interest and any successor trustee under the Indenture.
SECTION 1.2. Other Definitional Provisions. (a) Capitalized terms used
herein and not otherwise defined have the meanings assigned to them in the Sale
and Servicing Agreement or, if not defined therein, in the Spread Account
Agreement or in the Indenture.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles as in effect on the date of
this Agreement or any such certificate or other document, as applicable. To the
extent
3
that the definitions of accounting terms in this Agreement or in any such
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Agreement or in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
ARTICLE II.
Organization
SECTION 2.1. Name. There is hereby formed a trust to be known as "CPS
Auto Receivables Trust 199[ ]-[ ]", in which name the Owner Trustee may conduct
the business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.
SECTION 2.2. Office. The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address as the
Owner Trustee may designate by written notice to the Certificateholders and the
Depositor.
SECTION 2.3. Purposes and Powers. (a) The purpose of the Trust is, and
the Trust shall have the power and authority, to engage in the following
activities:
(i) to issue the Notes pursuant to the Indenture and the
Certificates pursuant to this Agreement;
(ii) to pay the organizational, start-up and transactional
expenses of the Trust pursuant to the Sale and Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey
the Owner Trust Estate to the Trustee pursuant to the Indenture for the
benefit of the Insurer and the Noteholders and to hold, manage and
distribute to the Certificateholders and the Depositor pursuant to the
terms of the Sale and Servicing Agreement any portion of the Owner
Trust Estate released from the Lien of, and remitted to the Trust
pursuant to, the Indenture;
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(iv) to enter into and perform its obligations under the Basic
Documents to which it is a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish
the foregoing or are incidental thereto or connected therewith; and
(vi) subject to compliance with the Basic Documents, to engage
in such other activities as may be required in connection with the
conservation of the Owner Trust Estate and the making of distributions
to the Certificateholders and the Noteholders.
The Trust is hereby authorized to engage in the foregoing activities. The Trust
shall not engage in any activity other than in connection with the foregoing or
other than as required or authorized by the terms of this Agreement or the Basic
Documents.
SECTION 2.4. Appointment of Owner Trustee. The Depositor hereby
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein.
SECTION 2.5. Initial Capital Contribution of Trust Estate. The
Depositor hereby sells, assigns, transfers, conveys and sets over to the Owner
Trustee, as of the date hereof, the sum of $10.00. The Owner Trustee hereby
acknowledges receipt of the foregoing contribution in trust from the Depositor,
as of the date hereof, which contribution shall constitute the initial Owner
Trust Estate. The Depositor shall pay organizational expenses of the Trust as
they may arise.
SECTION 2.6. Declaration of Trust. The Owner Trustee hereby declares
that it will hold the Owner Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the Certificateholders,
subject to the conditions of the Trust under the Basic Documents. It is the
intention of the parties hereto that the Trust constitute a business trust under
the Business Trust Statute and that this Agreement constitute the governing
instrument of such business trust. It is the intention of the parties hereto
that (i) so long as the Depositor is the Holder of 100 percent of the
Certificates (either directly or indirectly through wholly-owned non-corporate
subsidiaries), for federal income tax purposes and to the extent consistent with
the laws of any other jurisdiction for which the characterization of the Trust
as an entity is relevant, the Trust shall be treated solely as a security device
and not as an entity separate from the Depositor, and (ii) if the Depositor is
not the Holder of 100 percent of the Certificates (either directly or indirectly
through wholly-owned non-corporate subsidiaries), then for federal income tax
purposes and for purposes of the laws of any other jurisdiction for which the
characterization of the Trust as an entity is relevant, the Trust shall be
treated as a partnership among the Certificateholders and the Depositor and not
as an association (or publicly traded partnership) taxable as a corporation. The
parties agree that, unless otherwise required by appropriate tax authorities,
the Trust will file or cause to be filed annual or other necessary returns,
reports and other forms, if any, consistent with such characterization of the
5
Trust. Effective as of the date hereof, the Owner Trustee shall have all rights,
powers and duties set forth herein and to the extent not inconsistent herewith,
in the Business Trust the Certificate of Trust with the Secretary of State.
SECTION 2.7. Title to Trust Property. (a) Legal title to all the Owner
Trust Estate shall be vested at all times in the Trust as a separate legal
entity except where applicable law in any jurisdiction requires title to any
part of the Owner Trust Estate to be vested in a trustee or trustees, in which
case title shall be deemed to be vested in the Owner Trustee, a co-trustee
and/or a separate trustee, as the case may be.
(b) The Holders shall not have legal title to any part of the Owner
Trust Estate. The Holders shall be entitled to receive distributions in respect
of their undivided ownership interest therein only in accordance with Article
IX. No transfer, by operation of law or otherwise, of any right, title or
interest by any Certificateholder of its ownership interest in the Owner Trust
Estate shall operate to terminate this Agreement or the trusts hereunder or
entitle any transferee to an accounting or the transfer to it of legal title to
any part of the Owner Trust Estate.
SECTION 2.8. Situs of Trust. The Trust will be located and administered
in the State of Delaware or the State of New York. All bank accounts maintained
by the Owner Trustee on behalf of the Trust shall be located in the State of
Delaware, the State of New York or the State of Minnesota. Payments will be
received by the Trust only in Delaware, New York or Minnesota and payments will
be made by the Trust only from Delaware, New York or Minnesota. The Trust shall
not have any employees in any state other than Delaware or New York; provided,
however, that nothing herein shall restrict or prohibit the Owner Trustee or the
Servicer or any agent of the Trust from having employees within or without the
State of Delaware and New York. The only office of the Trust will be at the
Corporate Trust Office in Delaware.
SECTION 2.9. Representations and Warranties of the Depositor. The
Depositor makes the following representations and warranties on which the Owner
Trustee relies in accepting the Owner Trust Estate in trust and issuing the
Certificates and upon which the Insurer relies in issuing the Note Policy.
(a) Organization and Good Standing. The Depositor is duly
organized and validly existing as a California corporation with power
and authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted
and is proposed to be conducted pursuant to this Agreement and the
Basic Documents.
(b) Due Qualification. The Depositor is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of its property, the
6
conduct of its business and the performance of its obligations under
this Agreement and the Basic Documents requires such qualification.
(c) Power and Authority. The Depositor has the corporate power
and authority to execute and deliver this Agreement and to carry out
its terms; the Depositor has full power and authority to sell and
assign the property to be sold and assigned to, and deposited with, the
Trust and the Depositor has duly authorized such sale and assignment
and deposit to the Trust by all necessary corporate action; and the
execution, delivery and performance of this Agreement has been duly
authorized by the Depositor by all necessary corporate action.
(d) No Consent Required. No consent, license, approval or
authorization or registration or declaration with, any Person or with
any governmental authority, bureau or agency is required in connection
with the execution, delivery or performance of this Agreement and the
Basic Documents, except for such as have been obtained, effected or
made.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof
do not conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time)
a default under, the certificate of incorporation or by-laws of the
Depositor, or any material indenture, agreement or other instrument to
which the Depositor is a party or by which it is bound; nor result in
the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other
instrument (other than pursuant to the Basic Documents); nor violate
any law or, to the best of the Depositor's knowledge, any order, rule
or regulation applicable to the Depositor of any court or of any
Federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Depositor or
its properties.
(f) No Proceedings. There are no proceedings or investigations
pending or, to its knowledge, threatened against it before any court,
regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over it or its
properties (A) asserting the invalidity of this Agreement or any of the
Basic Documents, (B) seeking to prevent the issuance of the
Certificates or the Notes or the consummation of any of the
transactions contemplated by this Agreement or any of the Basic
Documents, (C) seeking any determination or ruling that might
materially and adversely affect its performance of its obligations
under, or the validity or enforceability of, this Agreement or any of
the Basic Documents, or (D) seeking to adversely affect the federal
income tax or other federal, state or local tax attributes of the
Certificates.
SECTION 2.10. Federal Income Tax Allocations. (a) For purposes of the
laws of any jurisdiction for which the Trust is characterized as a partnership
(consistent with the
7
characterization of the Trust described in Section 2.6 above), the following
allocations shall apply for Federal income tax purposes. Net income of the Trust
for any month as determined for Federal income tax purposes (and each item of
income, gain, loss and deduction entering into the computation thereof) shall be
allocated among the Holders of Certificates as of the close of business on the
last day of such month, in proportion to their ownership of the principal amount
of the Certificates on such date. Net losses of the Trust, if any, for any month
as determined for Federal income tax purposes (and each item of income, gain,
loss and deduction entering into the computation thereof) shall be allocated to
the Depositor, to the extent it is reasonably expected to bear the economic
burden of such net losses, and any remaining net losses shall be allocated among
the other Holders of Certificates as of the close of business on the last day of
such month in proportion to their ownership of principal amount of Certificates
on such day. The Depositor is authorized to modify the allocations in this
paragraph if necessary or appropriate, in its sole discretion, for the
allocations to fairly reflect the economic income, gain or loss to the Holders
of Certificates, or as otherwise required by the Code. Notwithstanding anything
provided in this Section 2.10(a), if all Certificates are held solely by the
Depositor, the application of this Section 2.10(a) shall be disregarded.
(b) One hundred percent of the "excess nonrecourse liabilities" of the
Trust represented by all outstanding Classes of Notes shall be allocated, for
purposes of Treasury Regulations section 1.752-3(3), to the Depositor.
SECTION 2.11. Covenants of the Depositor. The Depositor agrees and
covenants for the benefit of each Certificateholder, the Insurer and the Owner
Trustee, during the term of this Agreement, and to the fullest extent permitted
by applicable law, that:
(a) it shall not create, incur or suffer to exist any
indebtedness or engage in any business, except, in each case, as
permitted by its certificate of incorporation and the Basic Documents;
(b) it shall not, for any reason, institute proceedings for
the Trust to be adjudicated a bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against the Trust,
or file a petition seeking or consenting to reorganization or relief
under any applicable federal or state law relating to the bankruptcy of
the Trust, or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of the
Trust or a substantial part of the property of the Trust or cause or
permit the Trust to make any assignment for the benefit of creditors,
or admit in writing the inability of the Trust to pay its debts
generally as they become due, or declare or effect a moratorium on the
debt of the Trust or take any action in furtherance of any such action;
(c) it shall obtain from each counterparty to each Basic
Document to which it or the Trust is a party and each other agreement
entered into on or after the date hereof to which it or the Trust is a
party, an agreement by each such counterparty that
8
prior to the occurrence of the event specified in Section 9.1(e) such
counterparty shall not institute against, or join any other Person in
instituting against, it or the Trust, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar
proceedings under the laws of the United States or any state of the
United States; and
(d) it shall not, for any reason, withdraw or attempt to
withdraw from this Agreement, dissolve, institute proceedings for it to
be adjudicated a bankrupt or insolvent, or consent to the institution
of bankruptcy or insolvency proceedings against it, or file a petition
seeking or consenting to reorganization or relief under any applicable
federal or state law relating to bankruptcy, or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator
(or other similar official) of it or a substantial part of its
property, or make any assignment for the benefit of creditors, or admit
in writing its inability to pay its debts generally as they become due,
or declare or effect a moratorium on its debt or take any action in
furtherance of any such action.
SECTION 2.12. Covenants of the Certificateholders. Each
Certificateholder by its acceptance of a Certificate agrees:
(a) to be bound by the terms and conditions of the
Certificates of which such party is the record or beneficial owner and
of this Agreement, including any supplements or amendments hereto and
to perform the obligations of a Holder as set forth therein or herein,
in all respects as if it were a signatory hereto. This undertaking is
made for the benefit of the Trust, the Owner Trustee, the Insurer and
all other Holders present and future;
(b) to hereby appoint the Depositor as its agent and
attorney-in-fact to sign any federal income tax information return
filed on behalf of the Trust and agree that, if requested by the Trust,
it will sign such federal income tax information return in its capacity
as a Holder of an interest in the Trust. Each Holder also hereby agrees
that in its tax returns it will not take any position inconsistent with
those taken in any tax returns filed by the Trust;
(c) if such Holder is other than an individual or other entity
holding its Certificate through a broker who reports securities sales
on Form 1099-B, to notify the Owner Trustee of any transfer by it of a
Certificate or a beneficial interest in a Certificate in a taxable sale
or exchange, within 30 days of the date of the transfer; and
(d) until the completion of the events specified in Section
9.1(e), not to, for any reason, institute proceedings for the Trust or
the Depositor to be adjudicated a bankrupt or insolvent, or consent to
the institution of bankruptcy or insolvency proceedings against the
Trust, or file a petition seeking or consenting to reorganization or
relief under any applicable federal or state law relating to
bankruptcy, or consent to
9
the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Trust or a substantial
part of its property, or cause or permit the Trust to make any
assignment for the benefit of its creditors, or admit in writing its
inability to pay its debts generally as they become due, or declare or
effect a moratorium on its debt or take any action in furtherance of
any such action.
ARTICLE III.
Certificates and Transfer of Interests
SECTION 3.1. Initial Ownership. Upon the formation of the Trust by the
contribution by the Depositor pursuant to Section 2.5 and until the issuance of
the Certificates, the Depositor shall be the sole beneficiary of the Trust.
SECTION 3.2. The Certificates. The Certificates shall be issued
initially to the Depositor with a Certificate Balance of [$ ]. Certificates
shall be issued in minimum denominations of $1,000 and integral multiples
thereof (except for one Certificate which may be issued in a denomination other
than an integral multiple of $1,000). The Certificates shall be executed on
behalf of the Trust by manual or facsimile signature of an authorized officer of
the Owner Trustee. Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures shall have been affixed,
authorized to sign on behalf of the Trust, shall be validly issued and entitled
to the benefit of this Agreement, notwithstanding that such individuals or any
of them shall have ceased to be so authorized prior to the authentication and
delivery of such Certificates or did not hold such offices at the date of
authentication and delivery of such Certificates. A transferee of a Certificate
shall become a Certificateholder, and shall be entitled to the rights and
subject to the obligations of a Certificateholder hereunder, upon due
registration of such Certificate in such transferee's name pursuant to Section
3.4.
SECTION 3.3. Authentication of Certificates. Concurrently with the
initial sale of the Receivables to the Trust pursuant to the Sale and Servicing
Agreement, the Owner Trustee shall cause the Certificates with an aggregate
Certificate Balance equal to $4,807,160.19 to be executed on behalf of the
Trust, authenticated and delivered upon the written order of the Depositor,
signed by its chairman of the board, its president or any vice president, its
treasurer or any assistant treasurer without further corporate action by the
Depositor, in authorized denominations. No Certificate shall entitle its holder
to any benefit under this Agreement, or shall be valid for any purpose, unless
there shall appear on such Certificate a certificate of authentication
substantially in the form set forth in Exhibit A, executed by the Owner Trustee
or the Owner Trustee's authentication agent, by manual signature; such
authentication shall constitute conclusive evidence that such Certificate shall
have been duly authenticated and delivered hereunder. All Certificates shall be
dated the date of their authentication. Bankers Trust Company shall be the
initial authentication agent of the Owner Trustee and all
10
references herein to the authentication of Certificates shall be deemed to
include the authentication agent.
SECTION 3.4. Registration of Transfer and Exchange of Certificates. (a)
The Certificate Registrar shall keep or cause to be kept, at the office or
agency maintained pursuant to Section 3.8, a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, the Owner Trustee
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. Bankers Trust Company shall be the
initial Certificate Registrar.
(b) The Certificate Registrar shall provide the Paying Agent with a
list of the names and addresses of the Certificateholders on the Closing Date in
the form in which such information is provided to the Certificate Registrar.
Upon any transfers of Certificates, the Certificate Registrar shall promptly
notify the Paying Agent (if other than the Certificate Registrar) of the name
and address of the transferee in writing, by facsimile.
(c) No transfer of a Certificate shall be made unless (i) the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and any applicable State securities laws are complied with,
(ii) such transfer is exempt from the registration requirements under said
Securities Act and laws or (iii) such transfer is made to a Person who the
transferor reasonably believes is a "qualified institutional buyer" (as defined
in Rule 144A of the Securities Act) that is purchasing such Certificate for its
own account or the account of a qualified institutional buyer to whom notice is
given that the transfer is being made in reliance on said Rule 144A. In the
event that a transfer is to be made in reliance upon clause (ii) above, the
Certificateholder desiring to effect such transfer and such Certificateholder's
prospective transferee must each (x) certify in writing to the Certificate
Registrar the facts surrounding such transfer and (y) provide the Certificate
Registrar with a written opinion of counsel in form and substance satisfactory
to the Depositor and the Certificate Registrar that such transfer may be made
pursuant to an exemption from the Securities Act or laws, which Opinion of
Counsel shall not be an expense of the Depositor or the Certificate Registrar.
In the event that a transfer is to be made in reliance upon clause (iii) above,
the prospective transferee shall have furnished to the Certificate Registrar and
the Depositor a Transferee Certificate, signed by such transferee, in the form
of Exhibit C. Neither the Depositor nor the Certificate Registrar is under any
obligation to register the Certificates under said Securities Act or any other
securities law. The Certificate Registrar may request and shall receive in
connection with any transfer signature guarantees satisfactory to it in its sole
discretion.
(d) In no event shall a Certificate be transferred to an employee
benefit plan, trust annuity or account subject to ERISA or a plan described in
Section 4975(e)(1) of the Code (any such plan, trust or account including any
Keogh (HR-10) plans, individual retirement accounts or annuities and other
employee benefit plans subject to Section 406 of ERISA or Section 4975 of the
Code being referred to in this Section 6.3 as an "Employee Plan"), a trustee of
any Employee Plan, or an entity, account or other pooled investment fund the
underlying assets of which include or are deemed to include Employee Plan assets
by reason
11
of an Employee Plan's investment in the entity, account or other pooled
investment fund. The Seller, the Servicer, the Trustee, the Owner Trustee, the
Insurer and the Standby Servicer shall not be responsible for confirming or
otherwise investigating whether a proposed purchaser is an employee benefit
plan, trust or account subject to ERISA, or described in Section 4975(e)(1) of
the Code.
(e) Each Holder of a Certificate, except the Depositor, if the
Depositor is the Holder of a Certificate, by virtue of the acquisition and
holding thereof, will be deemed to have represented and agreed as follows:
(i) It is a qualified institutional buyer as defined in Rule
144A or an institutional accredited investor as defined in Regulation D
promulgated under the Securities Act and is acquiring the Certificates
for its own institutional account or for the account of a qualified
institutional buyer or an institutional accredited investor.
(ii) It understands that the Certificates have been offered in
a transaction not involving any public offering within the meaning of
the Securities Act, and that, if in the future it decides to resell,
pledge or otherwise transfer any Certificates, such Certificates may be
resold, pledged or transferred only (a) to a person whom the seller
reasonably believes is a qualified institutional buyer (as defined in
Rule 144A under the Securities Act) that purchases for its own account
or for the account of a qualified institutional buyer to whom notice is
given that the resale, pledge or transfer is being made in reliance on
Rule 144A, (b) pursuant to an effective registration statement under
the Securities Act or (c) in reliance on another exemption under the
Securities Act.
(iii) It understands that the Certificates will bear a legend
substantially to the following effect:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE
HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES THAT THIS
SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
(1) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT
TO RULE 144A, TO A PERSON WHOM THE TRANSFEROR REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING
OF RULE 144A UNDER THE SECURITIES ACT, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, AND SUBJECT
TO THE RECEIPT BY THE CERTIFICATE REGISTRAR AND THE DEPOSITOR
OF A TRANSFEREE CERTIFICATE, (2) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER
12
THE SECURITIES ACT OR (3) IN RELIANCE ON ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
SUBJECT TO THE RECEIPT BY THE CERTIFICATE REGISTRAR AND THE
DEPOSITOR, OF A CERTIFICATION OF THE TRANSFEREE (SATISFACTORY
TO THE CERTIFICATE REGISTRAR AND THE DEPOSITOR) AND AN OPINION
OF COUNSEL (SATISFACTORY TO THE CERTIFICATE REGISTRAR AND THE
DEPOSITOR) TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE
WITH THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
AND IN COMPLIANCE WITH THE TRANSFER REQUIREMENTS SET FORTH IN
SECTION 3.4 OF THE TRUST AGREEMENT.
IN NO EVENT SHALL THIS SECURITY BE TRANSFERRED TO AN
EMPLOYEE BENEFIT PLAN, TRUST ANNUITY OR ACCOUNT SUBJECT TO
ERISA OR A PLAN DESCRIBED IN SECTION 4975(E)(1) OF THE CODE,
(ANY SUCH PLAN, TRUST OR ACCOUNT BEING REFERRED TO AS AN
"EMPLOYEE PLAN"), A TRUSTEE OF ANY EMPLOYEE PLAN, OR AN
ENTITY, ACCOUNT OR OTHER POOLED INVESTMENT FUND THE UNDERLYING
ASSETS OF WHICH INCLUDE OR ARE DEEMED TO INCLUDE EMPLOYEE PLAN
ASSETS BY REASON OF AN EMPLOYEE PLAN'S INVESTMENT IN THE
ENTITY, ACCOUNT OR OTHER POOLED INVESTMENT FUND. INCLUDED
WITHIN THE DEFINITION OF "EMPLOYEE PLANS" ARE, WITHOUT
LIMITATION, KEOGH (HR-10) PLANS, IRA's (INDIVIDUAL RETIREMENT
ACCOUNTS OR ANNUITIES) AND OTHER EMPLOYEE BENEFIT PLANS,
SUBJECT TO SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE.
(iv) It has not acquired the Certificates with the assets of
an Employee Plan.
(f) Upon surrender for registration of transfer of any Certificate at
the office or agency maintained pursuant to Section 3.8, the Owner Trustee shall
execute, authenticate and deliver (or shall cause its authenticating agent to
authenticate and deliver), in the name of the designated transferee or
transferees, one or more new Certificates in authorized denominations of a like
class and aggregate Certificate Balance dated the date of authentication by the
Owner Trustee or any authenticating agent. At the option of a Holder,
Certificates may be exchanged for other Certificates of the same class in
authorized denominations of a like aggregate Certificate Balance upon surrender
of the Certificates to be exchanged at the office or agency maintained pursuant
to Section 3.8.
(g) Every Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Owner
13
Trustee and the Certificate Registrar duly executed by the Certificateholder or
his attorney duly authorized in writing, with such signature guaranteed by an
"eligible guarantor institution" meeting the requirements of the Certificate
Registrar, which requirements include membership or participation in the
Securities Transfer Agent's Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the Certificate Registrar in addition
to, or in substitution for, STAMP, all in accordance with the Exchange Act. Each
Certificate surrendered for registration of transfer or exchange shall be
canceled and subsequently disposed of by the Owner Trustee in accordance with
its customary practice.
