SALE AND SERVICING AGREEMENT (this "AGREEMENT") dated as of November
15, 2005, among PAGE THREE FUNDING LLC, a Delaware limited liability company
(the "PURCHASER"), CONSUMER PORTFOLIO SERVICES, INC., a California corporation
(in its capacities as Seller, the "SELLER" and as Servicer, the "SERVICER,"
respectively), XXXXX FARGO BANK, NATIONAL ASSOCIATION, a national banking
association (in its capacities as Backup Servicer, the "BACKUP SERVICER" and as
Trustee, the "TRUSTEE," respectively).
WHEREAS, the Purchaser desires to purchase, from time to time,
portfolios of receivables arising in connection with motor vehicle retail
installment sale contracts acquired by Consumer Portfolio Services, Inc., from
motor vehicle dealers and independent finance companies;
WHEREAS, the Purchaser intends to finance such purchases by issuing the
Note, secured by, among other assets, the Receivables and the Other Conveyed
Property, pursuant to the Indenture (as defined below);
WHEREAS, the Seller is willing to sell such Receivables and the Other
Conveyed Property to the Purchaser from time to time; and
WHEREAS the Servicer is willing to service all such Receivables.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
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DEFINITIONS
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SECTION 1.1. DEFINITIONS. Capitalized terms used in this Agreement and
not otherwise defined in this Agreement, shall have the meanings set forth in
Annex A attached hereto.
SECTION 1.2. OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any instrument governed hereby and in any
certificate or other document made or delivered pursuant hereto unless
otherwise defined therein.
(b) Accounting terms used but not defined or partly defined in
this Agreement, in any instrument governed hereby or in any certificate
or other document made or delivered pursuant hereto, to the extent not
defined, shall have the respective meanings given to them under GAAP as
in effect on the date of determination or any such instrument,
certificate or other document, as applicable. To the extent that the
definitions of accounting terms in this Agreement or in any such
instrument, certificate or other document are inconsistent with the
meanings of such terms under GAAP, the definitions contained in this
Agreement or in any such instrument, certificate or other document
shall control.
(c) 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.
(d) Section, Schedule and Exhibit references contained in this
Agreement are references to Sections, Schedules and Exhibits in or to
this Agreement unless otherwise specified; and the term "INCLUDING"
shall mean "INCLUDING WITHOUT LIMITATION."
(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.
Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as the same may from time to time be
amended, modified or supplemented in accordance with the terms thereof and
includes (in the case of agreements or instruments) references to all
attachments and instruments associated therewith; all references to a Person
include its permitted successors and assigns.
ARTICLE II
CONVEYANCE OF RECEIVABLES
-------------------------
SECTION 2.1. CONVEYANCE OF RECEIVABLES.
(a) In consideration of the Purchaser's delivery to or upon
the order of the Seller on any Funding Date of the Purchase Price
therefor, the Seller does hereby sell, transfer, assign, set over and
otherwise convey to the Purchaser, without recourse (subject to the
obligations set forth herein) all right, title and interest of the
Seller, whether now existing or hereafter arising, in, to and under:
(i) the Receivables listed in Schedule A to each
Assignment executed and delivered by the Seller on such
Funding Date;
(ii) all monies received under the Receivables on and
after the related Cutoff Date and all Net Liquidation Proceeds
received with respect to the Receivables on and after the
related Cutoff Date;
(iii) the security interests in the Financed Vehicles
and any accessions thereto granted by Obligors pursuant to the
related Contracts and any other interest of the Seller in such
Financed Vehicles, including, without limitation, the
certificates of title or, with respect to such Receivables
that finance a vehicle in the States listed in ANNEX B, other
evidence of title issued by the applicable Department of Motor
Vehicles or similar authority in such States, with respect to
such Financed Vehicles;
(iv) any proceeds from claims on any Receivables
Insurance Policies or certificates relating to the Financed
Vehicles securing the Receivables or the Obligors thereunder;
(v) all proceeds from recourse against Dealers with
respect to the Receivables and all other rights (but none of
the obligations) of the Seller under any agreements with
Dealers;
(vi) refunds for the costs of extended service
contracts with respect to Financed Vehicles securing the
Receivables, refunds of unearned premiums with respect to
credit life and credit accident and health insurance policies
or certificates covering an Obligor or Financed Vehicle under
a Receivable 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
and all other documents that the Seller keeps on file in
accordance with its customary procedures relating to the
Receivables for Obligors of the Financed Vehicles;
(viii) all amounts and property from time to time
held in or credited to the Collection Account or the Lockbox
Account;
(ix) all property (including the right to receive
future Net Liquidation Proceeds) that secures a Receivable
that has been acquired by or on behalf of the Seller or the
Purchaser pursuant to a liquidation of such Receivable;
(x) the proceeds from any Servicer's errors and
omissions policy or fidelity bond, to the extent such proceeds
relate to any Receivable, Financed Vehicle or other
Collateral; and
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(xi) 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.
(b) The Seller shall transfer to the Purchaser the Receivables
and the Other Conveyed Property described in PARAGRAPH (A) above only
upon the satisfaction of each of the conditions set forth below on or
prior to the related Funding Date. In addition to constituting
conditions precedent to any purchase hereunder and under each
Assignment, the following shall also be conditions precedent to any
Advance on any Funding Date under the terms of the Note Purchase
Agreement:
(i) the Seller shall have provided the Purchaser,
Trustee, the Note Purchaser and the Noteholders with (A) an
Addition Notice substantially in the form of EXHIBIT G hereto
(which shall include a supplement to the Schedule of
Receivables) and (B) a data tape or other electronic file
containing information regarding the Related Receivables in
the form of EXHIBIT H hereto to be transferred on such Funding
Date (the "DATA TAPE FIELDS") no later than 2:00 p.m. (New
York City time) four (4) Business Days prior to such Funding
Date and shall have provided any information reasonably
requested by any of the foregoing with respect to the Issuer,
the Servicer and the Related Receivables;
(ii) the Seller shall, to the extent required by
SECTION 4.2 of this Agreement, have deposited in the
Collection Account all collections received on and after the
Cutoff Date in respect of the Related Receivables to be
purchased on such Funding Date;
(iii) as of each Funding Date, (A) the Seller shall
not be insolvent and shall not become insolvent as a result of
the transfer of Related Receivables on such Funding Date, (B)
the Seller shall not intend to incur or believe that it shall
incur debts that would be beyond its ability to pay as such
debts mature, (C) such transfer shall not have been made with
actual intent to hinder, delay or defraud any Person and (D)
the assets of the Seller shall not constitute unreasonably
small capital to carry out its business as then conducted;
(iv) the Facility Termination Date shall not have
occurred;
(v) the Servicer shall have established a Lockbox
Account acceptable to the Note Purchaser;
(vi) each of the representations and warranties made
by the Seller pursuant to SECTION 3.1 and the other Basic
Documents with respect to the Related Receivables to be
purchased on such Funding Date shall be true and correct as of
the related Funding Date and the Seller shall have performed
all obligations to be performed by it hereunder or in any
Assignment on or prior to such Funding Date;
(vii) the Seller shall, at its own expense, on or
prior to the Funding Date, indicate in its computer files that
the Related Receivables to be purchased on such Funding Date
have been sold to the Purchaser pursuant to this Agreement or
an Assignment, as applicable, and have been pledged by the
Purchaser to the Trustee under the Indenture;
(viii) the Seller shall have taken all action
required to maintain (i) the first priority perfected
ownership interest of the Purchaser in the Related Receivables
and Other Conveyed Property and (ii) the first priority
perfected security interest of the Trustee in the Collateral;
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(ix) no selection procedures adverse to the interests
of the Note Purchaser or any Noteholder shall have been
utilized in selecting the Related Receivables to be sold on
such Funding Date;
(x) the addition of any such Related Receivables to
be purchased on such Funding Date shall not result in a
material adverse tax consequence to any Noteholder, the Note
Purchaser or the Purchaser;
(xi) the Seller shall have delivered to each
Noteholder, the Note Purchaser and the Trustee an Officers'
Certificate confirming the satisfaction of each condition
precedent specified in this paragraph (b);
(xii) no Funding Termination Event, Servicer
Termination Event, or any event that, with the giving of
notice or the passage of time, would constitute a Funding
Termination Event or Servicer Termination Event, shall have
occurred and be continuing;
(xiii) the Trustee shall have confirmed receipt of
the related Receivable File for each Related Receivable
included in the Borrowing Base calculation and shall have
delivered a copy to the Noteholders and the Note Purchaser of
a Trust Receipt with respect to the Receivable Files related
to the Related Receivables to be purchased on such Funding
Date;
(xiv) the Seller shall have filed or caused to be
filed all necessary UCC-l financing statements (or amendments
thereto) necessary to maintain (in each case assuming for
purposes of this clause (xiv) that such perfection may be
achieved by making the appropriate filings), and taken any
other steps necessary to maintain, (1) the first, priority,
perfected ownership interest of Purchaser and (2) the first
priority, perfected security interest of the Trustee, with
respect to the Related Receivables and Other Conveyed Property
and the Collateral, respectively, to be transferred on such
Funding Date;
(xv) the Seller shall have executed and delivered an
Assignment in the form of EXHIBIT F with respect to such
Related Receivables and the Other Conveyed Property related
thereto;
(xvi) each of the conditions precedent to such
Advance set forth in this Agreement, the Indenture and the
Note Purchase Agreement shall have been satisfied; and
(xvii) the Funding Date shall not occur in the same
calendar week as any prior Funding Date;
Unless waived by Note Purchaser in writing, the Seller
covenants that in the event any of the foregoing conditions precedent
are not satisfied with respect to any Related Receivable on the date
required as specified above, the Seller will immediately repurchase
such Related Receivable from the Purchaser, at a price equal to the
Purchase Amount thereof, in the manner specified in SECTION 3.2 and
SECTION 4.7. Except with respect to ITEM (XIII) above, the Trustee may
rely on the accuracy of the Officers' Certificate delivered pursuant to
ITEM (XI) above without independent inquiry or verification.
(c) PAYMENT OF PURCHASE PRICE. In consideration for the sale
of the Related Receivables and Other Conveyed Property described in
SECTION 2.1(A) or the related Assignment, the Purchaser shall, on each
Funding Date on which Related Receivables are transferred hereunder,
pay to or upon the order of the Seller the applicable Purchase Price in
the following manner: (i) cash in an amount equal to the amount of the
Advance received by the Purchaser under the Notes on such Funding Date
and (ii) to the extent the Purchase Price for the related Receivables
and Other Conveyed Property exceeds the amount of cash described in
(i), such excess shall be treated as a capital contribution by the
Seller to the Purchaser.
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SECTION 2.2. TRANSFERS INTENDED AS SALES. It is the intention of the Seller and
the Purchaser that each transfer and assignment contemplated by this Agreement
and each Assignment shall constitute a sale of the Related Receivables and Other
Conveyed Property from the Seller to the Purchaser free and clear of all liens
and rights of others and it is intended that the beneficial interest in and
title to the Related Receivables and Other Conveyed Property shall not be part
of the Seller's estate in the event of the filing of a bankruptcy petition by or
against the Seller under any bankruptcy law. In the event that, notwithstanding
the intent of the Seller and the Purchaser, the transfer and assignment
contemplated hereby or by any Assignment is held not to be a sale, this
Agreement and each Assignment shall constitute a security agreement under
applicable law and the Seller hereby grants to the Purchaser a security interest
in the Receivables and Other Conveyed Property, which security interest has been
assigned to the Trustee, acting on behalf of the Noteholders and Note Purchaser.
SECTION 2.3. FURTHER ENCUMBRANCE OF RECEIVABLES AND OTHER CONVEYED PROPERTY.
(a) Immediately upon the conveyance to the Purchaser by the
Seller of the Related Receivables and any item of the related Other
Conveyed Property pursuant to SECTION 2.1 and the related Assignment,
all right, title and interest of the Seller in and to such Related
Receivables and Other Conveyed Property shall terminate, and all such
right, title and interest shall vest in the Purchaser.
(b) Immediately upon the vesting of any Related Receivables
and the related Other Conveyed Property in the Purchaser, the Purchaser
shall have the sole right to pledge or otherwise encumber such Related
Receivables and the related Other Conveyed Property. Pursuant to the
Indenture, the Purchaser shall grant a security interest in the
Collateral to secure the repayment of the Notes and the other Secured
Obligations.
(c) The Trustee shall, at such time as (i) the Facility
Termination Date has occurred, (ii) the payment in full of the Secured
Obligations has occurred, (iii) the Note Purchase Agreement shall have
been terminated pursuant to its terms, (iv) there is no Note
Outstanding, (v) all sums due to the Trustee pursuant to the Basic
Documents have been paid, and (vi) all other conditions precedent under
the Indenture shall have been satisfied, release any remaining portion
of the Collateral to the Purchaser.
ARTICLE III
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THE RECEIVABLES
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SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF SELLER. (a) The Seller
makes the following representations and warranties as to the Receivables to the
Purchaser, to the Trustee for the benefit of the Note Purchaser and the
Noteholders, to the Note Purchaser and to the Noteholders, on which the
Purchaser relies in acquiring the Receivables, on which the Trustee relies in
accepting a pledge of the Receivables under the Indenture, on which the
Noteholders have relied in purchasing the Notes and on which the Note Purchaser
will rely in paying the Advance Amount to the Purchaser. Such representations
and warranties speak as of the Closing Date and as of each Funding Date;
PROVIDED that to the extent such representations and warranties relate to the
Receivables conveyed on any Funding Date, such representations and warranties
shall speak as of the related Funding Date, but shall survive the sale, transfer
and assignment of the Receivables to the Purchaser and the pledge thereof by the
Purchaser hereunder to the Trustee pursuant to the Indenture.
(i) CHARACTERISTICS OF RECEIVABLES. Each Receivable
(1) has been originated in the United States of America by a
Dealer for the retail sale of a Financed Vehicle in the
ordinary course of such Dealer's business and without any
fraud or misrepresentation on the part of the Dealer, such
Dealer had all necessary licenses and permits to originate
such Receivables in the state where such Dealer was located,
has been fully and properly executed by the parties thereto,
has been purchased by the Seller directly from the Dealer in
connection with the sale of Financed Vehicles by the Dealers
and has been validly assigned without any intervening
assignments by such Dealer to the Seller in accordance with
its terms, (2) has created a valid, subsisting, and
enforceable first priority perfected security interest in
favor of the Seller in the Financed Vehicle, which security
interest has been validly assigned by the Seller to the
Purchaser and by the Purchaser to the Trustee, (3) contains
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customary and enforceable provisions such that the rights and
remedies of the holder or assignee thereof shall be adequate
for realization against the collateral of the benefits of the
security including without limitation a right of repossession
following a default, (4) provides for level weekly, bi-weekly,
semi-monthly or monthly payments that fully amortize the
Amount Financed over the original term (except for the last
payment, which may be different from the level payment but in
no event shall exceed three times such level payment) and
yield interest at the Annual Percentage Rate, (5) was
originated by a Dealer to an Obligor and was sold by the
Dealer to the Seller without any fraud or misrepresentation on
the part of such Dealer, the Obligor or the Seller, (6) is
denominated in U.S. dollars; (7) provides, in the case of
prepayment, for the full payment of the Principal Balance
thereof plus accrued interest through the date of prepayment
based on the APR of the Receivable; and (8) contains no
obligation to lend more money to the related Obligor in the
future.
(ii) ADDITIONAL RECEIVABLES CHARACTERISTICS. As of
the related Funding Date, as applicable:
(A) each Related Receivable has (1) an original term
of 24 to 72 months; (2) an original Amount Financed of at
least $3,000 and not more than $35,000; and (3) had an APR of
at least 8% and not more than 30% (subject to applicable
laws);
(B) each Related Receivable is not more than 30 days
past due with respect to more than 10% of any Scheduled
Receivable Payment as of the related Cutoff Date and no funds
have been advanced by the Seller, any Dealer or anyone acting
on their behalf in order to cause any Related Receivable to
satisfy such requirement;
(C) no Related Receivable has been extended beyond
its original term, except in accordance with the Seller's
Contract Purchase Guidelines regarding deferments or
extensions;
(D) each Related Receivable satisfies in all material
respects the Seller's Contract Purchase Guidelines as in
effect on the Closing Date or as otherwise amended from time
to time with the prior written consent of the Note Purchaser
(which consent shall not be unreasonably withheld); and
(E) each Related Receivable that is a Seasoned
Receivable shall (i) not have an Obligor that has failed to
make the first Scheduled Receivable Payment due on such
Seasoned Receivable, (ii) not have been sold to the Purchaser
and pledged to the Trustee for the benefit of the Noteholders
and the Note Purchaser more than 120 days after the Seller
paid the related Dealer for such Seasoned Receivable, (iii)
not have an Obligor that has ever been delinquent in payment
with respect to such Seasoned Receivable for more than sixty
(60) days.
(iii) SCHEDULE OF RECEIVABLES. The information with
respect to the Related Receivables set forth in Schedule A to
the related Assignment is true and correct in all material
respects as of the close of business on the related Cutoff
Date, and no selection procedures adverse to any Noteholders
or the Note Purchaser have been utilized in selecting the
Related Receivables to be sold hereunder and thereunder.
(iv) COMPLIANCE WITH LAW. Each Related Receivable,
the sale of the Financed Vehicle and the sale of any physical
damage, credit life and credit accident and health insurance
and any extended warranties or service contracts complied at
the time the Related Receivable was originated or made and at
the execution of the applicable Assignment complies in all
material respects with all requirements of applicable Federal,
State, and local laws, including, without limitation, Consumer
Laws. Each Receivable has been serviced in compliance with all
applicable requirements of law.
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(v) NO GOVERNMENT OBLIGOR. None of the Related
Receivables are due from the United States of America or any
State or from any agency, department, or instrumentality of
the United States of America or any State.
(vi) NO FLEET SALES. None of the Receivables have
been included in a "fleet" sale (i.e., a sale to any single
Obligor of more than five Financed Vehicles).
(vii) SECURITY INTEREST IN FINANCED VEHICLE.
Immediately subsequent to the sale, assignment and transfer
thereof to the Purchaser, each Related Receivable shall be
secured by a validly perfected first priority security
interest in the Financed Vehicle in favor of the Seller as
secured party which security interest has been validly
assigned to the Purchaser and subsequently validly pledged to
the Trustee for the benefit of the Noteholders and Note
Purchaser, and such assigned security interest is prior to all
other liens upon and security interests in such Financed
Vehicle which now exist or may hereafter arise or be created
(except, as to priority, for any tax liens or mechanics' liens
which may arise after the related Funding Date as a result of
an Obligor's failure to pay its obligations, as applicable).
(viii) RECEIVABLES IN FORCE. No Related Receivable
has been satisfied, subordinated or rescinded, nor has any
related Financed Vehicle been released from the lien granted
by the related Receivable in whole or in part.
(ix) NO WAIVER. Except as permitted under SECTION 4.2
and CLAUSE (X) below, no provision of a Related Receivable has
been waived, altered or modified in any respect since its
origination. No Related Receivable has been modified as a
result of application of the Servicemembers Civil Relief Act,
as amended.
(x) NO AMENDMENTS. No Related Receivable has been
amended, modified, waived or refinanced except as such Related
Receivable may have been amended in accordance with Servicer's
Servicing Guidelines.
(xi) NO DEFENSES. No right of rescission, setoff,
counterclaim or defense exists or has been asserted or
threatened with respect to any Related Receivable. The
operation of the terms of any Related Receivable or the
exercise of any right thereunder will not render such Related
Receivable unenforceable in whole or in part and such
Receivable is not subject to any such right of rescission,
setoff, counterclaim, or defense.
(xii) NO LIENS. As of the related Cutoff Date, (a)
there are no liens or claims existing or which have been filed
for work, labor, storage or materials relating to a Financed
Vehicle financed under a Related Receivable that shall be
liens prior to, or equal or coordinate with, the security
interest in the Financed Vehicle granted by the Related
Receivable and (b) there is no lien against the Financed
Vehicle financed under a Related Receivable for delinquent
taxes.
(xiii) NO DEFAULT; REPOSSESSION. Except for payment
delinquencies continuing for a period of not more than 45 days
as of the related Cutoff Date, no default, breach, violation
or event permitting acceleration under the terms of any
Related Receivable has occurred; and no continuing condition
that with notice or the lapse of time, or both, would
constitute a default, breach, violation or event permitting
acceleration under the terms of any Related Receivable has
arisen; and the Seller shall not waive and has not waived any
of the foregoing (except in a manner consistent with SECTION
4.2) and no Financed Vehicle financed under a Related
Receivable shall have been repossessed.
(xiv) INSURANCE; OTHER. (A) Each Obligor under the
Related Receivables has obtained an insurance policy covering
the Financed Vehicle as of the execution of such Receivable
insuring against loss and damage due to fire, theft,
transportation, collision and other risks generally covered by
comprehensive and collision coverage, the Seller and its
successors and assigns are named the loss payee or an
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additional insured of such insurance policy, such insurance
policy is in an amount at least equal to the lesser of (i) the
Financed Vehicle's actual cash value or (ii) the remaining
Principal Balance of the Related Receivable, and each Related
Receivable requires the Obligor to obtain and maintain such
insurance naming the Seller and its successors and assigns as
loss payee or an additional insured, (B) each Related
Receivable that finances the cost of premiums for credit life
and credit accident and health insurance is covered by an
insurance policy or certificate of insurance naming the Seller
as policyholder (creditor) under each such insurance policy
and certificate of insurance and (C) as to each Related
Receivable that finances the cost of an extended service
contract, the respective Financed Vehicle which secures the
Related Receivable is covered by an extended service contract.