(h) No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Owner Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate shall be surrendered to the Certificate Registrar, or
if the Certificate Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Certificate and (b) there shall be delivered
to the Certificate Registrar, the Owner Trustee and (unless an Insurer Default
shall have occurred and be continuing) the Insurer, such security or indemnity
as may be required by them to save each of them harmless, then in the absence of
notice that such Certificate shall have been acquired by a bona fide purchaser,
the Owner Trustee on behalf of the Trust shall execute and the Owner Trustee, or
the Owner Trustee's authenticating agent, shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like class, tenor and denomination. In
connection with the issuance of any new Certificate under this Section, the
Owner Trustee or the Certificate Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith. Any duplicate Certificate issued pursuant to this Section
shall constitute conclusive evidence of an ownership interest in the Trust, as
if originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
SECTION 3.6. Persons Deemed Certificateholders. Every Person by virtue
of becoming a Certificateholder in accordance with this Agreement and the rules
and regulations of the Clearing Agency shall be deemed to be bound by the terms
of this Agreement. Prior to due presentation of a Certificate for registration
of transfer, the Owner Trustee, the Certificate Registrar and the Insurer and
any agent of the Owner Trustee, the Certificate Registrar and the Insurer, may
treat the Person in whose name any Certificate shall be registered in the
Certificate Register as the owner of such Certificate for the purpose of
receiving distributions pursuant to the Sale and Servicing Agreement and for all
other purposes whatsoever, and none of the Owner Trustee, the Certificate
Registrar or the Insurer nor any agent of the Owner Trustee, the Certificate
Registrar or the Insurer shall be bound by any notice to the contrary.
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SECTION 3.7. Access to List of Certificateholders' Names and Addresses.
The Certificate Registrar shall furnish or cause to be furnished to the
Servicer, the Depositor or (unless an Insurer Default shall have occurred and be
continuing) the Insurer, within 15 days after receipt by the Certificate
Registrar of a request therefor from such Person in writing, a list, of the
names and addresses of the Certificateholders as of the most recent Record Date.
If three or more Holders of Certificates or one or more Holders of Certificates
evidencing not less than 25% of the Certificate Balance then outstanding apply
in writing to the Certificate Registrar, and such application states that the
applicants desire to communicate with other Certificateholders with respect to
their rights under this Agreement or under the Certificates and such application
is accompanied by a copy of the communication that such applicants propose to
transmit, then the Certificate Registrar shall, within five Business Days after
the receipt of such application, afford such applicants access during normal
business hours to the current list of Certificateholders. Each Holder, by
receiving and holding a Certificate or a beneficial interest therein, shall be
deemed to have agreed not to hold any of the Depositor, the Servicer, the Owner
Trustee, the Certificate Registrar or the Insurer or any agent thereof
accountable by reason of the disclosure of its name and address, regardless of
the source from which such information was derived.
SECTION 3.8. Maintenance of Office or Agency. The Trust shall maintain
in New York, an office or offices or agency or agencies where Certificates may
be surrendered for registration of transfer or exchange and where notices and
demands to or upon the Trust in respect of the Certificates and the Basic
Documents may be served. The Trust initially designates [ ] at [ ] as its
principal corporate trust office for such purposes. The Owner Trustee shall give
prompt written notice to the Depositor, the Certificateholders and (unless an
Insurer Default shall have occurred and be continuing) the Insurer of any change
in the location of the Certificate Register or any such office or agency.
SECTION 3.9. ERISA Restrictions. The Certificates may not be acquired
by or for the account of (i) an employee benefit plan (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) that is subject to the provisions of Title I of ERISA, (ii) a plan
described in Section 4975(e)(1) of the Internal Revenue Code of 1986, as
amended, or (iii) any entity whose underlying assets include plan assets by
reason of a plan's investment in the entity (each, a "Benefit Plan"). By
accepting and holding its ownership interest in its Certificate, the Holder
thereof shall be deemed to have represented and warranted that it is not a
Benefit Plan.
ARTICLE IV.
Voting Rights and Other Actions
SECTION 4.1. Prior Notice to Holders with Respect to Certain Matters.
With respect to the following matters, the Owner Trustee shall not take action
unless at least 30 days before the taking of such action, the Owner Trustee
shall have notified the Certificateholders
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in writing of the proposed action and the Certificateholders shall not have
notified the Owner Trustee in writing prior to the 30th day after such notice is
given that such Certificateholders have withheld consent or provided alternative
direction:
(a) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed
under the Business Trust Statute or unless such amendment would not
materially and adversely affect the interests of the Holders);
(b) the amendment of the Indenture by a supplemental indenture
in circumstances where the consent of any Certificateholder is
required;
(c) the amendment of the Indenture by a supplemental indenture
in circumstances where the consent of any Certificateholder is not
required and such amendment materially adversely affects the interest
of the Certificateholders; or
(d) except pursuant to Section 13.1(b) of the Sale and
Servicing Agreement, the amendment, change or modification of the Sale
and Servicing Agreement, except to cure any ambiguity or defect or to
amend or supplement any provision in a manner that would not materially
adversely affect the interests of the Certificateholders.
The Depositor shall notify the Certificateholders in writing of any appointment
of a successor Note Registrar, Trustee or Certificate Registrar within five
Business Days thereof.
SECTION 4.2. Action by Certificateholders with Respect to Certain
Matters. The Owner Trustee shall not have the power, except upon the direction
of the Certificateholders or the Insurer in accordance with the Basic Documents,
to (a) remove the Servicer under the Sale and Servicing Agreement pursuant to
Section 10.1 thereof or (b) except as expressly provided in the Basic Documents,
sell the Receivables after the termination of the Indenture. The Owner Trustee
shall take the actions referred to in the preceding sentence only upon written
instructions signed by the Certificateholders and the furnishing of
indemnification satisfactory to the Owner Trustee by the Certificateholders.
SECTION 4.3. Action by Certificateholders with Respect to Bankruptcy.
The Owner Trustee shall not have the power to, and shall not, commence any
proceeding or other actions contemplated by Section 2.12(d) relating to the
Trust without the prior written consent of the Insurer (unless an Insurer
Default shall have occurred and be continuing) and the unanimous prior approval
of all Certificateholders and the delivery to the Owner Trustee by each
Certificateholder of a certificate signed by such Certificateholder, certifying
that such Certificateholder reasonably believes that the Trust is insolvent.
SECTION 4.4. Restrictions on Certificateholders' Power. (a) The
Certificateholders shall not direct the Owner Trustee to take or refrain from
taking any action if such action or inaction would be contrary to any obligation
of the Trust or the Owner Trustee under this
16
Agreement or any of the Basic Documents or would be contrary to Section 2.3 nor
shall the Owner Trustee be obligated to follow any such direction, if given.
(b) No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action, or
proceeding in equity or at law upon or under or with respect to this Agreement
or any Basic Document, unless the Certificateholders are the Instructing Party
pursuant to Section 6.3 and unless a Certificateholder previously shall have
given to the Owner Trustee a written notice of default and of the continuance
thereof, as provided in this Agreement, and also unless Certificateholders
evidencing not less than 25% of the Certificate Balance then outstanding shall
have made written request upon the Owner Trustee to institute such action, suit
or proceeding in its own name as Owner Trustee under this Agreement and shall
have offered to the Owner Trustee such reasonable indemnity as it may require
against the costs, expenses and liabilities to be incurred therein or thereby,
and the Owner Trustee, for 30 days after its receipt of such notice, request,
and offer of indemnity, shall have neglected or refused to institute any such
action, suit, or proceeding, and during such 30-day period no request or waiver
inconsistent with such written request has been given to the Owner Trustee
pursuant to and in compliance with this Section or Section 6.3; it being
understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Owner Trustee, that
no one or more Holders of Certificates shall have any right in any manner
whatever by virtue or by availing itself or themselves of any provisions of this
Agreement to affect, disturb, or prejudice the rights of the Holders of any
other of the Certificates, or to obtain or seek to obtain priority over or
preference to any other such Holder, or to enforce any right under this
Agreement, except in the manner provided in this Agreement and for the equal,
ratable, and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section 4.4, each and every
Certificateholder and the Owner Trustee shall be entitled to such relief as can
be given either at law or in equity.
SECTION 4.5. Majority Control. No Certificateholder shall have any
right to vote or in any manner otherwise control the operation and management of
the Trust except as expressly provided in this Agreement. Except as expressly
provided herein, any action that may be taken by the Certificateholders under
this Agreement may be taken by the Holders of Certificates evidencing not less
than a majority of the aggregate Certificate Balance. Except as expressly
provided herein, any written notice of the Certificateholders delivered pursuant
to this Agreement shall be effective if signed by Certificateholders evidencing
not less than a majority of the Certificate Balance at the time of the delivery
of such notice.
SECTION 4.6. Rights of Insurer. Notwithstanding anything to the
contrary in the Basic Documents, without the prior written consent of the
Insurer (so long as no Insurer Default shall have occurred and be continuing),
the Owner Trustee shall not (i) remove the Servicer, (ii) initiate any claim,
suit or proceeding by the Trust or compromise any claim, suit or proceeding
brought by or against the Trust, other than with respect to the enforcement of
any Receivable or any rights of the Trust thereunder, (iii) authorize the merger
or
17
consolidation of the Trust with or into any other business trust or other entity
(other than in accordance with Section 3.10 of the Indenture) or (iv) amend the
Certificate of Trust.
ARTICLE V.
Certain Duties
SECTION 5.1. Accounting and Records to the Noteholders,
Certificateholders, the Internal Revenue Service and Others. Subject to Sections
12.1(b)(iii) and 12.1(c) of the Sale and Servicing Agreement, the Depositor
shall (a) maintain (or cause to be maintained) the books of the Trust on a
calendar year basis on the accrual method of accounting, (b) deliver (or cause
to be delivered) to each Certificateholder, as may be required by the Code and
applicable Treasury Regulations, such information, if any, as may be required
(including, if appropriate consistent with the characterization of the Trust
pursuant to Section 2.6, Schedule K-1) to enable each Certificateholder to
prepare its Federal and state income tax returns, (c) file or cause to be filed
such tax returns, if any, relating to the Trust (including, if appropriate
consistent with the characterization of the Trust pursuant to Section 2.6, a
partnership information return on Internal Revenue Service Form 1065), and
direct the Servicer to make such elections as may from time to time be required
or appropriate under any applicable state or Federal statute or rule or
regulation thereunder so as to maintain the Trust's characterization pursuant to
Section 2.6 for Federal income and California franchise tax purposes and for
purposes of any other jurisdiction for which the characterization of the Trust
is relevant. In any period in which the Paying Agent receives written notice
that the Trust is not treated solely as a security device in accordance with the
provisions of Section 2.6, the Paying Agent will, in accordance with Section
1446 of the Code and Rev. Proc. 89-31, 1989- 1 C.B. 895 thereunder, collect or
cause to be collected any withholding tax as described in and in accordance with
Section 5.5 with respect to income or distributions to Certificateholders and
the appropriate forms relating thereto. The Depositor shall make all elections
pursuant to this Section. The Depositor shall have the power to sign all tax
information returns filed pursuant to this Section 5.1 and any other returns as
may be required by law, to the extent it is legally entitled to do so. In the
event the Trust is treated as a partnership for federal income tax purposes, the
Depositor shall elect under Section 1278 of the Code to include in income
currently any market discount that accrues with respect to the Receivables. None
of the Trust, the Depositor nor any Person on behalf of the Trust or the
Depositor shall make the election provided under Section 754 of the Code.
SECTION 5.2. Signature on Returns; Tax Matters Partner. (a) The
Depositor shall sign on behalf of the Trust the tax returns of the Trust, unless
applicable law requires a Certificateholder to sign such documents.
(b) In the event the Trust is treated as a partnership for federal
income tax purposes, the Depositor shall be the "tax matters partner" of the
Trust pursuant to the Code.
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ARTICLE VI.
Authority and Duties of Owner Trustee
SECTION 6.1. General Authority. The Owner Trustee is authorized and
directed to execute and deliver the Basic Documents to which the Trust is named
as a party and each certificate or other document attached as an exhibit to or
contemplated by the Basic Documents to which the Trust is named as a party and
any amendment thereto, in each case, in such form as the Depositor shall approve
as evidenced conclusively by the Owner Trustee's execution thereof, and on
behalf of the Trust, to direct the Trustee to authenticate and deliver Class A-1
Notes in the aggregate principal amount of [$ ], Class A-2 Notes in the
aggregate principal amount of [$ ]. [Describe additional classes of Notes, if
any.] In addition to the foregoing, the Owner Trustee is authorized but shall
not be obligated, to take all actions required of the Trust pursuant to the
Basic Documents. The Owner Trustee is further authorized from time to time to
take such action as the Instructing Party recommends with respect to the Basic
Documents so long as such activities are consistent with the terms of the Basic
Documents.
SECTION 6.2. General Duties. It shall be the duty of the Owner Trustee
to discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Agreement and the Sale and Servicing Agreement and to
administer the Trust in the interest of the Holders, subject to the Basic
Documents and in accordance with the provisions of this Agreement.
Notwithstanding the foregoing, the Owner Trustee shall be deemed to have
discharged its duties and responsibilities hereunder and under the Basic
Documents to the extent the Servicer has agreed in the Sale and Servicing
Agreement to perform any act or to discharge any duty of the Trust or the Owner
Trustee hereunder or under any Basic Document, and the Owner Trustee shall not
be liable for the default or failure of the Servicer to carry out its
obligations under the Sale and Servicing Agreement.
SECTION 6.3. Action upon Instruction. (a) Subject to Article IV and the
terms of the Spread Account Agreement, the Insurer (so long as an Insurer
Default shall not have occurred and be continuing) or the Certificateholders (if
an Insurer Default shall have occurred and be continuing) (the "Instructing
Party") shall have the exclusive right to direct the actions of the Owner
Trustee in the management of the Trust, so long as such instructions are not
inconsistent with the express terms set forth herein or in any Basic Document.
The Instructing Party shall not instruct the Owner Trustee in a manner
inconsistent with this Agreement or the Basic Documents.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if the Owner Trustee shall have reasonably
determined, or shall have been advised by counsel, that such action is likely to
result in liability on the part of the Owner Trustee or is contrary to the terms
hereof or of any Basic Document or is otherwise contrary to law.
19
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or any
Basic Document, the Owner Trustee shall promptly give notice (in such form as
shall be appropriate under the circumstances) to the Instructing Party
requesting instruction as to the course of action to be adopted, and to the
extent the Owner Trustee acts in good faith in accordance with any written
instruction received from the Instructing Party, the Owner Trustee shall not be
liable on account of such action to any Person. If the Owner Trustee shall not
have received appropriate instruction within ten days of such notice (or within
such shorter period of time as reasonably may be specified in such notice or may
be necessary under the circumstances) it may, but shall be under no duty to,
take or refrain from taking such action, not inconsistent with this Agreement or
the Basic Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
(d) In the event that the Owner Trustee is unsure as to the application
of any provision of this Agreement or any Basic Document or any such provision
is ambiguous as to its application, or is, or appears to be, in conflict with
any other applicable provision, or in the event that this Agreement permits any
determination by the Owner Trustee or is silent or is incomplete as to the
course of action that the Owner Trustee is required to take with respect to a
particular set of facts, the Owner Trustee may give notice (in such form as
shall be appropriate under the circumstances) to the Instructing Party
requesting instruction and, to the extent that the Owner Trustee acts or
refrains from acting in good faith in accordance with any such instruction
received, the Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may but shall be under no duty to, take or refrain
from taking such action not inconsistent with this Agreement or the Basic
Documents as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
SECTION 6.4. No Duties Except as Specified in this Agreement or in
Instructions. The Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.3; and no implied duties or obligations
shall be read into this Agreement or any Basic Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to prepare or file any United States Securities and Exchange
Commission filing for the Trust or to record this Agreement or any Basic
Document.
20
SECTION 6.5. No Action Except under Basic Documents or Instructions.
The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise
deal with any part of the Owner Trust Estate except (i) in accordance with the
powers granted to and the authority conferred upon the Owner Trustee pursuant to
this Agreement, (ii) in accordance with the Basic Documents and (iii) in
accordance with any document or instruction delivered to the Owner Trustee
pursuant to Section 6.3.
SECTION 6.6. Restrictions. The Owner Trustee shall not take any action
(a) that is inconsistent with the purposes of the Trust set forth in Section 2.3
or (b) that, to the actual knowledge of the Owner Trustee, would result in the
Trust's becoming taxable as a corporation for Federal income tax purposes or for
the purposes of any applicable state tax on corporations. The Certificateholders
shall not direct the Owner Trustee to take action that would violate the
provisions of this Section.
ARTICLE VII.
Concerning the Owner Trustee
SECTION 7.1. Acceptance of Trusts and Duties. The Owner Trustee accepts
the trusts hereby created and agrees to perform its duties hereunder with
respect to such trusts but only upon the terms of this Agreement. The Owner
Trustee also agrees to disburse all moneys actually received by it constituting
part of the Owner Trust Estate upon the terms of the Basic Documents and this
Agreement. The Owner Trustee shall not be answerable or accountable hereunder or
under any Basic Document under any circumstances, except (i) for its own willful
misconduct, bad faith or negligence, (ii) in the case of the inaccuracy of any
representation or warranty contained in Section 7.3 expressly made by the Owner
Trustee, (iii) for liabilities arising from the failure of the Owner Trustee to
perform obligations expressly undertaken by it in the last sentence of Section
6.4 hereof, (iv) for any investments issued by the Owner Trustee or any branch
or affiliate thereof in its commercial capacity or (v) for taxes, fees or other
charges on, based on or measured by, any fees, commissions or compensation
received by the Owner Trustee. In particular, but not by way of limitation (and
subject to the exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of
judgment made by a Responsible Officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in accordance with the
instructions of the Instructing Party, the Servicer or any
Certificateholder;
(c) no provision of this Agreement or any Basic Document shall
require the Owner Trustee to expend or risk funds or otherwise incur
any financial liability in the performance of any of its rights or
powers hereunder or under any Basic Document if
21
the Owner Trustee shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable
for indebtedness evidenced by or arising under any of the Basic
Documents, including the principal of and interest on the Notes;
(e) the Owner Trustee shall not be responsible for or in
respect of the validity or sufficiency of this Agreement or for the due
execution hereof by the Depositor or for the form, character,
genuineness, sufficiency, value or validity of any of the Owner Trust
Estate or for or in respect of the validity or sufficiency of the Basic
Documents, other than the certificate of authentication on the
Certificates, and the Owner Trustee shall in no event assume or incur
any liability, duty or obligation to the Insurer, Trustee, the
Collateral Agent, any Noteholder or to any Certificateholder, other
than as expressly provided for herein and in the Basic Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Depositor, the Insurer, the Trustee or the Servicer
under any of the Basic Documents or otherwise and the Owner Trustee
shall have no obligation or liability to perform the obligations under
this Agreement or the Basic Documents that are required to be performed
by the Depositor under this Agreement, the Insurer or the Trustee under
the Note Policy, by the Trustee under the Indenture or the Trustee or
the Servicer under the Sale and Servicing Agreement; and
(g) the Owner Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation under this Agreement or
otherwise or in relation to this Agreement or any Basic Document, at
the request, order or direction of the Instructing Party or any of the
Certificateholders, unless such Instructing Party or Certificateholders
have offered to the Owner Trustee security or indemnity satisfactory to
it against the costs, expenses and liabilities that may be incurred by
the Owner Trustee therein or thereby. The right of the Owner Trustee to
perform any discretionary act enumerated in this Agreement or in any
Basic Document shall not be construed as a duty, and the Owner Trustee
shall not be answerable for other than its negligence, bad faith or
willful misconduct in the performance of any such act.
SECTION 7.2. Furnishing of Documents. The Owner Trustee shall furnish
to the Certificateholders promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Owner Trustee
under the Basic Documents.
22
SECTION 7.3. Representations and Warranties. The Owner Trustee hereby
represents and warrants to the Depositor, the Holders and the Insurer (which
shall have relied on such representations and warranties in issuing the Note
Policy), that:
(a) It is a banking corporation, duly organized and validly
existing in good standing under the laws of the State of Delaware. It
has all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize
the execution and delivery by it of this Agreement, and this Agreement
will be executed and delivered by one of its officers who is duly
authorized to execute and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will contravene or constitute any default under its charter documents
or by-laws.
SECTION 7.4. Reliance; Advice of Counsel. (a) The Owner Trustee shall
incur no liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper believed by it to be genuine and believed by it to be signed
by the proper party or parties. The Owner Trustee may accept a certified copy of
a resolution of the board of directors or other governing body of any corporate
party as conclusive evidence that such resolution has been duly adopted by such
body and that the same is in full force and effect. As to any fact or matter the
method of the determination of which is not specifically prescribed herein, the
Owner Trustee may for all purposes hereof rely on a certificate, signed by the
president or any vice president or by the treasurer, secretary or other
authorized officers of the relevant party, as to such fact or matter, and such
certificate shall constitute full protection to the Owner Trustee for any action
taken or omitted to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the Basic
Documents, the Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for the conduct or misconduct of such agents or
attorneys if such agents or attorneys shall have been selected by the Owner
Trustee with reasonable care, and (ii) may consult with counsel, accountants and
other skilled persons to be selected with reasonable care and employed by it.
The Owner Trustee shall not be liable for anything done, suffered or omitted in
good faith by it in accordance with the written opinion or advice of any such
counsel, accountants or other such persons and according to such opinion not
contrary to this Agreement or any Basic Document.
SECTION 7.5. Not Acting in Individual Capacity. Except as provided in
this Article VII, in accepting the trusts hereby created Bankers Trust
(Delaware) acts solely as Owner
23
Trustee hereunder and not in its individual capacity and all Persons having any
claim against the Owner Trustee by reason of the transactions contemplated by
this Agreement or any Basic Document shall look only to the Owner Trust Estate
for payment or satisfaction thereof.
SECTION 7.6. Owner Trustee Not Liable for Certificates or Receivables.
The recitals contained herein and in the Certificates (other than the signature
and countersignature of the Owner Trustee on the Certificates) shall be taken as
the statements of the Depositor and the Owner Trustee assumes no responsibility
for the correctness thereof. The Owner Trustee makes no representations as to
the validity or sufficiency of this Agreement, of any Basic Document or of the
Certificates (other than the signature and countersignature of the Owner Trustee
on the Certificates) or the Notes, or of any Receivable or related documents.
The Owner Trustee shall at no time have any responsibility or liability for or
with respect to the legality, validity and enforceability of any Receivable, or
the perfection and priority of any security interest created by any Receivable
in any Financed Vehicle or the maintenance of any such perfection and priority,
or for or with respect to the sufficiency of the Owner Trust Estate or its
ability to generate the payments to be distributed to Certificateholders under
this Agreement or the Noteholders under the Indenture, including, without
limitation: the existence, condition and ownership of any Financed Vehicle; the
existence and enforceability of any insurance thereon; the existence and
contents of any Receivable on any computer or other record thereof; the validity
of the assignment of any Receivable to the Trust or of any intervening
assignment; the completeness of any Receivable; the performance or enforcement
of any Receivable; the compliance by the Depositor, the Servicer or any other
Person with any warranty or representation made under any Basic Document or in
any related document or the accuracy of any such warranty or representation or
any action of the Trustee or the Servicer or any subservicer taken in the name
of the Owner Trustee.
SECTION 7.7. Owner Trustee May Own Certificates and Notes. The Owner
Trustee in its individual or any other capacity may become the owner or pledgee
of Certificates or Notes and may deal with the Depositor, the Trustee and the
Servicer in banking transactions with the same rights as it would have if it
were not Owner Trustee.
SECTION 7.8. Payments from Owner Trust Estate. All payments to be made
by the Owner Trustee under this Agreement or any of the Basic Documents to which
the Trust or the Owner Trustee is a party shall be made only from the income and
proceeds of the Owner Trust Estate and only to the extent that the Owner Trust
shall have received income or proceeds from the Owner Trust Estate to make such
payments in accordance with the terms hereof. [ ], or any successor thereto, in
its individual capacity, will not be liable for any amounts payable under this
Agreement or any of the Basic Documents to which the Trust or the Owner Trustee
is a party.
SECTION 7.9. Doing Business in other Jurisdictions. Notwithstanding
anything herein contained to the contrary, neither [ ] nor any successor
thereto, nor the Owner Trustee shall be required to take any action in any
jurisdiction other than in the State of Delaware if the taking of such action
will, even after the appointment of a co-trustee or
24
separate trustee in accordance with Section 10.5 hereof, (i) require the consent
or approval or authorization or order of or the giving of notice to, or the
registration with or the taking of any other action in respect of, any state or
other governmental authority or agency of any jurisdiction other than the State
of Delaware; (ii) result in any fee, tax or other governmental charge under the
laws of the State of Delaware becoming payable by [ ] (or any successor
thereto); or (iii) subject [ ] (or any successor thereto) to personal
jurisdiction in any jurisdiction other than the State of Delaware for causes of
action arising from acts unrelated to the consummation of the transactions by [
] (or any successor thereto) or the Owner Trustee, as the case may be,
contemplated hereby.
ARTICLE VIII.
Compensation of Owner Trustee
SECTION 8.1. Owner Trustee's Fees and Expenses. The Owner Trustee shall
receive at the direction of the Depositor as compensation for its services
hereunder such fees as have been separately agreed upon before the date hereof
between CPS and the Owner Trustee, and the Owner Trustee shall be entitled to be
reimbursed by the Depositor for its other reasonable expenses hereunder,
including the reasonable compensation, expenses and disbursements of such
agents, representatives, experts and counsel as the Owner Trustee may employ in
connection with the exercise and performance of its rights and its duties
hereunder and under the Basic Documents.
SECTION 8.2. Indemnification. The Depositor shall be liable as primary
obligor for, and shall indemnify the Owner Trustee and its officers, directors,
successors, assigns, agents and servants (collectively, the "Indemnified
Parties") from and against, any and all liabilities, obligations, losses,
damages, taxes, claims, actions and suits, and any and all reasonable costs,
expenses and disbursements (including reasonable legal fees and expenses) of any
kind and nature whatsoever (collectively, "Expenses") which may at any time be
imposed on, incurred by, or asserted against the Owner Trustee or any
Indemnified Party in any way relating to or arising out of this Agreement, the
Basic Documents, the Owner Trust Estate, the administration of the Owner Trust
Estate or the action or inaction of the Owner Trustee hereunder, except only
that the Depositor shall not be liable for or required to indemnify the Owner
Trustee from and against Expenses arising or resulting from any of the matters
described in the third sentence of Section 7.1. The indemnities contained in
this Section 8.2 and the rights under Section 8.1 shall survive the resignation
or termination of the Owner Trustee or the termination of this Agreement.
SECTION 8.3. Payments to the Owner Trustee. Any amounts paid to the
Owner Trustee pursuant to this Article VIII shall be deemed not to be a part of
the Owner Trust Estate immediately after such payment.
25
SECTION 8.4. Non-recourse Obligations. Notwithstanding anything in this
Agreement or any Basic Document, the Owner Trustee agrees in its individual
capacity and in its capacity as Owner Trustee for the Trust that all obligations
of the Trust to the Owner Trustee individually or as Owner Trustee for the Trust
shall be recourse to the Owner Trust Estate only and specifically shall not be
recourse to the assets of any Certificateholder.
ARTICLE IX.
Termination of Trust Agreement
SECTION 9.1. Termination of Trust Agreement. (a) This Agreement and the
Trust shall terminate and be of no further force or effect upon the latest of
(i) the maturity or other liquidation of the last Receivable (including the
purchase by the Servicer at its option of the corpus of the Trust as described
in Section 11.1 of the Sale and Servicing Agreement) and the subsequent
distribution of amounts in respect of such Receivables as provided in the Basic
Documents, or (ii) the payment to Certificateholders of all amounts required to
be paid to them pursuant to this Agreement and the Sale and Servicing Agreement
and the payment to the Insurer of all amounts payable or reimbursable to it
pursuant to the Sale and Servicing Agreement; provided, however, that the rights
to indemnification under Section 8.2 and the rights under Section 8.1 shall
survive the termination of the Trust. The Servicer shall promptly notify the
Owner Trustee and the Insurer of any prospective termination pursuant to this
Section 9.1. The bankruptcy, liquidation, dissolution, death or incapacity of
any Certificateholder shall not (x) operate to terminate this Agreement or the
Trust, nor (y) entitle such Certificateholder's legal representatives or heirs
to claim an accounting or to take any action or proceeding in any court for a
partition or winding up of all or any part of the Trust or Owner Trust Estate
nor (z) otherwise affect the rights, obligations and liabilities of the parties
hereto.
(b) Except as provided in clause (a), neither the Depositor nor any
Certificateholder shall be entitled to revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the Payment Date
upon which the Certificateholders shall surrender their Certificates to the
Paying Agent for payment of the final distribution and cancellation, shall be
given by the Paying Agent by letter to Certificateholders mailed within five
Business Days of receipt of notice of such termination from the Servicer given
pursuant to Section 11.1(c) of the Sale and Servicing Agreement, stating (i) the
Payment Date upon or with respect to which final payment of the Certificates
shall be made upon presentation and surrender of the Certificates at the office
of the Paying Agent therein designated (ii) the amount of any such final payment
and (iii) that the Record Date otherwise applicable to such Payment Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office of the Paying Agent therein specified. The Paying
Agent shall give such notice to the Certificate Registrar (if other than the
Paying Agent) at the time such notice is given to Certificateholders. Upon
presentation
26
and surrender of the Certificates, if any, the Paying Agent shall cause to be
distributed to Certificateholders amounts distributable on such Payment Date
pursuant to Section 5.7 of the Sale and Servicing Agreement and Section 5.5
hereof.
In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date specified
in the above mentioned written notice, the Paying Agent shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the Certificates shall
not have been surrendered for cancellation, the Paying Agent may take
appropriate steps, or may appoint an agent to take appropriate steps, to contact
the remaining Certificateholders concerning surrender of their Certificates, and
the cost thereof shall be paid out of the funds and other assets that shall
remain subject to this Agreement. Any funds remaining in the Trust after
exhaustion of such remedies shall be distributed, subject to applicable escheat
laws, by the Paying Agent to the Depositor and Holders shall look solely to the
Depositor for payment.
(d) Any funds remaining in the Trust after funds for final distribution
have been distributed or set aside for distribution and all amounts owed to the
Owner Trustee pursuant to this Agreement have been paid shall be distributed by
the Paying Agent to the Depositor.
(e) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation presented to the Owner Trustee in execution form by
the Servicer with the Secretary of State in accordance with the provisions of
Section 3810 of the Business Trust Statute.
ARTICLE X.
Successor Owner Trustees and Additional Owner Trustees
SECTION 10.1. Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation (i) satisfying the provisions of
Section 3807(a) of the Business Trust Statute; (ii) authorized to exercise
corporate trust powers; (iii) having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by Federal or State
authorities; and (iv) acceptable to the Insurer in its sole discretion, so long
as an Insurer Default shall not have occurred and be continuing. If such
corporation shall publish reports of condition at least annually, pursuant to
law or to the requirements of the aforesaid supervising or examining authority,
then for the purpose of this Section 10.1, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. In case at any time
the Owner Trustee shall cease to be eligible in accordance with the provisions
of this Section 10.1, the Owner Trustee shall resign immediately in the manner
and with the effect specified in Section 10.2.
27
SECTION 10.2. Resignation or Removal of Owner Trustee. The Owner
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Depositor, the Insurer and the Servicer.
Upon receiving such notice of resignation, the Depositor shall promptly appoint
a successor Owner Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Owner Trustee and one copy to the
successor Owner Trustee, provided that the Depositor shall have received written
confirmation from each of the Rating Agencies that the proposed appointment will
not result in an increased capital charge to the Insurer by either of the Rating
Agencies. If no successor Owner Trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Owner Trustee or the Insurer may petition any court
of competent jurisdiction for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Depositor, or if at any time the Owner Trustee
shall be legally unable to act or shall be adjudged bankrupt or insolvent, or a
receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Depositor with the consent of the Insurer (so long as an
Insurer Default shall not have occurred and be continuing) may remove the Owner
Trustee. If the Depositor shall remove the Owner Trustee under the authority of
the immediately preceding sentence, the Depositor shall promptly appoint a
successor Owner Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the outgoing Owner Trustee so removed, one copy
to the Insurer and one copy to the successor Owner Trustee and payment of all
fees owed to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section 10.2
shall not become effective until acceptance of appointment by the successor
Owner Trustee pursuant to Section 10.3 and payment of all fees and expenses owed
to the outgoing Owner Trustee. The Depositor shall provide notice of such
resignation or removal of the Owner Trustee to each of the Rating Agencies.
SECTION 10.3. Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.2 shall execute, acknowledge and deliver to the
Depositor, the Servicer, the Insurer and to its predecessor Owner Trustee an
instrument accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Owner Trustee shall become effective
and such successor Owner Trustee, without any further act, deed or conveyance,
shall become fully vested with all the rights, powers, duties and obligations of
its predecessor under this Agreement, with like effect as if originally named as
Owner Trustee. The predecessor Owner Trustee shall upon payment of its fees and
expenses deliver to the successor Owner Trustee all documents and statements and
monies held by it under this Agreement; and the Depositor and the predecessor
Owner Trustee shall
28
execute and deliver such instruments and do such other things as may reasonably
be required for fully and certainly vesting and confirming in the successor
Owner Trustee all such rights, powers, duties and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this section, the Servicer shall mail notice of the successor of such Owner
Trustee to all Certificateholders, the Trustee, the Noteholders and the Rating
Agencies. If the Servicer shall fail to mail such notice within 10 days after
acceptance of appointment by the successor Owner Trustee, the successor Owner
Trustee shall cause such notice to be mailed at the expense of the Servicer.
SECTION 10.4. Merger or Consolidation of Owner Trustee. Any corporation
into which the Owner Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, provided
such corporation shall be eligible pursuant to Section 10.1, without the
execution or filing of any instrument or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding; provided
further that the Owner Trustee shall mail notice of such merger or consolidation
to the Rating Agencies.
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Owner Trust Estate or any Financed Vehicle may at the time be located,
the Servicer and the Owner Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved by
the Owner Trustee and the Insurer to act as co-trustee, jointly with the Owner
Trustee, or separate trustee or separate trustees, of all or any part of the
owner Trust Estate, and to vest in such Person, in such capacity, such title to
the Trust, or any part thereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the Servicer and
the Owner Trustee may consider necessary or desirable. If the Servicer shall not
have joined in such appointment within 15 days after the receipt by it of a
request so to do, the Owner Trustee subject, unless an Insurer Default shall
have occurred and be continuing, to the approval of the Insurer (which approval
shall not be unreasonably withheld) shall have the power to make such
appointment. No co-trustee or separate trustee under this Agreement shall be
required to meet the terms of eligibility as a successor trustee pursuant to
Section 10.1 and no notice of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 10.3.
29
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised or
performed by the Owner Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without the Owner Trustee joining
in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed,
the Owner Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in
any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the
Owner Trustee;
(ii) no trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under this
Agreement; and
(iii) the Servicer and the Owner Trustee acting jointly may at
any time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Owner Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article X. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Owner
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Owner Trustee. Each such instrument shall be filed with the Owner
Trustee and a copy thereof given to the Servicer and the Insurer.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
30
ARTICLE XI.
Miscellaneous
SECTION 11.1. Supplements and Amendments. (a) This Agreement may be
amended by the Depositor and the Owner Trustee, with the prior written consent
of the Insurer (so long as an Insurer Default shall not have occurred and be
continuing) and with prior written notice to the Rating Agencies and the
Trustee, without the consent of any of the Noteholders or the
Certificateholders, (i) to cure any ambiguity or defect or (ii) to correct,
supplement or modify any provisions in this Agreement; provided, however, that
such action shall not, as evidenced by an Opinion of Counsel which may be based
upon a certificate of the Servicer, adversely affect in any material respect the
interests of any Noteholder or Certificateholder.
(b) This Agreement may also be amended from time to time, with the
prior written consent of the Insurer (so long as an Insurer Default shall not
have occurred and be continuing) by the Depositor and the Owner Trustee, with
prior written notice to the Rating Agencies and the Trustee and the consent of
the Certificateholders evidencing not less than a majority by aggregate
Certificate Balance and, to the extent such amendment materially and adversely
affects the interests of the Noteholders, with the consent of Noteholders
evidencing not less than a majority of the aggregate outstanding principal
amount of the Notes (which consent of any Holder of a Certificate or Note given
pursuant to this Section or pursuant to any other provision of this Agreement
shall be conclusive and binding on such Holder and on all future Holders of such
Certificate or Note and of any Certificate or Note issued upon the transfer
thereof or in exchange thereof or in lieu thereof whether or not notation of
such consent is made upon the Certificate or Note) for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Noteholders or
the Certificateholders; provided, however, that, subject to the express rights
of the Insurer under the Basic Documents, no such amendment shall (a) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Receivables or distributions that shall be required
to be made for the benefit of the Noteholders or the Certificateholders or (b)
reduce the aforesaid percentage of the aggregate outstanding principal amount of
the Notes and the Certificate Balance required to consent to any such amendment,
without the consent of the Holders of all the outstanding Notes and Holders of
all outstanding Certificates.
For purposes of determining the extent to which an amendment does not
have a material adverse effect on the Noteholders, the Owner Trustee may rely on
an Opinion of Counsel, which may be based upon a certificate of the Servicer.
Promptly after the execution of any such amendment or consent, the
Servicer shall furnish written notification of the substance of such amendment
or consent to each Certificateholder, the Trustee and each of the Rating
Agencies.
31
It shall not be necessary for the consent of Certificateholders, the
Noteholders or the Trustee pursuant to this Section to approve the particular
form of any proposed amendment or consent, but it shall be sufficient if such
consent shall approve the substance thereof. The manner of obtaining such
consents (and any other consents of Certificateholders provided for in this
Agreement or in any other Basic Document) and of evidencing the authorization of
the execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe. Promptly after the execution of
any amendment to the Certificate of Trust, the Owner Trustee shall cause the
filing of such amendment with the Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and that all conditions precedent to
the execution and delivery of such amendment have been satisfied. The Owner
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Owner Trustee's own rights, duties or immunities under this
Agreement or otherwise.
SECTION 11.2. No Legal Title to Owner Trust Estate in
Certificateholders. The Certificateholders shall not have legal title to any
part of the Owner Trust Estate. The Certificateholders shall be entitled to
receive distributions with respect to their undivided ownership interest therein
only in accordance with Article IX. No transfer, by operation of law or
otherwise, of any right, title or interest of the Certificateholders to and in
their ownership interest in the Owner Trust Estate shall operate to terminate
this Agreement or the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any part of the Owner
Trust Estate.
SECTION 11.3. Limitations on Rights of Others. Except for Section 2.7,
the provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Depositor, the Certificateholders, the Servicer and, to the extent
expressly provided herein, the Insurer, the Trustee and the Noteholders, and
nothing in this Agreement, whether express or implied, shall be construed to
give to any other Person any legal or equitable right, remedy or claim in the
Owner Trust Estate or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.
SECTION 11.4. Notices. (a) Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt personally delivered, delivered by overnight courier
or mailed first class mail or certified mail, in each case return receipt
requested, and shall be deemed to have been duly given upon receipt, if to the
Owner Trustee, addressed to the Corporate Trust Office; if to the Depositor,
addressed to CPS Receivables Corp., 2 Ada, Irvine, California 92718; if to the
Insurer, addressed to Financial Security Assurance Inc., 350 Park Avenue, New
York, New York 10022, Attention: Senior Vice President Surveillance (Telecopy:
(212) 339-3547); (in each case in which notice or other communication to the
Insurer refers to an Event of Default, a
32
claim on the Note Policy or with respect to which failure on the part of the
Insurer to respond shall be deemed to constitute consent or acceptance, then a
copy of such notice or other communication should also be sent to the attention
of the General Counsel and the Head-Financial Guaranty Group "URGENT MATERIAL
ENCLOSED"); or, as to each party, at such other address as shall be designated
by such party in a written notice to each other party.
(b) Any notice required or permitted to be given to a Certificateholder
shall be given by first-class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register. Any notice so mailed within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not the Certificateholder receives such notice.
SECTION 11.5. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.6. Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.7. Assignments; Insurer. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Upon issuance of the Note Policy, this
Agreement shall also inure to the benefit of the Insurer for so long as an
Insurer Default shall not have occurred and be continuing. Without limiting the
generality of the foregoing, all covenants and agreements in this Agreement
which confer rights upon the Insurer shall be for the benefit of and run
directly to the Insurer, and the Insurer shall be entitled to rely on and
enforce such covenants, subject, however, to the limitations on such rights
provided in this Agreement and the Basic Documents. The Insurer may disclaim any
of its rights and powers under this Agreement (but not its duties and
obligations under the Policies) upon delivery of a written notice to the Owner
Trustee.
SECTION 11.8. No Petition. The Owner Trustee (not in its individual
capacity but solely as Owner Trustee), by entering into this Agreement, each
Certificateholder, by accepting a Certificate, and the Trustee and each
Noteholder by accepting the benefits of this Agreement, hereby covenants and
agrees that it will not at any time institute against the Depositor, or join in
any institution against the Depositor of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Certificates, the Notes, this Agreement or any
of the Basic Documents.
33
SECTION 11.9. No Recourse. Each Certificateholder, by accepting a
Certificate, acknowledges that such Certificateholder's Certificates represent
beneficial interests in the Trust only and do not represent interests in or
obligations of the Depositor, the Servicer, the Owner Trustee, the Trustee, the
Noteholders, the Insurer or any Affiliate thereof and no recourse may be had
against such parties or their assets, except as may be expressly set forth or
contemplated in this Agreement, the Certificates or the Basic Documents.
SECTION 11.10. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.11. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.12. Servicer. The Servicer is authorized to prepare, or
cause to be prepared, execute and deliver on behalf of the Trust all such
documents, reports, filings, instruments, certificates and opinions as it shall
be the duty of the Trust or Owner Trustee to prepare, file or deliver pursuant
to the Basic Documents. Upon written request, the Owner Trustee shall execute
and deliver to the Servicer a limited power of attorney appointing the Servicer
the Trust's agent and attorney-in-fact to prepare, or cause to be prepared,
execute and deliver all such documents, reports, filings, instruments,
certificates and opinions.
34
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed by their respective officers hereunto duly authorized as of
the day and year first above written.
[ ], as
Owner Trustee
By:
Title:
CPS RECEIVABLES CORP., as Depositor
By:
Title:
35
EXHIBIT A
NUMBER Initial Certificate Balance:
R-1 [$ ]
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES THAT THIS SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY (1) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A, TO A PERSON WHOM THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT,
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, AND SUBJECT TO THE RECEIPT BY THE CERTIFICATE
REGISTRAR AND THE DEPOSITOR OF A TRANSFEREE CERTIFICATE, (2) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (3) IN RELIANCE ON
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
SUBJECT TO THE RECEIPT BY THE CERTIFICATE REGISTRAR AND THE DEPOSITOR, OF A
CERTIFICATION OF THE TRANSFEREE (SATISFACTORY TO THE CERTIFICATE REGISTRAR AND
THE DEPOSITOR) AND AN OPINION OF COUNSEL (SATISFACTORY TO THE CERTIFICATE
REGISTRAR AND THE DEPOSITOR) TO THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE
WITH THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND IN COMPLIANCE WITH THE
TRANSFER REQUIREMENTS SET FORTH IN SECTION 3.4 OF THE TRUST AGREEMENT.
IN NO EVENT SHALL THIS SECURITY BE TRANSFERRED TO AN EMPLOYEE BENEFIT
PLAN, TRUST ANNUITY OR ACCOUNT SUBJECT TO ERISA OR A PLAN DESCRIBED IN SECTION
4975(E)(1) OF THE CODE, (ANY SUCH PLAN, TRUST OR ACCOUNT BEING REFERRED TO AS AN
"EMPLOYEE PLAN"), A TRUSTEE OF ANY EMPLOYEE PLAN, OR AN ENTITY, ACCOUNT OR OTHER
POOLED INVESTMENT FUND THE UNDERLYING ASSETS OF WHICH INCLUDE OR ARE DEEMED TO
INCLUDE EMPLOYEE PLAN ASSETS BY REASON OF AN EMPLOYEE PLAN'S INVESTMENT IN THE
ENTITY, ACCOUNT OR OTHER POOLED INVESTMENT FUND. INCLUDED WITHIN THE DEFINITION
OF "EMPLOYEE PLANS" ARE, WITHOUT LIMITATION, KEOGH (HR-10) PLANS, IRA's
(INDIVIDUAL
RETIREMENT ACCOUNTS OR ANNUITIES) AND OTHER EMPLOYEE BENEFIT PLANS, SUBJECT TO
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE.
THE PRINCIPAL OF THIS CERTIFICATE IS DISTRIBUTABLE IN INSTALLMENTS AS
SET FORTH IN THE TRUST AGREEMENT. ACCORDINGLY, THE OUTSTANDING PRINCIPAL OF THIS
CERTIFICATE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
------------------------------
ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in certain distributions of the
Trust, as defined below, the property of which includes a pool of retail
installment sale contracts secured by new or used automobiles, vans or light
duty trucks and sold to the Trust by CPS Receivables Corp.
(This Certificate does not represent an interest in or obligation of CPS
Receivables Corp. or any of its Affiliates, except to the extent described
below.)
2
THIS CERTIFIES THAT CPS RECEIVABLES CORP. is the registered owner of [
] DOLLARS nonassessable, fully-paid, beneficial interest in certain
distributions of CPS Auto Receivables Trust 199[ ]-[ ] (the "Trust") formed by
CPS Receivables Corp., a California corporation.
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Trust Agreement.
[ ] [ ]
not in its individual not in its individual
capacity but solely or capacity but solely as
as Owner Trustee Owner Trustee
By: By: [ ]
Authenticating Agent
By:
Date:
The Trust was created pursuant to a Trust Agreement dated as of [ ],
between the Depositor and [ ], as Owner Trustee (the "Owner Trustee") as amended
by an amendment, dated as of [ ], between the Depositor and the Owner Trustee
(the "Trust Agreement"), a summary of certain of the pertinent provisions of
which is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the Trust
Agreement.