As of the related Cutoff Date, no Financed Vehicle is or had
previously been insured under a policy of forced-placed
insurance.
(xv) TITLE. It is the intention of the Seller that
each transfer and assignment herein contemplated constitutes a
sale of the Related Receivables and the related Other Conveyed
Property from the Seller to the Purchaser and that the
beneficial interest in and title to such Related Receivables
and related Other Conveyed Property not be part of the
Seller's estate in the event of the filing of a bankruptcy
petition by or against the Seller under any bankruptcy law. No
Related Receivable or related Other Conveyed Property has been
sold, transferred, assigned, or pledged by the Seller to any
Person other than the Purchaser and by the Purchaser to any
Person other than the Trustee. Immediately prior to each
transfer and assignment herein contemplated, the Seller had
good and marketable title to each Related Receivable and
related Other Conveyed Property and was the sole owner
thereof, free and clear of all liens, claims, encumbrances,
security interests, and rights of others, and, immediately
upon the transfer thereof to the Purchaser and the Purchaser
shall have good and marketable title to the Receivables and
the other Conveyed Property and shall be the sole owner
thereof, free and clear of all Liens and, immediately upon the
pledge thereof to the Trustee under the Indenture, the Trustee
for the benefit of the Noteholders and the Note Purchaser
shall have a valid and enforceable security interest in the
Collateral, free and clear of all liens, encumbrances,
security interests, and rights of others, and each such
transfer and pledge has been perfected under the UCC. No
Dealer has a participation in, or other right to receive,
proceeds of any Receivable.
(xvi) LAWFUL ASSIGNMENT; NO CONSENT REQUIRED. No
Related Receivable has been originated in, or is subject to
the laws of, any jurisdiction under which the sale, transfer,
and assignment of such Related Receivable under this Agreement
or the pledge of such Related Receivable under the Indenture
or pursuant to transfers of the Notes shall be unlawful, void,
or voidable. The Seller has not entered into any agreement
with any account debtor that prohibits, restricts or
conditions the assignment of any portion of the Related
Receivables. For the validity of such sales, transfers,
assignments and pledges, no consent by any Dealer, Obligor or
any other Person is required under any agreement or applicable
law.
(xvii) ALL FILINGS MADE. All filings (including,
without limitation, UCC filings or other actions) necessary in
any jurisdiction to give: (a) the Purchaser a first priority
perfected ownership interest in the Receivables and the Other
Conveyed Property, including, without limitation, the proceeds
of the Receivables (to the extent that the Purchaser can
obtain such first priority perfected security interest
pursuant to one or more filings) and (b) the Trustee, for the
benefit of the Noteholders and the Note Purchaser, a first
priority perfected security interest in the Collateral, have
been made, taken or performed.
(xviii) RECEIVABLE FILE; ONE ORIGINAL. The Seller has
delivered to the Trustee, at the location specified in
SCHEDULE B hereto, a complete Receivable File with respect to
each Related Receivable, and the Trustee has delivered to the
Purchaser, the Note Purchaser and the Noteholders a copy of
the Trust Receipt therefor. There is only one original
executed copy of each Receivable. The Servicer has in its
possession all other relevant documents with respect to the
Receivables, including without limitation the related credit
application and verification of insurance.
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(xix) CHATTEL Paper. Each Related Receivable
constitutes "TANGIBLE CHATTEL PAPER" under the UCC.
(xx) TITLE DOCUMENTS. (A) If the Related Receivable
was originated in a State in which notation of a security
interest on the title document of the related Financed Vehicle
is required or permitted to perfect such security interest,
the title document of the related Financed Vehicle for such
Related Receivable shows, or if a new or replacement title
document is being applied for with respect to such Financed
Vehicle the title document (or, with respect to Related
Receivables that finance a vehicle in the States listed in
ANNEX B, other evidence of title issued by the applicable
Department of Motor Vehicles or similar authority in such
States) will be received within 180 days of the origination
date and will show, the Seller named as the original secured
party under the Related Receivable as the holder of a first
priority security interest in such Financed Vehicle, and (B)
if the Related Receivable was originated in a State in which
the filing of a financing statement under the UCC is required
to perfect a security interest in motor vehicles, such filings
or recordings have been duly made and show the Seller named as
the original secured party under the Related Receivable, and
in either case, the Trustee has the same rights as such
secured party has or would have (if such secured party were
still the owner of the Receivable) against all parties
claiming an interest in such Financed Vehicle, and such rights
have been validly pledged to the Trustee for the benefit of
the Noteholders and the Note Purchaser pursuant to the
Indenture. With respect to each Related Receivable for which
the title document has not yet been returned from the
Registrar of Titles, the Seller has received written evidence
from the related Dealer that such title document showing the
Seller as first lienholder has been applied for.
(xxi) VALID AND BINDING OBLIGATION OF OBLIGOR. Each
Related Receivable is the legal, valid and binding obligation
in writing of the Obligor thereunder and is enforceable in
accordance with its terms, except only as such enforcement may
be limited by bankruptcy, insolvency or similar laws affecting
the enforcement of creditors' rights generally, and all
parties to such contract had full legal capacity to execute
and deliver such contract and all other documents related
thereto and to grant the security interest purported to be
granted thereby. Each Related Receivable is not subject to any
right of set-off by the Obligor.
(xxii) CHARACTERISTICS OF OBLIGORS. As of the date of
each Obligor's application for credit from which the Related
Receivable arises, such Obligor (a) did not have any material
past due credit obligations or any personal or real property
repossessed or wages garnished within one year prior to the
date of such application, unless such amounts have been repaid
or discharged through bankruptcy, (b) was not the subject of
any Federal, State or other bankruptcy, insolvency or similar
proceeding pending on the date of application that has not
been discharged, (c) had not been the subject of more than one
Federal, State or other bankruptcy, insolvency or similar
proceeding that has not completed a Xxxxxxx 000 Xxxxxxx, (x)
was domiciled in the United States and (e) was not
self-employed. During the period from the date of each
Obligor's application for financing of the Financed Vehicle
from which the related Receivable arises to the applicable
Funding Date, no Obligor is or has been the subject of any
Federal, State or other bankruptcy, insolvency or similar
proceeding that has not completed a Section 341 Meeting.
(xxiii) POST-OFFICE BOX. On or prior to the next
billing period after the related Cutoff Date, the Servicer
will notify each Obligor to make payments with respect to its
respective Related Receivables after the related Cutoff Date
directly to the Post-Office Box, and will provide each Obligor
with a monthly statement in order to enable such Obligor to
make payments directly to the Post-Office Box.
(xxiv) CASUALTY AND IMPOUNDING. No Financed Vehicle
financed under a Related Receivable has suffered a Casualty
and the Seller has not received any notice that any Financed
Vehicle has been impounded.
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(xxv) NO AGREEMENT TO LEND. The Obligor with respect
to each Related Receivable does not have any option under the
Receivable to borrow from any person any funds secured by the
Financed Vehicle.
(xxvi) OBLIGATION TO DEALERS OR OTHERS. The Purchaser
and its assignees will assume no obligation to Dealers or
other originators or holders of the Related Receivables
(including, but not limited to under dealer reserves) as a
result of its purchase of the Related Receivables.
(xxvii) NO IMPAIRMENT. Neither Seller nor the
Purchaser has done anything to convey any right to any Person
that would result in such Person having a right to payments
due under any Related Receivables or otherwise to impair the
rights of the Purchaser, the Trustee, the Noteholders or the
Note Purchaser in any Related Receivable or the proceeds
thereof.
(xxviii) RECEIVABLES NOT ASSUMABLE. No Related
Receivable is assumable by another Person in a manner which
would release the Obligor thereof from such Obligor's
obligations to the Purchaser or Seller with respect to such
Related Receivable.
(xxix) SERVICING. The servicing of each Related
Receivable and the collection practices relating thereto have
been lawful and in accordance with the standards set forth in
this Agreement; and other than Seller and the Back-up Servicer
pursuant to the Basic Documents, no other person has the right
to service the Receivable.
(xxx) CREATION OF SECURITY INTEREST. This Agreement
creates a valid and continuing security interest (as defined
in the UCC) in the Receivables and the Other Conveyed Property
in favor of the Purchaser, which security interest is prior to
all other Liens (other than the Lien of the Trustee under the
Indenture) and is enforceable as such as against creditors of
and purchasers from the Seller. The Indenture creates a valid
and continuing security interest (as defined in the UCC) in
the Collateral in favor of the Trustee for the benefit of the
Noteholders and the Note Purchaser, which security interest is
prior to all other Liens and is enforceable as such as against
creditors of and purchasers from the Issuer.
(xxxi) PERFECTION OF SECURITY INTEREST IN RECEIVABLES
AND OTHER CONVEYED PROPERTY. The Seller has caused the filing
of all appropriate financing statements in the proper filing
office in the appropriate jurisdictions under applicable law
in order to perfect the security interest in the Receivables
and the Other Conveyed Property granted to the Purchaser
hereunder pursuant to SECTION 2.1 and the related Assignment.
(xxxii) PERFECTION OF SECURITY INTEREST IN TRUST
ESTATE. The Purchaser has caused the filing of all appropriate
financing statements in the proper filing office in the
appropriate jurisdictions under applicable law in order to
perfect the security interest in the Receivables and the other
Collateral granted to the Trustee for the benefit of the
Noteholders and the Note Purchaser under the Indenture.
(xxxiii) PERFECTION OF SECURITY INTERESTS IN FINANCED
VEHICLES. The Seller has taken all steps necessary to perfect
its security interest against the Obligors in the Financed
Vehicles securing the Receivables and such security interest
has been validly assigned by the Seller to the Purchaser and
pledged by the Purchaser to the Trustee for the benefit of the
Noteholders and the Note Purchaser.
(xxxiv) NO OTHER SECURITY INTERESTS - SELLER. Other
than the security interest granted to the Purchaser pursuant
to SECTION 2.1 and the related Assignment, the Seller has not
pledged, assigned, sold, granted a security interest in, or
otherwise conveyed any of the Receivables or the Other
Conveyed Property, other than such security interests as are
released at or before the conveyance thereof. The Seller has
not authorized the filing of and is not aware of any financing
statements filed against the Seller that include a description
of collateral covering any portion of the Receivables and the
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Other Conveyed Property other than any financing statement
relating to the security interest granted to the Purchaser
hereunder or that has been terminated or released as to the
Receivables and the Other Conveyed Property. The Seller is not
aware of any judgment or tax lien filings against the Seller.
(xxxv) NO OTHER SECURITY INTERESTS - PURCHASER. Other
than the security interest granted to the Trustee for the
benefit of the Noteholders and Note Purchaser pursuant to the
Indenture, the Purchaser has not pledged, assigned, sold,
granted a security interest in, or otherwise conveyed any of
the Collateral. The Purchaser has not authorized the filing of
and is not aware of any financing statements filed against the
Purchaser that include a description of collateral covering
any portion of the Collateral other than any financing
statement relating to the security interest granted to the
Trustee for the benefit of the Noteholders and Note Purchaser
under the Indenture or that has been terminated or released as
to the Collateral. The Purchaser is not aware of any judgment
or tax lien filings against the Purchaser.
(xxxvi) NOTATIONS ON CONTRACTS; FINANCING STATEMENT
DISCLOSURE. The Servicer has in its possession copies of all
Contracts that constitute or evidence the Receivables. The
Contracts that constitute or evidence the Receivables do not
have any marks or notations indicating that they have been
pledged, assigned or otherwise conveyed to any Person other
than the Purchaser and/or the Trustee for the benefit of the
Noteholders and the Note Purchaser. All financing statements
filed or to be filed against the Seller in favor of the
Purchaser in connection herewith describing the Trust Estate
contain a statement to the following effect: "A purchase of or
security interest in any collateral described in this
financing statement will violate the rights of the secured
party."
(xxxvii) RECORDS. On or prior to each Funding Date,
the Seller will have caused its records (including electronic
ledgers) relating to each Related Receivable to be conveyed by
it on such Funding Date to be clearly and unambiguously marked
to reflect that such Related Receivable was conveyed by it to
the Purchaser and pledged by the Purchaser to the Trustee for
the benefit of the Noteholders and the Note Purchaser.
(xxxviii) COMPUTER INFORMATION. The computer
diskette, computer tape or other electronic transmission made
available by the Seller to the Purchaser on each Funding Date
is, as of the related Cutoff Date, complete and accurate and
includes a description of the same Receivables described in
Schedule A to the related Assignment.
(xxxix) TFC, MFN, SEAWEST RECEIVABLES. None of the
Related Receivables was originated by TFC, MFN, SeaWest or any
of their respective Subsidiaries.
(xl) REMAINING PRINCIPAL BALANCE. As of the related
Cutoff Date, each Related Receivable has a remaining Principal
Balance of at least $3,000 and the Principal Balance of each
Receivable set forth in Schedule A to the related Assignment
is true and accurate in all respects.
(xli) NET ACQUISITION FEE. The average Net
Acquisition Fee is less than 3.0%.
(xlii) DELIVERY OF RECEIVABLE FILES. A complete
Receivable File (other than, if applicable, a certificate of
title missing from the related Receivable File as described in
SECTION 3.4(B)) with respect to each Receivable has been,
prior to the Funding Date, delivered to the Trustee at the
location listed in SCHEDULE B hereof.
(xliii) FULL AMOUNT ADVANCED. The full amount of each
Receivable has been advanced to each Obligor, and there are no
requirements for future advances thereunder.
(xliv) ILLINOIS RECEIVABLES. (a) The Seller does not
own a substantial interest in the business of a Dealer within
the meaning of Illinois Sales Finance Agency Act Rules and
Regulations, Section 160.230(1) and (b) with respect to each
Receivable originated in the State of Illinois, (i) the
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printed or typed portion of the related Form of Receivable
complies with the requirements of 815 ILCS 375/3(b) and (ii)
the Seller has not, and for so long as such Receivable is
outstanding shall not, place or cause to be placed on the
related Financed Vehicle any collateral protection insurance
in violation of 815 ILCS 180/10.
(xlv) CALIFORNIA RECEIVABLES. Each Receivable
originated in the State of California has been, and at all
times during the term of the Sale and Servicing Agreement will
be, serviced by the Servicer in compliance with Cal. Civil
Code ss. 2981, et seq.
SECTION 3.2. REPURCHASE UPON BREACH; SECTION 341 MEETING(a) . The Seller, the
Servicer, any Noteholder or the Trustee, as the case may be, shall inform the
other parties to this Agreement promptly, in writing, upon the discovery of any
breach of the Seller's representations and warranties made pursuant to SECTION
3.1 with respect to a Receivable (without regard to any limitations therein as
to the Seller's knowledge). Unless the breach shall have been cured within
thirty (30) days of the discovery thereof by the Trustee or receipt by the
Trustee of notice from the Seller or the Servicer of such breach, the Seller
shall repurchase such Receivable. In consideration of the purchase of any
Receivable, the Seller shall remit the Purchase Amount, in the manner specified
in SECTION 5.6. The sole remedies of the Purchaser, the Trustee, the Note
Purchaser or the Noteholders with respect to any Receivables as to which a
breach of representations and warranties pursuant to SECTION 3.1 has occurred
shall be to enforce the Seller's obligation to purchase such Receivables and the
indemnity provided by SECTION 8.3(E) . Upon receipt of the Purchase Amount in
respect of any Defective Receivables and written instructions from the Servicer,
the Trustee shall release to the Seller or its designee the related Receivable
File and shall execute and deliver all reasonable instruments of transfer or
assignment, without recourse, as are prepared by the Seller and delivered to the
Trustee and necessary to vest in the Seller or such designee title to such
Defective Receivables. The parties hereto hereby acknowledge that the Note
Purchaser and the Majority Noteholders shall each have the right to enforce
directly against the Seller the Seller's repurchase and indemnity obligations
pursuant to this SECTION 3.2.
(b) If (i) the Insolvency Event related to a Section 341 Meeting has
not been discharged by the bankruptcy court or other similar court presiding
over such Insolvency Event within 90 days of the conveyance of the related
Receivable by the Seller to the Purchaser pursuant to SECTION 2.1(A), or (ii)
the Obligor on any Receivable that was the subject of a Section 341 Meeting
shall not have made the first two payments due on such Receivable, in each case,
the Seller shall repurchase such Receivable as of the last day of such next
Accrual Period.
SECTION 3.3. CUSTODY OF RECEIVABLE FILES.
(a) In connection with each sale, transfer and assignment of
Receivables and related Other Conveyed Property to the Purchaser pursuant to
this Agreement and each Assignment, and each pledge thereof by the Purchaser to
the Trustee pursuant to the Indenture, the Trustee shall act as custodian of the
following documents or instruments in its possession which shall be delivered to
the Trustee on or before the Closing Date or the related Funding Date in
accordance with SECTION 3.4 (with respect to each Receivable):
(i) The fully executed original of the Receivable (together
with any agreements modifying or assigning the Receivable, including
without limitation any extension agreements); and
(ii) The original certificate of title in the name of the
Obligor with a notation on such certificate of title evidencing
Seller's security interest therein or such documents that the Seller
shall keep on file, in accordance with its customary procedures,
evidencing the security interest of the Seller in the Financed Vehicle
or, if not yet received, a copy of the application therefor showing the
Seller as secured party, or a dealer guarantee of title.
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(b) Upon payment in full of any Receivable, the Servicer will
notify the Trustee pursuant to a certificate of a Servicing Officer in
the form of EXHIBIT C and shall request delivery of the Receivable and
Receivable File to the Servicer.
SECTION 3.4. Acceptance of Receivable Files by Trustee; Missing Certificates of
Title (a) In connection with any Funding Date, the Seller shall cause to be
delivered to the Trustee the Receivable Files for the Related Receivables to be
purchased on such Funding Date not less than four Business Days prior to the
related Funding Date. The Trustee declares that it will hold and will continue
to hold such files and any amendments, replacements or supplements thereto and
all Other Conveyed Property as Trustee, custodian, agent and bailee in trust for
the use and benefit of the Noteholders and the Note Purchaser. The Trustee shall
within three Business Days after receipt of such files, execute and deliver to
the Noteholders and the Note Purchaser, a receipt substantially in the form of
EXHIBIT B hereto (a "TRUST RECEIPT") for the Receivable Files received by the
Trustee. By its delivery of a Trust Receipt, the Trustee shall be deemed to have
(a) acknowledged receipt of the files (or the Receivables) which the Seller has
represented are and contain the Receivable Files for the Related Receivables to
be purchased by the Purchaser on the related Funding Date as indicated on
Schedule A to the Addition Notice, (b) reviewed such files or Receivables and
(c) determined that it has received the items referred to in SECTION 3.3(A)(I)
and (II) for each Related Receivable identified on Schedule A to the Addition
Notice, except, in each case, as may otherwise be noted in Schedule I to the
Trust Receipt. Unless such defect noted on Schedule I of the related Trust
Receipt with respect to such Receivable to be transferred on the related Funding
Date shall have been cured by the Seller or waived by the Note Purchaser, in its
sole discretion, and the Trustee shall have executed a Trust Receipt reflecting
that such Receivable is no longer on Schedule I thereto prior to 11 a.m. New
York time on the related Funding Date, the Purchaser shall not purchase such
Receivable from the Seller on such Funding Date. The Trustee shall return to or
otherwise handle the files at the direction of the Seller and any file unrelated
to a Receivable identified in Schedule A to the related Addition Notice (it
being understood that the Trustee's obligation to review the contents of any
Receivable File shall be limited as set forth in the preceding sentence).
(b) The Trustee shall make a list of Receivables for which an
application for a certificate of title but not an original certificate of title
or, with respect to Receivables that finance a vehicle in the States listed in
ANNEX B, other evidence of title issued by the applicable Department of Motor -
Vehicles or similar authority in such States, is included in the Receivable File
as of the date of its review of the Receivable Files and deliver a copy of such
list to the Servicer, the Noteholders and the Note Purchaser. On the date which
is 180 days following the related Funding Date, and monthly thereafter, the
Trustee shall inform the Seller, the Purchaser, the Noteholders and the Note
Purchaser of any Receivable for which the related Receivable File on such date
does not include an original certificate of title or, with respect to Financed
Vehicles in the States listed in ANNEX B, other - evidence of title issued by
the applicable Department of Motor Vehicles or similar authority in such States,
and the Seller shall repurchase any such Receivable as of the last Business Day
of the Accrual Period in which the expiration of such 180 days occurs. In
consideration of the purchase of the Receivable, the Seller shall remit the
Purchase Amount for such Receivable, in the manner specified in SECTION 5.6.
Upon receipt of the Purchase Amount for a Receivable and written instructions
from the -- Servicer, the Trustee shall release to the Seller or its designee
the related Receivable File and shall execute and deliver all reasonable
instruments of transfer or assignment, without recourse, as are prepared by the
Seller and delivered to the Trustee and are necessary to vest in the Seller or
such designee title to the Receivable.
(c) For those Receivable Files that do not contain an original
certificate of title or, with respect to Receivables that finance a vehicle in
the States listed in ANNEX B, other evidence of title issued by the applicable
Department of Motor Vehicles or similar authority in such States, upon receipt
of such original title documents, the Seller shall promptly deliver or cause to
be delivered to the Trustee such original title documents to the Trustee to
place in the applicable Receivable File.