This Certificate is one of the duly authorized Certificates designated
as "Asset Backed Certificates" (herein called the "Certificates"). Issued under
the Indenture, dated as of [ ] between the Trust and [ ], as Trustee and
collateral agent, are [ ] classes of Notes designated as "Class A-1 [ %] Asset
Backed Notes" (the "Class A-1 Notes"), "Class A-2 [ %] Asset Backed Notes" (the
"Class A-2 Notes") and together with the Class A-1 Notes, the "Notes"). This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Trust Agreement, to which Trust Agreement the holder of this
Certificate by virtue of the acceptance hereof assents and by which such holder
is bound. The property of the Trust includes a pool of retail installment sale
contracts secured by new and used automobiles, vans or light duty trucks (the
"Receivables"), all monies received thereunder after the Cutoff Date, security
interests in the vehicles financed thereby, certain bank accounts and the
proceeds thereof, proceeds from claims on certain insurance policies and certain
other rights under the Trust Agreement and the Sale and Servicing Agreement, all
right, to and interest of the Depositor in and to the Purchase Agreement dated
as of [ ] between Consumer Portfolio Services, Inc. and the Depositor, all right
to
3
and interest of the Depositor in and to the Purchase Agreement dated as of [ ]
between Samco Acceptance Corp. and the Depositor, all right to and interest of
the Depositor in and to the Purchase Agreement dated as of [ ] between Linc
Acceptance Company LLC and the Depositor, and all proceeds of the foregoing.
Under the Trust Agreement, there will be distributed on the 15th day of
each month or, if such 15th day is not a Business Day, the next Business Day
(the "Payment Date"), commencing on [ ], to the Person in whose name this
Certificate is registered at the close of business on the 10th day of the
calendar month of such Payment Date (the "Record Date") such Certificateholder's
fractional undivided interest in the amount to be distributed to
Certificateholders on such Payment Date.
The holder of this Certificate acknowledges and agrees that its rights
to receive distributions in respect of this Certificate are subordinated to the
rights of the Noteholders as described in the Sale and Servicing Agreement, the
Indenture and the Trust Agreement, as applicable.
It is the intent of the Depositor, Servicer, and Certificateholders
that, in the event that Certificates are held by any person other than the
Depositor, for purposes of Federal income taxes, the Trust will be treated as a
partnership and the Certificateholders (including the Depositor) will be treated
as partners in that partnership. In such event, the Depositor and such other
Certificateholders, by acceptance of a Certificate, agree to treat, and to take
no action inconsistent with the treatment of, the Certificates for such tax
purposes as partnership interests in the Trust. Each Certificateholder, by its
acceptance of a Certificate, covenants and agrees that such Certificateholder
will not at any time institute against the Trust or the Depositor, or join in
any institution against the Trust or the Depositor of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Certificates, the Notes, the
Trust Agreement or any of the Basic Documents.
Distributions on this Certificate will be made as provided in the Trust
Agreement by the Owner Trustee or its agent by wire transfer or check mailed to
the Certificateholder of record in the Certificate Register without the
presentation or surrender of this Certificate or the making of any notation
hereon. Except as otherwise provided in the Trust Agreement and notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Owner Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for the purpose by the Owner Trustee in the Borough of Manhattan, The
City of New York.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
4
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee or its agent, by manual
signature, this Certificate shall not entitle the holder hereof to any benefit
under the Trust Agreement or the Sale and Servicing Agreement or be valid for
any purpose.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE IN ACCORDANCE
WITH SUCH LAWS.
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not
in its individual capacity, has caused this Certificate to be duly executed.
CPS AUTO RECEIVABLES TRUST 199[ ]-[ ]
By:[ ], not in its
individual capacity, but solely as Owner Trustee
By: _______________________________
Name:
Title:
Date: [ ]
5
(Reverse of Certificate)
The Certificates do not represent an obligation of, or an interest in
the Servicer, the Depositor, the Owner Trustee or any Affiliates of any of them
and no recourse may be had against such parties or their assets, except as may
be expressly set forth or contemplated herein or in the Trust Agreement, the
Indenture or the Basic Documents. In addition, this Certificate is not
guaranteed by any governmental agency or instrumentality and is limited in right
of payment to certain collections with respect to the Receivables, all as more
specifically set forth herein and in the Sale and Servicing Agreement. A copy of
each of the Sale and Servicing Agreement and the Trust Agreement may be examined
during normal business hours at the principal office of the Depositor, and at
such other places, if any, designated by the Depositor, by any Certificateholder
upon written request.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Trust Agreement at
any time by the Depositor and the Owner Trustee with the consent of the holders
of the Notes and the Certificates evidencing not less than a majority of the
outstanding principal balance of the Notes and the Certificate Balance. Any such
consent by the holder of this Certificate shall be conclusive and binding on
such holder and on all future holders of this Certificate and of any Certificate
issued upon the transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent is made upon this Certificate. The Trust
Agreement also permits the amendment thereof, in certain limited circumstances,
without the consent of the holders of any of the Certificates.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained by
the Owner Trustee in the Borough of Manhattan, The City of New York, accompanied
by a written instrument of transfer in form satisfactory to the Owner Trustee
and the Certificate Registrar duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates in authorized denominations evidencing the same aggregate interest
in the Trust will be issued to the designated transferee. The initial
Certificate Registrar appointed under the Trust Agreement is Bankers Trust
Company.
Except for Certificates issued to the Depositor, the Certificates are
issuable only as registered Certificates without coupons in denominations of
$1,000 or integral multiples thereof. As provided in the Trust Agreement and
subject to certain limitations therein set forth, Certificates are exchangeable
for new Certificates in authorized denominations evidencing the same aggregate
denomination as requested by the holder surrendering the same. No service charge
will be made for any such registration of transfer or exchange, but the Owner
Trustee or the Certificate Registrar may require payment of a sum sufficient to
cover any tax or governmental charge payable in connection therewith.
The Owner Trustee, the Certificate Registrar, the Insurer and any agent
of the Owner Trustee, the Certificate Registrar or the Insurer may treat the
person in whose name this Certificate is registered as the owner hereof for all
purposes, and none of the Owner Trustee, the Certificate Registrar, the Insurer
nor any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement and
the Trust created thereby shall terminate upon the payment to Certificateholders
of all amounts required to be paid to them pursuant to the Trust Agreement and
the Sale and Servicing Agreement and the disposition of all property held as
part of the Trust. The Servicer of the Receivables may at its option purchase
all remaining Receivables from the Trust on or after the last day of any month
as of which the then outstanding Pool Balance is equal to 10% or less of the
Original Pool Balance.
The Certificates may not be acquired by (a) an employee benefit plan
(as defined in Section 3(3) of ERISA) that is subject to the provisions of Title
I of ERISA, (b) a plan described in Section 4975(e) (1) of the Code or (c) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity (each, a "Benefit Plan"). By accepting and holding this
Certificate, the Holder hereof shall be deemed to have represented and warranted
that it is not a Benefit Plan.
The recitals contained herein shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Certificate or of any
Receivable or related document.
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ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- --------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)
- --------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing _______________________________ Attorney to transfer
said Certificate on the books of the Certificate Registrar, with full power of
substitution in the premises.
Dated:
-------------------------
Signature
Guaranteed:
*
-------------------------
- ----------
* NOTICE: The signature to this assignment must correspond with the name
of the registered owner as it appears on the face of the within
Certificate in every particular, without alteration, enlargement or any
change whatever. Such signature must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the Certificate
Registrar, which requirements include membership or participation in
STAMP or such other "signature guarantee program" as may be determined
by the Certificate Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.
EXHIBIT B
[FORM OF]
CERTIFICATE OF TRUST OF
CPS AUTO RECEIVABLES TRUST 199[ ]-[ ]
This Certificate of Trust of CPS Auto Receivables Trust 199[ ]-[ ] (the
"Trust"), dated as of ___________, 199_, is being duly executed and filed by
_______________________________, a ____________, and ______________, an
individual, as trustee, to form a business trust under the Delaware Business
Trust Act (12 Del. Code, ss.
3801 et seq.).
1. Name. The name of the business trust formed hereby is CPS Auto
Receivables Trust 199[ ]-[ ].
2. This Certificate of Trust will be effective ______ __, 199_.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
[ ],
not in its individual capacity, but
solely as Owner Trustee of the Trust.
By:
Name:
Title:
2
Exhibit C to
Trust Agreement
Transferee Certificate
Pursuant to Section 3.4 of
the Trust Agreement
In connection with the transfer of $________________ aggregate
principal amount of CPS Auto Receivables Trust 1998-3 [ ]% Asset Backed
Certificates (the "Transferred Certificates"), __________________________, the
undersigned transferee (the "Transferee"), pursuant to Section 3.4 of the Trust
Agreement (as defined below), hereby notifies the Trustee and the Seller and
certifies, represents and warrants to each of them that it is a "qualified
institutional buyer" (as defined in Rule 144A promulgated under the Securities
Act of 1933, as amended), that it is purchasing such Transferred Certificates
for its own account or the account of a qualified institutional buyer to whom
notice has been given that the transfer is to be made in reliance of Rule 144A,
and acknowledges that it has received such information regarding the Trust and
the Transferred Certificates as it has requested and that it is aware that the
transferor is relying upon the foregoing certification to claim the exemption
from registration provided by Rule 144A and the Transferee represents and
warrants that it has delivered an executed copy of this certificate to the
Trustee and the Seller prior to the transfer of any Transferred Certificates
discussed herein.
In no event shall a Certificate be transferred to an employee benefit
plan, trust annuity or account subject to ERISA or a plan described in Section
4975(e)(1) of the Code (any such plan, trust or account including any Keogh
(HR-10) plans, individual retirement accounts or annuities and other employee
benefit plans subject to Section 406 of ERISA or Section 4975 of the Code being
referred to herein as an "Employee Plan"), a trustee of any Employee Plan, or an
entity, account or other pooled investment fund, the underlying assets of which
include or are deemed to include Employee Plan assets by reason of an Employee
Plan's investment in the entity, account or other pooled investment fund. The
Seller, Servicer, Trustee and Standby Servicer shall not be responsible for
confirming or otherwise investigating whether a proposed transferee is an
employee benefit plan, trust or account subject to ERISA, or described in
Section 4975(e)(1) of the Code.
Terms used herein and not otherwise defined have the meanings assigned
to them in the Trust Agreement dated as of [ ], between CPS Receivables Corp.
and [ ], as Owner Trustee.
[TRANSFEREE]
By:
Name:
Title:
Exhibit 4.2
FORM OF INDENTURE
- --------------------------------------------------------------------------------
CPS AUTO RECEIVABLES TRUST 199[ ]-[ ]
Class A-1 [ %] Asset-Backed Notes Class
A-2 [ %] Asset-Backed Notes [other
classes of Notes, if any]
---------------------------------
INDENTURE
Dated as of [ ]
-----------------------------------
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Trustee
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1. Definitions..................................................3
SECTION 1.2. Incorporation by Reference of Trust Indenture Act...........10
SECTION 1.3. Other Definitional Provisions...............................11
ARTICLE II
The Notes
SECTION 2.1. Form........................................................11
SECTION 2.2. Execution, Authentication and Delivery......................12
SECTION 2.3. Temporary Notes.............................................12
SECTION 2.4. Registration; Registration of Transfer and Exchange.........13
SECTION 2.5. Mutilated, Destroyed, Lost or Stolen Notes..................14
SECTION 2.6. Persons Deemed Owner........................................15
SECTION 2.7. Payment of Principal and Interest; Defaulted Interest.......15
SECTION 2.8. Cancellation................................................16
SECTION 2.9. Release of Collateral.......................................17
SECTION 2.10. Book-Entry Notes............................................17
SECTION 2.11. Notices to Clearing Agency..................................18
SECTION 2.12. Definitive Notes............................................18
ARTICLE III
Covenants
SECTION 3.1. Payment of Principal and Interest...........................18
SECTION 3.2. Maintenance of Office or Agency.............................19
SECTION 3.3. Money for Payments to be Held in Trust......................19
SECTION 3.4. Existence...................................................20
SECTION 3.5. Protection of Trust Estate..................................21
SECTION 3.6. Opinions as to Trust Estate.................................21
SECTION 3.7. Performance of Obligations; Servicing of Receivables........22
SECTION 3.8. Negative Covenants..........................................23
SECTION 3.9. Annual Statement as to Compliance...........................23
SECTION 3.10. Issuer May Consolidate, Etc. Only on Certain Terms..........24
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SECTION 3.11. Successor or Transferee.....................................26
SECTION 3.12. No Other Business...........................................26
SECTION 3.13. No Borrowing................................................26
SECTION 3.14. Servicer's Obligations......................................27
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities...........27
SECTION 3.16. Capital Expenditures........................................27
SECTION 3.17. Compliance with Laws........................................27
SECTION 3.18. Restricted Payments.........................................27
SECTION 3.19. Notice of Events of Default.................................27
SECTION 3.20. Further Instruments and Acts................................28
SECTION 3.21. Amendments of Sale and Servicing Agreement and Trust
Agreement...................................................28
SECTION 3.22. Income Tax Characterization.................................28
ARTICLE IV
Satisfaction and Discharge
SECTION 4.1. Satisfaction and Discharge of Indenture.....................28
SECTION 4.2. Application of Trust Money..................................29
SECTION 4.3. Repayment of Moneys Held by Note Paying Agent...............29
ARTICLE V
Remedies
SECTION 5.1. Events of Default...........................................29
SECTION 5.2. Rights Upon Event of Default................................31
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by
Trustee.....................................................32
SECTION 5.4. Remedies....................................................35
SECTION 5.5. Optional Preservation of the Receivables....................36
SECTION 5.6. Priorities..................................................36
SECTION 5.7. Limitation of Suits.........................................37
SECTION 5.8. Unconditional Rights of Noteholders To Receive Principal
and Interest................................................38
SECTION 5.9. Restoration of Rights and Remedies..........................38
SECTION 5.10. Rights and Remedies Cumulative..............................38
SECTION 5.11. Delay or Omission Not a Waiver..............................38
SECTION 5.12. Control by Noteholders......................................38
SECTION 5.13. Waiver of Past Defaults.....................................39
SECTION 5.14. Undertaking for Costs.......................................39
SECTION 5.15. Waiver of Stay or Extension Laws............................40
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ARTICLE VI
The Trustee
SECTION 6.1. Duties of Trustee...........................................40
SECTION 6.2. Rights of Trustee...........................................42
SECTION 6.3. Individual Rights of Trustee................................43
SECTION 6.4. Trustee's Disclaimer........................................43
SECTION 6.5. Notice of Defaults..........................................43
SECTION 6.6. Reports by Trustee to Holders...............................43
SECTION 6.7. Compensation and Indemnity..................................44
SECTION 6.8. Replacement of Trustee......................................44
SECTION 6.9. Successor Trustee by Merger.................................46
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee...............46
SECTION 6.11. Eligibility: Disqualification...............................47
SECTION 6.12. Preferential Collection of Claims Against Issuer............47
SECTION 6.13. Appointment and Powers......................................47
SECTION 6.14. Performance of Duties.......................................48
SECTION 6.15. Limitation on Liability.....................................48
SECTION 6.16. Reserved....................................................49
SECTION 6.17. Successor Trustee...........................................49
SECTION 6.18. [Reserved]..................................................50
SECTION 6.19. Representations and Warranties of the Trustee...............50
SECTION 6.20. Waiver of Setoffs...........................................50
SECTION 6.21. Control by the Controlling Party............................51
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.1. Issuer To Furnish To Trustee Names and Addresses of
Noteholders.................................................51
SECTION 7.2. Preservation of Information; Communications to Noteholders..51
SECTION 7.3. Reports by Issuer...........................................51
SECTION 7.4. Reports by Trustee..........................................52
ARTICLE VIII
Collection of Money and Releases of Trust Estate
SECTION 8.1. Collection of Money.........................................52
SECTION 8.2. Release of Trust Estate.....................................53
SECTION 8.3. Opinion of Counsel..........................................53
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ARTICLE IX
Supplemental Indentures
SECTION 9.1. Supplemental Indentures Without Consent of Noteholders......53
SECTION 9.2. Supplemental Indentures with Consent of Noteholders.........55
SECTION 9.3. Execution of Supplemental Indentures........................56
SECTION 9.4. Effect of Supplemental Indenture............................56
SECTION 9.5. Conformity With Trust Indenture Act.........................57
SECTION 9.6. Reference in Notes to Supplemental Indentures...............57
ARTICLE X
Redemption of Notes
SECTION 10.1. Redemption..................................................57
SECTION 10.2. Form of Redemption Notice...................................57
SECTION 10.3. Notes Payable on Redemption Date............................58
ARTICLE XI
Miscellaneous
SECTION 11.1. Compliance Certificates and Opinions, etc...................58
SECTION 11.2. Form of Documents Delivered to Trustee......................60
SECTION 11.3. Acts of Noteholders.........................................61
SECTION 11.4. Notices, etc., to Trustee, Issuer and Rating Agencies.......61
SECTION 11.5. Notices to Noteholders; Waiver..............................62
SECTION 11.6. Alternate Payment and Notice Provisions.....................63
SECTION 11.7. Conflict with Trust Indenture Act...........................63
SECTION 11.8. Effect of Headings and Table of Contents....................63
SECTION 11.9. Successors and Assigns......................................63
SECTION 11.10. Severability................................................64
SECTION 11.11. Benefits of Indenture.......................................64
SECTION 11.12. Legal Holidays..............................................64
SECTION 11.13. Governing Law...............................................64
SECTION 11.14. Counterparts................................................64
SECTION 11.15. Recording of Indenture......................................64
SECTION 11.16. Trust Obligation............................................64
SECTION 11.17. No Petition.................................................65
SECTION 11.18. Inspection..................................................65
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Exhibit A-1 Form of Class A-1 Note
Exhibit A-2 Form of Class A-2 Note
Exhibit A-3 Form of Class A-3 Note
Exhibit A-4 Form of Class A-4 Note
Exhibit B Form of Depository Agreement
-v-
INDENTURE dated as of [ ], between CPS AUTO RECEIVABLES TRUST 199[ ]-
[ ], a Delaware business trust (the "Issuer"), and NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, a national banking association, as trustee (the
"Trustee").
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the Holders of the Issuer's Class A-1 [ %]
Asset-Backed Notes (the "Class A-1 Notes") and Class A-2 [ %] Asset-Backed Notes
(the "Class A-2 Notes") and, together with the Class A-1 Notes, the "Class A
Notes" or "Notes"):
As security for the payment and performance by the Issuer of its
obligations under this Indenture and the Notes, the Issuer has agreed to assign
the Collateral (as defined below) as collateral to the Trustee for the benefit
of the Noteholders.
[Financial Security Assurance Inc. (the "Note Insurer") has issued and
delivered a financial guaranty insurance policy, dated the Closing Date (with
endorsements, the "Note Policy"), pursuant to which the Note Insurer guarantees
Scheduled Payments, as defined in the Note Policy.]
[As an inducement to the Note Insurer to issue and deliver the Note
Policy, the Issuer and the Note Insurer have executed and delivered the
Insurance and Indemnity Agreement, dated as of [ ] (as amended from time to
time, the "Insurance Agreement") among the Note Insurer, the Issuer, Consumer
Portfolio Services, Inc., and CPS Receivables Corp.]
As an additional inducement to the Note Insurer to issue the Note
Policy, and as security for the performance by the Issuer of the Insurer Secured
Obligations (as defined below) and as security for the performance by the Issuer
of the Trustee Secured Obligations, the Issuer has agreed to assign the
Collateral (as defined below) as collateral to the Trustee for the benefit of
the Issuer Secured Parties, as their respective interests may appear.
GRANTING CLAUSE
The Issuer hereby Grants to the Trustee at the Closing Date, for the
benefit of the Issuer Secured Parties,
(i) all right, title and interest of the Issuer in and to the
Receivables listed in Schedule A to the Sale and Servicing Agreement,
all monies received thereon after the Cutoff Date and all Net
Liquidation Proceeds received with respect thereto after the Cutoff
Date;
(ii) all right, title and interest of the Issuer in and to the
security interests in the Financed Vehicles granted by Obligors
pursuant to the Receivables and any other
interest of the Issuer in such Financed Vehicles, including, without
limitation, the certificates of title or, with respect to such Financed
Vehicles in the State of Michigan, all other evidence of ownership with
respect to such Financed Vehicles;
(iii) all right, title and interest of the Issuer in and to
any proceeds from claims on any physical damage, credit life and credit
accident and health insurance policies or certificates relating to the
Financed Vehicles or the Obligors;
(iv) all right, title and interest of the Issuer in and to the
Purchase Agreements, including a direct right to cause CPS to purchase
Receivables from the Trust pursuant to the CPS Purchase Agreement under
the circumstances specified therein;
(v) the Issuer's rights and benefits, but none of its
obligations or burdens, under the Sale and Servicing Agreement
(including all rights of the Seller under the Purchase Agreements);
(vi) all right, title and interest of the Issuer in and to
refunds for the costs of extended service contracts with respect to
Financed Vehicles, refunds of unearned premiums with respect to credit
life and credit accident and health insurance policies or certificates
covering an Obligor or Financed Vehicle or his or her obligations with
respect to a Financed Vehicle and any recourse to Dealers for any of
the foregoing;
(vii) the Receivable File related to each Receivable;
(viii) all amounts and property from time to time held in or
credited to the Collection Account, the Lockbox Account and the Note
Distribution Account; and
(ix) all present and future claims, demands, causes and choses
in action in respect of any or all of the foregoing and all payments on
or under and all proceeds of every kind and nature whatsoever in
respect of any or all of the foregoing, including all proceeds of the
conversion, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every kind
and other forms of obligations and receivables, instruments and other
property which at any time constitute all or part of or are included in
the proceeds of any of the foregoing (collectively, the "Collateral").
In addition, the Issuer shall cause the Note Policy to be issued for the benefit
of the Class A Noteholders.
The foregoing Grant is made in trust to the Trustee, for the benefit of
the Holders of the Notes and for the benefit of the Note Insurer. The Trustee
hereby acknowledges such Grant, accepts the trusts under this Indenture in
accordance with the provisions of this Indenture and
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agrees to perform its duties as required in this Indenture to the best of its
ability to the end that the interests of such parties, recognizing the
priorities of their respective interests may be adequately and effectively
protected.
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1. Definitions. Except as otherwise specified herein, the
following terms have the respective meanings set forth below for all purposes of
this Indenture and the definitions of such terms are equally applicable to both
the singular and plural forms of such terms and to each gender.
Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in the Sale and Servicing Agreement or, if
not defined therein, in the Trust Agreement.
"Act" has the meaning specified in Section 11.3(a).
"Affiliate" of any Person means any Person who directly or indirectly
controls, is controlled by, or is under direct or indirect common control with
such Person. For purposes of this definition of "Affiliate", the term "control"
(including the terms "controlling", "controlled by" and "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause a direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
"Amount Financed" with respect to a Receivable shall have the meaning
specified in the Sale and Servicing Agreement.
"Annual Percentage Rate" or "APR" of a Receivable means the annual rate
of finance charges stated in the Receivable.