SECTION 3.5. ACCESS TO RECEIVABLE FILES. The Trustee shall permit the Servicer,
the Note Purchaser and the Noteholders access to the Receivable Files at all
reasonable times during the Trustee's normal business hours. The Trustee shall,
within two Business Days of the request of the Servicer, the Note Purchaser or
any Noteholder, execute such documents and instruments as are prepared by the
Servicer, the Note Purchaser or such Noteholder and delivered to the Trustee, as
the Servicer, the Note Purchaser or such Noteholder deems necessary to permit
the Servicer, in accordance with its customary servicing procedures, to enforce
13
the Receivable on behalf of the Purchaser and any related insurance policies
covering the Obligor, the Receivable or Financed Vehicle so long as such
execution in the Trustee's sole discretion does not conflict with the Indenture
or any other Basic Document and will not cause it undue risk or liability. The
Trustee shall not release any document from any Receivable File unless it
receives a release request signed by a Servicing Officer in the form of EXHIBIT
C hereto (the "RELEASE REQUEST"); PROVIDED, HOWEVER, if a Servicer Termination
Event or Event of Default shall have occurred and is continuing, the Trustee
shall not release any such Receivable File to the Servicer without the prior
written consent of the Note Purchaser. Such Release Request shall obligate the
Servicer to return such document(s) to the Trustee when the need therefor no
longer exists unless the Receivable shall be liquidated, in which case, the
Servicer shall certify in the Release Request that all amounts required to be
deposited in the Collection Account with respect to such Receivable have been so
deposited. Each Release Request delivered to the Trustee pursuant to this
SECTION 3.5 shall be forwarded by the Servicer to the Note Purchaser
electronically or by facsimile within one (1) Business Day of delivery to the
Trustee together with a list of all Receivables to be released by the Trustee
pursuant to such Release Request.
SECTION 3.6. TRUSTEE TO OBTAIN FIDELITY INSURANCE. The Trustee shall maintain a
fidelity bond in the form and amount as is customary for entities acting as a
trustee of funds and documents in respect of consumer contracts on behalf of
institutional investors.
SECTION 3.7. TRUSTEE TO MAINTAIN SECURE FACILITIES. The Trustee shall maintain
or cause to be maintained continuous custody of the Receivable Files in secure
and fire resistant facilities segregated from any other Receivables of the
Seller, the Purchaser or any of their Affiliates in accordance with customary
standards for such custody.
ARTICLE IV
----------
ADMINISTRATION AND SERVICING OF RECEIVABLES
-------------------------------------------
SECTION 4.1. DUTIES OF THE SERVICER. The Servicer, as agent for the Purchaser,
the Note Purchaser and the Noteholders shall manage, service, administer and
make collections on the Receivables with reasonable care, using that degree of
skill and attention customary and usual for institutions which service motor
vehicle retail installment sale contracts similar to the Receivables and, to the
extent more exacting, that the Servicer exercises with respect to all comparable
automotive receivables that it services for itself or others. In performing such
duties, the Servicer shall comply with its current servicing policies and
procedures, as such servicing policies and procedures may be amended from time
to time, so long as such amendments will not materially adversely affect the
interests of the Note Purchaser or the Noteholders, or otherwise with the prior
written consent of the Note Purchaser and the Noteholders (which consent shall
not be unreasonably withheld), and notice of such amendments is given to the
Note Purchaser and the Noteholders prior to the effectiveness thereof. Without
limiting the generality of the foregoing, and subject to the servicing standards
set forth in this Agreement including, without limitation, the restrictions set
forth in SECTION 4.6, the Servicer is authorized and empowered by the Purchaser
to execute and deliver, on behalf of itself, the Purchaser, the Note Purchaser
or the Noteholders, any and all instruments of satisfaction or cancellation, or
partial or full release or discharge, and all other comparable instruments, with
respect to such Receivables or to the Financed Vehicles securing such
Receivables and/or the certificates of title or, with respect to Financed
Vehicles in the States listed in ANNEX B, other evidence of title issued by the
applicable Department of Motor Vehicles or similar authority in such States with
respect to such Financed Vehicles. If the Servicer shall commence a legal
proceeding to enforce a Receivable, the Purchaser shall thereupon be deemed to
have automatically assigned, solely for the purpose of collection, such
Receivable to the Servicer. If in any enforcement suit or legal proceeding it
shall be held that the Servicer may not enforce a Receivable on the ground that
it shall not be a real party in interest or a holder entitled to enforce such
Receivable, the Purchaser shall, at the Servicer's expense and direction, take
steps to enforce such Receivable, including bringing suit in its name or the
name of the Note Purchaser or the Noteholders. The Servicer shall prepare and
furnish, and the Trustee shall execute, any powers of attorney and other
documents reasonably necessary or appropriate to enable the Servicer to carry
out its servicing and administrative duties hereunder.
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SECTION 4.2. COLLECTION OF RECEIVABLE PAYMENTS; MODIFICATIONS OF RECEIVABLES;
LOCKBOX AGREEMENTS.
(a) Consistent with the standards, policies and procedures required by
this Agreement, the Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Receivables as and
when the same shall become due and shall follow such collection procedures as it
follows with respect to all comparable automotive receivables that it services
for itself or others; PROVIDED, HOWEVER, that promptly after the Closing Date
(or the related Funding Date, as applicable), but in no event more than 30 days
thereafter, the Servicer shall notify each Obligor to make all payments with
respect to the Receivables to the Post-Office Box. The Servicer will provide
each Obligor with a monthly statement in order to notify such Obligors to make
payments directly to the Post-Office Box. The Servicer shall allocate
collections between principal and interest in accordance with the customary
servicing procedures it follows with respect to all comparable automotive
receivables that it services for itself or others and in accordance with the
terms of this Agreement. The Servicer, for so long as the Seller is the
Servicer, may in accordance with the Servicer's Servicing Guidelines grant
extensions on a Receivable; PROVIDED, HOWEVER, that the Servicer may not grant
more than one (1) extension per calendar year with respect to a Receivable or
grant an extension with respect to a Receivable for more than one (1) calendar
month or grant more than four (4) extensions in the aggregate with respect to a
Receivable without the prior written consent of the Note Purchaser. If the
Servicer is not the Seller or the Backup Servicer, the Servicer may not make any
extension on a Receivable without the prior written consent of the Note
Purchaser (which consent shall not unreasonably be withheld). The Servicer may
in its discretion waive any prepayment charge, late payment charge or any other
similar fees that may be collected in the ordinary course of servicing a
Receivable. Notwithstanding anything to the contrary contained herein, the
Servicer shall not agree to any alteration of the interest rate on any
Receivable or of the amount of any Scheduled Receivable Payment on Receivables,
other than to the extent that such alteration is required by applicable law.
(b) The Servicer shall establish the Lockbox Account in the name of the
Purchaser for the benefit of the Trustee for the further benefit of the
Noteholders and the Note Purchaser. Pursuant to the Lockbox Agreement, the
Trustee has authorized the Servicer to direct dispositions of funds on deposit
in the Lockbox Account to the Collection Account (but not to any other account),
and no other Person, except the Lockbox Processor and the Trustee, has authority
to direct disposition of funds on deposit in the Lockbox Account. However, the
Lockbox Agreement shall provide that Lockbox Bank will comply with instructions
originated by the Trustee relating to the disposition of the funds in the
Lockbox Account without further consent by the Seller, the Servicer or the
Purchaser. The Trustee shall have no liability or responsibility with respect to
the Lockbox Processor's directions or activities as set forth in the preceding
sentence. The Lockbox Account shall be established pursuant to and maintained in
accordance with the Lockbox Agreement and shall be a demand deposit account
initially established and maintained with Xxxxx Fargo Bank, National
Association, or at the request of the the Note Purchaser an Eligible Account
satisfying clause (i) of the definition thereof; PROVIDED, HOWEVER, that the
Trustee shall give the Servicer prior written notice of any change made at the
request of the Note Purchaser in the location of the Lockbox Account. The
Servicer shall establish and maintain the Post-Office Box at a United States
Post Office Branch in the name of the Purchaser for the benefit of the Trustee
for the further benefit of the Noteholders and the Note Purchaser.
(c) Notwithstanding any Lockbox Agreement, or any of the provisions of
this Agreement relating to the Lockbox Agreement, the Servicer shall remain
obligated and liable to the Purchaser, the Trustee, the Note Purchaser and the
Noteholders for servicing and administering the Receivables and the Other
Conveyed Property in accordance with the provisions of this Agreement without
diminution of such obligation or liability by virtue thereof.
(d) In the event the Seller shall for any reason no longer be acting as
the Servicer hereunder, the Backup Servicer or another successor Servicer shall
thereupon assume all of the rights and obligations of the outgoing Servicer
under the Lockbox Agreement. In such event, the Backup Servicer or such other
successor Servicer shall be deemed to have assumed all of the outgoing
Servicer's interest therein and to have replaced the outgoing Servicer as a
party to the Lockbox Agreement to the same extent as if such Lockbox Agreement
had been assigned to the Backup Servicer or such other successor Servicer,
except that the outgoing Servicer shall not thereby be relieved of any liability
or obligations on the part of the outgoing Servicer to the Lockbox Bank under
15
such Lockbox Agreement. The outgoing Servicer shall, upon request of the Note
Purchaser or the Trustee, but at the expense of the outgoing Servicer, deliver
to the Backup Servicer or such other successor Servicer all documents and
records relating to the Lockbox Agreement and an accounting of amounts collected
and held by the Lockbox Bank and otherwise use its best efforts to effect the
orderly and efficient assignment of any Lockbox Agreement to the Backup Servicer
or such other successor Servicer. In the event that the Note Purchaser shall
elect to change the identity of the Lockbox Bank, the Servicer, at its expense,
shall cause the Lockbox Bank to deliver, at the direction of the Note Purchaser,
to the Trustee or a successor Lockbox Bank, all documents and records relating
to the Receivables and all amounts held (or thereafter received) by the Lockbox
Bank (together with an accounting of such amounts) and shall otherwise use its
best efforts to effect the orderly and efficient transfer of the Lockbox
arrangements.
(e) On each Business Day, pursuant to the Lockbox Agreement, the
Lockbox Processor will transfer any payments from Obligors received in the
Post-Office Box to the Lockbox Account. Within two (2) Business Days of receipt
of funds into the Lockbox Account, the Servicer shall cause the Lockbox Bank to
transfer cleared funds from the Lockbox Account to the Collection Account. In
addition, the Servicer shall remit all payments by or on behalf of the Obligors
received by the Servicer with respect to the Receivables (other than Purchased
Receivables) and all Net Liquidation Proceeds no later than two (2) Business
Days following receipt directly (without deposit into any intervening account)
into the Lockbox Account or the Collection Account. The Servicer shall not
commingle its assets and funds with those on deposit in the Lockbox Account.
SECTION 4.3. REALIZATION UPON RECEIVABLES. On behalf of the Purchaser, the
Trustee, the Note Purchaser and the Noteholders, the Servicer shall use its best
efforts, consistent with the servicing procedures set forth herein, to repossess
or otherwise convert the ownership of the Financed Vehicle securing any
Receivable as to which the Servicer shall have determined eventual payment in
full is unlikely. The Servicer shall commence efforts to repossess or otherwise
convert the ownership of a Financed Vehicle on or prior to the date that an
Obligor has failed to make more than 90% of a Scheduled Receivable Payment
thereon in excess of $10 for 120 days or more; PROVIDED, HOWEVER, that the
Servicer may elect not to commence such efforts within such time period if in
its good faith judgment it determines either that it would be impracticable to
do so or that the proceeds ultimately recoverable with respect to such
Receivable would be increased by forbearance. The Servicer shall follow such
customary and usual practices and procedures as it shall deem necessary or
advisable in its servicing of automotive receivables, consistent with the
standards of care set forth in Section 4.2, which may include reasonable efforts
to realize upon any recourse to Dealers and selling the Financed Vehicle at
public or private sale. The foregoing shall be subject to the provision that, in
any case in which the Financed Vehicle shall have suffered damage, the Servicer
shall not expend funds in connection with the repair or the repossession of such
Financed Vehicle unless it shall determine in its discretion exercised in good
faith that such repair and/or repossession will increase the proceeds ultimately
recoverable with respect to such Receivable by an amount greater than the amount
of such expenses.
SECTION 4.4. INSURANCE.
(a) The Servicer, in accordance with the servicing procedures and
standards set forth herein, shall require that (i) each Obligor shall have
obtained insurance covering the Financed Vehicle, as of the date of the
execution of the Receivable, insuring against loss and damage due to fire,
theft, transportation, collision and other risks generally covered by
comprehensive and collision coverage and each Receivable requires the Obligor to
maintain such physical loss and damage insurance naming the Seller and its
successors and assigns as an additional insured, (ii) each Receivable that
finances the cost of premiums for credit life and credit accident and health
insurance is covered by an insurance policy or certificate naming the Seller as
policyholder (creditor) and (iii) as to each Receivable that finances the cost
of an extended service contract, the respective Financed Vehicle which secures
the Receivable is covered by an extended service contract (each, a "RECEIVABLES
INSURANCE POLICY").
(b) To the extent applicable, the Servicer shall not take any action
which would result in noncoverage under any Receivables Insurance Policy which,
but for the actions of the Servicer, would have been covered thereunder. The
Servicer, on behalf of the Purchaser, the Note Purchaser and the Noteholders,
shall take such reasonable action as shall be necessary to permit recovery under
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each Receivables Insurance Policy. Any amounts collected by the Servicer under
any Receivables Insurance Policy, including, without limitation, proceeds
thereof, shall be deposited in the Collection Account within one (1) Business
Day of receipt.
SECTION 4.5. MAINTENANCE OF SECURITY INTERESTS IN VEHICLES.
(a) Consistent with the policies and procedures required by this
Agreement, the Servicer shall take such steps on behalf of the Purchaser, the
Note Purchaser and the Noteholders as are necessary to maintain perfection of
the security interest created by each Receivable in the related Financed
Vehicle, including but not limited to obtaining the authorization or execution
by the Obligors and the recording, registering, filing, re-recording,
re-registering and refiling of all security agreements, financing statements and
continuation statements or instruments as are necessary to maintain the security
interest granted by the Obligors under the respective Receivables. The Trustee
hereby authorizes the Servicer, and the Servicer agrees, to take any and all
steps necessary to re-perfect or continue the perfection of such security
interest on behalf of the Purchaser and Trustee for the benefit of the
Noteholders and Note Purchaser as necessary because of the relocation of a
Financed Vehicle or for any other reason. In the event that the assignment of a
Receivable to the Purchaser, and the pledge thereof by the Purchaser to the
Trustee is insufficient, without a notation on the related Financed Vehicle's
certificate of title, or without fulfilling any additional administrative
requirements under the laws of the state in which the Financed Vehicle is
located, to perfect a security interest in the related Financed Vehicle in favor
of the Trustee for the benefit of the Noteholders and the Note Purchaser, each
of the Trustee and the Seller hereby agrees that the Seller's designation as the
secured party on the certificate of title is in respect of the Seller's capacity
as Servicer as agent of the Trustee for the benefit of the Noteholders and the
Note Purchaser.
(b) Upon the occurrence and continuance of a Servicer Termination
Event, the Trustee, and the Servicer shall take or cause to be taken such action
as may, in the opinion of counsel to the Trustee, which opinion shall be an
expense of the Servicer and shall not be an expense of the Trustee, be necessary
to perfect or re-perfect the security interests in the Financed Vehicles
securing the Receivables in the name of the Trustee on behalf of the Noteholders
and the Note Purchaser by amending the title documents of such Financed Vehicles
or by such other reasonable means as may, in the opinion of counsel to the
Trustee, which opinion shall be an expense of the Servicer and shall not be an
expense of the Trustee, be necessary or prudent.
(c) The Seller hereby agrees to pay all expenses related to such
perfection or re-perfection in accordance with clauses (a) and (b) above and to
take all action necessary therefor. In addition, the Note Purchaser or the
Trustee may instruct the Servicer to take or cause to be taken, and the Servicer
shall take or cause to be taken, such action as may, in the judgment of the
Trustee or the Note Purchaser, be necessary to perfect or re-perfect the
security interest in the Financed Vehicles underlying the Receivables in the
name of the Trustee on behalf of the Noteholders and the Note Purchaser,
including by amending the title documents of such Financed Vehicles or by such
other reasonable means as may, in the judgment of the Trustee or the Note
Purchaser, be necessary or prudent; PROVIDED, HOWEVER, that if the Note
Purchaser or the Trustee requests that the title documents be amended prior to
the occurrence of a Servicer Termination Event, the Servicer shall carry out
such action only to the extent that the out-of-pocket expenses of the Servicer
shall be reimbursed by the Note Purchaser or the Noteholders, respectively.
SECTION 4.6. ADDITIONAL COVENANTS OF SERVICER.
(a) The Servicer shall not release the Financed Vehicle securing any
Receivable from the security interest granted by such Receivable in whole or in
part except in the event of payment in full by the Obligor thereunder or
repossession or other liquidation of the Financed Vehicle, nor shall the
Servicer impair the rights of the Noteholders, the Note Purchaser or the Trustee
in such Receivables, nor shall the Servicer amend or otherwise modify a
Receivable, except as permitted in accordance with SECTION 4.2.
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(b) The Servicer shall obtain and/or maintain all necessary licenses,
approvals, authorizations, orders or other actions of any person, corporation or
other organization, or of any court, governmental agency or body or official,
required in connection with the execution, delivery and performance of this
Agreement and the other Basic Documents.
(c) The Servicer shall not make any material changes to its collection
policies unless the Note Purchaser expressly consents in writing prior to such
changes (which consent shall not be unreasonably withheld).
(d) The Servicer shall provide written notice to the Noteholders and
the Note Purchaser of any default, event of default, trigger event or servicer
termination event under any other warehouse financing facility or securitization
that has occurred and which default, event of default, trigger event or servicer
termination shall not have been waived or otherwise cured within the applicable
cure period.
(e) The Servicer shall reimburse the Note Purchaser and the Noteholders
for any and all fees or expenses that the Note Purchaser or such Noteholders, as
applicable, pay to a bank arising out of a return of payments from the Purchaser
or the Seller deposited for collection by or for the benefit of the Note
Purchaser or the Noteholders, as applicable.
(f) The Servicer will not (i) create, incur or suffer to exist, or
agree to create, incur or suffer to exist, or consent to cause or permit in the
future (upon the happening of a contingency or otherwise) the creation,
incurrence or existence of any lien, security interest, charge, pledge, equity,
encumbrance or restriction on transferability of the Receivables and the Other
Conveyed Property except (x) for the lien in favor of the Trustee for the
benefit of the Noteholders and the Note Purchaser and the restrictions on
transferability imposed by this Agreement or any other Basic Document or (y)
with respect to any portion of the Receivables and the Other Conveyed Property
released in a manner permitted by the Basic Documents from the lien in favor of
the Trustee for the benefit of the Noteholders and the Note Purchaser, or (ii)
sign or file under the UCC of any jurisdiction any financing statement which
names the Seller, the Servicer or the Purchaser as a debtor, or sign any
security agreement authorizing any secured party thereunder to file such
financing statement, with respect to the Receivables and Other Conveyed
Property, except in each case any such instrument solely securing the rights and
preserving the lien of the Trustee for the benefit of the Noteholders and the
Note Purchaser.
SECTION 4.7. PURCHASE OF RECEIVABLES UPON BREACH OF COVENANT. Upon discovery by
any of the Servicer, the Purchaser, the Trustee, the Note Purchaser or any
Noteholder of a breach of any of the covenants of the Servicer set forth in
SECTION 4.2(A), 4.4, 4.5 or 4.6, the party discovering such breach shall give
prompt written notice to the others; PROVIDED, HOWEVER, that the failure to give
any such notice shall not affect any obligation of the Servicer under this
SECTION 4.7. Unless the breach shall have been cured by the last day of the next
Accrual Period following such discovery, the Servicer shall purchase any
Receivable materially and adversely affected by such breach. In consideration of
the purchase of such Receivable, the Servicer shall remit the Purchase Amount
for such Receivable in the manner specified in SECTION 5.6. The sole remedy of
the Trustee, the Purchaser, the Note Purchaser or the Noteholders hereunder with
respect to a breach of SECTION 4.2(A), 4.4, 4.5 or 4.6 shall be to require the
Servicer to repurchase Receivables pursuant to this SECTION 4.7; PROVIDED,
however, that the Servicer shall indemnify the Trustee, the Backup Servicer, the
Purchaser, the Note Purchaser and the Noteholders against all costs, expenses,
losses, damages, claims and liabilities, including reasonable fees and expenses
of counsel, which may be asserted against or incurred by any of them as a result
of third party claims arising out of the events or facts giving rise to such
breach.
SECTION 4.8. SERVICING FEE. The "SERVICING FEE" for each Settlement Date shall
be equal (a) to the sum of the following amount calculated for each day in the
related Accrual Period: the product of (i) the Servicing Fee Percentage and (ii)
the aggregate Principal Balance of the Eligible Receivables minus the Excess
Concentration Amount, if any, on such day and (iii) 1/360. The Servicing Fee
shall also include all late fees, prepayment charges and other administrative
fees or similar charges allowed by applicable law with respect to Receivables,
collected (from whatever source) on the Receivables. If the Backup Servicer
becomes the successor Servicer, the "Servicing Fee" payable to the Backup
Servicer as successor Servicer shall be determined in accordance with the
Servicing Assumption Agreement.
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SECTION 4.9. SERVICER'S CERTIFICATE. No later than 12:00 noon New York City time
on each Determination Date, the Servicer shall deliver (in computer-readable
format reasonably acceptable to each such Person) to the Trustee, the Note
Purchaser, the Backup Servicer and the Purchaser, a certificate substantially in
the form of EXHIBIT A hereto (a "SERVICER'S CERTIFICATE") containing among other
things, (i) all information necessary to enable the Trustee to make the
distributions required by SECTION 5.7, (ii) all information necessary for the
Trustee to send statements to the Noteholders and the Note Purchaser pursuant to
SECTION 5.8(B) and 5.9, (iii) a listing of all Purchased Receivables purchased
as of the related Accounting Date, identifying the Receivables so purchased,
(iv) the calculation of the Borrowing Base as of the last day of the related
Accrual Period and (v) all information necessary to enable the Backup Servicer
to verify the information specified in SECTION 4.14(B) and to complete the
accounting required by SECTION 5.9. In addition to the information set forth in
the preceding sentence, each Servicer's Certificate shall also contain the
following information: (a) whether a Servicer Termination Event or any other
Funding Termination Event has occurred; (b) the Servicer Delinquency Ratio as of
the end of the Related Accrual Period; (c) the Servicer Loss Ratio as of such
Determination Date; (d) so long as the Servicer is CPS, a certification that the
Servicer is in compliance with the financial covenants contained in Sections
10.1(i), (j) and (k) of this Agreement; and (e) such other information
reasonably requested by the Note Purchaser and any Noteholder. The Servicer
shall deliver to the Trustee, the Noteholders, the Note Purchaser, the Backup
Servicer and the Purchaser a hard copy (which may be a facsimile) of any such
Servicer's Certificate upon request of such Person.
SECTION 4.10. ANNUAL STATEMENT AS TO COMPLIANCE, NOTICE OF SERVICER TERMINATION
EVENT.
(a) The Servicer shall deliver to the Purchaser, to the Trustee, the
Note Purchaser and to the Noteholders and the Backup Servicer, on or before
March 31 of each year beginning March 31, 2006, an Officer's Certificate, dated
as of December 31 of the preceding year, stating that (i) a review of the
activities of the Servicer during the preceding 12-month period (or, in the case
of the first such certificate, the period from the initial Cutoff Date to
December 31, 2005) and of its performance under this Agreement has been made
under such officer's supervision and (ii) to the best of such officer's
knowledge, based on such review, the Servicer has fulfilled all its obligations
under this Agreement throughout such year (or, in the case of the first such
certificate, such shorter period), or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof.
(b) The Servicer shall deliver to the Trustee, the Noteholders, the
Note Purchaser and the Backup Servicer, promptly after having obtained knowledge
thereof, but in no event later than two (2) Business Days thereafter, written
notice in an Officer's Certificate of any event which with the giving of notice
or lapse of time, or both, would become a Servicer Termination Event under
SECTION 10.1.
SECTION 4.11. INDEPENDENT ACCOUNTANTS' REPORTS. The Servicer shall cause a firm
of nationally recognized independent certified public accountants (the
"INDEPENDENT ACCOUNTANTS"), who may also render other services to the Servicer
or to the Purchaser, to deliver to the Trustee, the Backup Servicer, the Note
Purchaser and the Noteholders, on or before April 30 of each year beginning
April 30, 2006, a report dated as of December 31 of the preceding year in form
and substance reasonably acceptable to the Note Purchaser (the "ACCOUNTANTS'
REPORT") and reviewing the Servicer's activities during the preceding 12-month
period (or, in the case of the first such report, the period from the Cutoff
Date with respect to Receivables transferred to the Purchaser on the initial
Funding Date to December 31, 2005), addressed to the Board of Directors of the
Servicer, to the Trustee, the Backup Servicer, the Note Purchaser and the
Noteholders, to the effect that such firm has examined the financial statements
of the Servicer and issued its report therefor and that such examination (1) was
made in accordance with generally accepted auditing standards, and accordingly
included such tests of the accounting records and such other auditing procedures
as such firm considered necessary in the circumstances; (2) included tests
relating to auto loans serviced for others in accordance with the requirements
of the Uniform Single Attestation Program for Mortgage Bankers (the "PROGRAM"),
to the extent the procedure in the Program are applicable to the servicing
obligations set forth in this Agreement; (3) included an examination of the
delinquency and loss statistics relating to the Servicer's portfolio of
automobile and light truck installment sale contracts; and (4) except as
described in the report, disclosed no exceptions or errors in the records
relating to automobile and light truck loans serviced for others that, in the
firm's opinion, paragraph four of the Program requires such firm to report. The
accountant's report shall further state that (1) a review in accordance with
agreed upon procedures was made of two randomly selected Servicer's
Certificates; (2) except as disclosed in the report, no exceptions or errors in
the Servicer's Certificates were found; and (3) the delinquency and loss
information relating to the Receivables and the stated amount of Liquidated
Receivables, if any, contained in the Servicer's Certificates were found to be
accurate. In the event such firm requires the Trustee and/or the Backup Servicer
to agree to the procedures performed by such firm, the Servicer shall direct the
Trustee and/or the Backup Servicer, as applicable, in writing to so agree; it
being understood and agreed that the Trustee and/or the Backup Servicer will
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deliver such letter of agreement in conclusive reliance upon the direction of
the Servicer, and neither the Trustee nor the Backup Servicer makes any
independent inquiry or investigation as to, and shall have no obligation or
liability in respect of, the sufficiency, validity or correctness of such
procedures. The Report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
SECTION 4.12. INDEPENDENT ACCOUNTANTS' REVIEW OF RECEIVABLE FILES. Commencing on
December 31, 2005 and, thereafter on each March 31, June 30, September 30 and
December 31, to the extent that the Invested Amount on any day in the calendar
quarter then ending was greater than $10 million (or such other dates as the
Note Purchaser may determine in its reasonable discretion from time to time by
prior written notice to the Seller, the Servicer and the Trustee), the Seller at
its own expense shall cause Independent Accountants reasonably acceptable to the
Note Purchaser to conduct a post-funding review of the Seller's compliance with
its stated underwriting policies and verify certain characteristics of the
Receivables as of each Funding Date. The Independent Accountants shall within
ten Business Days complete such physical inspection and limited review and
execute and deliver to Seller, the Servicer, the Trustee, the Note Purchaser and
the Noteholders a report summarizing the findings. If such review reveals, in
the Note Purchaser's reasonable opinion, an unsatisfactory number of exceptions,
the Note Purchaser, in its reasonable discretion, may require a full review of a
larger sample of the Receivables by the Independent Accountants at the expense
of the Seller.
SECTION 4.13. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
RECEIVABLES. The Servicer shall provide to representatives of the Trustee, the
Backup Servicer, the Note Purchaser and the Noteholders reasonable access to the
documentation regarding the Receivables. In each case, such access shall be
afforded without charge but only upon reasonable request and during normal
business hours. Nothing in this Section shall derogate from the obligation of
the Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors, and the failure of the Servicer to provide access as
provided in this Section as a result of such obligation shall not constitute a
breach of this Section.
SECTION 4.14. VERIFICATION OF SERVICER'S CERTIFICATE.
(a) Concurrently with the delivery by the Servicer of the Servicer's
Certificate each month, the Servicer will deliver to the Trustee and the Backup
Servicer and the Note Purchaser a computer diskette (or other electronic
transmission) in a format acceptable to the Trustee and the Backup Servicer
containing information with respect to the Receivables as of the close of
business on the last day of the preceding Accrual Period which information is
necessary for preparation of the Servicer's Certificate. The Backup Servicer
shall use such computer diskette (or other electronic transmission) to verify
certain information specified in SECTION 4.14(B) contained in the Servicer's
Certificate delivered by the Servicer, and the Backup Servicer shall notify the
Servicer, the Note Purchaser and the Noteholders of any discrepancies on or
before the second Business Day following the Determination Date. In the event
that the Backup Servicer reports any discrepancies, the Servicer and the Backup
Servicer shall attempt to reconcile such discrepancies by the related Settlement
Date, but in the absence of a reconciliation, the Servicer's Certificate shall
control for the purpose of calculations and distributions pursuant to clauses
(i) through (vii) of Section 5.7(a) hereof with respect to the related
Settlement Date. No payments shall be made to the Issuer pursuant to, clause
(viii) of Section 5.7(a) hereof until any discrepancies shall have been
reconciled. In the event that the Backup Servicer and the Servicer are unable to
reconcile discrepancies with respect to a Servicer's Certificate by the related
Settlement Date, the Backup Servicer shall notify the Note Purchaser and the
Noteholders thereof in writing and the Servicer shall cause a firm of nationally
recognized, independent certified public accountants, at the Servicer's expense,
to audit the Servicer's Certificate and, prior to the fifth day of the following
calendar month, reconcile the discrepancies. The effect, if any, of such
reconciliation shall be reflected in the Servicer's Certificate for such next
succeeding Determination Date. Other than the duties specifically set forth in
this Agreement, the Backup Servicer shall have no obligations hereunder,
including, without limitation, to supervise, verify, monitor or administer the
performance of the Servicer. The Backup Servicer shall have no liability for any
actions taken or omitted by the Servicer. The duties and obligations of the
Backup Servicer shall be determined solely by the express provisions of this
Agreement and no implied covenants or obligations shall be read into this
Agreement against the Backup Servicer.
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(b) The Backup Servicer shall review each Servicer's Certificate
delivered pursuant to Section 4.14(a) and shall:
(i) confirm that such Servicer's Certificate is complete on
its face;
(ii) load the computer diskette (which shall be in a format
acceptable to the Backup Servicer) received from the Servicer pursuant
to SECTION 4.14(A) hereof, confirm that such computer diskette is in a
readable form and calculate and confirm the aggregate of the Principal
Balances of the Receivables for the most recent Settlement Date; and
(iii) confirm that Available Funds, the Noteholder's Principal
Distributable Amount, the Noteholder's Interest Distributable Amount,
the Servicing Fee, the Backup Servicing Fee, the Trustee Fee, the
Servicer Delinquency Ratio and the Servicer Loss Ratio in the
Servicer's Certificate are accurate based solely on the recalculation
of the Servicer's Certificate.
(c) Within 30 days of the Closing Date and within thirty (30) days of
the effective date of any renewal of the Term of the Commitment pursuant to
Section 2.05 of the Note Purchase Agreement, the Backup Servicer will cause an
affiliate of the Backup Servicer to data map to its servicing system all
servicing/loan file information, including all relevant borrower contact
information such as address and phone numbers as well as loan balance and
payment information, including comment histories and collection notes. On or
before the fifth calendar day of each month, the Servicer will provide to an
affiliate of the Backup Servicer and the Note Purchaser an electronic
transmission of all servicing/loan information, including all relevant borrower
contact information such as address and phone numbers as well as loan balance
and payment information, including comment histories and collection notes, and
the Backup Servicer will cause such affiliate to review each file to ensure that
it is in readable form and verify that the data balances conform to the trial
balance reports received from the Servicer. Additionally, the Backup Servicer
shall cause such affiliate to store each such file.
SECTION 4.15. RETENTION AND TERMINATION OF SERVICER. The Servicer hereby
covenants and agrees to act as such under this Agreement for an initial term
commencing on the Closing Date and ending on November 30, 2005, which term may
be extended by the Note Purchaser for successive monthly terms pursuant to
written instructions delivered by the Note Purchaser to the Servicer and the
Trustee (or, at the discretion of the Note Purchaser exercised pursuant to
revocable written standing instructions from time to time to the Servicer and
the Trustee, for any specified number of terms greater than one), until such
time as the Notes and all other Secured Obligations have been paid in full (each
such notice, including each notice pursuant to standing instructions, which
shall be deemed delivered at the end of successive terms for so long as such
instructions are in effect, a "SERVICER EXTENSION NOTICE"). The Servicer hereby
agrees that, upon its receipt of any such Servicer Extension Notice or other
extension of its term as Servicer, the Servicer shall become bound, for the
duration of the term covered by such Servicer Extension Notice or for the
monthly term, as applicable, to continue as the Servicer subject to and in
accordance with the other provisions of this Agreement. The Trustee agrees that
if as of the twentieth day prior to the last day of any term of the Servicer,
the Trustee shall not have received any Servicer Extension Notice as of such
date, the Trustee shall, within five days thereafter, give written notice of
such non-receipt to the Note Purchaser and the Servicer and the Servicer's term
shall not be extended unless a Servicer Extension Notice is received on or
before the last day of such term.
SECTION 4.16. ERRORS AND OMISSIONS POLICY AND FIDELITY BOND. The Servicer shall
maintain an errors and omissions insurance policy and a fidelity bond in such
form and amount as is customary for comparable servicers engaged in the business
of servicing motor vehicle receivables.
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ARTICLE V
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ACCOUNTS; DISTRIBUTIONS; STATEMENTS TO THE NOTEHOLDER
-----------------------------------------------------
SECTION 5.1. ESTABLISHMENT OF PLEDGED ACCOUNTS.
(a) The Trustee, on behalf of the Noteholders and the Note Purchaser,
shall establish and maintain in its own name an Eligible Account (the
"COLLECTION ACCOUNT"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Trustee on behalf of the
Noteholders and the Note Purchaser. The Collection Account shall initially be
established with the Trustee.
(b) The Trustee, on behalf of the Noteholders and the Note Purchaser,
shall establish and maintain in its own name an Eligible Account (the "NOTE
DISTRIBUTION ACCOUNT"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Trustee on behalf of the
Noteholders and the Note Purchaser. The Note Distribution Account shall
initially be established with the Trustee.
(c) Funds on deposit in the Collection Account and the Note
Distribution Account (collectively, the "PLEDGED ACCOUNTS") shall be invested by
the Trustee (or any custodian with respect to funds on deposit in any such
account) in Eligible Investments selected in writing by the Servicer or, after
the resignation or termination of CPS as Servicer, by the Note Purchaser
(pursuant to standing instructions or otherwise). All such Eligible Investments
shall be held by or on behalf of the Trustee for the benefit of the Noteholders
and the Note Purchaser. Other than as permitted by the Note Purchaser, funds on
deposit in any Pledged Account shall be invested in Eligible Investments that
will mature so that such funds will be available at the close of business on the
Business Day immediately preceding the following Settlement Date. Funds
deposited in a Pledged Account on the day immediately preceding a Settlement
Date upon the maturity of any Eligible Investments are not required to be
invested overnight. All Eligible Investments will be held to maturity. (d) All
investment earnings of moneys deposited in the Pledged Accounts shall be
deposited (or caused to be deposited) by the Trustee in the Collection Account
for distribution pursuant to SECTION 5.7(A), and any loss resulting from such
investments shall be charged to such account. The -- Servicer will not direct
the Trustee to make any investment of any funds held in any of the Pledged
Accounts unless the security interest granted and perfected in such account will
continue to be perfected in such investment, in either case without any further
action by any Person, and, in connection with any direction to the Trustee to
make any such investment, if requested by the Trustee, the Servicer shall
deliver to the Trustee an Opinion of Counsel, acceptable to the Trustee, to such
effect.
(e) The Trustee shall not in any way be held liable by reason of any
insufficiency in any of the Pledged Accounts resulting from any loss on any
Eligible Investment included therein except for losses attributable to the
Trustee's negligence or bad faith or its failure to make payments on such
Eligible Investments issued by the Trustee, in its commercial capacity as
principal obligor and not as trustee, in accordance with their terms.
(f) If (i) the Servicer or the Note Purchaser, as applicable, shall
have failed to give investment directions for any funds on deposit in the
Pledged Accounts to the Trustee by 1:00 p.m. Eastern Time (or such other time as
may be agreed by the Purchaser and Trustee) on any Business Day; or (ii) an
Event of Default shall have occurred and be continuing with respect to the Notes
but the Notes shall not have been declared due and payable, or, if the Notes
shall have been declared due and payable following an Event of Default, amounts
collected or receivable from the Receivables and the Other Conveyed Property are
being applied as if there had not been such a declaration; then the Trustee
shall, to the fullest extent practicable, invest and reinvest funds in the
Pledged Accounts in an Eligible Investment described in PARAGRAPH (A) OR (F) of
the definition thereof.
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(g) The Trustee shall possess all right, title and interest in all
funds on deposit from time to time in the Pledged Accounts and in all proceeds
thereof (including all Investment Earnings on the Pledged Accounts) and all such
funds, investments, proceeds and income shall be part of Other Conveyed Property
and the Collateral. Except as otherwise provided herein, the Pledged Accounts
shall be under the sole dominion and control of the Trustee for the benefit of
the Noteholders and the Note Purchaser. If at any time any of the Pledged
Accounts ceases to be an Eligible Account, the Trustee with the consent of the
Note Purchaser shall within five Business Days establish a new Pledged Account
as an Eligible Account and shall transfer any cash and/or any investments from
the Pledged Account that is no longer an Eligible Account to such new Pledged
Account. The Trustee shall promptly notify the Servicer, the Note Purchaser and
the Noteholders of any change in the location of any of the aforementioned
accounts. In connection with the foregoing, the Trustee agrees that, in the
event that any of the Pledged Accounts are not accounts with the Trustee, the
Trustee shall notify the Servicer, the Note Purchaser and the Noteholders in
writing promptly upon any of such Pledged Accounts ceasing to be an Eligible
Account.
(h) Notwithstanding anything to the contrary herein or in any other
document relating to a Trust Account, the "securities intermediary's
jurisdiction" (within the meaning of Section 8-110 of the UCC) or the "bank's
jurisdiction" (with the meaning of 9-304 of the UCC) as applicable, with respect
to each Pledged Account shall be the State of New York.
(i) With respect to the Pledged Account Property, the Trustee agrees
that:
(i) any Pledged Account Property that is held in deposit
accounts shall be held solely in an Eligible Account; and, except as
otherwise provided herein, each such Eligible Account shall be subject
to the exclusive custody and control of the Trustee and the Trustee
shall have sole signature authority with respect thereto; and
(ii) any Pledged Account Property shall be delivered to the
Trustee in accordance with the definition of "DELIVERY".
(iii) the Servicer shall have the power, revocable by the Note
Purchaser to instruct the Trustee to make withdrawals and payments from
the Pledged Accounts for the purpose of permitting the Servicer and the
Trustee to carry out their respective duties hereunder.
SECTION 5.2. ESTABLISHMENT OF DEPOSIT ACCOUNT
The Trustee shall establish and maintain the Deposit Account in the
name of CPS. The Deposit Account shall be established with the Trustee as the
Deposit Account Bank (as defined in the Account Control Agreement) and governed
and maintained in accordance with the provisions of the Account Control
Agreement. All distributions made by the Issuer and Seller to CPS in respect of
CPS's equity interest in the Issuer shall be deposited by the Issuer directly
into the Deposit Account. Amounts on deposit in the Deposit Account shall be
invested by the Trustee (or any custodian with respect to funds on deposit in
any such account) in Eligible Investments selected in writing by CPS (pursuant
to standing instructions or otherwise). All investment earnings of moneys
deposited in the Deposit Account shall be held in the Deposit Account until
withdrawn by CPS (unless otherwise prohibited pursuant to Section 2 of the
Account Control Agreement), and any loss resulting from such investments shall
be charged to the Deposit Account
SECTION 5.3. CERTAIN REIMBURSEMENTS TO THE SERVICER. The Servicer will be
entitled to be reimbursed from amounts on deposit in the Collection Account with
respect to an Accrual Period for amounts previously deposited in the Collection
Account but later determined by the Servicer to have resulted from mistaken
deposits or postings or checks returned for insufficient funds. The amount to be
reimbursed hereunder shall be paid to the Servicer on the related Settlement
Date pursuant to SECTION 5.7(A)(II) upon certification by the Servicer of such
amounts prior to such Settlement Date and the provision of such information to
the Trustee and the Note Purchaser prior to such Settlement Date as may be
necessary in the opinion of the Note Purchaser to verify the accuracy of such
certification; provided, however, that the Servicer must provide such
certification within three months of it becoming aware of such mistaken deposit,
posting or returned check. In the event that the Note Purchaser has not received
evidence satisfactory to it of the Servicer's entitlement to reimbursement
pursuant to this Section prior to such Settlement Date, the Note Purchaser shall
give the Trustee notice to such effect, following receipt of which the Trustee
shall not make a distribution to the Servicer in respect of such amount pursuant
to SECTION 5.7, or if prior thereto the Servicer has been reimbursed pursuant to
SECTION 5.7, the Trustee shall withhold such amounts from amounts otherwise
distributable to the Servicer on the next succeeding Settlement Date.
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SECTION 5.4. APPLICATION OF COLLECTIONS.All collections for each Accrual Period
shall be applied by the Servicer as follows:
With respect to each Receivable (other than a Purchased Receivable),
payments by or on behalf of the Obligor shall be applied to interest and
principal in accordance with the Simple Interest Method.
SECTION 5.5. [RESERVED].
SECTION 5.6. ADDITIONAL DEPOSITS. The Servicer, the Issuer, the Purchaser or the
Seller, as the case may be, shall each deposit or cause to be deposited in the
Collection Account (i) the Purchase Amount with respect to any Purchased
Receivable on the date of purchase of such Receivable and (ii) any amounts due
the Trustee, Noteholders, the Note Purchaser, the Backup Servicer, the Purchaser
(in each case, to the extent not paid directly thereto) in respect of any
indemnification obligation of the Servicer, the Issuer, the Purchaser or the
Seller under the Basic Documents.
SECTION 5.7. DISTRIBUTIONS.