"Authorized Officer" means, with respect to the Issuer and the
Servicer, any officer or agent acting pursuant to a power of attorney of the
Owner Trustee or the Servicer, as applicable, who is authorized to act for the
Owner Trustee or the Servicer, as applicable, in matters relating to the Issuer
and who is identified on the list of Authorized Officers delivered by each of
the Owner Trustee and the Servicer to the Trustee on the Closing Date (as such
list may be modified or supplemented from time to time thereafter).
"Basic Documents" means this Indenture, the Certificate of Trust, the
Trust Agreement, the Sale and Servicing Agreement, the Master Spread Account
Agreement, the Spread Account
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Supplement, the Insurance Agreement, the Indemnification Agreement, the Lockbox
Agreement and other documents and certificates delivered in connection
therewith.
"Book Entry Notes" means a beneficial interest in the Notes, ownership
and transfers of which shall be made through book entries by a Clearing Agency
as described in Section 2.10.
"Business Day" means (i) with respect to the Note Policy, any day other
than a Saturday, Sunday, legal holiday or other day on which commercial banking
institutions in Wilmington, Delaware, the City of New York, Minneapolis,
Minnesota, or the state in which the principal Corporate Trust Office of the
Trustee is located or any other location of any successor Servicer, successor
Owner Trustee or successor Trustee are authorized or obligated by law, executive
order or governmental decree to be closed and (ii) otherwise, a day other than a
Saturday, a Sunday or other day on which commercial banks located in the states
of Delaware, Minnesota, California or New York are authorized or obligated to be
closed.
"Certificate of Trust" means the certificate of trust of the Issuer
substantially in the form of Exhibit B to the Trust Agreement.
"Class A-1 Interest Rate" means a [floating/fixed] rate equal to [ %]
per annum.
"Class A-1 Notes" means the Class A-1 [ %] Asset-Backed Notes,
substantially in the form of Exhibit A-1.
"Class A-2 Interest Rate" means a [floating/fixed] rate equal to [ %]
per annum.
"Class A-2 Notes" means the Class A-2 [ %] Asset-Backed Notes,
substantially in the form of Exhibit A-2.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act, or any successor provision
thereto. The initial Clearing Agency shall be The Depository Trust Company.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means [ ].
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning specified in the Granting Clause of this
Indenture.
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"Commission" means the United State Securities and Exchange Commission.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered
which office at date of the execution of this Agreement is located at Sixth
Street and Marquette Avenue, Minneapolis, Minnesota 55479-0070, Attention:
Corporate Trust Services--Asset-Backed Administration, or at such other address
as the Trustee may designate from time to time by notice to the Noteholders, the
Note Insurer, the Servicer and the Issuer, or the principal corporate trust
office of any successor Trustee (the address of which the successor Trustee will
notify the Noteholders and the Issuer).
"Default" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"Definitive Notes" has the meaning specified in Section 2.10.
"Depositor" means the Seller, in its capacity as such under the Trust
Agreement.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, President,
Executive Vice President, any Vice President, the Secretary or the Treasurer of
such corporation; with respect to any limited liability company, the manager;
and with respect to any partnership, any general partner thereof.
"Grant" means to mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this Indenture. A Grant of the Collateral or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
proceedings in the name of the granting party or otherwise and generally to do
and receive anything that the granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Note Register.
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"Indebtedness" means, with respect to any Person at any time, (a)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (including trade obligations); (b)
obligations of such Person as lessee under leases which should be, in accordance
with generally accepted accounting principles, recorded as capital leases; (c)
current liabilities of such Person in respect of unfunded vested benefits under
plans covered by Title IV of ERISA; (d) obligations issued for or liabilities
incurred on the account of such Person; (e) obligations or liabilities of such
Person arising under acceptance facilities; (f) obligations of such Person under
any guarantees, endorsements (other than for collection or deposit in the
ordinary course of business) and other contingent obligations to purchase, to
provide funds for payment, to supply funds to invest in any Person or otherwise
to assure a creditor against loss; (g) obligations of such Person secured by any
lien on property or assets of such Person, whether or not the obligations have
been assumed by such Person; or (h) obligations of such Person under any
interest rate or currency exchange agreement.
"Indenture" means this Indenture as amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Independent" means, when used with respect to any specified Person,
that the person (a) is in fact independent of the Issuer, any other obliger upon
the Notes, the Seller and any Affiliate of any of the foregoing persons, (b)
does not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Seller or any Affiliate of
any of the foregoing Persons and (c) is not connected with the Issuer, any such
other obliger, the Seller or any Affiliate of any of the foregoing Persons as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1, prepared by an
Independent appraiser or other expert appointed by an Issuer Order and approved
by the Trustee in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read the definition of "Independent"
in this Indenture and that the signer is Independent within the meaning thereof.
"Insurance Agreement Indenture Cross Default" has the meaning specified
therefor in the Insurance Agreement.
"Insurer Secured Obligations" means all amounts and obligations which
the Issuer may at any time owe to or on behalf of the Note Insurer under this
Indenture, the Insurance Agreement or any other Basic Document.
"Interest Rate" means, with respect to the (i) Class A-1 Notes, the
Class A-1 Interest Rate, (ii) Class A-2 Notes, the Class A-2 Interest Rate,
(iii) [describe other classes of Notes, if any].
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"Issuer" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the Notes.
"Issuer Order" and "Issuer Request" means a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Trustee.
"Issuer Secured Obligations" means the Insurer Secured Obligations and
the Trustee Secured obligations.
"Issuer Secured Parties" means each of the Trustee, in respect of the
Trustee Secured Obligations, and the Note Insurer, in respect of the Insurer
Secured Obligations.
"Note" means a Class A-1 Note, a Class A-2 Note [other classes of
Notes, if any].
"Note Owner" means, with respect to a Book-Entry Note, the person who
is the owner of such Book-Entry Note, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency Participant or as an indirect participant,
in each case in accordance with the rules of such Clearing Agency).
"Note Paying Agent" means the Trustee or any other Person that meets
the eligibility standards for the Trustee specified in Section 6.11 and is
authorized by the Issuer to make the payments to and distributions from the
Collection Account and the Note Distribution Account, including payment of
principal of or interest on the Notes on behalf of the Issuer.
"Note Policy" means the insurance policy issued by the Note Insurer
with respect to the Notes, including any endorsements thereto.
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 2.4.
"Officer's Certificate" means a certificate signed by any Authorized
Officer of the Owner Trustee, under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1 and TIA
ss. 314, and delivered to the Trustee. Unless otherwise specified, any reference
in this Indenture to an Officer's Certificate shall be to an Officer's
Certificate of any Authorized Officer of the Issuer.
"Opinion of Counsel" means one or more written opinions of counsel who
may, except as otherwise expressly provided in this Indenture, be employees of
or counsel to the Issuer and who shall be satisfactory to the Trustee and, if
addressed to the Note Insurer, satisfactory to the Note Insurer, and which shall
comply with any applicable requirements of Section 11.1, and shall be
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in form and substance satisfactory to the Trustee, and if addressed to the Note
Insurer, satisfactory to the Note Insurer.
"Outstanding" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore canceled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in
the necessary amount has been theretofore deposited with the Trustee or
any Note Paying Agent in trust for the Holders of such Notes (provided,
however, that if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture, satisfactory
to the Trustee); and
(iii) Notes in exchange for or in lieu of other Notes which
have been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Trustee is presented that any such Notes are
held by a bona fide purchaser;
provided, however, that Notes which have been paid with proceeds of the Note
Policy shall continue to remain Outstanding for purposes of this Indenture until
the Note Insurer has been paid as subrogee hereunder or reimbursed pursuant to
the Insurance Agreement as evidenced by a written notice from the Note Insurer
delivered to the Trustee, and the Note Insurer shall be deemed to be the Holder
thereof to the extent of any payments thereon made by the Note Insurer;
provided, further, that in determining whether the Holders of the requisite
Outstanding Amount of the Notes have given any request, demand, authorization,
direction, notice, consent or waiver hereunder or under any Basic Document,
Notes owned by the Issuer, any other obliger upon the Notes, the Seller or any
Affiliate of any of the foregoing Persons shall be disregarded and deemed not to
be Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Notes that a Responsible Officer of the Trustee
either actually knows to be so owned or has received written notice thereof
shall be so disregarded. Notes so owned that have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgees right so to act with respect to such Notes and that the
pledgee is not the Issuer, any other obliger upon the Notes, the Seller or any
Affiliate of any of the foregoing Persons.
"Outstanding Amount" means the aggregate principal amount of all Notes,
or class of Notes, as applicable, Outstanding at the date of determination.
"Owner Trustee" means [ ], and its successors.
"Payment Date" has the meaning specified in the Notes.
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"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.5 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Proceeding" means any suit in equity, action at law or other judicial
or administrative proceeding.
"Rating Agency" means [each of Moody's and Standard & Poor's,] so long
as such Persons maintain a rating on the Notes; and if either [Moody's or
Standard & Poor's] no longer maintains a rating on the Notes, such other
nationally recognized statistical rating organization selected by the Seller and
(so long as an Insurer Default shall not have occurred and be continuing)
acceptable to the Note Insurer.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 10 days' (or such shorter period as shall be
acceptable to each Rating Agency) prior notice thereof and that each of the
Rating Agencies shall have notified the Seller, the Servicer, the Note Insurer,
the Trustee, the Owner Trustee and the Issuer in writing that such action will
not result in a reduction or withdrawal of the then current rating of the Notes.
"Record Date" means, with respect to a Payment Date or Redemption Date,
the tenth day of the calendar month in which such Payment Date or Redemption
Date occurs.
"Redemption Date" means, in the case of a redemption of the Notes
pursuant to Section 10.1, the Payment Date specified by the Servicer or the
Issuer pursuant to Section 10.1.
"Redemption Price" means, in the case of a redemption of the Notes
pursuant to Section 10.1, an amount equal to the unpaid principal amount of each
class of Notes being redeemed plus accrued and unpaid interest thereon to but
excluding the Redemption Date.
"Responsible Officer" means, with respect to the Trustee, any officer
within the Corporate Trust Office of the Trustee, including any Vice President,
Assistant Vice President, Assistant Treasurer, Assistant Secretary, or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
dated as of [ ], among the Issuer, the Seller, the Servicer and the Trustee as
Standby Servicer and Trustee, as the same may be amended or supplemented from
time to time.
"Scheduled Payments" has the meaning specified in the Note Policy.
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"State" means any one of the 50 states of the United States of America
or the District of Columbia.
"Termination Date" means the latest of (i) the expiration of the Note
Policy and the return of the Note Policy to the Note Insurer for cancellation,
(ii) the date on which the Note Insurer shall have received payment and
performance of all Insurer Secured Obligations and (iii) the date on which the
Trustee shall have received payment and performance of all Trustee Secured
Obligations.
"Trust Estate" means all money, instruments, rights and other property
that are subject or intended to be subject to the lien and security interest of
this Indenture for the benefit of the Noteholders (including all property and
interests Granted to the Trustee), including all proceeds thereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939,
as amended and as in force on the date hereof, unless otherwise specifically
provided.
"Trustee" means Norwest Bank Minnesota, National Association, a
national banking association, not in its individual capacity but as trustee
under this Indenture, or any successor trustee under this Indenture.
"Trustee Secured Obligations" means all amounts and obligations which
the Issuer may at any time owe to or on behalf of the Trustee for the benefit of
the Noteholders under this Indenture or the Notes.
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from time
to time.
SECTION 1.2. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
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"obligor" on the indenture securities means the Issuer.
All other TIA terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by Commission rule have the
meaning assigned to them by such definitions.
SECTION 1.3. Other Definitional Provisions. Unless the context
otherwise requires:
(i) All references in this instrument to designated
"Articles," "Sections," "Subsections" and other subdivisions are to the
designated Articles, Sections, Subsections and other subdivisions of
this instrument as originally executed.
(ii) The words "herein," "hereof," "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any
particular Article, Section, Subsection or other subdivision.
(iii) an accounting term not otherwise defined herein has the
meaning assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;
(iv) "or" is not exclusive; and
(v) "including" means including without limitation.
ARTICLE II
The Notes
SECTION 2.1. Form. (a) The Class A-1 Notes, the Class A-2 Notes, [other
classes of Notes, if any], in each case together with the Trustee's certificate
of authentication, shall be in substantially the form set forth in Exhibits A-1,
A-2, [other classes of Notes, if any], respectively, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may,
consistently herewith, be determined by the officers executing such Notes, as
evidenced by their execution of the Notes. Any portion of the text of any Note
may be set forth on the reverse thereof, with an appropriate reference thereto
on the face of the Note.
(b) The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders), all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
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(c) Each Note shall be dated the date of its authentication. The terms
of the Notes set forth in Exhibits A-1, A-2, [other classes of Notes, if any],
are part of the terms of this Indenture.
SECTION 2.2. Execution, Authentication and Delivery. (a) The Notes
shall be executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
(b) Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
(c) The Trustee shall [upon receipt of the Note Policy and] Issuer
Order authenticate and deliver Class A-1 Notes for original issue in an
aggregate principal amount of [$ ], Class A-2 Notes for original issue in an
aggregate principal amount of [$ ], [other classes of Notes, if any], Class A-1
Notes, Class A-2 Notes, [other classes of Notes, if any] outstanding at any time
may not exceed such amounts except as provided in Section 2.5.
(d) Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of $1,000 and
in integral multiples thereof (except for one Note of each class which may be
issued in a denomination other than an integral multiple of $1,000).
(e) No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein,
executed by the Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and delivered
hereunder.
SECTION 2.3. Temporary Notes. (a) Pending the preparation of Definitive
Notes, the Issuer may execute, and upon receipt of an Issuer Order the Trustee
shall authenticate and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, of the tenor of the Definitive
Notes in lieu of which they are issued and with such variations not inconsistent
with the terms of this Indenture as the officers executing such Notes may
determine, as evidenced by their execution of such Notes.
(b) If temporary Notes are issued, the Issuer will cause Definitive
Notes to be prepared without unreasonable delay. After the preparation of
Definitive Notes, the temporary Notes shall be exchangeable without charge to
the Holder for Definitive Notes upon surrender of the temporary Notes at the
office or agency of the Issuer to be maintained as provided in Section 3.2. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
like principal amount of
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Definitive Notes of authorized denominations. Until so exchanged, the temporary
Notes shall in all respects be entitled to the same benefits under this
Indenture as Definitive Notes.
SECTION 2.4. Registration; Registration of Transfer and Exchange. (a)
The Issuer shall cause to be kept a register (the "Note Register") in which,
subject to such reasonable regulations as it may prescribe, the Issuer shall
provide for the registration of Notes and the registration of transfers of
Notes. The Trustee is hereby initially appointed "Note Registrar" for the
purpose of registering Notes and transfers of Notes as herein provided. Upon any
resignation or removal of any Note Registrar, the Issuer shall promptly appoint
a successor or, in the absence of such an appointment, assume the duties of Note
Registrar.
(b) If a Person other than the Trustee is appointed by the Issuer as
Note Registrar, the Issuer will give the Trustee prompt written notice of the
appointment of such Note Registrar and of the location, and any change in the
location, of the Note Register, and the Trustee shall have the right to inspect
the Note Register at all reasonable times and to obtain copies thereof, and the
Trustee shall have the right to rely upon a certificate executed on behalf of
the Note Registrar by an Executive Officer thereof as to the names and addresses
of the Holders of the Notes and the principal amounts and number of such Notes.
(c) Subject to Sections 2.10 and 2.12 hereof, upon surrender for
registration of transfer of any Note at the office or agency of the Issuer to be
maintained as provided in Section 3.2, if the requirements of Section 8-401(l)
of the UCC are met, the Issuer shall execute, and upon request by the Issuer the
Trustee shall authenticate, and the Noteholder shall obtain from the Trustee, in
the name of the designated transferee or transferees, one or more new Notes in
any authorized denominations of the same class and a like aggregate principal
amount.
(d) At the option of the Holder, Notes may be exchanged for other Notes
in any authorized denominations, of the same class and a like aggregate
principal amount, upon surrender of the Notes to be exchanged at such office or
agency. Whenever any Notes are so surrendered for exchange, subject to Sections
2.10 and 2.12 hereof, if the requirements of Section 8-401(1) of the UCC are met
the Issuer shall execute, and upon request by the Issuer the Trustee shall
authenticate, and the Noteholder shall obtain from the Trustee, the Notes which
the Noteholder making the exchange is entitled to receive.
(e) All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
(f) Every Note presented or surrendered for registration of transfer or
exchange shall be (i) duly endorsed by, or accompanied by a written instrument
of transfer in the form attached to Exhibits A-1, A-2 [others] and duly executed
by, the Holder thereof or such Holder's attorney, duly authorized in writing,
with such signature guaranteed by an "eligible guarantor institution" meeting
the requirements of the Note Registrar which requirements include membership or
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participation in Securities Transfer Agents Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Note Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Exchange Act and (ii) accompanied by such other documents as the Trustee may
require.
(g) Each Noteholder by its acquisition of any Notes (or a beneficial
interest therein) shall be deemed to have represented and warranted for the
benefit of the Issuer, the Trustee, the Indenture Trustee and the Noteholders,
that either (i) it is not acquiring any Notes with the assets of any "employee
benefit plan" as defined in Section 3(3) of ERISA which is subject to Title I of
ERISA or any "plan" as defined in Section 4875 of the Internal Revenue Code or
(ii) the acquisition of the Notes will not give rise to a nonexempt prohibited
transaction under Section 406(a) of ERISA or Section 4975 of the Code.
(h) No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Note Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.3 or 9.6 not involving any transfer.
(i) The preceding provisions of this Section 2.4 notwithstanding, the
Issuer shall not be required to make and the Note Registrar shall not register
transfers or exchanges of Notes selected for redemption or of any Note for a
period of 15 days preceding the due date for any payment with respect to the
Note.
SECTION 2.5. Mutilated, Destroyed, Lost or Stolen Notes. (a) If (i) any
mutilated Note is surrendered to the Trustee, or the Trustee receives evidence
to its satisfaction of the destruction, loss or theft of any Note, and (ii)
there is delivered to the Trustee and the Note Insurer (unless an Insurer
Default shall have occurred and be continuing) such security or indemnity as may
be required by it to hold the Issuer, the Trustee and the Note Insurer harmless,
then, in the absence of notice to the Issuer, the Note Registrar or the Trustee
that such Note has been acquired by a bona fide purchaser, and, provided that
the requirements of Section 8-405 of the UCC are met, the Issuer shall execute,
and upon request by the Issuer, the Trustee shall authenticate and deliver in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a
replacement Note; provided, however, that if any such destroyed, lost or stolen
Note, but not a mutilated Note, shall have become, or within seven days shall
be, due and payable or shall have been called for redemption, instead of issuing
a replacement Note, the Issuer may direct the Trustee, in writing, to pay such
destroyed, lost or stolen Note when so due or payable or upon the Redemption
Date without surrender thereof. If, after the delivery of such replacement Note
or payment of a destroyed, lost or stolen Note pursuant to the proviso to the
preceding sentence, a bona fide purchaser of the original Note in lieu of which
such replacement Note was issued, presents for payment such original Note, the
Issuer, the Trustee and the Note Insurer shall be entitled to recover such
replacement Note (or such payment) from the Person to whom it was delivered or
any Person taking such replacement Note from such Person to whom such
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replacement Note was delivered or any assignee of such Person, except a bona
fide purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Issuer or the Trustee in connection therewith.
(b) Upon the issuance of any replacement Note under this Section, the
Issuer may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Trustee) connected therewith.
(c) Every replacement Note issued pursuant to this Section in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
(d) The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.6. Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Trustee, the Note Insurer
and any agent of the Issuer, the Trustee or the Note Insurer may treat the
Person in whose name any Note is registered (as of the applicable Record Date)
as the owner of such Note for the purpose of receiving payments of principal of
and interest, if any, on such Note, for all other purposes whatsoever and
whether or not such Note be overdue, and none of the Issuer, the Note Insurer,
the Trustee nor any agent of the Issuer, the Note Insurer or the Trustee shall
be affected by notice to the contrary.
SECTION 2.7. Payment of Principal and Interest; Defaulted Interest. (a)
The Notes shall accrue interest as provided in the forms of the Class A-1 Note,
the Class A-2 Note, [other classes if any] set forth in Exhibits A-1, A-2,
[other classes if any] respectively, and such interest shall be payable on each
Payment Date as specified therein. Any installment of interest or principal, if
any, payable on any Note which is punctually paid or duly provided for by the
Issuer on the applicable Payment Date shall be paid to the Person in whose name
such Note (or one or more Predecessor Notes) is registered on the Record Date,
by check mailed first-class, postage prepaid, to such Person's address as it
appears on the Note Register on such Record Date, except that, unless Definitive
Notes have been issued pursuant to Section 2.12, with respect to Notes
registered on the Record Date in the name of the nominee of the Clearing Agency
(initially, such nominee to be Cede & Co.), payment will be made by wire
transfer in immediately available funds to the account designated by such
nominee, except for the final installment of principal payable with respect to
such Note on a Payment Date or on the Final Scheduled Payment Date (and except
for the Redemption Price for any Note called for redemption pursuant to Section
10.1), which shall be payable as provided below. The funds represented by any
such checks returned undelivered shall be held in accordance with Section 3.3.
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(b) The principal of each Note shall be payable in installments on each
Payment Date as provided in the forms of the Class A-1 Notes, the Class A-2
Notes, [other classes if any] set forth in Exhibits A-1, A-2, [other classes if
any] respectively. Notwithstanding the foregoing, the entire unpaid principal
amount of the Notes shall be due and payable, if not previously paid, on the
date on which an Event of Default shall have occurred and be continuing in the
manner and under the circumstances provided in Section 5.2. All principal
payments on each class of Notes shall be made pro rata to the Noteholders of
such class entitled thereto. Upon written notice from the Issuer, the Trustee
shall notify the Person in whose name a Note is registered at the close of
business on the Record Date preceding the Payment Date on which the Issuer
expects that the final installment of principal of and interest on such Note
will be paid. Such notice shall be mailed or transmitted by facsimile prior to
such final Payment Date and shall specify that such final installment will be
payable only upon presentation and surrender of such Note and shall specify the
place where such Note may be presented and surrendered for payment of such
installment. Notices in connection with redemptions of Notes shall be mailed to
Noteholders as provided in Section 10.2.
(c) If the Issuer defaults in a payment of interest on the Notes, the
Issuer shall pay defaulted interest (plus interest on such defaulted interest to
the extent lawful) at the applicable Interest Rate in any lawful manner. The
Issuer may pay such defaulted interest to the Persons who are Noteholders on a
subsequent special record date, which date shall be at least five Business Days
prior to the payment date. The Issuer shall fix or cause to be fixed any such
special record date and payment date, and, at least 15 days before any such
special record date, the Issuer shall mail to each Noteholder and the Trustee a
notice that states the special record date, the payment date and the amount of
defaulted interest to be paid.
(d) Promptly following the date on which all principal of and interest
on the Notes has been paid in full and the Notes have been surrendered to the
Trustee, the Trustee shall, if the Note Insurer has paid any amount in respect
of the Notes under the Note Policy or otherwise which has not been reimbursed to
it, deliver such surrendered Notes to the Note Insurer.