(a) On each Settlement Date prior to the acceleration of the Notes
following an Event of Default, the Trustee (based on the information contained
in the Servicer's Certificate delivered on the related Determination Date) shall
make the following distributions in the following order of priority from amounts
on deposit in the Collection Account:
(i) to the Backup Servicer and the Trustee, as applicable, pro
rata from Available Funds, in respect of the Backup Servicing Fee (so
long as the Backup Servicer is not acting as successor Servicer), the
Trustee Fee, reasonable expenses incurred in connection with
transitioning the servicing to the Backup Servicer and all other
reasonable out-of-pocket expenses thereof (including counsel fees and
expenses) and all unpaid Backup Servicing Fees (so long as the Backup
Servicer is not acting as successor Servicer), Trustee Fees, reasonable
expenses incurred in connection with transitioning the servicing to the
Backup Servicer and all other reasonable out-of-pocket expenses
(including counsel fees and expenses) from prior Accrual Periods;
PROVIDED, HOWEVER, that expenses payable to each of the Backup Servicer
and Trustee pursuant to this clause (i), excluding amounts paid to the
Backup Servicer in respect of transition expenses, shall be limited to
a total of $25,000 per annum (calculated from November 15, 2005 to
November 14, 2006, and each succeeding 364-day period to the extent the
Term is extended pursuant to the Note Purchase Agreement); PROVIDED,
FURTHER, that the amount of transition expenses distributed to the
Backup Servicer during the term of this Agreement pursuant to this
clause (i) shall in no case exceed $50,000 in the aggregate;
(ii) to the Servicer, from Available Funds, in respect of the
Servicing Fee and all unpaid Servicing Fees from prior Accrual Periods
and all reimbursements to which the Servicer is entitled pursuant to
SECTION 5.3;
(iii) to the Note Distribution Account, from Available Funds,
the Noteholders' Interest Distributable Amount for such Accrual Period;
(iv) to the Note Distribution Account, from Available Funds,
the Noteholders' Principal Distributable Amount for such Accrual
Period;
(v) to any successor Servicer, from Available Funds, its
servicing fees in excess of the Servicing Fee and, to the extent not
previously paid by the predecessor Servicer pursuant to this Agreement,
reasonable transition expenses (up to a maximum of $50,000 in the
aggregate over the term of this Agreement) incurred in becoming the
successor Servicer; and
24
(vi) to the Backup Servicer and the Trustee, as applicable,
pro rata, from Available Funds, in respect of reasonable out-of-pocket
expenses thereof (including counsel fees and expenses) and reasonable
out-of-pocket expenses (including counsel fees and expenses) from prior
Accrual Periods to the extent not paid thereto pursuant to SECTION
5.7(A)(I) above; and
(vii) to the Note Distribution Account, from Available Funds,
any Margin Call, the Commitment Fee, the Minimum Placement Fee and all
other fees, expenses, indemnity payments (to the extent not paid
directly) and all other amounts owing to the Note Purchaser and/or the
Noteholders under the Basic Documents; and
(viii) to the Issuer, the remaining Available Funds, if any;
provided that no Available Funds shall be paid to the Issuer pursuant
to this priority (viii) until (x) any amounts owed to the Noteholders
and the Note Purchaser pursuant to Sections 3.03, 3.04 and 3.05 of the
Note Purchase Agreement have been paid in full and (y) any
discrepancies in the Servicer's Certificate shall have been reconciled
pursuant to Section 4.14(a) hereof.
(b) Following an acceleration of the Notes after an Event of Default,
any money or property that the Trustee collects pursuant to Article V of the
Indenture shall be paid pursuant to Section 5.6(a) of the Indenture; provided,
however, that Available Funds shall be applied in the order of priority
specified in SECTION 5.7(A) above.
(c) In the event that the Collection Account is maintained with an
institution other than the Trustee, the Servicer shall instruct and cause such
institution to make all deposits and distributions pursuant to SECTION 5.7(A) on
the related Settlement Date.
SECTION 5.8. NOTE DISTRIBUTION ACCOUNT.
(a) On each Settlement Date (based solely on the information contained
in the Servicer's Certificate), the Trustee shall distribute all amounts on
deposit in the Note Distribution Account to the Noteholders in respect of the
Notes to the extent of amounts due and unpaid on the Notes for principal and
interest, and to the Note Purchaser in respect of other amounts due and owing
under the Basic Documents, in the following amounts and in the following order
of priority:
(i) to the Noteholders, the Noteholders' Interest
Distributable Amount; PROVIDED that if there are not sufficient funds
in the Note Distribution Account to pay the entire amount then due on
the Note, the amount in the Note Distribution Account shall be applied
to the payment of such interest pro rata among the Holders of the
Notes;
(ii) to the Noteholders, in reduction of the Invested Amount,
the Noteholders' Principal Distributable Amount to pay principal on the
Notes until the outstanding principal amount of the Notes have been
reduced to zero; PROVIDED that if there are not sufficient funds in the
Note Distribution Account to pay the entire amount then due on the
Notes, the amount in the Note Distribution Account shall be applied to
the payment of such principal pro rata among the Holders of the Notes;
(iii) to the Noteholders, in reduction of the Invested Amount,
in an amount necessary to cover any Margin Call;
(iv) to the Note Purchaser, the Commitment Fee;
(v) to the Note Purchaser, if such Settlement Date occurs on
or after the Minimum Placement Fee Payment Date, the Minimum Placement
Fee; and
25
(vi) sequentially, to the Note Purchaser and the Noteholders,
in that order, any other amounts due the Note Purchaser and the
Noteholders, respectively, pursuant to any of the Basic Documents.
(b) On each Settlement Date, the Trustee shall provide or make
available electronically (or, upon written request, by first class mail or
facsimile) to the Noteholders and the Note Purchaser the statement or statements
provided to the Trustee by the Servicer pursuant to SECTION 5.9 hereof on such
Settlement Date; PROVIDED HOWEVER, the Trustee shall have no obligation to
provide such information described in this SECTION 5.8(B) until it has received
the requisite information from the Servicer.
SECTION 5.9. STATEMENTS TO NOTEHOLDERS. (a) On the Determination Date (in
accordance with SECTION 4.9), the Servicer shall provide to the Trustee, the
Note Purchaser and the Noteholders on the related Record Date a copy of the
Servicer's Certificate setting forth at least the following information as to
the Notes to the extent applicable in the form attached as hereto EXHIBIT A:
(i) the amount of such distribution allocable to principal of
the Notes;
(ii) the amount of such distribution allocable to interest on
or with respect to the Notes;
(iii) the aggregate of the Principal Balances of the
Receivables as of the close of business on the last day of the
preceding Accrual Period;
(iv) the aggregate outstanding principal amount of the Notes;
(v) the amount of the Servicing Fee paid to the Servicer with
respect to the related Accrual Period, and the amount of any unpaid
Servicing Fees and the change in such amount from the prior Settlement
Date;
(vi) (A) the amount of each of the Backup Servicing Fee and
the Trustee Fee paid to the Backup Servicer and the Trustee as
applicable, with respect to the related Accrual Period, (B) the amount
of any unpaid Backup Servicing Fees and Trustee Fees and the change in
such amounts from the prior Settlement Date, (C) the amount of all
expenses paid to the Trustee and the Backup Servicer, with respect to
the related Accrual Period, and (D) the difference between the maximum
per annum amount payable to the Trustee and Backup Servicer in respect
of expenses (other than servicing transition expenses) as set forth in
Section 5.7(a)(i) and the amount paid to the Backup Servicer and
Trustee year-to-date (to and including the related Settlement Date) in
respect of such expenses;
(vii) the Noteholders' Interest Carryover Shortfall and the
Noteholders' Principal Carryover Shortfall, if any;
(viii) the number of Receivables and the aggregate gross
amount scheduled to be paid thereon, including unearned finance and
other charges, for which the related Obligors are delinquent in making
Scheduled Receivable Payments for (a) 31 to 45 days and (d) 46 days or
more, in each case as of the last day of the related Accrual Period;
(ix) the amount of aggregate Realized Losses, if any, for the
related Accrual Period;
(x) the number of, and the aggregate Purchase Amounts for,
Receivables, if any, that were repurchased during the related Interest
Period and summary information as to losses and delinquencies with
respect to the Receivables as of the end of the related Accrual Period;
(xi) the cumulative amount of Realized Losses from the initial
Cutoff Date to the last day of the related Accrual Period; and
26
(xii) the Servicer Delinquency Ratio as of the end of the
related Accrual Period and the Servicer Loss Ratio as of the related
Determination Date.
(b) Within 60 days after the end of each calendar year, commencing
February 28, 2006, the Servicer shall deliver to the Trustee, and the Trustee
shall, provided it has received the necessary information from the Servicer,
promptly thereafter furnish to each Noteholder (a) a report (prepared by the
Servicer) as to the aggregate of the amounts reported pursuant to subclauses
(i), (ii), (v) and (vi) of SECTION 5.9(A) for such preceding calendar year, and
(b) such information as may be reasonably requested by such Noteholder or
required by the Code and regulations thereunder, to enable such Noteholder to
prepare its Federal and State income tax returns. The obligation of the Trustee
set forth in this paragraph shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Servicer to
such Noteholder pursuant to any requirements of the Code.
(c) The Trustee may make available to the Note Purchaser and the
Noteholders via the Trustee's Internet Website, all statements described herein
and, with the consent or at the direction of the Seller, such other information
regarding the Notes and/or the Receivables as the Trustee may have in its
possession, but only with the use of a password provided by the Trustee. The
Trustee will make no representation or warranties as to the accuracy or
completeness of such documents accurately posted and will assume no
responsibility therefor. The Trustee's Internet Website shall be initially
located at XXX.XXXXXXX.XXX or at such other address as shall be specified by the
Trustee from time to time in writing to the Noteholders and the Note Purchaser.
In connection with providing access to the Trustee's Internet Website, the
Trustee may require registration and the acceptance of a disclaimer. The Trustee
shall not be liable for the dissemination of information in accordance with this
Agreement.
SECTION 5.10. DIVIDEND OF INELIGIBLE RECEIVABLES. The Issuer may on the last day
of the month in which any Receivables are sold into a securitization transaction
distribute any Ineligible Receivables to the Seller as a dividend, free of the
deemed security interest referred to in Section 2.2 hereof; PROVIDED THAT there
is no Borrowing Base Deficiency immediately after such dividend.
ARTICLE VI
----------
[RESERVED]
----------
ARTICLE VII
-----------
THE PURCHASER
-------------
SECTION 7.1. REPRESENTATIONS OF PURCHASER. The Purchaser makes the following
representations on which the Noteholders shall be deemed to have relied in
purchasing the Notes and the Note Purchaser shall have been deemed to have
relied in making each Advance. The representations speak as of the execution and
delivery of this Agreement and as of each Funding Date, and shall survive the
sale of the Receivables to the Purchaser and the pledge thereof to the Trustee
for the benefit of the Note Purchaser and the Noteholders pursuant to the
Indenture.
(a) ORGANIZATION AND GOOD STANDING. The Purchaser has been duly formed
and is validly existing as a limited liability company solely under the laws of
the state of Delaware and is in good standing under the laws of the State of
Delaware, with power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is currently
conducted, and had at all relevant times, and now has, power, authority and
legal right to acquire, own and pledge the Receivables and the Other Conveyed
Property pledged to the Trustee and to enter into and perform its other
obligations under this Agreement and each other Basic Document to which it is a
party.
(b) DUE QUALIFICATION. The Purchaser is duly qualified to do business
as a foreign limited liability company in good standing, and has obtained all
necessary licenses and approvals in all jurisdictions in which the ownership or
lease of property or the conduct of its business (including, without limitation,
the purchase of Receivables from CPS, the pledge of Collateral to the Trustee
for the benefit of the Note Purchaser and the Noteholders pursuant to the
Indenture, and the performance of its other obligations under this Agreement and
each other Basic Document) shall require such qualifications.
27
(c) POWER AND AUTHORITY. The Purchaser has the power (corporate and
other) and authority, and has all material government licenses, authorizations,
consents and approvals necessary to own its assets and carry on its business as
now being conducted, to execute and deliver this Agreement and the other Basic
Documents to which it is a party and to carry out its terms and their terms,
respectively; the Purchaser has full power and authority to pledge the
Collateral to be pledged to the Trustee for the benefit of the Note Purchaser
and the Noteholders by it pursuant to the Indenture and has duly authorized such
pledge to the Trustee by all necessary corporate action; and the execution,
delivery and performance of this Agreement and the Basic Documents to which the
Purchaser is a party have been duly authorized by the Purchaser by all necessary
action.
(d) VALID SALE. BINDING OBLIGATIONS. This Agreement effects a valid
sale of the Receivables and the Other Conveyed Property, enforceable against the
Seller and creditors of and purchasers from the Seller, the Indenture
constitutes a valid pledge of the Collateral which constitutes a first priority
perfected security interest in the Collateral in favor of the Trustee for the
benefit of the Noteholders and the Note Purchaser, enforceable against the
Issuer and creditors of and purchasers from the Issuer, and this Agreement and
the other Basic Documents to which the Purchaser is a party, when duly executed
and delivered, shall constitute legal, valid and binding obligations of the
Purchaser enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
(e) NO VIOLATION. The consummation of the transactions contemplated by
this Agreement and the other Basic Documents and the fulfillment of the terms of
this Agreement and the other Basic Documents shall not conflict with, result in
any breach of any of the terms and provisions of or constitute (with or without
notice, lapse of time or both) a default under the Limited Liability Company
Agreement of the Purchaser, or any indenture, agreement, mortgage, deed of trust
or other instrument to which the Purchaser is a party or by which it is bound,
or result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement, mortgage, deed of trust
or other instrument, other than the Basic Documents, or violate any law, order,
rule, regulation, ordinance or directive of any Governmental Authority
applicable to the Purchaser of any court or of any federal or state regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Purchaser or any of its properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations pending
or, to the Purchaser's knowledge, threatened against the Purchaser, before any
court, regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Purchaser or its properties (A)
asserting the invalidity of this Agreement, the Notes or any of the Basic
Documents, (B) seeking to prevent the issuance of 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 the performance by the Purchaser of its obligations under, or
the validity or enforceability of, this Agreement or any of the Basic Documents
or otherwise have a Material Adverse Effect or result in a Material Adverse
Change in respect of the Purchaser, or (D) relating to the Purchaser or the
Collateral and which might adversely affect the federal or State income, excise,
franchise or similar tax attributes of the Notes.
(g) NO CONSENTS. The Purchaser is not required to obtain the consent of
any other Person and no consent, approval, authorization or order of or
declaration or filing with any governmental authority is required for conduct of
the Purchaser's business, the issuance or sale of the Notes or the consummation
of the other transactions contemplated by this Agreement and the other Basic
Documents, except such as have been duly made or obtained or as may be required
by the Basic Documents.
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(h) TAX RETURNS. The Purchaser has filed all federal and state tax
returns that are required to be filed and paid all taxes, including any
assessments received by it, to the extent that such taxes have become due. Any
taxes, fees and other governmental charges payable by the Purchaser in
connection with consummation of the transactions contemplated by this Agreement
and the other Basic Documents to which the Purchaser is a party and the
fulfillment of the terms of this Agreement and the other Basic Documents to
which the Purchaser is a party have been paid or shall have been paid at or
prior to the Closing Date and as of each Funding Date.
(i) OTHER OBLIGATIONS. The Purchaser is not in default in the
performance, observance or fulfillment of any obligation, covenant or condition
in any of the Basic Documents to which it is a party or in any other agreement
or instrument to which it is a party or by which it is bound the result of which
would have a Material Adverse Effect or result in a Material Adverse Change.
(j) CHIEF EXECUTIVE OFFICE. The chief executive office of the Purchaser
is at 00000 Xxxxxx Xxxxxx Xxxx, Xxxxxx, XX 00000.
(k) CERTIFICATE, STATEMENTS AND REPORTS. The officer's certificates,
statements, reports and other documents prepared by the Purchaser and furnished
by the Purchaser to the Trustee, the Note Purchaser or the Noteholders pursuant
to this Agreement or any other Basic Document to which it is a party, or
otherwise in connection with the transactions contemplated hereby or thereby,
when taken as a whole, do not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements contained herein
or therein not misleading.
(l) LEGAL COUNSEL, ETC. The Purchaser consulted with its own legal
counsel and independent accountants to the extent it deems necessary regarding
the tax, accounting and regulatory consequences of the transactions contemplated
hereby, the Purchaser is not participating in such transactions in reliance on
any representations of any other party, their affiliates, or their counsel with
respect to tax, accounting, regulatory or any other matters.
(m) NO DEFAULT. The Purchaser is not in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in, and is not otherwise in default under (i) any law or statute
applicable to it, including, without limitation, any Consumer Law, (ii) any
judgment, decree, writ, injunction, order, award or other action of any court or
governmental authority or arbitrator or any order, rule or regulation of any
federal, state, county, municipal or other governmental or public authority or
agency having or asserting jurisdiction over it or any of its properties or
(iii) (x) any indebtedness or any instrument or agreement under or pursuant to
which any such indebtedness has been, or could be, issued or incurred or (y) any
other instrument or agreement to which it is a party or by which it is bound or
any of its properties is affected, including, without limitation, the Basic
Documents, that either individually or in the aggregate, (A) would result in a
Material Adverse Change with respect to the Purchaser, or in any impairment of
the right or ability of the Purchaser to carry on its business substantially as
now conducted or (B) would result in a Material Adverse Effect.
(n) ERISA. The Purchaser does not maintain any Plans, and the Purchaser
agrees to notify the Note Purchaser in advance of forming any Plans. Neither the
Issuer nor any Affiliate of the Purchaser (other than MFN under the MFN
Financial Corporation Pension Plan and CPS under its defined contribution
(401(k)) plan) has any obligations or liabilities with respect to any Plans or
Multiemployer Plans, nor have any such Persons had any obligations or
liabilities with respect to any such Plans during the five year period prior to
the date this representation is made or deemed made. The Purchaser will give
notice to the Note Purchaser and the Noteholders if at any time it or any
Affiliate has any obligations or liabilities with respect to any Plan or
Multiemployer Plan. All Plans maintained by the Purchaser or any Affiliate are
in substantial compliance with all applicable laws (including ERISA). The
Purchaser is not an employer under any Multiemployer Plan.
(o) COMPLIANCE WITH LAWS. The Purchaser has complied and will comply in
all material respects with all applicable laws, rules, regulations, judgments,
agreements, decrees and orders with respect to its business and properties.
29
ARTICLE VIII
------------
THE SELLER
----------
SECTION 8.1. REPRESENTATIONS OF SELLER. The Seller makes the following
representations on which the Purchaser shall be deemed to have relied in
acquiring the Receivables, the Noteholders shall be deemed to have relied in
purchasing the Notes and the Note Purchaser shall have been deemed to have
relied in making each Advance. The representations speak as of the execution and
delivery of this Agreement, as of the Closing Date and as of each Funding Date,
and shall survive the sale of the Receivables to the Purchaser and the pledge
thereof by the Purchaser to the Trustee for the benefit of the Noteholders and
the Note Purchaser pursuant to the Indenture.
(a) ORGANIZATION AND GOOD STANDING. The Seller has been duly organized
and is validly existing as a corporation solely under the laws of the State of
California and is in good standing under the laws of the State of California,
with power and authority to own its properties and to conduct its business as
such properties are currently owned and such business is currently conducted,
and had at all relevant times, and now has, power, authority and legal right to
acquire, own and sell the Receivables and the Other Conveyed Property
transferred to the Purchaser and to perform its other obligations under this
Agreement or any other Basic Documents to which it is a party.
(b) DUE QUALIFICATION. The Seller is duly qualified to do business as a
foreign corporation in good standing and has obtained all necessary licenses and
approvals, in all jurisdictions in which the ownership or lease of property or
the conduct of its business (including, without limitation, the origination or
purchase of motor vehicle retail installment sales contracts, the sale of the
Receivables to the Purchaser hereunder, the servicing of the Receivables as
required by this Agreement, and its other obligations hereunder and under the
other Basic Documents) requires or shall require such qualification except where
the failure to so qualify or obtain such licenses or consents would result in a
Material Adverse Effect or a Material Adverse Change.
(c) POWER AND AUTHORITY. The Seller has the power (corporate and other)
and authority, and has all material government licenses, authorizations,
consents and approvals necessary to own its assets and carry on its business as
now being conducted, to execute and deliver this Agreement and the other Basic
Documents to which it is a party and to carry out its terms and their terms,
respectively; the Seller has full power and authority to sell and assign the
Receivables and the Other Conveyed Property to be sold and assigned to and
deposited with the Purchaser by it and has duly authorized such sale and
assignment to the Purchaser by all necessary corporate action; and the
execution, delivery and performance of this Agreement and the Basic Documents to
which the Seller is a party have been duly authorized by the Seller by all
necessary corporate action.
(d) VALID SALE; BINDING OBLIGATIONS. This Agreement effects a valid
sale, transfer and assignment of the Receivables and the Other Conveyed Property
to the Purchaser, enforceable against the Seller and creditors of and purchasers
from the Seller; and this Agreement and the Basic Documents to which the Seller
is a party, when duly executed and delivered, shall constitute legal, valid and
binding obligations of the Seller enforceable in accordance with their
respective terms, except as enforceability may be limited, by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by equitable limitations on the availability of
specific remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(e) NO VIOLATION. The consummation of the transactions contemplated by
this Agreement and the Basic Documents and the fulfillment of the terms of this
Agreement and the Basic Documents does not conflict with, result in any breach
of any of the terms and provisions of or constitute (with or without notice,
lapse of time or both) a default under the certificate of incorporation or
by-laws of the Seller, or any indenture, agreement, mortgage, deed of trust or
other instrument to which the Seller is a party or by which it is bound, or
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement, mortgage, deed of trust
or other instrument, other than the Basic Documents, or violate any law, order,
rule, regulation, ordinance or directive of any Governmental Authority
applicable to the Seller of any court or of any federal or state regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Seller or any of its properties.