SECTION 2.8. Cancellation. Subject to Section 2.7(d), all Notes
surrendered for payment, registration of transfer, exchange or redemption shall,
if surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by the Trustee. Subject to Section 2.7(d), the
Issuer may at any time deliver to the Trustee for cancellation any Notes
previously authenticated and delivered hereunder which the Issuer may have
acquired in any manner whatsoever, and all Notes so delivered shall be promptly
canceled by the Trustee. No Notes shall be authenticated in lieu of or in
exchange for any Notes canceled as provided in this Section, except as expressly
permitted by this Indenture. Subject to Section 2.7(d), all canceled Notes may
be held or disposed of by the Trustee in accordance with its standard retention
or disposal policy as in effect at the time unless the Issuer shall direct by an
Issuer Order that they be destroyed or returned to it; provided that such Issuer
Order is timely and the Notes have not been previously disposed of by the
Trustee.
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SECTION 2.9. Release of Collateral. The Trustee shall, on or after the
Termination Date, release any remaining portion of the Trust Estate from the
lien created by this Indenture and deposit in the Collection Account any funds
then on deposit in any other Trust Account. The Trustee shall release property
from the lien created by this Indenture pursuant to this Section 2.9 only upon
receipt of an Issuer Request accompanied by an Officer's Certificate, an Opinion
of Counsel and (if required by the TIA) Independent Certificates in accordance
with TIA ss. 314(c) and 314(d)(1) meeting the applicable requirements of Section
11.1.
SECTION 2.10. Book-Entry Notes. The Notes, upon original issuance, will
be issued in the form of typewritten Notes representing the Book-Entry Notes, to
be delivered to DTC or to the Trustee as custodian for the initial Clearing
Agency, by, or on behalf of, the Issuer. Such Notes shall initially be
registered on the Note Register in the name of Cede & Co., the nominee of the
initial Clearing Agency, and no Note Owner will receive a Definitive Note
representing such Note Owner's interest in such Note, except as provided in
Section 2.12. Unless and until definitive, fully registered Notes (the
"Definitive Notes") have been issued to Note Owners pursuant to Section 2.12:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Note Registrar and the Trustee shall be entitled to
deal with the Clearing Agency for all purposes of this Indenture
(including the payment of principal of and interest on the Notes and
the giving of instructions or directions hereunder) as the sole Holder
of the Notes, and shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Indenture, the provisions of
this Section shall control;
(iv) the rights of Note Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law
and agreements between such Note Owners and the Clearing Agency and/or
the Clearing Agency Participants. Unless and until Definitive Notes are
issued pursuant to Section 2.12, the Clearing Agency will make
book-entry transfers among the Clearing Agency Participants and receive
and transmit payments of principal of and interest on the Notes to such
Clearing Agency Participants;
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Notes
evidencing a specified percentage of the Outstanding Amount of the
Notes, the Clearing Agency shall be deemed to represent such percentage
only to the extent that it has received instructions to such effect
from Note Owners and/or Clearing Agency Participants owning or
representing, respectively, such required percentage of the beneficial
interest in the Notes and has delivered such instructions to the
Trustee; and
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(vi) Note Owners may receive copies of any reports sent to
Noteholders pursuant to this Indenture, upon written request, together
with a certification that they are Note Owners and payment of
reproduction and postage expenses associated with the distribution of
such reports, from the Trustee at the Corporate Trust Office.
SECTION 2.11. Notices to Clearing Agency. Whenever a notice or other
communication to the Class A Noteholders is required under this Indenture,
unless and until Definitive Notes shall have been issued to Note Owners pursuant
to Section 2.12, the Trustee shall give all such notices and communications
specified herein to be given to Holders of the Notes to the Clearing Agency and
shall have no obligation to deliver such notices or communications to the Note
Owners.
SECTION 2.12. Definitive Notes. If (i) the Servicer advises the Trustee
in writing that the Clearing Agency is no longer willing or able to properly
discharge its responsibilities with respect to the Notes, and the Servicer is
unable to locate a qualified successor, (ii) the Servicer at its option advises
the Trustee in writing that it elects to terminate the book-entry system through
the Clearing Agency or (iii) after the occurrence of an Event of Default, Note
Owners representing beneficial interests aggregating at least a majority of the
Outstanding Amount of the Notes advise the Trustee through the Clearing Agency
in writing that the continuation of a book entry system through the Clearing
Agency is no longer in the best interests of the Note Owners, then the Clearing
Agency shall notify all Note Owners and the Trustee of the occurrence of any
such event and of the availability of Definitive Notes to Note Owners requesting
the same. Upon surrender to the Trustee of the typewritten Note or Notes
representing the Book-Entry Notes by the Clearing Agency, accompanied by
registration instructions, the Issuer shall execute and the Trustee shall
authenticate the Definitive Notes in accordance with the instructions of the
Clearing Agency. None of the Issuer, the Note Registrar or the Trustee shall be
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions. Upon the issuance
of Definitive Notes, the Trustee shall recognize the Holders of the Definitive
Notes as Class A Noteholders.
ARTICLE III
Covenants
SECTION 3.1. Payment of Principal and Interest. The Issuer will duly
and punctually pay the principal of and interest on the Notes in accordance with
the terms of the Notes and this Indenture. Without limiting the foregoing, the
Issuer will cause to be distributed on each Payment Date all amounts deposited
in the Note Distribution Account pursuant to the Sale and Servicing Agreement
(i) for the benefit of the Class A-1 Notes, to the Class A-1 Noteholders, (ii)
for the benefit of the Class A-2 Notes, to the Class A-2 Noteholders, (iii) for
the benefit of the Class A-3 Notes, to the Class A-3 Noteholders and (iv) for
the benefit of the Class A-4 Notes, to the Class A-4 Noteholders. Amounts
properly withheld under the Code by any Person from a
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payment to any Noteholder of interest and/or principal shall be considered as
having been paid by the Issuer to such Noteholder for all purposes of this
Indenture.
SECTION 3.2. Maintenance of Office or Agency. The Issuer will maintain
in Minneapolis, Minnesota, an office or agency where Notes may be surrendered
for registration of transfer or exchange, and where notices and demands to or
upon the Issuer in respect of the Notes and this Indenture may be served. The
Issuer hereby initially appoints the Trustee to serve as its agent for the
foregoing purposes. The Issuer will give prompt written notice to the Trustee of
the location, and of any change in the location, of any such office or agency.
If at any time the Issuer shall fail to maintain any such office or agency or
shall fail to furnish the Trustee with the address thereof, such surrenders,
notices and demands may be made or served at the Corporate Trust Office, and the
Issuer hereby appoints the Trustee as its agent to receive all such surrenders,
notices and demands.
SECTION 3.3. Money for Payments to be Held in Trust. (a) On or before
each Payment Date and Redemption Date, the Issuer shall deposit or cause to be
deposited in the Note Distribution Account from the Collection Account an
aggregate sum sufficient to pay the amounts then becoming due under the Notes,
such sum to be held in trust for the benefit of the Persons entitled thereto and
(unless the Note Paying Agent is the Trustee) shall promptly notify the Trustee
of its action or failure so to act.
(b) The Issuer shall cause each Note Paying Agent other than the
Trustee to execute and deliver to the Trustee and the Note Insurer an instrument
in which such Note Paying Agent shall agree with the Trustee (and if the Trustee
acts as Note Paying Agent, it hereby so agrees), subject to the provisions of
this Section, that such Note Paying Agent shall:
(i) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(ii) give the Trustee notice of any default by the Issuer (or
any other obligor upon the Notes) of which it has actual knowledge in
the making of any payment required to be made with respect to the
Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Note Paying Agent;
(iv) immediately resign as a Note Paying Agent and forthwith
pay to the Trustee all sums held by it in trust for the payment of
Notes if at any time it ceases to meet the standards required to be met
by a Note Paying Agent at the time of its appointment; and
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(v) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
(c) The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Note Paying Agent to pay to the Trustee all sums held in trust
by such Note Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which the sums were held by such Note Paying Agent; and
upon such a payment by any Note Paying Agent to the Trustee, such Note Paying
Agent shall be released from all further liability with respect to such money.
(d) Subject to applicable laws with respect to the escheat of funds,
any money held by the Trustee or any Note Paying Agent in trust for the payment
of any amount due with respect to any Note and remaining unclaimed for two years
after such amount has become due and payable shall be discharged from such trust
and be paid to the Issuer on Issuer Request with the consent of the Note Insurer
(unless an Insurer Default shall have occurred and be continuing) and shall be
deposited by the Trustee in the Collection Account; and the Holder of such Note
shall thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Trustee or such Note Paying Agent with respect to such
trust money shall thereupon cease; provided, however, that if such money or any
portion thereof had been previously deposited by the Note Insurer with the
Trustee for the payment of principal or interest on the Notes, to the extent any
amounts are owing to the Note Insurer, such amounts shall be paid promptly to
the Note Insurer upon receipt of a written request by the Note Insurer to such
effect, and provided, further, that the Trustee or such Note Paying Agent,
before being required to make any such repayment, shall at the expense of the
Issuer cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in the City of New York, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Issuer. The Trustee shall also adopt and employ, at the
expense of the Issuer, any other reasonable means of notification of such
repayment (including, but not limited to, mailing notice of such repayment to
Holders whose Notes have been called but have not been surrendered for
redemption or whose right to or interest in moneys due and payable but not
claimed is determinable from the records of the Trustee or of any Note Paying
Agent, at the last address of record for each such Holder).
SECTION 3.4. Existence. Except as otherwise permitted by the provisions
of Section 3.10, the Issuer will keep in full effect its existence, rights and
franchises as a business trust under the laws of the State of Delaware (unless
it becomes, or any successor Issuer hereunder is or becomes, organized under the
laws of any other state or of the United States of America, in which case the
Issuer will keep in full effect its existence, rights and franchises under the
laws of such other jurisdiction) and will obtain and preserve its qualification
to do
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business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Indenture, the
Notes, the Collateral and each other instrument or agreement included in the
Trust Estate.
SECTION 3.5. Protection of Trust Estate. The Issuer intends the
security interest Granted pursuant to this Indenture in favor of the Issuer
Secured Parties to be prior to all other liens in respect of the Trust Estate,
and the Issuer shall take all actions necessary to obtain and maintain, in favor
of the Trustee, for the benefit of the Issuer Secured Parties, a first lien on
and a first priority, perfected security interest in the Trust Estate. The
Issuer will from time to time prepare (or shall cause to be prepared), execute
and deliver all such supplements and amendments hereto and all such financing
statements, continuation statements, instruments of further assurance and other
instruments, and will take such other action necessary or advisable to:
(i) Grant more effectively all or any portion of the Trust
Estate;
(ii) maintain or preserve the lien and security interest (and
the priority thereof) in favor of the Trustee for the benefit of the
Issuer Secured Parties created by this Indenture or carry out more
effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity of
any Grant made or to be made by this Indenture;
(iv) enforce any of the collateral;
(v) preserve and defend title to the Trust Estate and the
rights of the Trustee in such Trust Estate against the claims of all
persons and parties; and
(vi) pay all taxes or assessments levied or assessed upon the
Trust Estate when due.
The Issuer hereby designates the Trustee its agent and attorney-in-fact to
execute any financing statement, continuation statement or other instrument
required by the Trustee pursuant to this Section.
SECTION 3.6. Opinions as to Trust Estate. (a) On the Closing Date, the
Issuer shall furnish to the Trustee and the Note Insurer an Opinion of Counsel
either stating that, in the opinion of such counsel, such action has been taken
with respect to the recording and filing of this Indenture, any indentures
supplemental hereto, and any other requisite documents, and with respect to the
execution and filing of any financing statements and continuation statements, as
are necessary to perfect and make effective the first priority lien and security
interest in favor of the Trustee, for the benefit of the Issuer Secured Parties,
created by this Indenture and reciting
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the details of such action, or stating that, in the opinion of such counsel, no
such action is necessary to make such lien and security interest effective.
(b) Within 90 days after the beginning of each calendar year, beginning
with the first calendar year beginning more than three months after the Cutoff
Date, the Issuer shall furnish to the Trustee and the Note Insurer an Opinion of
Counsel either stating that, in the opinion of such counsel, such action has
been taken with respect to the recording, filing, re-recording and refiling of
this Indenture, any indentures supplemental hereto and any other requisite
documents and with respect to the execution and filing of any financing
statements and continuation statements as are necessary to maintain the lien and
security interest created by this Indenture and reciting the details of such
action or stating that in the opinion of such counsel no such action is
necessary to maintain such lien and security interest. Such Opinion of Counsel
shall also describe any action necessary (as of the date of such opinion) to be
taken in the following year to maintain the lien and security interest of this
Indenture.
SECTION 3.7. Performance of Obligations; Servicing of Receivables. (a)
The Issuer will not take any action and will use its best efforts not to permit
any action to be taken by others that would release any Person from any of such
Person's material covenants or obligations under any instrument or agreement
included in the Trust Estate or that would result in the amendment,
hypothecation, subordination, termination or discharge of or impair the validity
or effectiveness of, any such instrument or agreement, except as ordered by any
bankruptcy or other court or as expressly provided in this Indenture, the Basic
Documents or such other instrument or agreement.
(b) The Issuer may contract with other Persons acceptable to the Note
Insurer (so long as no Insurer Default shall have occurred and be continuing) to
assist it in performing its duties under this Indenture, and any performance of
such duties by a Person identified to the Trustee and the Note Insurer in an
Officer's Certificate of the Issuer shall be deemed to be action taken by the
Issuer. Initially, the Issuer has contracted with the Servicer to assist the
Issuer in performing its duties under this Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Basic Documents and
in the instruments and agreements included in the Trust Estate, including but
not limited to preparing (or causing to prepared) and filing (or causing to be
filed) all UCC financing statements and continuation statements required to be
filed by the terms of this Indenture and the Sale and Servicing Agreement in
accordance with and within the time periods provided for herein and therein.
Except as otherwise expressly provided therein, the Issuer shall not waive,
amend, modify, supplement or terminate any Basic Document or any provision
thereof without the consent of the Trustee, the Note Insurer or the Holders of
at least a majority of the Outstanding Amount of the Notes.
(d) If a responsible officer of the Owner Trustee shall have written
notice or actual knowledge of the occurrence of a Servicer Termination Event
under the Sale and Servicing
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Agreement, the Issuer shall promptly notify the Trustee, the Note Insurer and
the Rating Agencies thereof in accordance with Section 11.4, and shall specify
in such notice the action, if any, the Issuer is taking in respect of such
default. If a Servicer Termination Event shall arise from the failure of the
Servicer to perform any of its duties or obligations under the Sale and
Servicing Agreement with respect to the Receivables, the Issuer shall take all
reasonable steps available to it to remedy such failure.
(e) The Issuer agrees that it will not waive timely performance or
observance by the Servicer or the Seller of their respective duties under the
Basic Documents (x) without the prior consent of the Note Insurer (unless an
Insurer Default shall have occurred and be continuing) or (y) if the effect
thereof would adversely affect the Holders of the Notes.
SECTION 3.8. Negative Covenants. So long as any Notes are Outstanding,
the Issuer shall not:
(i) except as expressly permitted by this Indenture or the
Basic Documents, sell, transfer, exchange or otherwise dispose of any
of the properties or assets of the Issuer, including those included in
the Trust Estate, unless directed to do so by the Controlling Party;
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Noteholder by reason of the
payment of the taxes levied or assessed upon any part of the Trust
Estate; or
(iii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien in favor of the Trustee
created by this Indenture to be amended, hypothecated, subordinated,
terminated or discharged, or permit any Person to be released from any
covenants or obligations with respect to the Notes under this Indenture
except as may be expressly permitted hereby, (B) permit any lien,
charge, excise, claim, security interest, mortgage or other encumbrance
(other than the lien of this Indenture) to be created on or extend to
or otherwise arise upon or burden the Trust Estate or any part thereof
or any interest therein or the proceeds thereof (other than tax liens,
mechanics' liens and other liens that arise by operation of law, in
each case on a Financed Vehicle and arising solely as a result of an
action or omission of the related Obligor), (C) permit the lien of this
Indenture not to constitute a valid first priority (other than with
respect to any such tax, mechanics' or other lien) security interest in
the Trust Estate or (D) amend, modify or fail to comply with the
provisions of the Basic Documents without the prior written consent of
the Controlling Party.
SECTION 3.9. Annual Statement as to Compliance. The Issuer will deliver
to the Trustee and the Note Insurer, on or before July 31 of each year,
beginning July 31, [ ]and
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otherwise in compliance with the requirements of TIA Section 314(a)(4) an
Officer's Certificate, dated as of March 31 of such year, stating, as to the
Authorized Officer signing such Officer's Certificate, that
(i) a review of the activities of the Issuer during such year
and of performance under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based
on such review, the Issuer has complied with all conditions and
covenants under this Indenture throughout such year, or, if there has
been a default in the compliance of any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof.
SECTION 3.10. Issuer May Consolidate, Etc. Only on Certain Terms. (a)
The Issuer shall not consolidate or merge with or into any other Person, unless
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger shall be a Delaware Business
Trust organized and existing under the laws of the United States of
America or any state and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee and the Note Insurer (so long as no Insurer
Default shall have occurred and be continuing), the due and punctual
payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this
Indenture on the part of the Issuer to be performed or observed, all as
provided herein;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Trustee and the Note Insurer
(so long as no Insurer Default shall have occurred and be continuing))
to the effect that such transaction will not have any material adverse
tax consequence to the Trust, the Note Insurer, any Noteholder or any
Certificateholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation or merger and such supplemental indenture comply with
this Article III and that all conditions precedent herein provided
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for relating to such transaction have been complied with (including any
filing required by the Exchange Act); and
(vii) so long as no Insurer Default shall have occurred and be
continuing, the Issuer shall have given the Note Insurer written notice
of such conveyance or transfer at least 20 Business Days prior to the
consummation of such action and shall have received the prior written
approval of the Note Insurer of such conveyance or transfer and the
Issuer or the Person (if other than the Issuer) formed by or surviving
such conveyance or transfer has a net worth, immediately after such
conveyance or transfer, that is (a) greater than zero and (b) not less
than the net worth of the Issuer immediately prior to giving effect to
such conveyance or transfer.
(b) The Issuer shall not convey or transfer all or substantially all of
its properties or assets, including those included in the Trust Estate, to any
Person, unless
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer the conveyance or transfer of which
is hereby restricted shall (A) be a Delaware Business Trust organized
and existing under the laws of the United States of America or any
state, (B) expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the
Trustee, and the Note Insurer (so long as no Insurer Default shall have
occurred and be continuing), the due and punctual payment of the
principal of and interest on all Notes and the performance or
observance of every agreement and covenant of this Indenture and each
of the Basic Documents on the part of the Issuer to be performed or
observed, all as provided herein, (C) expressly agree by means of such
supplemental indenture that all right, title and interest so conveyed
or transferred shall be subject and subordinate to the rights of
Holders of the Notes, (D) unless otherwise provided in such
supplemental indenture, expressly agree to indemnify, defend and hold
harmless the Issuer against and from any loss, liability or expense
arising under or related to this Indenture and the Notes and (E)
expressly agree by means of such supplemental indenture that such
Person (or if a group of persons, then one specified Person) shall
prepare (or cause to be prepared) and make all filings with the
Commission (and any other appropriate Person) required by the Exchange
Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Trustee and the Note Insurer
(so long as no Insurer Default shall have occurred and be continuing))
to the effect that such transaction will not
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have any material adverse tax consequence to the Trust, the Note
Insurer, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel each stating that such
conveyance or transfer and such supplemental indenture comply with this
Article III and that all conditions precedent herein provided for
relating to such transaction have been complied with (including any
filing required by the Exchange Act); and
(vii) so long as no Insurer Default shall have occurred and be
continuing, the Issuer shall have given the Note Insurer written notice
of such conveyance or transfer at least 20 Business Days prior to the
consummation of such action and shall have received the prior written
approval of the Note Insurer of such consolidation or merger and the
Issuer or the Person (if other than the Issuer) formed by or surviving
such consolidation or merger has a net worth, immediately after such
consolidation or merger, that is (a) greater than zero and (b) not less
than the net worth of the Issuer immediately prior to giving effect to
such consolidation or merger.
SECTION 3.11. Successor or Transferee. (a) Upon any consolidation or
merger of the Issuer in accordance with Section 3.10(a), the Person formed by or
surviving such consolidation or merger (if other than the Issuer) shall succeed
to, and be substituted for, and may exercise every right and power of, the
Issuer under this Indenture with the same effect as if such Person had been
named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of
the Issuer pursuant to Section 3.10(b), CPS Auto Receivables Trust 1998[ ]-[ ]
will be released from every covenant and agreement of this Indenture to be
observed or performed on the part of the Issuer with respect to the Notes
immediately upon the delivery of written notice to the Trustee stating that CPS
Auto Receivables Trust 1998[ ]-[ ] is to be so released.
SECTION 3.12. No Other Business. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing the
Receivables in the manner contemplated by this Indenture and the Basic Documents
and activities incidental thereto. After the Closing Date, the Issuer shall not
fund the purchase of any additional Receivables.
SECTION 3.13. No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Notes (ii) obligations owing from time to time
to the Note Insurer under the Insurance Agreement and (iii) any other
Indebtedness permitted by or arising under the Basic Documents. The proceeds of
the Notes shall be used exclusively to fund the Issuer's purchase of the
Receivables and the other
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assets specified in the Sale and Servicing Agreement, to fund the Spread Account
and to pay the Issuer's organizational, transactional and start-up expenses.
SECTION 3.14. Servicer's Obligations. The Issuer shall cause the
Servicer to comply with Sections 4.9, 4.10, 4.11 and 5.11 of the Sale and
Servicing Agreement.
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities. Except
as contemplated by the Sale and Servicing Agreement or this Indenture, the
Issuer shall not make any loan or advance or credit to, or guarantee (directly
or indirectly or by an instrument having the effect of assuring another's
payment or performance on any obligation or capability of so doing or
otherwise), endorse or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stocks or dividends of, or own,
purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
SECTION 3.16. Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
SECTION 3.17. Compliance with Laws. The Issuer shall comply with the
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Issuer to perform its obligations under the Notes, this Indenture or any
Basic Document.
SECTION 3.18. Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer or to the Servicer, (ii) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest or security or
(iii) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Issuer may make, or cause to be made, distributions
to the Servicer, the Owner Trustee, the Trustee and the Certificateholders as
permitted by, and to the extent funds are available for such purpose under, the
Sale and Servicing Agreement or the Trust Agreement. The Issuer will not,
directly or indirectly, make payments to or distributions from the Collection
Account except in accordance with this Indenture and the Basic Documents.
SECTION 3.19. Notice of Events of Default. Upon a responsible officer
of the Owner Trustee having notice or actual knowledge thereof, the Issuer
agrees to give the Trustee, the Note Insurer and the Rating Agencies prompt
written notice of each Event of Default hereunder and each default on the part
of the Servicer or the Seller of its obligations under the Sale and Servicing
Agreement.
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SECTION 3.20. Further Instruments and Acts. Upon request of the Trustee
or the Note Insurer, the Issuer will execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper to
carry out more effectively the purpose of this Indenture.
SECTION 3.21. Amendments of Sale and Servicing Agreement and Trust
Agreement. The Issuer shall not agree to any amendment to Section 13.1 of the
Sale and Servicing Agreement or Section 11.1 of the Trust Agreement to eliminate
the requirements thereunder that the Trustee or the Holders of the Notes consent
to amendments thereto as provided therein.
SECTION 3.22. Income Tax Characterization. For purposes of federal
income tax, state and local income tax franchise tax and any other income taxes,
the Issuer will treat the Notes as indebtedness of the Issuer and hereby
instructs the Trustee to treat the Notes as indebtedness of the Issuer for
federal and state tax reporting purposes.
ARTICLE IV
Satisfaction and Discharge
SECTION 4.1. Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.3, 3.4, 3.5, 3.8,
3.10, 3.12, 3.13, 3.20, 3.21 and 3.22, (v) the rights, obligations and
immunities of the Trustee hereunder (including the rights of the Trustee under
Section 6.7 and the obligations of the Trustee under Section 4.2) and (vi) the
rights of Noteholders as beneficiaries hereof with respect to the property so
deposited with the Trustee payable to all or any of them, and the Trustee, on
demand of and at the expense of the Issuer, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture with respect to the
Notes, when
(A) all Notes theretofore authenticated and delivered (other
than (i) Notes that have been destroyed, lost or stolen and that have
been replaced or paid as provided in Section 2.5 and (ii) Notes for
whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Issuer and thereafter repaid to the
Issuer or discharged from such trust, as provided in Section 3.3) have
been delivered to the Trustee for cancellation and the Note Policy has
expired and been returned to the Note Insurer for cancellation;
(B) the Issuer has paid or caused to be paid all Insurer
Secured Obligations and all Trustee Secured Obligations; and
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(C) the Issuer has delivered (i) to the Trustee and the Note
Insurer an Officer's Certificate, an Opinion of Counsel and (ii) if
required by the TIA, to the Trustee or the Note Insurer (so long as an
Insurer Default shall not have occurred and be continuing) an
Independent Certificate from a firm of certified public accountants,
each meeting the applicable requirements of Section 11.1(a) and each
stating that all conditions precedent herein provided for relating to
the satisfaction and discharge of this Indenture have been complied
with.
SECTION 4.2. Application of Trust Money. All moneys deposited with the
Trustee pursuant to Section 4.1 hereof shall be held in trust and applied by it,
in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Note Paying Agent, as the Trustee may
determine, to the Holders of the particular Notes for the payment or redemption
of which such moneys have been deposited with the Trustee, of all sums due and
to become due thereon for principal and interest; but such moneys need not be
segregated from other funds except to the extent required herein or in the Sale
and Servicing Agreement or required by law.
SECTION 4.3. Repayment of Moneys Held by Note Paying Agent. In
connection with the satisfaction and discharge of this Indenture with respect to
the Notes, all moneys then held by any Note Paying Agent other than the Trustee
under the provisions of this Indenture with respect to such Notes shall, upon
demand of the Issuer, be paid to the Trustee to be held and applied according to
Section 3.3 and thereupon such Note Paying Agent shall be released from all
further liability with respect to such moneys.
ARTICLE V
Remedies
SECTION 5.1. Events of Default. (a) "Event of Default", wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) default in the payment of any interest on any Note when
the same becomes due and payable, and such default shall continue for a
period of five days (solely for purposes of this clause, a payment on
the Notes funded by the Note Insurer or the Collateral Agent pursuant
to the Master Spread Account Agreement shall be deemed to be a payment
made by the Issuer); or
(ii) default in the payment of the principal of or any
installment of the principal of any Note when the same becomes due and
payable and such default shall continue for
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a period of five days (solely for purposes of this clause, a payment on
the Notes funded by the Note Insurer or the Collateral Agent pursuant
to the Master Spread Account Agreement, shall be deemed to be a payment
made by the Issuer); or
(iii) so long as an Insurer Default shall not have occurred
and be continuing, an Insurance Agreement Indenture Cross Default shall
have occurred; provided, however, that the occurrence of an Insurance
Agreement Indenture Cross Default may not form the basis of an Event of
Default unless the Note Insurer shall, upon prior written notice to the
Rating Agencies, have delivered to the Issuer and the Trustee and not
rescinded a written notice specifying that such Insurance Agreement
Indenture Cross Default constitutes an Event of Default under the
Indenture; or
(iv) so long as an Insurer Default shall have occurred and be
continuing, default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant
or agreement, a default in the observance or performance of which is
elsewhere in this Section specifically dealt with), or any
representation or warranty of the Issuer made in this Indenture or in
any certificate or other writing delivered pursuant hereto or in
connection herewith proving to have been incorrect in any material
respect as of the time when the same shall have been made, and such
default shall continue or not be cured, or the circumstance or
condition in respect of which such misrepresentation or warranty was
incorrect shall not have been eliminated or otherwise cured, for a
period of 30 days (or for such longer period, not in excess of 90 days,
as may be reasonably necessary to remedy such default; provided that
such default is capable of remedy within 90 days or less and the
Servicer on behalf of the Owner Trustee delivers an Officer's
Certificate to the Trustee to the effect that the Issuer has commenced,
or will promptly commence and diligently pursue, all reasonable efforts
to remedy such default) after there shall have been given, by
registered or certified mail, to the Issuer by the Trustee or to the
Issuer and the Trustee by the Holders of at least 25% of the
Outstanding Amount of the Notes, a written notice specifying such
default or incorrect representation or warranty and requiring it to be
remedied and stating that such notice is a "Notice of Default"
hereunder; or
(v) so long as an Insurer Default shall have occurred and be
continuing, the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Issuer or any
substantial part of the Trust Estate in an involuntary case under any
applicable Federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the
Issuer or for any substantial part of the Trust Estate, or ordering the
winding-up or liquidation of the Issuer's affairs, which decree or
order shall remain unstayed and in effect for a period of 60
consecutive days; or
(vi) so long as an Insurer Default shall have occurred and be
continuing, the commencement by the Issuer of a voluntary case under
any applicable Federal or state
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bankruptcy, insolvency or other similar law now or hereafter in effect,
or the consent by the Issuer to the entry of an order for relief in an
involuntary case under any such law, or the consent by the Issuer to
the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the
Issuer or for any substantial part of the Trust Estate, or the making
by the Issuer of any general assignment for the benefit of creditors,
or the failure by the Issuer generally to pay its debts as such debts
become due, or the taking of action by the Issuer in furtherance of any
of the foregoing.
(b) The Issuer shall deliver to the Trustee and the Note Insurer,
within five days after the occurrence thereof, written notice in the form of an
Officer's Certificate of any event which with the giving of notice and the lapse
of time would become an Event of Default under clause (iii), its status and what
action the Issuer is taking or proposes to take with respect thereto.
SECTION 5.2. Rights Upon Event of Default. (a) If an Insurer Default
shall not have occurred and be continuing and an Event of Default shall have
occurred and be continuing, the Notes shall become immediately due and payable
at par, together with accrued interest thereon. If an Event of Default shall
have occurred and be continuing, the Controlling Party may exercise any of the
remedies specified in Section 5.4(a). In the event of any acceleration of any
Notes by operation of this Section 5.2, the Trustee shall continue to be
entitled to make claims under the Note Policy pursuant to the Sale and Servicing
Agreement for Scheduled Payments on the Notes. Payments under the Note Policy
following acceleration of any Notes shall be applied by the Trustee:
FIRST: to Noteholders for amounts due and unpaid on the Notes
for interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for interest;
SECOND: to Class A-1 Noteholders for amounts due and unpaid on
the Notes for principal, ratably, without preference or priority of any
kind, according to the amounts due and payable on the A-1 Notes for
principal;
THIRD: to Class A-2 Noteholders for amounts due and unpaid on
the Notes for principal, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Class A-2 Notes
for principal;
[other classes, if any]
(b) In the event any Notes are accelerated due to an Event of Default,
the Note Insurer shall have the right (in addition to its obligation to pay
Scheduled Payments on the Notes in accordance with the Note Policy), but not the
obligation, to make payments under the Note
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Policy or otherwise of interest and principal due on such Notes, in whole or in
part, on any date or dates following such acceleration as the Note Insurer, in
its sole discretion, shall elect.
(c) If an Insurer Default shall have occurred and be continuing and an
Event of Default shall have occurred and be continuing, the Trustee in its
discretion may, or if so requested in writing by Holders holding Notes
representing not less than a majority of the Outstanding Amount of the Notes,
declare by written notice to the Issuer that the Notes become, whereupon they
shall become, immediately due and payable at par, together with accrued interest
thereon.
(d) If an Insurer Default shall have occurred and be continuing, then
at any time after such declaration of acceleration of maturity has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article V provided, the Holders of Notes
representing a majority of the Outstanding Amount of the Notes, by written
notice to the Issuer and the Trustee, may rescind and annul such declaration and
its consequences if:
(i) the Issuer has paid or deposited with the Trustee a sum
sufficient to pay
(A) all payments of principal of and interest on all
Notes and all other amounts that would then be due hereunder
or upon such Notes if the Event of Default giving rise to such
acceleration had not occurred; and
(B) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and
counsel; and
(ii) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such acceleration,
have been cured or waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by
Trustee. (a) The Issuer covenants that if (i) default is made in the payment of
any interest on any Note when the same becomes due and payable, and such default
continues for a period of five days, or (ii) default is made in the payment of
the principal of or any installment of the principal of any Note when the same
becomes due and payable and such default continues for a period of five days,
the Issuer will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of the Notes, the whole amount then due and payable on such Notes for
principal and interest, with interest upon the overdue principal, and, to the
extent payment at such rate of interest shall be legally enforceable, upon
overdue installments of interest, at the applicable Interest Rate and in
addition thereto such further amount as shall be sufficient to cover the costs
and expenses of collection,
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including the reasonable compensation, expenses, disbursements and advances of
the Trustee and its agents and counsel.
(b) Each Issuer Secured Party hereby irrevocably and unconditionally
appoints the Controlling Party as the true and lawful attorney-in-fact of such
Issuer Secured Party for so long as such Issuer Secured Party is not the
Controlling Party, with full power of substitution, to execute, acknowledge and
deliver any notice, document, certificate, paper, pleading or instrument and to
do in the name of the Controlling Party as well as in the name, place and stead
of such Issuer Secured Party such acts, things and deeds for or on behalf of and
in the name of such Issuer Secured Party under this Indenture (including
specifically under Section 5.4) and under the Basic Documents which such Issuer
Secured Party could or might do or which may be necessary, desirable or
convenient in such Controlling Party's sole discretion to effect the purposes
contemplated hereunder and under the Basic Documents and, without limitation,
following the occurrence of an Event of Default, exercise full right, power and
authority to take, or defer from taking, any and all acts with respect to the
administration, maintenance or disposition of the Trust Estate.
(c) If an Event of Default occurs and is continuing, the Trustee may in
its discretion subject to the consent of the Controlling Party and shall, at the
direction of the Controlling Party (except as provided in Section 5.3(d) below),
proceed to protect and enforce its rights and the rights of the Noteholders by
such appropriate Proceedings as the Trustee or the Controlling Party shall deem
most effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy or
legal or equitable right vested in the Trustee by this Indenture or by law.
(d) [Reserved].
(e) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Trust Estate, proceedings under Title 11 of the United States Code or any
other applicable Federal or state bankruptcy, insolvency or other similar law,
or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Trustee, irrespective of whether the principal of any
Notes shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section, shall be entitled and empowered, by
intervention in such proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount
of principal and interest owing and unpaid in respect of the Notes and
to file such other papers or
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documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for reasonable compensation to the
Trustee and each predecessor Trustee, and their respective agents,
attorneys and counsel, and for reimbursement of all expenses and
liabilities incurred, and all advances made, by the Trustee and each
predecessor Trustee, except as a result of negligence, bad faith or
willful misconduct) and of the Noteholders allowed in such proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of Notes in any election of a trustee, a
standby trustee or person performing similar functions in any such
proceedings;
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders and of the
Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims
of the Trustee or the Holders of Notes allowed in any judicial
proceedings relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such proceeding is hereby authorized by each of such Noteholders to make
payments to the Trustee, and, in the event that the Trustee shall consent to the
making of payments directly to such Noteholders, to pay to the Trustee such
amounts as shall be sufficient to cover reasonable compensation to the Trustee,
each predecessor Trustee and their respective agents, attorneys and counsel, and
all other expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee except as a result of negligence or bad
faith.
(f) Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or vote for or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Noteholder in any such proceeding
except, as aforesaid, to vote for the election of a trustee in bankruptcy or
similar person.
(g) All rights of action and of asserting claims under this Indenture,
the Master Spread Account Agreement or under any of the Notes, may be enforced
by the Trustee without the possession of any of the Notes or the production
thereof in any trial or other proceedings relative thereto, and any such action
or proceedings instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment, subject to the
payment of the expenses, disbursements and compensation of the Trustee, each
predecessor Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders of the Notes.
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(h) In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture or the Master
Spread Account Agreement), the Trustee shall be held to represent all the
Holders of the Notes, and it shall not be necessary to make any Noteholder a
party to any such proceedings.
SECTION 5.4. Remedies. If an Event of Default shall have occurred and
be continuing, the Controlling Party may do one or more of the following
(subject to Section 5.5):
(i) institute or direct the Trustee to institute Proceedings
in its own name and as trustee of an express trust for the collection
of all amounts then payable on the Notes or under this Indenture with
respect thereto, whether by declaration or otherwise, enforce any
judgment obtained, and collect from the Issuer and any other obligor
upon such Notes moneys adjudged due;
(ii) institute or direct the Trustee to institute Proceedings
from time to time for the complete or partial foreclosure of this
Indenture with respect to the Trust Estate;
(iii) exercise or direct the Trustee to exercise any remedies
of a secured party under the UCC and take any other appropriate action
to protect and enforce the rights and remedies of the Trustee and the
Holders of the Notes; and
(iv) sell or direct the Trustee to sell the Trust Estate or
any portion thereof or rights or interest therein, at one or more
public or private sales called and conducted in any manner permitted by
law; provided, however, that if the Trustee is the Controlling Party,
the Trustee may not sell or otherwise liquidate the Trust Estate
following an Event of Default unless
(A) such Event of Default is of the type described in
Section 5.1(i) or (ii), or
(B) either
(x) the Holders of 100% of the Outstanding
Amount of the Notes consent thereto, or
(y) the proceeds of such sale or liquidation
distributable to the Noteholders are sufficient to
discharge in full all amounts then due and unpaid
upon such Notes for principal and interest.
In determining such sufficiency or insufficiency with respect to clause
(y), the Trustee may, but need not, obtain and rely upon an opinion of an
Independent investment banking or accounting firm of national reputation as to
the feasibility of such proposed action and as to the sufficiency of the Trust
Estate for such purpose.
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SECTION 5.5. Optional Preservation of the Receivables. If the Trustee
is the Controlling Party and if the Notes have been declared to be due and
payable under Section 5.2 following an Event of Default and such declaration and
its consequences have not been rescinded and annulled, the Trustee may, but need
not, elect to maintain possession of the Trust Estate. It is the desire of the
parties hereto and the Noteholders that there be at all times sufficient funds
for the payment of principal of and interest on the Notes, and the Trustee shall
take such desire into account when determining whether or not to maintain
possession of the Trust Estate. In determining whether to maintain possession of
the Trust Estate, the Trustee may, but need not, obtain and rely upon an opinion
of an Independent investment banking or accounting firm of national reputation
as to the feasibility of such proposed action and as to the sufficiency of the
Trust Estate for such purpose.
SECTION 5.6. Priorities.
(a) Following (1) the acceleration of the Notes pursuant to Section 5.2
or (2) if an Insurer Default shall have occurred and be continuing, the
occurrence of an Event of Default pursuant to Section 5.1(i), 5.1(ii), 5.1(iv),
5.1(v) or 5.1(vi) of this Indenture the Total Distribution Amount, including any
money or property collected pursuant to Section 5.4 of this Indenture shall be
applied by the Trustee on the related Payment Date in the following order of
priority:
FIRST: amounts due and owing and required to be distributed to
the Servicer, the Standby Servicer, the Owner Trustee, the Trustee and
the Collateral Agent, respectively, pursuant to priorities (i) through
(v) of Section 5.7(b) of the Sale and Servicing Agreement and not
previously distributed, in the order of such priorities and without
preference or priority of any kind within such priorities;
SECOND: to Noteholders for amounts due and unpaid on the Notes
for interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for interest;
THIRD: to Class A-1 Noteholders for amounts due and unpaid on
the Notes for principal, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Class A-1 Notes
for principal;
FOURTH: to Class A-2 Noteholders for amounts due and unpaid on
the Notes for principal, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Class A-2 Notes
for principal;
[other classes of Notes, if any]
FIFTH: amounts due and owing and required to be distributed to
the Note Insurer pursuant to priority (viii) of Section 5.7(b) of the
Sale and Servicing Agreement and not previously distributed);
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SIXTH: in the event any Person other than the Standby Servicer
becomes the successor Servicer, to such successor Servicer, to the
extent not previously paid by the predecessor Servicer pursuant to the
Sale and Servicing Agreement, reasonable transition expenses (up to a
maximum of $50,000 for all such expenses) incurred in becoming the
successor Servicer; and
SEVENTH: to the Collateral Agent to be applied as provided in
the Master Spread Account Agreement.
(b) The Trustee may fix a record date and payment date for any payment
to Noteholders pursuant to this Section. At least 15 days before such record
date the Issuer shall mail to each Noteholder and the Trustee a notice that
states such record date, the payment date and the amount to be paid.
SECTION 5.7. Limitation of Suits. No Holder of any Note shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(i) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding
Amount of the Notes have made written request to the Trustee to
institute such proceeding in respect of such Event of Default in its
own name as Trustee hereunder;
(iii) such Holder or Holders have offered to the Trustee
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities to be incurred in complying with such request;
(iv) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such
proceedings;
(v) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority of the Outstanding Amount of the Notes; and
(vi) an Insurer Default shall have occurred and be continuing;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
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In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of Notes, each
representing less than a majority of the Outstanding Amount of the Notes, the
Trustee in its sole discretion may determine what action, if any, shall be
taken, notwithstanding any other provisions of this Indenture.
SECTION 5.8. Unconditional Rights of Noteholders To Receive Principal
and Interest. Notwithstanding any other provisions of this Indenture, the Holder
of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest, if any, on such Note on or
after the respective due dates thereof expressed in such Note or in this
Indenture (or, in the case of redemption, on or after the Redemption Date) and
to institute suit for the enforcement of any such payment, and such right shall
not be impaired without the consent of such Holder.
SECTION 5.9. Restoration of Rights and Remedies. If the Controlling
Party or any Noteholder has instituted any proceeding to enforce any right or
remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Trustee or to
such Noteholder, then and in every such case the Issuer, the Trustee and the
Noteholders shall, subject to any determination in such Proceeding, be restored
severally and respectively to their former positions hereunder, and thereafter
all rights and remedies of the Trustee and the Noteholders shall continue as
though no such proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Controlling Party or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not a Waiver. No delay or omission of
the Controlling Party or any Holder of any Note to exercise any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by law
to the Trustee or to the Noteholders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Noteholders, as the
case may be.
SECTION 5.12. Control by Noteholders. If the Trustee is the Controlling
Party, the Holders of a majority of the Outstanding Amount of the Notes shall
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee with respect to the Notes or exercising
any trust or power conferred on the Trustee; provided that
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(i) such direction shall not be in conflict with any rule of
law or with this Indenture;
(ii) subject to the express terms of Section 5.4, any
direction to the Trustee to sell or liquidate the Trust Estate shall be
by the Holders of Notes representing not less than 100% of the
Outstanding Amount of the Notes;
(iii) if the conditions set forth in Section 5.5 have been
satisfied and the Trustee elects to retain the Trust Estate pursuant to
such Section, then any direction to the Trustee by Holders of Notes
representing less than 100% of the Outstanding Amount of the Notes to
sell or liquidate the Trust Estate shall be of no force and effect; and
(iv) the Trustee may take any other action deemed proper by
the Trustee that is not inconsistent with such direction;
provided, however, that, subject to Section 6.1, the Trustee need not take any
action that it determines might involve it in liability or might materially
adversely affect the rights of any Noteholders not consenting to such action.
SECTION 5.13. Waiver of Past Defaults. (a) If an Insurer Default shall
have occurred and be continuing, prior to the declaration of the acceleration of
the maturity of the Notes as provided in Section 5.4, the Holders of Notes of
not less than a majority of the Outstanding Amount of the Notes may waive any
past Default or Event of Default and its consequences except a Default or Event
of Default (i) in payment of principal of or interest on any of the Notes or
(ii) in respect of a covenant or provision hereof which cannot be modified or
amended without the consent of the Holder of each Note. In the case of any such
waiver, the Issuer, the Trustee and the Holders of the Notes shall be restored
to their former positions and rights hereunder, respectively; but no such waiver
shall extend to any subsequent or other Default or Event of Default or impair
any right consequent thereto.
Upon any such waiver, such Default or Event of Default shall cease to
exist and be deemed to have been cured and not to have occurred, and any Event
of Default arising therefrom shall be deemed to have been cured and not to have
occurred, for every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other Default or Event of Default or impair any right
consequent thereto.
SECTION 5.14. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good
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faith of the claims or defenses made by such party litigant; but the provisions
of this Section shall not apply to (a) any suit instituted by the Trustee, (b)
any suit instituted by any Noteholder, or group of Noteholders, in each case
holding in the aggregate more than 10% of the Outstanding Amount of the Notes or
(c) any suit instituted by any Noteholder for the enforcement of the payment of
principal of or interest on any Note on or after the respective due dates
expressed in such Note and in this Indenture (or, in the case of redemption, on
or after the Redemption Date).
SECTION 5.15. Waiver of Stay or Extension Laws. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power and any right of the
Issuer to take such action shall be suspended.
ARTICLE VI
The Trustee
SECTION 6.1. Duties of Trustee. (a) If an Event of Default has occurred
and is continuing, the Trustee shall exercise the rights and powers vested in it
by this Indenture and the Basic Documents and use the same degree of care and
skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; however, the Trustee shall examine the certificates and
opinions to determine whether or not they conform on their face to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
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(i) this paragraph does not limit the effect of paragraph (b)
of this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.12.
(d) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Issuer.
(e) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law or the terms of this Indenture
or the Sale and Servicing Agreement.
(f) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or
powers, if it shall have reasonable grounds to believe that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(g) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
(h) The Trustee shall permit any representative of the Note Insurer,
during the Trustee's normal business hours, to examine all books of account,
records, reports and other papers of the Trustee relating to the Notes, to make
copies and extracts therefrom and to discuss the Trustee's affairs and actions,
as such affairs and actions relate to the Trustee's duties with respect to the
Notes, with the Trustee's officers and employees responsible for carrying out
the Trustee's duties with respect to the Notes.