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(f) NO PROCEEDINGS. There are no proceedings or investigations pending
or, to the Seller's knowledge, threatened against the Seller, before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Seller or its properties (A)
asserting the invalidity of this Agreement or any of the Basic Documents, (B)
seeking to prevent the issuance of the Notes or the consummation of any of the
transactions contemplated by this Agreement or any of the Basic Documents, or
(C) seeking any determination or ruling that might materially and adversely
affect the performance by the Seller of its obligations under, or the validity
or enforceability of, this Agreement or any of the other Basic Documents or
otherwise have a Material Adverse Effect or result in a Material Adverse Change
in respect of the Seller or (D) relating to the Seller or the Receivables or
Other Conveyed Property and which might adversely affect the federal or State
income, excise, franchise or similar tax attributes of the Notes.
(g) NO CONSENTS. No consent, approval, authorization or order of or
declaration or filing with any governmental authority is required for the
conduct of the Seller's business, the issuance or sale of the Notes or the
consummation of the other transactions contemplated by this Agreement and the
Basic Documents, except such as have been duly made or obtained.
(h) FINANCIAL CONDITION. The Seller has a positive net worth and is
able to and does pay its liabilities as they mature. The Seller is not in
default under any obligation to pay money to any Person except for matters being
disputed in good faith which do not involve an obligation of the Seller on a
promissory note. The Seller will not use the proceeds from the transactions
contemplated by the Basic Documents to give any preference to any creditor or
class of creditors, and such transactions will not leave the Seller with
remaining assets which are unreasonably small compared to its ongoing
operations.
(i) FRAUDULENT CONVEYANCE. The Seller is not selling the Receivables to
the Purchaser with any intent to hinder, delay or defraud any of its creditors;
the Seller will not be rendered insolvent as a result of the sale of the
Receivables to the Purchaser.
(j) TAX RETURNS. The Seller has filed all material federal and state
tax returns that are required to be filed and paid all material taxes, including
any assessments received by it, to the extent that such taxes have become due
(other than taxes, the amount or validity of which are currently being contested
in good faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of the Seller). Any taxes,
fees and other governmental charges payable by the Seller in connection with
consummation of the transactions contemplated by this Agreement and the other
Basic Documents to which the Seller is a party and the fulfillment of the terms
of this Agreement and the other Basic Documents to which the Seller is a party
have been paid or shall have been paid as of each Funding Date.
(k) CHIEF EXECUTIVE OFFICE. The Seller has more than one place of
business, and the chief executive office of the Seller is at 00000 Xxxxxx Xxxxxx
Xxxx, Xxxxxx, XX 00000 and its organizational number is 1682500.
(l) CERTIFICATE, STATEMENTS AND REPORTS. The officer's certificates,
statements, reports and other documents prepared by Seller and furnished by
Seller to the Purchaser, the Trustee, the Note Purchaser or the Noteholders
pursuant to this Agreement or any other Basic Document to which it is a party,
or otherwise in connection with the transactions contemplated hereby or thereby,
when taken as a whole, do not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements contained herein
or therein not misleading.
(m) LEGAL COUNSEL, ETC. Seller consulted with its own legal counsel and
independent accountants to the extent it deems necessary regarding the tax,
accounting and regulatory consequences of the transactions contemplated hereby,
Seller is not participating in such transactions in reliance on any
representations of any other party, their affiliates, or their counsel with
respect to tax, accounting and regulatory matters.
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(n) NO MATERIAL ADVERSE CHANGE AS OF SEPTEMBER 30, 2005. No Material
Adverse Change has occurred with respect to the Seller since the end of the
quarter reported on in the Seller's Form 10-Q filed with the Commission on
November 3, 2005.
(o) NO DEFAULT. The Seller is not in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in, and is not otherwise in default under (i) any law or statute
applicable to it, including, without limitation, any Consumer Law, (ii) any
judgment, decree, writ, injunction, order, award or other action of any court or
governmental authority or arbitrator or any order, rule or regulation of any
federal, state, county, municipal or other governmental or public authority or
agency having or asserting jurisdiction over it or any of its properties or
(iii) (x) any indebtedness or any instrument or agreement under or pursuant to
which any such indebtedness has been, or could be, issued or incurred or (y) any
other instrument or agreement to which it is a party or by which it is bound or
any of its properties is affected, including, without limitation, the Basic
Documents, that either individually or in the aggregate, (A) would result in a
Material Adverse Change with respect to the Seller, or in any impairment of the
right or ability of the Seller to carry on its business substantially as now
conducted or (B) would result in a Material Adverse Effect.
(p) OTHER OBLIGATIONS. The Seller is not in default in the performance,
observance or fulfillment of any obligation, covenant or condition in any of the
Basic Documents to which it is a party or in any agreement or instrument to
which it is a party or by which it is bound the result of which would have a
Material Adverse Effect or result in a Material Adverse Change.
(q) ERISA. The Seller does not maintain any Plans (other than its
defined contribution (401(k)) plan and the MFN Financial Corporation Pension
Plan), and the Seller agrees to notify the Note Purchaser in advance of forming
any Plans. Neither the Seller nor any Affiliate of the Seller (other than MFN
under the MFN Financial Corporation Pension Plan) has any obligations or
liabilities with respect to any Plans or Multiemployer Plans, nor have any such
Persons had any obligations or liabilities with respect to any such Plans during
the five year period prior to the date this representation is made or deemed
made. The Seller will give notice to the Note Purchaser if at any time it or any
Affiliate has any obligations or liabilities with respect to any Plan or
Multiemployer Plan. All Plans maintained by the Seller or any Affiliate are in
substantial compliance with all applicable laws (including ERISA). The Seller is
not an employer under any Multiemployer Plan.
(r) COMPLIANCE WITH LAWS. The Seller has complied and will comply in
all material respects with all applicable laws, rules, regulations, judgments,
agreements, decrees and orders with respect to its business and properties.
SECTION 8.2. ADDITIONAL COVENANTS OF THE SELLER.
(a) SALE. The Seller agrees to treat the conveyances hereunder as
financings for tax and accounting purposes and as sales for all other purposes
(including without limitation legal and bankruptcy purposes) on all relevant
books, records, tax returns, financial statements and other applicable
documents.
(b) NON-PETITION. In the event of any breach of a representation and
warranty made by the Purchaser hereunder, the Seller covenants and agrees that
it will not take any action to pursue any remedy that it may have hereunder, in
law, in equity or otherwise, until a year and a day have passed since the date
on which the Notes issued by the Issuer and all other amounts due and owing to
the Noteholders and the Note Purchaser pursuant to the Basic Documents have been
paid in full. The Purchaser and the Seller agree that damages will not be an
adequate remedy for breach of this covenant and that this covenant may be
specifically enforced by the Purchaser, by the Trustee on behalf of the
Noteholders and the Note Purchaser, by the Note Purchaser or by the Majority
Noteholders.
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(c) CHANGES TO SELLER'S CONTRACT PURCHASE GUIDELINES. The Seller
covenants that it will not make any material credit-related changes to the
Seller's Contract Purchase Guidelines without the prior written consent of the
Note Purchaser (which consent shall not unreasonably be withheld). The Seller
covenants to provide prompt written notice to the Note Purchaser upon any
material change made to the Seller's Contract Purchase Guidelines.
(d) COOPERATION. If an Event of Default shall have occurred and be
continuing, Seller shall cooperate with and provide all information and access
requested by the Trustee, the Note Purchaser and/or the Noteholders in
connection with any actions taken pursuant to SECTION 5.4 of the Indenture.
SECTION 8.3. LIABILITY OF SELLER; INDEMNITIES. The Seller shall indemnify the
Purchaser, the Backup Servicer, the Trustee, the Noteholders, the Note Purchaser
and their respective officers, directors, agents and employees for any liability
as a result of the failure of a Receivable to be originated in compliance with
all requirements of law and for any breach of any of its representations,
warranties, covenants or other agreements contained herein.
(a) The Seller shall defend, indemnify, and hold harmless the
Purchaser, the Backup Servicer, the Trustee, the Noteholders, the Note Purchaser
and their respective officers, directors, agents and employees from and against
any and all costs, expenses, losses, damages, claims, and liabilities, arising
out of or resulting from the use, ownership, or operation by the Seller, any
Affiliate thereof or any of their respective agents or subcontractors, of a
Financed Vehicle.
(b) The Seller shall indemnify, defend and hold harmless the Purchaser,
the Backup Servicer, the Trustee, the Noteholders, the Note Purchaser and their
respective officers, directors, agents and employees from and against any taxes
that may at any time be asserted against any such Person with respect to the
transactions contemplated in this Agreement and any of the Basic Documents
(except any income taxes arising out of fees paid to the Trustee and the Backup
Servicer and except any taxes to which the Trustee may otherwise be subject),
including without limitation any sales, gross receipts, general corporation,
tangible personal property, privilege or license taxes (but, in the case of the
Purchaser, not including any taxes asserted with respect to federal or other
income taxes arising out of distributions on the Notes) and costs and expenses
in defending against the same.
(c) The Seller shall indemnify, defend and hold harmless the Purchaser,
the Backup Servicer, the Trustee, the Noteholders, the Note Purchaser and their
respective officers, directors, agents and employees from and against any loss,
liability or expense incurred by reason of (i) the Seller's willful misfeasance,
bad faith or negligence in the performance of its duties under this Agreement,
or by reason of reckless disregard of its obligations and duties under this
Agreement and/or (ii) the Seller's or the Purchaser's violation of federal or
State securities laws in connection with the offering and sale of the Notes
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(d) The Seller shall indemnify, defend and hold harmless the Trustee
and the Backup Servicer and its officers, directors, employees and agents from
and against any and all costs, expenses, losses, claims, damages and liabilities
arising out of, or incurred in connection with the acceptance or performance of
the trusts and duties set forth herein and in the Basic Documents except to the
extent that such cost, expense, loss, claim, damage or liability shall be due to
the willful misfeasance, bad faith or negligence (except for errors in judgment)
of the Trustee or the Backup Servicer.
(e) The Seller shall indemnify, defend and hold harmless the Purchaser,
the Backup Servicer, the Trustee, the Noteholders, the Note Purchaser and their
respective officers, directors, agents and employees from and against any and
all costs, expenses, losses, claims, damages and liabilities arising out of or
relating to the failure of a Receivable to be originated in compliance with all
requirements of law, including without limitation all Consumer Laws, and for any
breach of any of the Seller's representations and warranties, covenants or other
agreements contained herein (including, without limitation, the representations
contained in SECTION 3.1 hereof) or in any other Basic Document to which the
Seller is a party.
Indemnification under this Section shall survive the resignation or
removal of the Servicer or the Trustee and the termination of this Agreement and
the other Basic Documents and shall include reasonable fees and expenses of
counsel and other expenses of litigation. These indemnity obligations shall be
in addition to any obligation that the Seller may otherwise have under
applicable law, hereunder or under any other Basic Document. If the Seller shall
have made any indemnity payments pursuant to this Section and the Person to or
on behalf of whom such payments are made thereafter shall collect any of such
amounts from others, such Person shall promptly repay such amounts to the
Seller, without interest.
Notwithstanding any provision of this Section 8.3 or any other
provision of this Agreement, nothing herein shall be construed as to require the
Seller to provide any indemnification hereunder or under any other Basic
Document for any costs, expenses, losses, claims, damages or liabilities arising
out of, or incurred in connection with, credit losses with respect to the
Receivables.
SECTION 8.4. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF,
SELLER. Seller shall not merge or consolidate with any other person, convey,
transfer or lease substantially all its assets as an entirety to another Person,
or permit any other Person to become the successor to Seller's business unless,
after the merger, consolidation, conveyance, transfer, lease or succession, the
successor or surviving entity shall be capable of fulfilling the duties of
Seller contained in this Agreement and the other Basic Documents to which it is
a party. Any corporation (i) into which Seller may be merged or consolidated,
(ii) resulting from any merger or consolidation to which Seller shall be a
party, (iii) which acquires by conveyance, transfer, or lease substantially all
of the assets of Seller, or (iv) succeeding to the business of Seller, in any of
the foregoing cases shall execute an agreement of assumption to perform every
obligation of Seller under this Agreement and the other Basic Documents to which
it is a party and, whether or not such assumption agreement is executed, shall
be the successor to Seller under this Agreement and the other Basic Documents to
which it is a party without the execution or filing of any paper or any further
act on the part of any of the parties to this Agreement, anything in this
Agreement to the contrary notwithstanding; PROVIDED, HOWEVER, that nothing
contained herein shall be deemed to release Seller from any obligation. Seller
shall provide notice of any merger, consolidation or succession pursuant to this
Section to the Trustee, the Note Purchaser and the Noteholders. Notwithstanding
the foregoing, Seller shall not merge or consolidate with any other Person or
permit any other Person to become a successor to Seller's business, unless (x)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to SECTION 8.1 shall have been breached (for purposes
hereof, such representations and warranties shall be deemed made as of the date
of the consummation of such transaction) and no event that, after notice or
lapse of time, or both, would become an Event of Default shall have occurred and
be continuing, (y) Seller shall have delivered to the Trustee, the Note
Purchaser and the Noteholders an Officer's Certificate and an Opinion of Counsel
each stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section and that all conditions precedent, if any,
provided for in this Agreement relating to such transaction have been complied
with, and (z) Seller shall have delivered to the Trustee, the Note Purchaser and
the Noteholders an Opinion of Counsel, stating in the opinion of such counsel,
either (A) all financing statements and continuation statements and amendments
thereto have been authorized and filed that are necessary to preserve and
protect the interest of the Purchaser and the Trustee in the Opinion Collateral
and reciting the details of the filings or (B) no such action shall be necessary
to preserve and protect such interest.
SECTION 8.5. [RESERVED].
SECTION 8.6. REPORTING REQUIREMENTS. (a) The Seller shall furnish, or cause to
be furnished to the Noteholders and Note Purchaser:
(i) AUDIT REPORT. As soon as available and in any event within
90 days after the end of each fiscal year of the Seller, a copy of the
consolidated balance sheet of the Seller and its Affiliates as at the
end of such fiscal year, together with the related statements of
earnings, stockholders' equity and cash flows for such fiscal year,
prepared in reasonable detail and in accordance with GAAP certified by
independent certified public accountants of recognized national
standing as shall be selected by the Seller.
(ii) QUARTERLY STATEMENTS. As soon as available, but in any
event within 45 days after the end of each fiscal quarter (except the
fourth fiscal quarter) of the Seller, copies of the unaudited condensed
consolidated balance sheet of the Seller and its Affiliates as at the
end of such fiscal quarter and the related unaudited statements of
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earnings, stockholders' equity and cash flows for the portion of the
fiscal year through such fiscal quarter (and as to the statements of
earnings for such fiscal quarter) in each case setting forth in
comparative form the figures for the corresponding periods of the
previous fiscal year, prepared in reasonable detail and in accordance
with GAAP applied consistently throughout the periods reflected therein
and certified by the chief financial or accounting officer of the
Seller as presenting fairly the financial condition and results of
operations of the Seller and its Affiliates (subject to normal year-end
adjustments).
(b) For so long as Seller is subject to the reporting requirements of
Section 13(a) of the Exchange Act, its filing of the annual and quarterly
reports required under said act, on a timely basis, shall be deemed compliance
with this Section 8.6.
ARTICLE IX
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THE SERVICER
------------
SECTION 9.1. REPRESENTATIONS AND COVENANTS OF SERVICER. The Servicer (and the
Backup Servicer, in the case of clause (j) below) makes the following
representations and covenants on which the Purchaser shall be deemed to have
relied in acquiring the Receivables, on which the Noteholders shall be deemed to
have relied in purchasing the Notes and on which the Note Purchaser shall be
deemed to have relied in making each Advance. The representations speak as of
the execution and delivery of this Agreement and as of the Closing Date, in the
case of Receivables conveyed by the Closing Date, and as of the applicable
Funding Date, in the case of Receivables conveyed by such Funding Date, and the
representations and covenants shall survive the sale of the Receivables to the
Purchaser and the pledge thereof to the Trustee for the benefit of the
Noteholders and the Note Purchaser pursuant to the Indenture.
(a) ORGANIZATION AND GOOD STANDING. The Servicer has been duly
organized and is validly existing as a corporation and in good standing under
the laws of the State of California, with power, authority and legal right to
own its properties and to conduct its business as such properties are currently
owned and such business is presently conducted, and had at all relevant times,
and shall have, power, authority and legal right to acquire, own and service the
Receivables.
(b) DUE QUALIFICATION. The Servicer is duly qualified to do business as
a foreign corporation in good standing and has obtained all necessary licenses
and approvals, in all jurisdictions in which the ownership or lease of property
or the conduct of its business (including the servicing of the Receivables as
required by this Agreement) requires or shall require such qualification except
where the failure to so qualify or obtain such licenses or consents would not
result in a Material Adverse Effect or a Material Adverse Change.
(c) POWER AND AUTHORITY. The Servicer has the power and authority to
execute and deliver this Agreement and the Basic Documents to which it is a
party and to carry out its terms and their terms, respectively, and the
execution, delivery and performance of this Agreement and the Basic Documents to
which it is a party have been duly authorized by the Servicer by all necessary
corporate action.
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(d) BINDING OBLIGATION. This Agreement and the Basic Documents to which
the Servicer is a party shall constitute legal, valid and binding obligations of
the Servicer enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization, or
other similar laws affecting the enforcement of creditors' rights generally and
by equitable limitations on the availability of specific remedies, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
(e) NO VIOLATION. The consummation of the transactions contemplated by
this Agreement and the Basic Documents to which to the Servicer is a party, and
the fulfillment of the terms of this Agreement and the Basic Documents to which
the Servicer is a party, shall not conflict with, result in any breach of any of
the terms and provisions of, or constitute (with or without notice or lapse of
time) a default under, the articles of incorporation or bylaws of the Servicer,
or any indenture, agreement, mortgage, deed of trust or other instrument to
which the Servicer is a party or by which it is bound or any of its properties
are subject, or result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement, mortgage,
deed of trust or other instrument, other than the Basic Documents, or violate
any law, order, rule or regulation applicable to the Servicer of any court or of
any federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Servicer or any of its
properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations pending
or, to the Servicer's knowledge, threatened against the Servicer, before any
court, regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Servicer or its properties (A)
asserting the invalidity of this Agreement or any of the Basic Documents, (B)
seeking to prevent the issuance of the Notes or the consummation of any of the
transactions contemplated by this Agreement or any of the Basic Documents, or
(C) seeking any determination or ruling that might materially and adversely
affect the performance by the Servicer of its obligations under, or the validity
or enforceability of, this Agreement or any of the other Basic Documents or
otherwise have a Material Adverse Effect or result in a Material Adverse Change,
or (D) relating to the Servicer and which might adversely affect the federal or
state income, excise, franchise or similar tax attributes of the Notes.
(g) NO CONSENTS. No consent, approval, authorization or order of or
declaration or filing with any governmental authority is required for the
issuance or sale of the Notes or the consummation of the other transactions
contemplated by this Agreement, except such as have been duly made or obtained.
(h) TAXES. The Servicer has filed all federal and state tax returns
that are required to be filed and paid all taxes, including any assessments
received by it, to the extent that such taxes have become due (other than taxes,
the amount or validity of which are currently being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of the Servicer). Any taxes, fees and other
governmental charges payable by the Servicer in connection with consummation of
the transactions contemplated by this Agreement and the other Basic Documents to
which the Servicer is a party and the fulfillment of the terms of this Agreement
and the other Basic Documents to which the Servicer is a party have been paid or
shall have been paid as of each Funding Date.
(i) CHIEF EXECUTIVE OFFICE. The Servicer hereby represents and warrants
to the Trustee that the Servicer's principal place of business and chief
executive office is 00000 Xxxxxx Xxxxxx Xxxx, Xxxxxx, Xxxxxxxxxx 00000.
(j) DATA MAPPING. Neither the Servicer nor the Backup Servicer is aware
of any fact that would cause such Person reasonably to believe that the
Servicer's servicing data cannot be mapped from the Servicer's system to the
Backup Servicer's system.
(k) CHANGES TO SERVICING GUIDELINES. The Servicer covenants that it
will not make any material changes to the Servicing Guidelines prior to the
Termination Date without the prior written consent of the Note Purchaser (which
consent shall not unreasonably be withheld).
(l) COOPERATION. If an Event of Default shall have occurred and be
continuing, Servicer shall cooperate with and provide all information and access
reasonably requested by the Trustee, the Note Purchaser and the Noteholders in
connection with any actions taken pursuant to SECTION 5.4 of the Indenture.
SECTION 9.2. LIABILITY OF SERVICER; INDEMNITIES.
(a) The Servicer (in its capacity as such) shall be liable hereunder
only to the extent of the obligations in this Agreement specifically undertaken
by the Servicer and the representations made by the Servicer in the Basic
Documents to which it is a party.
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(i) The Servicer shall defend, indemnify and hold harmless the
Purchaser, the Trustee, the Backup Servicer, the Noteholders, the Note
Purchaser and their respective officers, directors, agents and
employees from and against any and all costs, expenses, losses,
damages, claims and liabilities, arising out of or resulting from the
use, ownership, repossession or operation by the Servicer or any
Affiliate or agent or sub-contractor thereof of any Financed Vehicle.
(ii) The Servicer, so long as CPS is the Servicer, shall
indemnify, defend and hold harmless the Purchaser, the Trustee, the
Backup Servicer, the Noteholders, the Note Purchaser and their
respective officers, directors, agents and employees from and against
any taxes that may at any time be asserted against any of such parties
with respect to the transactions contemplated in this Agreement and the
other Basic Documents, including, without limitation, any sales, gross
receipts, general corporation, tangible personal property, privilege or
license taxes (but not including any federal or other income taxes,
including franchise taxes asserted with respect to, and as of the date
of, the sale of the Receivables and the Other Conveyed Property to the
Purchaser, the pledge thereof to the Trustee for the benefit of the
Note Purchaser and the Noteholders or the issuance and original sale of
the Notes) and costs and expenses in defending against the same.