(i) The Trustee shall, and hereby agrees that it will, perform all of
the obligations and duties required of it under the Sale and Servicing
Agreement.
(j) The Trustee shall, and hereby agrees that it will, hold the Note
Policy in trust, and will hold any proceeds of any claim on the Note Policy in
trust solely for the use and benefit of the Noteholders.
(k) In no event shall Norwest Bank Minnesota, National Association, in
any of its capacities hereunder, be deemed to have assumed any duties of the
Owner Trustee under the Delaware Business Trust Statute, common law, or the
Trust Agreement.
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(l) Except for actions expressly authorized by this Indenture, the
Trustee shall take no action reasonably likely to impair the security interests
created or existing under any Receivable or Financed Vehicle or to impair the
value of any Receivable or Financed Vehicle.
(m) All information obtained by the Trustee regarding the Obligors and
the Receivables, whether upon the exercise of its rights under this Indenture or
otherwise, shall be maintained by the Trustee in confidence and shall not be
disclosed to any other Person, other than the Trustee's attorneys, accountants
and agents unless such disclosure is required by this Indenture or any
applicable law or regulation.
SECTION 6.2. Rights of Trustee. (a) Subject to Sections 6.1 and 6.2,
the Trustee shall be protected and shall incur no liability to the Issuer or any
Issuer Secured Party in relying upon the accuracy, acting in reliance upon the
contents, and assuming the genuineness of any notice, demand, certificate,
signature, instrument or other document reasonably believed by the Trustee to be
genuine and to have been duly executed by the appropriate signatory, and, except
to the extent the Trustee has actual knowledge to the contrary or as required
pursuant to Section 6.1 or Section 6.2(g) the Trustee shall not be required to
make any independent investigation with respect thereto.
(b) Before the Trustee acts or refrains from acting, it may require an
Officer's Certificate. Subject to Section 6.1(c), the Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on the
Officer's Certificate.
(c) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and the Trustee shall not be responsible
for any misconduct or negligence on the part of, or for the supervision of
Consumer Portfolio Services, Inc., or any other such agent, attorney, custodian
or nominee appointed with due care by it hereunder.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute wilful
misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the Notes
shall be full and complete authorization and protection from liability in
respect to any action taken, omitted or suffered by it hereunder in good faith
and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall be under no obligation to institute, conduct or
defend any litigation under this Indenture or in relation to this Indenture, at
the request, order or direction of any of the Holders of Notes or the
Controlling Party, pursuant to the provisions of this Indenture, unless such
Holders of Notes or the Controlling Party shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that may be incurred therein or
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thereby; provided, however, that the Trustee shall, upon the occurrence of an
Event of Default (that has not been cured), exercise the rights and powers
vested in it by this Indenture in accordance with Section 6.1.
(g) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other paper
or document, unless requested in writing to do so by the Note Insurer (so long
as no Insurer Default shall have occurred and be continuing) or (if an Insurer
Default shall have occurred and be continuing) by the Holders of Notes
evidencing not less than 25% of the Outstanding Amount thereof; provided,
however, that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of this Indenture or the
Sale and Servicing Agreement, the Trustee may require reasonable indemnity
against such cost, expense or liability as a condition to so proceeding; the
reasonable expense of every such examination shall be paid by the Person making
such request, or, if paid by the Trustee, shall be reimbursed by the Person
making such request upon demand.
SECTION 6.3. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not the Trustee. Any Note Paying Agent, Note Registrar,
co-registrar or co-paying agent may do the same with like rights.
However, the Trustee must comply with Sections 6.11 and 6.12.
SECTION 6.4. Trustee's Disclaimer. The Trustee shall not be responsible
for and makes no representation as to the validity or adequacy of this
Indenture, the Trust Estate, the Collateral or the Notes, it shall not be
accountable for the Issuer's use of the proceeds from the Notes, and it shall
not be responsible for any statement of the Issuer in the Indenture or in any
document issued in connection with the sale of the Notes or in the Notes other
than the Trustee's certificate of authentication.
SECTION 6.5. Notice of Defaults. If an Event of Default occurs and is
continuing and if it is either known by, or written notice of the existence
thereof has been delivered to, a Responsible Officer of the Trustee, the Trustee
shall mail to each Noteholder notice of the Default within 30 days after such
knowledge or notice occurs. Except in the case of a Default in payment of
principal of or interest on any Note (including payments pursuant to the
mandatory redemption provisions of such Note, if any), the Trustee may withhold
the notice if and so long as a committee of its Responsible Officers in good
faith determines that withholding the notice is in the interests of Noteholders.
SECTION 6.6. Reports by Trustee to Holders. The Trustee shall on behalf
of the Issuer deliver to each Noteholder such information as may be reasonably
required to enable such Holder to prepare its Federal and state income tax
returns.
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SECTION 6.7. Compensation and Indemnity. (a) Pursuant to Section 5.7(b)
of the Sale and Servicing Agreement, the Issuer shall pay to the Trustee from
time to time compensation for its services. The Trustee's compensation shall not
be limited by any law on compensation of a trustee of an express trust. The
Issuer shall reimburse the Trustee, pursuant to Section 5.7(b) of the Sale and
Servicing Agreement, for all reasonable out-of-pocket expenses incurred or made
by it, including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee's agents, counsel, accountants and
experts. The Issuer shall or shall cause the Servicer to indemnify the Trustee
against any and all loss, liability or expense incurred by the Trustee without
willful misfeasance, negligence or bad faith on its part arising out of or in
connection with the acceptance or the administration of this trust and the
performance of its duties hereunder, including the costs and expenses of
defending itself against any claim or liability in connection therewith. The
Trustee shall notify the Issuer and the Servicer promptly of any claim for which
it may seek indemnity. Failure by the Trustee to so notify the Issuer and the
Servicer shall not relieve the Issuer of its obligations hereunder or the
Servicer of its obligations under Article XII of the Sale and Servicing
Agreement. The Trustee may have separate counsel and the Issuer shall or shall
cause the Servicer to pay the fees and expenses of such counsel. Neither the
Issuer nor the Servicer need reimburse any expense or indemnify against any
loss, liability or expense incurred by the Trustee through the Trustee's own
wilful misconduct, negligence or bad faith.
(b) The Issuer's payment obligations to the Trustee pursuant to this
Section shall survive the discharge of this Indenture. When the Trustee incurs
expenses after the occurrence of a Default specified in Section 5.1(v) or (vi)
with respect to the Issuer, the expenses are intended to constitute expenses of
administration under Title 11 of the United States Code or any other applicable
Federal or state bankruptcy, insolvency or similar law. Notwithstanding anything
else set forth in this Indenture or the Basic Documents, the recourse of the
Trustee hereunder and under the Basic Documents shall be to the Trust Estate
only and specifically shall not be recourse to the assets of the Depositor or
any Noteholder. In addition, the Trustee agrees that its recourse to the Issuer,
the Trust Estate, the Seller and amounts held pursuant to the Master Spread
Account Agreement shall be limited to the right to receive the distributions
referred to in Section 5.7(b) of the Sale and Servicing Agreement.
SECTION 6.8. Replacement of Trustee. The Issuer may, with the consent
of the Note Insurer, and at the request of the Note Insurer (unless an Insurer
Default shall have occurred and be continuing), shall, remove the Trustee if:
(i) the Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect of the
Trustee in an involuntary case or proceeding under federal or state banking or
bankruptcy laws, as now or hereafter constituted, or any other applicable
federal or state bankruptcy, insolvency or other similar law, shall have entered
a decree or order granting relief or appointing a receiver,
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liquidator, assignee, custodian, trustee, conservator, sequestrator (or similar
official) for the Trustee or for any substantial part of the Trustee's property,
or ordering the winding-up or liquidation of the Trustee's affairs;
(iii) an involuntary case under the federal bankruptcy laws, as now or
hereafter in effect, or another present or future federal or state bankruptcy,
insolvency or similar law is commenced with respect to the Trustee and such case
is not dismissed within 60 days;
(iv) the Trustee commences a voluntary case under any federal or state
banking or bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law, or
consents to the appointment of or taking possession by a received, liquidator,
assignee, custodian, trustee, conservator or sequestrator (or other similar
official) for the Trustee or for any substantial part of the Trustee's property,
or makes any assignment for the benefit of creditors or fails generally to pay
its debts as such debts become due or takes any corporate action in furtherances
of any of the foregoing; or
(v) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Issuer shall promptly appoint a successor
Trustee acceptable to the Note Insurer (so long as an Insurer Default shall not
have occurred and be continuing). If the Issuer fails to appoint such a
successor Trustee, the Note Insurer may appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee, the Note Insurer (provided that no Insurer
Default shall have occurred and be continuing) and the Issuer, whereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the retiring
Trustee under this Indenture, subject to satisfaction of the Rating Agency
Condition. The successor Trustee shall mail a notice of its succession to each
Noteholder. The retiring Trustee shall promptly transfer all property held by it
as Trustee to the successor Trustee.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuer or the
Holders of a majority in outstanding Amount of the Notes may petition any court
of competent jurisdiction for the appointment of a successor Trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor Trustee
pursuant to Section 6.8.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Issuer's and the Servicer's obligations under Section 6.7 shall
continue for the benefit of the retiring Trustee.
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SECTION 6.9. Successor Trustee by Merger. (a) If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee. The Trustee shall provide the Rating
Agencies prior written notice of any such transaction.
(b) In case at the time such successor or successors to the Trustee by
merger, conversion or consolidation shall succeed to the trusts created by this
Indenture any of the Notes shall have been authenticated but not delivered, any
such successor to the Trustee may adopt the certificate of authentication of any
predecessor trustee, and deliver such Notes so authenticated; and in case at
that time any of the Notes shall not have been authenticated, any successor to
the Trustee may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor to the Trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the Notes or
in this Indenture provided that the certificate of the Trustee shall have.
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions of this Indenture, at any time, for the
purpose of meeting any legal requirement of any jurisdiction in which any part
of the Trust may at the time be located, the Trustee with the consent of the
Note Insurer (so long as an Insurer Default shall not have occurred and be
continuing) shall have the power and may execute and deliver all instruments to
appoint one or more Persons to act as a co-trustee or co-trustees, or separate
trustee or separate trustees, of all or any part of the Trust, and to vest in
such Person or Persons, in such capacity and for the benefit of the Noteholders,
such title to the Trust, or any part hereof, and, subject to the other
provisions of this Section, such powers, duties, obligations, rights and trusts
as the Trustee may consider necessary or desirable. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor trustee under Section 6.11 and no notice to Noteholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 6.8 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
the Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in
any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the
Trustee;
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(ii) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder, including acts
or omissions of predecessor or successor trustees; and
(iii) the Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VI. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Indenture,
specifically including every provision of this Indenture relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, dissolve, become insolvent, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall
invest in and be exercised by the Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.
SECTION 6.11. Eligibility: Disqualification. The Trustee shall at all
times satisfy the requirements of TIA ss. 310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition and subject to supervision or
examination by federal or state authorities; and having a rating, both with
respect to long-term and short-term unsecured obligations, of not less than
investment grade by the Rating Agencies. The Trustee shall provide copies of
such reports to the Note Insurer upon request. The Trustee shall comply with TIA
ss. 310(b), including the optional provision permitted by the second sentence of
TIA ss. 310(b)(9); provided, however, that there shall be excluded from the
operation of TIA ss. 310(b)(1) any indenture or indentures under which other
securities of the Issuer are outstanding if the requirements for such exclusion
set forth in TIA ss. 310(b)(1) are met.
SECTION 6.12. Preferential Collection of Claims Against Issuer. The
Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship
listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be
subject to TIA ss. 311(a) to the extent indicated.
SECTION 6.13. Appointment and Powers. Subject to the terms and
conditions hereof, each of the Issuer Secured Parties hereby appoints Norwest
Bank Minnesota, National
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Association as the Trustee with respect to the Collateral, and Norwest Bank
Minnesota, National Association hereby accepts such appointment and agrees to
act as Trustee with respect to the Collateral for the Issuer Secured Parties, to
maintain custody and possession of such Collateral (except as otherwise provided
hereunder) and to perform the other duties of the Trustee in accordance with the
provisions of this Indenture and the other Basic Documents. Each Issuer Secured
Party hereby authorizes the Trustee to take such action on its behalf, and to
exercise such rights, remedies, powers and privileges hereunder, as the
Controlling Party may direct and as are specifically authorized to be exercised
by the Trustee by the terms hereof, together with such actions, rights,
remedies, powers and privileges as are reasonably incidental thereto. The
Trustee shall act upon and in compliance with the written instructions of the
Controlling Party delivered pursuant to this Indenture promptly following
receipt of such written instructions; provided that the Trustee shall not act in
accordance with any instructions (i) which are not authorized by, or in
violation of the provisions of, this Indenture, (ii) which are in violation of
any applicable law, rule or regulation or (iii) for which the Trustee has not
received reasonable indemnity. Receipt of such instructions shall not be a
condition to the exercise by the Trustee of its express duties hereunder, except
where this Indenture provides that the Trustee is permitted to act only
following and in accordance with such instructions.
SECTION 6.14. Performance of Duties. The Trustee shall have no duties
or responsibilities except those expressly set forth in this Indenture and the
other Basic Documents to which the Trustee is a party or as directed by the
Controlling Party in accordance with this Indenture. The Trustee shall not be
required to take any discretionary actions hereunder except at the written
direction and with the indemnification of the Controlling Party and as provided
in Section 5.12. The Trustee shall, and hereby agrees that it will, perform all
of the duties and obligations required of it under the Sale and Servicing
Agreement.
SECTION 6.15. Limitation on Liability. Neither the Trustee nor any of
its directors, officers or employees shall be liable for any action taken or
omitted to be taken by it or them in good faith hereunder, or in connection
herewith, except that the Trustee shall be liable for its negligence, bad faith
or willful misconduct. Notwithstanding any term or provision of this Indenture,
the Trustee shall incur no liability to the Issuer or the Issuer Secured Parties
for any action taken or omitted by the Trustee in connection with the
Collateral, except for the negligence, bad faith or willful misconduct on the
part of the Trustee, and, further, shall incur no liability to the Issuer
Secured Parties except for negligence, bad faith or willful misconduct in
carrying out its duties to the Issuer Secured Parties. The Trustee shall at all
times be free independently to establish to its reasonable satisfaction, but
shall have no duty to independently verify, the existence or nonexistence of
facts that are a condition to the exercise or enforcement of any right or remedy
hereunder or under any of the Basic Documents. The Trustee may consult with
counsel, and shall not be liable for any action taken or omitted to be taken by
it hereunder in good faith and in accordance with the written advice of such
counsel. The Trustee shall not be under any obligation to exercise any of the
remedial rights or powers vested in it by this Indenture or to follow any
direction from the Controlling Party unless it shall have received
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reasonable security or indemnity satisfactory to the Trustee against the costs,
expenses and liabilities which might be incurred by it.
SECTION 6.16. Reserved.
SECTION 6.17. Successor Trustee.
(a) Merger. Any Person into which the Trustee may be converted or
merged, or with which it may be consolidated, or to which it may sell or
transfer its trust business and assets as a whole or substantially as a whole,
or any Person resulting from any such conversion, merger, consolidation, sale or
transfer to which the Trustee is a party, shall (provided it is otherwise
qualified to serve as the Trustee hereunder) be and become a successor Trustee
hereunder and be vested with all of the title to and interest in the Collateral
and all of the trusts, powers, descriptions, immunities, privileges and other
matters as was its predecessor without the execution or filing of any instrument
or any further act, deed or conveyance on the part of any of the parties hereto,
anything herein to the contrary notwithstanding, except to the extent, if any,
that any such action is necessary to perfect, or continue the perfection of, the
security interest of the Issuer Secured Parties in the Collateral; provided that
any such successor shall also be the successor Trustee under Section 6.9.
(b) Removal. The Trustee may be removed by the Note Insurer (or, if an
Insurer Default has occurred and is continuing, by Holders of Notes evidencing
more than 50% of the principal balance of the Notes) at any time, with or
without cause, by an instrument or concurrent instruments in writing delivered
to the Trustee, the other Issuer Secured Party and the Issuer. A temporary
successor may be removed at any time to allow a successor Trustee to be
appointed pursuant to subsection (c) below. Any removal pursuant to the
provisions of this subsection (b) shall take effect only upon the date which is
the latest of (i) the effective date of the appointment of a successor Trustee
and the acceptance in writing by such successor Trustee of such appointment and
of its obligation to perform its duties hereunder in accordance with the
provisions hereof, and (ii) receipt by the Controlling Party of an Opinion of
Counsel to the effect described in Section 3.6.
(c) Acceptance by Successor. The Controlling Party shall have the sole
right to appoint each successor Trustee. Every temporary or permanent successor
Trustee appointed hereunder shall execute, acknowledge and deliver to its
predecessor and to the Trustee, each Issuer Secured Party and the Issuer an
instrument in writing accepting such appointment hereunder and the relevant
predecessor shall execute, acknowledge and deliver such other documents and
instruments as will effectuate the delivery of all Collateral to the successor
Trustee, whereupon such successor, without any further act, deed or conveyance,
shall become fully vested with all the estates, properties, rights, powers,
duties and obligations of its predecessor. Such predecessor shall, nevertheless,
on the written request of either Issuer Secured Party or the Issuer, execute and
deliver an instrument transferring to such successor all the estates,
properties, rights and powers of such predecessor hereunder. In the event that
any instrument in writing
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from the Issuer or an Issuer Secured Party is reasonably required by a successor
Trustee to more fully and certainly vest in such successor the estates,
properties, rights, powers, duties and obligations vested or intended to be
vested hereunder in the Trustee, any and all such written instruments shall at
the request of the temporary or permanent successor Trustee, be forthwith
executed, acknowledged and delivered by the Trustee or the Issuer, as the case
may be. The designation of any successor Trustee and the instrument or
instruments removing any Trustee and appointing a successor hereunder, together
with all other instruments provided for herein, shall be maintained with the
records relating to the Collateral and, to the extent required by applicable
law, filed or recorded by the successor Trustee in each place where such filing
or recording is necessary to effect the transfer of the Collateral to the
successor Trustee or to protect or continue the perfection of the security
interests granted hereunder.
SECTION 6.18. [Reserved]
SECTION 6.19. Representations and Warranties of the Trustee. The
Trustee represents and warrants to the Issuer and to each Issuer Secured Party
as follows:
(a) Due Organization. The Trustee is a national banking
association, duly organized, validly existing and in good standing
under the laws of the United States and is duly authorized and licensed
under applicable law to conduct its business as presently conducted.
(b) Corporate Power. The Trustee has all requisite right,
power and authority to execute and deliver this Indenture and to
perform all of its duties as Trustee hereunder.
(c) Due Authorization. The execution and delivery by the
Trustee of this Indenture and the other Basic Documents to which it is
a party, and the performance by the Trustee of its duties hereunder and
thereunder, have been duly authorized by all necessary corporate
proceedings and no further approvals or filings, including any
governmental approvals, are required for the valid execution and
delivery by the Trustee, or the performance by the Trustee, of this
Indenture and such other Basic Documents.
(d) Valid and Binding Indenture. The Trustee has duly executed
and delivered this Indenture and each other Basic Document to which it
is a party, and each of this Indenture and each such other Basic
Document constitutes the legal, valid and binding obligation of the
Trustee, enforceable against the Trustee in accordance with its terms,
except as (i) such enforceability may be limited by bankruptcy,
insolvency, reorganization and similar laws relating to or affecting
the enforcement of creditors' rights generally and (ii) the
availability of equitable remedies may be limited by equitable
principles of general applicability.
SECTION 6.20. Waiver of Setoffs. The Trustee hereby expressly waives
any and all rights of setoff that the Trustee may otherwise at any time have
under applicable law with
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respect to any Trust Account and agrees that amounts in the Trust Accounts shall
at all times be held and applied solely in accordance with the provisions
hereof.
SECTION 6.21. Control by the Controlling Party. The Trustee shall
comply with notices and instructions given by the Issuer only if accompanied by
the written consent of the Controlling Party, except that if any Event of
Default shall have occurred and be continuing, the Trustee shall act upon and
comply with notices and instructions given by the Controlling Party alone in the
place and stead of the Issuer.
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.1. Issuer To Furnish To Trustee Names and Addresses of
Noteholders. The Issuer will furnish or cause to be furnished to the Trustee (a)
not more than five days after the earlier of (i) each Record Date and (ii) three
months after the last Record Date, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders as of such Record
Date, (b) at such other times as the Trustee may request in writing, within 30
days after receipt by the Issuer of any such request, a list of similar form and
content as of a date not more than 10 days prior to the time such list is
furnished; provided, however, that so long as the Trustee is the Note Registrar,
no such list shall be required to be furnished. The Trustee or, if the Trustee
is not the Note Registrar, the Issuer shall furnish to the Note Insurer in
writing on an annual basis on each March 31 and at such other times as the Note
Insurer may request a copy of the list.
SECTION 7.2. Preservation of Information; Communications to
Noteholders. (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders contained in the
most recent list furnished to the Trustee as provided in Section 7.1 and the
names and addresses of Holders received by the Trustee in its capacity as Note
Registrar. The Trustee may destroy any list furnished to it as provided in such
Section 7.1 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA ss. 312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Trustee and the Note Registrar shall have the
protection of TIA ss. 312(c).
SECTION 7.3. Reports by Issuer. (a) The Issuer shall:
(i) file with the Trustee, within 15 days after the Issuer is
required to file the same with the Commission, copies of the annual
reports and of the information,
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documents and other reports (or copies of such portions of any of the
foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Issuer may be required to file with
the Commission pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Trustee and the Commission in accordance
with rules and regulations prescribed from time to time by the
Commission such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations; and
(iii) supply to the Trustee (and the Trustee shall transmit by
mail to all Noteholders described in TIA ss. 313(c)) such summaries of
any information, documents and reports required to be filed by the
Issuer pursuant to clauses (i) and (ii) of this Section 7.3(a) as may
be required by rules and regulations prescribed from time to time by
the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
SECTION 7.4. Reports by Trustee. (a) If required by TIA ss. 313(a),
within 60 days after each November 30, beginning with November 30, [ ], the
Trustee shall mail to each Noteholder as required by TIA ss. 313(c) a brief
report dated as of such date that complies with TIA ss. 313(a). The Trustee also
shall comply with TIA ss. 313(b).
(b) A copy of each report at the time of its mailing to Noteholders
shall be filed by the Trustee with the Commission and each stock exchange, if
any, on which the Notes are listed. The Issuer shall notify the Trustee if and
when the Notes are listed on any stock exchange.
ARTICLE VIII
Collection of Money and Releases of Trust Estate
SECTION 8.1. Collection of Money. Except as otherwise expressly
provided herein, the Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Trustee pursuant to this Indenture and the Sale and Servicing
Agreement. The Trustee shall apply all such money received by it as provided in
this Indenture and the Sale and Servicing Agreement. Except as otherwise
expressly provided in this Indenture or in the Sale and Servicing Agreement, if
any default occurs in the making of any payment or performance under any
agreement or instrument that is part of the Trust Estate, the Trustee may take
such action as may be appropriate to enforce such payment or performance,
including the
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