(iii) The Servicer shall indemnify, defend and hold harmless
the Purchaser, the Trustee, the Backup Servicer, the Noteholders, the
Note Purchaser and their respective officers, directors, agents and
employees from and against any and all costs, expenses, losses, claims,
damages, and liabilities to the extent that such cost, expense, loss,
claim, damage, or liability arose out of, or was imposed upon the
Purchaser, the Trustee, the Backup Servicer, the Noteholders or the
Note Purchaser through the negligence, willful misfeasance or bad faith
of the Servicer in the performance of its duties under this Agreement
or by reason of reckless disregard of its obligations and duties under
this Agreement or as a result of a breach of any representation,
warranty, covenant or other agreement made by the Servicer in this
Agreement or in any other Basic Document to which it is a party.
(iv) The Servicer shall indemnify, defend, and hold harmless
the Trustee and the Backup Servicer from and against all costs,
expenses, losses, claims, damages, and liabilities arising out of or
incurred in connection with the acceptance or performance of the trusts
and duties herein contained, except to the extent that such cost,
expense, loss, claim, damage or liability: (A) shall be due to the
willful misfeasance, bad faith, or negligence (except for errors in
judgment) of the Trustee or the Backup Servicer, as applicable or (B)
relates to any tax other than the taxes with respect to which the
Servicer shall be required to indemnify the Trustee or the Backup
Servicer.
(v) The Servicer shall indemnify, defend and hold harmless the
Purchaser, the Backup Servicer, the Trustee, the Noteholders, the Note
Purchaser and their respective officers, directors, agents and
employees from and against any and all costs, expenses, losses, claims,
damages and liabilities arising out of or relating to the failure of a
Receivable to be serviced in compliance with all requirements of law,
including without limitation all Consumer Laws, and for any breach of
any of the Servicer's representations and warranties, covenants or
other agreements contained herein or in any other Basic Document to
which the Servicer is a party.
(b) Notwithstanding the foregoing, the Servicer shall not be obligated
to defend, indemnify, and hold harmless any Noteholder or the Note Purchaser for
any losses, claims, damages or liabilities incurred by such Noteholder or the
Note Purchaser arising out of claims, complaints, actions and allegations
relating to Section 406 of ERISA or Section 4975 of the Code as a result of the
purchase or holding of any Note by such Noteholder or the Note Purchaser with
the assets of a plan subject to such provisions of ERISA or the Code.
(c) For purposes of this SECTION 9.2, in the event of the termination
of the rights and obligations of the Servicer (or any successor thereto pursuant
to SECTION 9.3) as Servicer pursuant to SECTION 10.1, or a resignation by such
Servicer pursuant to this Agreement, such Servicer shall be deemed to be the
Servicer pending appointment of a successor Servicer pursuant to SECTION 10.2.
The provisions of this SECTION 9.2(C) shall in no way affect the survival
pursuant to SECTION 9.2(D) of the indemnification by the Servicer provided by
SECTION 9.2(A).
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(d) Indemnification under this SECTION 9.2 shall survive the
termination of this Agreement and the other Basic Documents and any resignation
or removal of CPS or any successor Servicer as Servicer and shall include
reasonable fees and expenses of counsel and expenses of litigation. These
indemnity obligations shall be in addition to any obligation that the Servicer
may otherwise have under applicable law, hereunder or under any other Basic
Document. If the Servicer shall have made any indemnity payments pursuant to
this Section and the recipient thereafter collects any of such amounts from
others, the recipient shall promptly repay such amounts to the Servicer, without
interest.
SECTION 9.3. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF THE
SERVICER OR BACKUP SERVICER.
(a) The Servicer shall not merge or consolidate with any other Person,
convey, transfer or lease all or substantially all of its assets as an entirety
to another Person, or permit any other Person to become the successor to the
Servicer's business unless, after the merger, consolidation, conveyance,
transfer, lease or succession, the successor or surviving entity shall be
capable of fulfilling the duties of the Servicer contained in this Agreement and
the other Basic Documents to which it is a party. Any corporation (i) into which
the Servicer may be merged or consolidated, (ii) resulting from any merger or
consolidation to which the Servicer shall be a party, (iii) which acquires by
conveyance, transfer, or lease substantially all of the assets of the Servicer,
or (iv) succeeding to the business of the Servicer, in any of the foregoing
cases shall execute an agreement of assumption to perform every obligation of
the Servicer under this Agreement and the other Basic Documents to which it is a
party and, whether or not such assumption agreement is executed, shall be the
successor to the Servicer under this Agreement and the other Basic Documents to
which it is a party without the execution or filing of any paper or any further
act on the part of any of the parties to this Agreement, anything in this
Agreement to the contrary notwithstanding; PROVIDED, HOWEVER, that nothing
contained herein shall be -- - deemed to release the Servicer from any
obligation. The Servicer shall provide notice of any merger, consolidation or
succession pursuant to this Section to the Trustee, the Note Purchaser and the
Noteholders. Notwithstanding the foregoing, the Servicer shall not merge or
consolidate with any other Person or permit any other Person to become a
successor to the Servicer's business, unless (x) immediately after giving effect
to such transaction, no representation or warranty made pursuant to SECTION 9.1
shall have been breached (for purposes hereof, such representations and
warranties shall be -- deemed made as of the date of the consummation of such
transaction) and no event that, after notice or lapse of time, or both, would
become Event of Default shall have occurred and be continuing, (y) the Servicer
shall have delivered to the Trustee, the Note Purchaser and the Noteholders an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply with
this Section and that all conditions precedent, if any, provided for in this
Agreement relating to such transaction have been complied with, and (z) the
Servicer shall have delivered to the Trustee, the Note Purchaser and the
Noteholders an Opinion of Counsel, stating in the opinion of such counsel,
either (A) all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary to preserve and protect
the interest of the Purchaser and the Trustee for the benefit of the Noteholders
and the Note Purchaser in the Opinion Collateral and reciting the details of the
filings or (B) no such action shall be necessary to preserve and protect such
interest.
(b) Any Person (i) into which the Backup Servicer (in its capacity as
Backup Servicer or successor Servicer) may be merged or consolidated, (ii)
resulting from any merger or consolidation to which the Backup Servicer shall be
a party, (iii) which acquires by conveyance, transfer or lease substantially all
of the assets of the Backup Servicer, or (iv) succeeding to the business of the
Backup Servicer, in any of the foregoing cases shall execute an agreement of
assumption to perform every obligation of the Backup Servicer under this
Agreement and, whether or not such assumption agreement is executed, shall be
the successor to the Backup Servicer under this Agreement without the execution
or filing of any paper or any further act on the part of any of the parties to
this Agreement, anything in this Agreement to the contrary notwithstanding;
PROVIDED, HOWEVER, that nothing contained herein shall be deemed to release the
Backup Servicer from any obligation.
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SECTION 9.4. [RESERVED]
SECTION 9.5. DELEGATION OF DUTIES. The Servicer may at any time delegate duties
under this Agreement to sub-contractors who are in the business of servicing
automotive receivables with the prior written consent of the Note Purchaser
(which consent shall not unreasonably be withheld); PROVIDED, HOWEVER, that no
such delegation or subcontracting of duties by the Servicer shall relieve the
Servicer of its responsibility with respect to such duties.
SECTION 9.6. SERVICER AND BACKUP SERVICER NOT TO RESIGN. Subject to the
provisions of SECTION 9.3, neither the Servicer nor the Backup Servicer shall
resign from the obligations and duties imposed on it by this Agreement as
Servicer or Backup Servicer except (i) upon a determination that by reason of a
change in legal requirements the performance of its duties under this Agreement
would cause it to be in violation of such legal requirements in a manner which
would have a material adverse effect on the Servicer or the Backup Servicer, as
the case may be, and the Note Purchaser does not elect to waive the obligations
of the Servicer or the Backup Servicer, as the case may be, to perform the
duties which render it legally unable to act or to delegate those duties to
another Person or, (ii) in the case of the Backup Servicer, upon the prior
written consent of the Note Purchaser. Any such determination permitting the
resignation of the Servicer or Backup Servicer pursuant to clause (i) in the
immediately preceding sentence shall be evidenced by an Opinion of Counsel to
such effect delivered and acceptable to the Trustee and the Note Purchaser. No
resignation of the Servicer shall become effective until the Backup Servicer or
an entity acceptable to the Note Purchaser shall have assumed the
responsibilities and obligations of the Servicer. No resignation of the Backup
Servicer shall become effective until an entity acceptable to the Note Purchaser
shall have assumed the responsibilities and obligations of the Backup Servicer;
provided, however, that in the event a successor Backup Servicer is not
appointed within 60 days after the Backup Servicer has given notice of its
resignation and has provided the Opinion of Counsel required by this SECTION
9.6, the Backup Servicer may petition a court for its removal.
ARTICLE X
---------
DEFAULT
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SECTION 10.1. SERVICER TERMINATION EVENTS. For purposes of this Agreement, each
of the following shall constitute a "SERVICER TERMINATION EVENT":
(a) Any failure by the Servicer to deliver or cause to be delivered any
proceeds or payment required to be so delivered under this Agreement or any
other Basic Document within one (1) Business Day of the date when the same
becomes due;
(b) Failure by the Servicer to deliver, or cause to be delivered, to
the Noteholders, the Note Purchaser, the Trustee and the Backup Servicer, any
Servicer's Certificate by the Determination Date prior to the related Settlement
Date, which failure continues unremedied for a period of two (2) Business Days;
(c) Failure by the Servicer to perform or observe in any material
respect any term, covenant, or agreement under this Agreement or any other Basic
Document (other than any term, covenant or agreement referred to in another
subparagraph of this SECTION 10.1), which failure materially and adversely
affects the rights of the Note Purchaser or the Noteholders and is not cured
within 30 calendar days after written notice is received by the Servicer from
the Trustee, the Note Purchaser or a Noteholder or after discovery of such
failure by a Responsible Officer of the Servicer;
(d) Any representation, warranty or statement of the Servicer made in
this Agreement or any other Basic Document to which it is a party or any
certificate, report or other writing delivered pursuant hereto or thereto shall
prove to be incorrect in any material respect as of the time when the same shall
have been made, and such incorrectness materially and adversely affects the
rights of the Note Purchaser or the Noteholders and is not cured within 30
calendar days after written notice is received by the Servicer from the Trustee,
the Note Purchaser or a Noteholder or after discovery of such failure by a
Responsible Officer of the Servicer;
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(e) An application is made by the Servicer for the appointment of a
receiver, trustee or custodian for the Collateral or any other material assets
of Purchaser or the Servicer; a petition under any section or chapter of the
Bankruptcy Code or federal or State law or regulation shall be filed by the
Servicer, or the Servicer shall make an assignment for the benefit of its
creditors, or any case or proceeding shall be filed by the Servicer for its
dissolution, liquidation, or termination; or the Servicer ceases to conduct its
business;
(f) The Servicer is enjoined, restrained or prevented by court order
from conducting all or any material part of its business affairs, or a petition
under any section or chapter of the Bankruptcy Code or any similar federal or
State law or regulation is filed against the Servicer, or any case or proceeding
is filed against the Servicer, for its dissolution or liquidation, and such
injunction, restraint, petition, case or proceeding is not dismissed within
sixty (60) days after the entry of filing thereof;
(g) An Event of Default shall have occurred (so long as CPS is
Servicer);
(h) The occurrence of any of the following trigger events: (i) the
three-month rolling average Servicer Delinquency Ratio exceeds (A) 6.00% during
the Accrual Periods from April to September or (B) 6.50% during the Accrual
Periods from October to March; or (ii) the Servicer Loss Ratio exceeds (A) 7.50%
during the Accrual Periods from May to October or (B) 8.25% during the Accrual
Periods from November to April;
(i) The Servicer fails to maintain minimum Consolidated Total Adjusted
Equity of $60,000,000 as of the end of any fiscal quarter;
(j) The Servicer exceeds a maximum leverage ratio (total liabilities
less all non-recourse debt/Consolidated Total Adjusted Equity) of six times as
of the end of any fiscal quarter; and
(k) The Servicer fails to maintain cash and cash equivalents of at
least $8.5 million as of the end of any calendar month.
In the event that the Servicer, Purchaser or Trustee gains knowledge of
the occurrence of a Servicer Termination Event, the Servicer, Purchaser or
Trustee, as applicable, shall promptly notify the Note Purchaser and the
Noteholders in writing of such occurrence; PROVIDED, THAT, the Servicer shall be
deemed to satisfy such obligation upon its delivery of an Officer's Certificate
in accordance with SECTION 4.10 hereof.
SECTION 10.2. CONSEQUENCES OF A SERVICER TERMINATION EVENT OR NON-EXTENSION OF
TERM OF SERVICER. If a Servicer Termination Event shall occur and be continuing,
the Majority Noteholders or the Note Purchaser by notice given in writing to the
Backup Servicer and the Servicer may terminate all of the rights and obligations
of the Servicer under this Agreement. The outgoing Servicer shall be entitled to
its pro rata share of the Servicing Fee for the number of days in the Accrual
Period prior to the effective date of its termination. On or after the receipt
by the Servicer of such written notice or upon non-extension of the servicing
term as referred to in SECTION 4.15, all authority, power, obligations and
responsibilities of the Servicer under this Agreement, whether with respect to
the Notes or the Receivables and Other Conveyed Property or otherwise,
automatically shall pass to, be vested in and become obligations and
responsibilities of the Backup Servicer (or such other successor Servicer
appointed by the Majority Noteholders and the Note Purchaser under SECTION
10.3); PROVIDED, HOWEVER, that the successor Servicer shall have no liability
with respect to any obligation which was required to be performed by the
outgoing Servicer prior to the date that the successor Servicer becomes the
Servicer or any claim of a third party based on any alleged action or inaction
of the outgoing Servicer. The successor Servicer is authorized and empowered by
this Agreement to execute and deliver, on behalf of the outgoing Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement of the Receivables and the Other Conveyed Property and related
documents to show the Purchaser as lienholder or secured party on the related
Lien Certificates, or otherwise. The outgoing Servicer agrees to cooperate with
40
the successor Servicer in effecting the termination of the responsibilities and
rights of the outgoing Servicer under this Agreement, including, without
limitation, the transfer to the successor Servicer for administration by it of
all cash amounts that shall at the time be held by the outgoing Servicer for
deposit, or have been deposited by the outgoing Servicer, in the Collection
Account or thereafter received with respect to the Receivables and the delivery
to the successor Servicer of all Receivable Files that shall at the time be held
by the outgoing Servicer and a computer tape in readable form as of the most
recent Business Day containing all information necessary to enable the successor
Servicer to service the Receivables and the Other Conveyed Property. All
reasonable costs and expenses (including reasonable attorneys' fees) incurred in
connection with transferring any Receivable Files to the successor Servicer and
amending this Agreement to reflect such succession as Servicer pursuant to this
SECTION 10.2 shall be paid by the predecessor Servicer upon presentation of
reasonable documentation of such costs and expenses. In addition, any successor
Servicer shall be entitled to payment from the immediate predecessor Servicer
for reasonable transition expenses incurred in connection with acting as
successor Servicer, and to the extent not so paid, such payment shall be made
pursuant to SECTION 5.7 hereof. Upon receipt of notice of the occurrence of a
Servicer Termination Event or the non-extension of the Servicer's term, the
Trustee shall give notice thereof to the Noteholders and the Note Purchaser. If
requested by the Majority Noteholders or the Note Purchaser, the successor
Servicer shall terminate the Lockbox Agreement and direct the Obligors to make
all payments under the Receivables directly to the successor Servicer (in which
event the successor Servicer shall process such payments in accordance with
SECTION 4.2(E)), or to a lockbox established by the successor Servicer at the
direction of the Note Purchaser, at the successor Servicer's expense. The
outgoing Servicer shall grant the Trustee, the successor Servicer, the Note
Purchaser and the Noteholders reasonable access to the outgoing Servicer's
premises at the outgoing Servicer's expense.
SECTION 10.3. APPOINTMENT OF SUCCESSOR.
(a) On and after the time the Servicer receives a notice of termination
pursuant to SECTION 10.2, upon non-extension of the servicing term as referred
to in SECTION 4.15, or upon the resignation of the Servicer pursuant to SECTION
9.6, the outgoing Servicer shall continue to perform its functions as Servicer
under this Agreement, in the case of termination, only until the date specified
in such termination notice or, if no such date is specified in a notice of
termination, until receipt of such notice and, in the case of expiration and
non-renewal of the term of the Servicer upon the expiration of such term, and,
in the case of resignation, until (i) the later of (x) the date 45 days from the
delivery to the Trustee of written notice of such resignation (or written
confirmation of such notice) in accordance with the terms of this Agreement and
(y) the date upon which the predecessor Servicer shall become unable to act as
Servicer, as specified in the notice of resignation and accompanying Opinion of
Counsel or (ii) such time as a successor Servicer shall assume all of the rights
and obligations of the predecessor Servicer hereunder and under any other Basic
Document; PROVIDED, HOWEVER, that the outgoing Servicer shall not be relieved of
its duties, obligations and liabilities as Servicer until a successor Servicer
has assumed such duties, obligations and liabilities. Notwithstanding the
preceding sentence, if the Backup Servicer or any other successor Servicer shall
not have assumed the duties, obligations and liabilities of the Servicer within
45 days of the termination, non-extension or resignation described in this
SECTION 10.3, the outgoing Servicer may petition a court of competent
jurisdiction to appoint any Eligible Servicer as the successor to the outgoing
Servicer. Pending appointment as successor Servicer, the Backup Servicer (or
such other Person as shall have been appointed by the Majority Noteholders or
the Note Purchaser) shall act as successor Servicer unless it is legally unable
to do so, in which event the outgoing Servicer shall continue to act as Servicer
until a successor has been appointed and accepted such appointment. In the event
of termination of the Servicer, Xxxxx Fargo Bank, National Association, as the
Backup Servicer shall assume the obligations of Servicer hereunder on the date
(the "ASSUMPTION DATE") specified in the written notice delivered by the Trustee
to the Backup Servicer and the Servicer pursuant to SECTION 10.2 or, in the
event that the Majority Noteholders or the Note Purchaser shall have determined
that a Person other than the Backup Servicer shall be the successor Servicer in
accordance with SECTION 10.2, on the date of the execution of a written
assumption agreement by such Person to serve as successor Servicer.
Notwithstanding the Backup Servicer's assumption of, and its agreement to
perform and observe, all duties, responsibilities and obligations of the Seller
as Servicer, or any successor Servicer, under this Agreement arising on and
after the Assumption Date, the Backup Servicer shall not be deemed to have
assumed or to become liable for, or otherwise have any liability for any duties,
responsibilities, obligations or liabilities of the Seller or any other Servicer
arising on or before the Assumption Date, whether provided for by the terms of
this Agreement, arising by operation of law or otherwise, including, without
limitation, any liability for any duties, responsibilities, obligations or
liabilities of the Seller or any other Servicer arising on or before the
Assumption Date under SECTION 4.7 or 9.2 of this Agreement, regardless of when
41
the liability, duty, responsibility or obligation of the Seller or any other
Servicer therefor arose, whether provided by the terms of this Agreement,
arising by operation of law or otherwise. Notwithstanding the above, if the
Backup Servicer shall be legally unable or unwilling to act as Servicer, the
Backup Servicer, the Trustee, the Majority Noteholders or the Note Purchaser may
petition a court of competent jurisdiction to appoint any Eligible Servicer as
the successor to the outgoing Servicer. Pending appointment pursuant to the
preceding sentence, the Backup Servicer shall act as successor Servicer unless
it is legally unable to do so, in which event the outgoing Servicer shall
continue to act as Servicer until a successor has been appointed and accepted
such appointment. Subject to SECTION 9.6, no provision of this Agreement shall
be construed as relieving the Backup Servicer of its obligation to succeed as
successor Servicer upon the termination of the Servicer pursuant to SECTION
10.2, the non-extension of the Servicer's term pursuant to SECTION 4.15 or the
resignation of the Servicer pursuant to SECTION 9.6. If upon the termination of
the Servicer pursuant to SECTION 10.2, the non-extension of the Servicer's term
pursuant to SECTION 4.15 or the resignation of the Servicer pursuant to SECTION
9.6, the Majority Noteholders and the Note Purchaser appoint a successor
Servicer other than the Backup Servicer, the Backup Servicer shall not be
relieved of its duties as Backup Servicer hereunder.
(b) Any successor Servicer shall be entitled to such compensation
(whether payable out of the Collection Account or otherwise) as the outgoing
Servicer would have been entitled to under this Agreement if the outgoing
Servicer had not resigned or been terminated hereunder or had been renewed for
an additional servicing term hereunder.
SECTION 10.4. NOTIFICATION TO THE NOTEHOLDERS AND NOTE PURCHASERS. Upon any
termination of, or appointment of a successor to, the Servicer, the Trustee
shall give prompt written notice thereof to the Noteholders and the Note
Purchaser.
SECTION 10.5. WAIVER OF PAST DEFAUlTS. The Note Purchaser and the Majority
Noteholders may waive in writing any default by the Servicer in the performance
of its obligations under this Agreement and the consequences thereof. Upon any
such waiver of a past default, such default shall cease to exist, and any
Servicer Termination Event arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereto.
SECTION 10.6. ACTION UPON CERTAIN FAILURES OF THE SERVICER. In the event that
the Trustee shall have knowledge of any failure of the Servicer specified in
SECTION 10.1 that would give rise to a right of termination under such Section
upon the Servicer's failure to remedy the same after notice, the Trustee shall
give notice thereof to the Servicer, the Note Purchaser and the Noteholders. For
all purposes of this Agreement (including, without limitation, this SECTION
10.6), the Trustee shall not be deemed to have knowledge of any failure of the
Servicer as specified in SECTIONS 10.1(C) through (H) unless notified thereof in
writing by the Servicer, the Note Purchaser or a Noteholder. The Trustee shall
be under no duty or obligation to investigate or inquire as to any potential
failure of the Servicer specified in SECTION 10.1.
SECTION 10.7. CONTINUED ERRORS. Notwithstanding anything contained herein to the
contrary, if the Backup Servicer becomes successor Servicer it is authorized to
accept and rely on all of the accounting, records (including computer records)
and work of the prior Servicer relating to the Receivables (collectively, the
"PREDECESSOR SERVICER WORK PRODUCT") without any audit or other examination
thereof, and the Backup Servicer as successor Servicer shall have no duty,
responsibility, obligation or liability for the acts and omissions of the prior
Servicer. If any error, inaccuracy, omission or incorrect or non-standard
practice or procedure (collectively, "ERRORS") exist in any Predecessor Servicer
Work Product and such Errors make it materially more difficult to service or
should cause or materially contribute to the Backup Servicer as successor
Servicer making or continuing any Errors (collectively, "CONTINUED ERRORS"), the
Backup Servicer as successor Servicer shall have no duty or responsibility for
such Continued Errors; PROVIDED, HOWEVER, that the Backup Servicer as successor
Servicer agrees to use its best efforts to prevent further Continued Errors. In
the event that the Backup Servicer as successor Servicer becomes aware of Errors
or Continued Errors, the Backup Servicer as successor Servicer shall, with the
prior consent of the Note Purchaser use its best efforts to reconstruct and
reconcile such data as is commercially reasonable to correct such Errors and
Continued Errors and to prevent future Continued Errors. The Backup Servicer as
successor Servicer shall be entitled to recover its costs thereby expended in
accordance with SECTIONS 5.7(A)(I) and 5.7(A)(VI) hereof.
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ARTICLE XI
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MISCELLANEOUS PROVISIONS
------------------------
SECTION 11.1. AMENDMENT.
(a) This Agreement may not be waived, amended or otherwise modified
except in a writing signed by the parties hereto, the Note Purchaser and the
Majority Noteholders; PROVIDED, HOWEVER, that, no such amendment shall, without
the prior written consent of the Note Purchaser and all of the Noteholders, (i)
modify or have the effect of modifying Sections 5.7 or 5.8 or this SECTION 11.1
or (ii) eliminate or materially alter any party's delivery or notice obligations
to the Noteholders; PROVIDED, FURTHER, that no increase in the Minimum Placement
Fee in accordance with the definition thereof shall constitute a modification of
SECTION 5.8.
(b) Prior to the execution of any amendment, waiver or consent to this
Agreement the Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment, waiver or consent is
authorized or permitted by this Agreement and the Opinion of Counsel referred to
in SECTION 11.2(I)(I).
(c) The Trustee may, but shall not be obligated to, enter into any such
amendment, waiver or consent which affects the Trustee's own rights, duties or
immunities under this Agreement or otherwise.
(d) Upon the termination of CPS as Servicer and the appointment of the
Backup Servicer as Servicer hereunder, all amendments to the terms of this
Agreement specified in the Servicing Assumption Agreement shall become a part of
this Agreement, as if this Agreement was amended to reflect such changes in
accordance with this SECTION 11.1.
SECTION 11.2. PROTECTION OF TITLE TO PROPERTY.
(a) The Seller, the Purchaser or the Servicer or each of them shall
authorize, execute (if necessary) and file such financing statements and cause
to be authorized, executed (if necessary) and filed such continuation
statements, all in such manner and in such places and take such other action as
may be required by law fully to preserve, maintain and protect the interest of
the Purchaser and the interests of the Trustee for the benefit of the
Noteholders and the Note Purchaser in the Collateral and in the proceeds
thereof. The Seller shall deliver (or cause to be delivered) to the Noteholders,
the Note Purchaser and the Trustee file-stamped copies of, or filing receipts
for, any document filed as provided above, as soon as available following such
filing.
(b) None of the Seller, the Purchaser or the Servicer shall change its
name, identity, jurisdiction of organization, form of organization or corporate
structure in any manner that would, could or might make any financing statement
or continuation statement filed in accordance with PARAGRAPH (A) above -
seriously misleading within the meaning of Section 9-506(a) of the UCC, unless
it shall have given the Noteholders, the Note Purchaser and the Trustee at least
thirty (30) days' prior written notice thereof and shall have promptly filed
appropriate amendments to all previously filed financing statements or
continuation statements. Promptly upon such filing, the Purchaser, the Seller or
the Servicer, as the case may be, shall deliver an Opinion of Counsel to the
Trustee, the Note Purchaser and the Noteholders, in a form and substance
reasonably satisfactory to the Note Purchaser, stating either (A) all financing
statements and continuation statements have been authorized, executed and filed
that are necessary fully to preserve and protect the interest of the Purchaser
and the Trustee for the benefit of the Noteholders and the Note Purchaser in the
Collateral, and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (B) no such action shall
be necessary to preserve and protect such interest.
43
(c) Each of the Seller, the Purchaser and the Servicer shall have an
obligation to give the Noteholders, the Note Purchaser and the Trustee at least
60 days' prior written notice of any relocation of its chief executive office or
a change in its corporate structure, jurisdiction of organization or name and
shall file amendments, continuation statements and new financing statements if,
as a result of such relocation or change, the applicable provisions of the UCC
would require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement to fully preserve and
protect the interest of the Purchaser and the Trustee on behalf of the
Noteholders and the Note Purchaser in the Collateral. The Servicer shall at all
times be organized under the laws of the United States (or any State thereof)
and maintain its chief executive office and jurisdiction of organization, within
the United States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection Account
in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables and the Other
Conveyed Property to the Purchaser, the Servicer's master computer records
(including any backup archives) that refer to a Receivable shall indicate
clearly the interest of the Purchaser in such Receivable and that such
Receivable is owned by the Purchaser and pledged to the Trustee. Indication of
the Purchaser's and the Trustee's interest in a Receivable shall be deleted from
or modified on the Servicer's computer systems when, and only when, the related
Receivable shall have been paid in full or repurchased.
(f) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender or other transferee, the
Servicer shall give to such prospective purchaser, lender or other transferee
computer tapes, records or printouts (including any restored from backup
archives) that, if they shall refer in any manner whatsoever to any Receivable,
shall indicate clearly that such Receivable has been sold and is owned by the
Purchaser and pledged to the Trustee for the benefit of the Noteholders and the
Note Purchaser.
(g) The Servicer shall permit the Trustee, the Backup Servicer, the
Note Purchaser and the Noteholders and their respective agents upon reasonable
notice and at any time during normal business hours to inspect, audit, and make
copies of and abstracts from the Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to any Noteholder, the
Note Purchaser or to the Trustee, within five Business Days, a list of all
Receivables (by contract number and name of Obligor) then pledged to the
Trustee, together with a reconciliation of such list to the Schedule of
Receivables and to each of the Servicer's Certificates furnished before such
request indicating removal of Receivables from the lien of the Indenture.
(i) The Servicer shall deliver to the Note Purchaser, the Noteholders
and the Trustee:
(i) promptly after the execution and delivery of this
Agreement and, if required pursuant to SECTION 11.1, of each amendment,
waiver, or consent, an Opinion of Counsel, in form and substance
satisfactory to the Note Purchaser and the Majority Noteholders,
stating that in the opinion of such counsel, either (A) all financing
statements and continuation statements have been authorized, executed
and filed that are necessary fully to preserve and protect the interest
of the Purchaser and the Trustee for the benefit of the Noteholders and
the Note Purchaser in the Receivables and the Opinion Collateral, and
reciting the details of such filings or referring to a prior Opinion of
Counsel in which such details are given, or (B) no such action shall be
necessary to preserve and protect such interest; and
(ii) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Closing Date, an Opinion of Counsel, dated as of a date
during such 90-day period, stating that, the opinion of such counsel,
44
either (a) all financing statements and continuation statement have
been authorized, executed and filed that are necessary fully to
preserve and protect the interest of the Purchaser and the Trustee for
the benefit of the Noteholders and the Note Purchaser in the
Receivables and the Opinion Collateral, and reciting the details of
such filings or referring to prior Opinions of Counsel in which such
details are given, or (b) no such action shall be necessary to preserve
and protect such interest.
Each Opinion of Counsel referred to in clause (i) or (ii) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
Subject to SECTION 4.5, the Seller hereby authorizes the Note
Purchaser, the Trustee and their respective agents to file such financing
statements and continuation statements and take such other actions as the Note
Purchaser or the Trustee may deem advisable in connection with the security
interest granted by the Seller pursuant to SECTION 2.2 to the extent permitted
by applicable law. Any such financing statements and continuation statements
shall be prepared by the Issuer or the Note Purchaser.
SECTION 11.3. NOTICES. All demands, notices and communications upon or to the
Seller, the Backup Servicer, the Servicer, the Purchaser, the Trustee, the
Backup Servicer, the Note Purchaser or the Noteholders under this Agreement
shall be in writing, via facsimile, personally delivered, or mailed by certified
mail, return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Seller, to Consumer Portfolio Services, Inc.,
00000 Xxxxxx Xxxxxx Xxxx, Xxxxxx, XX 00000, Attention: Chief Financial Officer,
Telecopy: (000) 000-0000; (b) in the case of the Servicer, to Consumer Portfolio
Services, Inc., 00000 Xxxxxx Xxxxxx Xxxx, Xxxxxx, XX 00000, Attention: Chief
Financial Officer, Telecopy: (000) 000-0000; (c) in the case of the Purchaser,
to Page Three Funding LLC, 00000 Xxxxxx Xxxxxx Xxxx, Xxxxxx, XX 00000,
Attention: Chief Financial Officer, Telecopy: (000) 000-0000; (d) in the case of
the Trustee or the Backup Servicer at the Corporate Trust Office; and (e) in the
case of the initial Noteholder and the Note Purchaser, to Bear, Xxxxxxx & Co.
Inc., as agent for Bear, Xxxxxxx International Limited, 000 Xxxxxxx Xxx., 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000; Attn: Xxxxx XxxXxxxxx; Telephone:
000-000-0000, Telecopy: 000-000-0000; with a copy to Bear, Xxxxxxx & Co. Inc.,
as agent for Bear, Xxxxxxx International Limited, 000 Xxxxxxx Xxx., 00xx Xxxxx,
Xxx Xxxx, Xxx Xxxx, 00000; Attn: Xxxxxxx Xxxxxxxx; Telephone: 000-000-0000,
Telecopy: 000-000-0000; and (e) in the case of any subsequent Noteholders, at
the address reflected on the Note Register. The Note Purchaser may deliver to
the Noteholders any notices, reports, Servicer's Certificates or any other
documentation delivered to the Note Purchaser hereunder or under any other Basic
Document, but is under no obligation to so deliver such documentation and shall
not be liable for the content thereof. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Noteholders or Note Purchaser shall receive such
notice.
SECTION 11.4. ASSIGNMENT. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns. Notwithstanding anything to the contrary contained herein, except as
provided in SECTIONS 8.4, 9.3 and this SECTION 11.4 and as provided in the
provisions of this Agreement concerning the resignation of the Servicer, this
Agreement may not be assigned by the Purchaser, the Seller or the Servicer
without the prior written consent of the Trustee, the Backup Servicer, the Note
Purchaser and the Majority Noteholders; PROVIDED THAT the Purchaser will grant
all of its right, title and interest herein to the Trustee for the benefit of
the Noteholders and the Note Purchaser.
SECTION 11.5. LIMITATIONS ON RIGHTS OF OTHERS. The provisions of this Agreement
are solely for the benefit of the parties hereto and for the benefit of the Note
Purchaser, as a third-party beneficiary. 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 Collateral or under or in respect of
this Agreement or any covenants, conditions or provisions contained herein.
SECTION 11.6. SEVERABILITY. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
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SECTION 11.7. SEPARATE COUNTERPARTS. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument. Any signature page to this Agreement
containing a manual signature may be delivered by facsimile transmission or
other electronic communication device capable of transmitting or creating a
printable written record, and when so delivered shall have the effect of
delivery of an original manually signed signature page.
SECTION 11.8. HEADINGS. The headings of the various Articles and Sections herein
are for convenience of reference only and shall not define or limit any of the
terms or provisions hereof.
SECTION 11.9. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW), AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
SECTION 11.10. ASSIGNMENT TO TRUSTEE. The Seller hereby acknowledges and
consents to any mortgage, pledge, assignment and grant of a security interest by
the Purchaser to the Trustee pursuant to the Indenture for the benefit of the
Noteholders and the Note Purchaser of all right, title and interest of the
Purchaser in, to and under the Receivables and Other Conveyed Property and/or
the assignment of any or all of the Purchaser's rights and obligations hereunder
to the Trustee for the benefit of the Noteholders and the Note Purchaser.
SECTION 11.11. NONPETITION COVENANTS. Notwithstanding any prior termination of
this Agreement, the Servicer and the Seller shall not, prior to the date which
is one year and one day after the day upon which the outstanding principal
amount of the Notes has been reduced to zero and all Secured Obligations have
been paid in full, acquiesce, petition or otherwise invoke or cause the
Purchaser to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Purchaser under any
federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Purchaser or any substantial part of its property, or ordering the
winding up or liquidation of the affairs of the Purchaser.
SECTION 11.12. LIMITATION OF LIABILITY OF TRUSTEE. Notwithstanding anything
contained herein to the contrary, this Agreement has been executed and delivered
by Xxxxx Fargo Bank, National Association, not in its individual capacity but
solely as Trustee and Backup Servicer and in no event shall Xxxxx Fargo Bank,
National Association, have any liability for the representations, warranties,
covenants, agreements or other obligations of the Purchaser hereunder or in any
of the certificates, notices or agreements delivered pursuant hereto, as to all
of which recourse shall be had solely to the assets of the Purchaser.
SECTION 11.13. INDEPENDENCE OF THE SERVICER. For all purposes of this Agreement,
the Servicer shall be an independent contractor and shall not be subject to the
supervision of the Purchaser, the Trustee and Backup Servicer with respect to
the manner in which it accomplishes the performance of its obligations
hereunder. Unless expressly authorized by this Agreement, the Servicer shall
have no authority to act for or represent the Purchaser in any way and shall not
otherwise be deemed an agent of the Purchaser.
SECTION 11.14. NO JOINT VENTURE. Nothing contained in this Agreement (i) shall
constitute the Servicer and the Purchaser as members of any partnership, joint
venture, association, syndicate, unincorporated business or other separate
entity, (ii) shall be construed to impose any liability as such on any of them
or (iii) shall be deemed to confer on any of them any express, implied or
apparent authority to incur any obligation or liability on behalf of the others.
SECTION 11.15. SPECIAL SUPPLEMENTAL AGREEMENT. If any party to this Agreement is
unable to sign any amendment or supplement due to its dissolution, winding up or
comparable circumstances, then the consent of the Majority Noteholders and the
Note Purchaser shall be sufficient to amend this Agreement without such party's
signature.
46
SECTION 11.16. FULL RECOURSE TO THE ISSUER AND THE PURCHASER. The obligations of
the Issuer and the Purchaser under this Agreement and the other Basic Documents
to which it is a party shall be full recourse obligations of the Issuer and the
Purchaser. Notwithstanding the foregoing, no recourse shall be had for the
payment of any amount owing hereunder or for the payment of any fee hereunder or
any other obligation of, or claim against, the Issuer or the Purchaser arising
out of or based upon any provision herein or under any other Basic Document,
against any member, employee, officer, agent, director or authorized person of
the Issuer or the Purchaser or any Affiliate thereof except as the Issuer or the
Purchaser may have expressly agreed and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity; PROVIDED, HOWEVER, that the
foregoing shall not relieve any such person or entity of any liability they
might otherwise have as a result of fraudulent actions or omissions taken by
them. Nothing contained in this Section shall limit or be deemed to limit any
obligations of the Issuer, the Purchaser, the Seller or the Servicer hereunder
or under any other Basic Document, which obligations are full recourse
obligations of the Issuer, the Purchaser, the Seller and the Servicer,
respectively.
SECTION 11.17. ACKNOWLEDGEMENT OF ROLES. The parties expressly acknowledge and
consent to Xxxxx Fargo Bank, National Association acting in the multiple
capacities of Backup Servicer and Trustee. The parties agree that Xxxxx Fargo
Bank, National Association in such multiple capacities shall not be subject to
any claim, defense or liability arising from its performance in any such
capacity based on conflict of interest principles, duty of loyalty principles or
other breach of fiduciary duties to the extent that any such conflict or breach
arises from the performance by Xxxxx Fargo Bank, National Association of any
other such capacity or capacities in accordance with this Agreement or any other
Basic Documents to which it is a party.
SECTION 11.18. TERMINATION. Except as otherwise provided herein, the respective
obligations and responsibilities of the Seller, the Purchaser, the Servicer, the
Backup Servicer and the Trustee created hereby shall terminate on the
Termination Date; PROVIDED, HOWEVER, in any case there shall be delivered to the
Trustee, the Note Purchaser and the Noteholders an Opinion of Counsel that all
applicable preference periods under federal, State and local bankruptcy,
insolvency and similar laws have expired with respect to the payments pursuant
to this SECTION 11.18. The Servicer shall promptly notify the Trustee, the
Seller, the Issuer, the Note Purchaser and the Noteholders of any prospective
termination pursuant to this SECTION 11.18.
SECTION 11.19. SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THOSE COURTS.
EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, OR ANY LEGAL PROCESS WITH RESPECT TO ITSELF OR ANY OF ITS PROPERTY,
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING
IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED
HERETO. EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
NEW YORK LAW.
SECTION 11.20. WAIVER OF TRIAL BY JURY. THE PARTIES HERETO EACH WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY
PARTY AGAINST THE OTHER PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS OR OTHERWISE. THE PARTIES HERETO EACH AGREE THAT ANY SUCH CLAIM OR CAUSE
OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY
JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR
OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT.
47
SECTION 11.21. PROCESS AGENT. Each of the Purchaser, Seller, Servicer and
Trustee agrees that the process by which any proceedings in the State of New
York are begun may be served on it by being delivered by certified mail at the
chief executive office or corporate trust office, as applicable, or at its
registered office for the time being. If such person is not or ceases to be
effectively appointed to accept service of process on the Purchaser's, Seller's,
Servicer's or Trustee's behalf, the Purchaser, Seller, Servicer or Trustee, as
applicable, shall, on the written demand of the process agent, appoint a further
person in the State of New York to accept service of process on its behalf and,
failing such appointment within 15 days, the process agent shall be entitled to
appoint such a person by written notice to the Purchaser, Seller, Servicer or
Trustee, as applicable. Nothing in this sub-clause shall affect the right of the
process agent to serve process in any other manner permitted by law.
SECTION 11.22. SET-OFF(a) Each of the Seller, the Purchaser, the Issuer and the
Servicer agrees that it shall have no right of set-off or banker's lien against,
and no right to otherwise deduct from, any funds held in any account described
herein or in the Basic Documents for any amount owed to it by the Note Purchaser
or any Noteholder.
(b) In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of such rights, during the continuance of any
Event of Default hereunder:
(i) the Note Purchaser is hereby authorized at any time and
from time to time, without notice to the Purchaser or the Issuer, such
notice being hereby expressly waived, to set-off any obligation owing
by the Note Purchaser or any of its Affiliates to the Purchaser or the
Issuer, or against any funds or other property of the Purchaser or the
Issuer, held by or otherwise in the possession of the Note Purchaser or
any of its Affiliates, the respective obligations of the Purchaser or
the Issuer to the Note Purchaser under this Agreement and the other
Basic Documents and irrespective of whether or not the Note Purchaser
shall have made any demand hereunder or thereunder; and
(ii) the Note Purchaser is hereby authorized at any time and
from time to time, without notice to the Seller or the Servicer, such
notice being hereby expressly waived, to set-off any obligation owing
by the Note Purchaser or any of its Affiliates to the Seller or the
Servicer, or against any funds or other property of the Seller or the
Servicer held by or otherwise in the possession of the Note Purchaser
or any of its Affiliates, the respective obligations of the Seller or
the Servicer to the Note Purchaser under this Agreement and the other
Basic Documents and irrespective of whether or not the Note Purchaser
shall have made any demand hereunder or thereunder.
SECTION 11.23. NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising any right, remedy, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise hereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exhaustive of any rights, remedies, powers and privileges provided by law.
SECTION 11.24. MERGER AND INTEGRATION. Except as specifically stated otherwise
herein, this Agreement and the other Basic Documents sets forth the entire
understanding of the parties relating to the subject matter hereof, and all
prior understandings, written or oral, are superseded by this Agreement and the
other Basic Documents. This Agreement may not be modified, amended, waived or
supplemented except as provided herein.
48
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective duly authorized officers as of
the day and the year first above written.
PAGE THREE FUNDING LLC, as Purchaser and Issuer
By:
-------------------------------------------------
Name:
Title:
CONSUMER PORTFOLIO SERVICES, INC., as
Seller and Servicer
By:
-------------------------------------------------
Name:
Title:
XXXXX FARGO BANK, NATIONAL ASSOCIATION, not in its
individual capacity, but solely as Backup Servicer and
Trustee
By:
-------------------------------------------------
Name:
Title:
49
ANNEX ADEFINED TERMS
"ACCOUNT CONTROL AGREEMENT" means that Deposit Account Control
Agreement dated as of November 15, 2005, by and among CPS, the Note Purchaser
and Xxxxx Fargo Bank, National Association, as such agreement may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.
"ACCOUNTING DATE" means, with respect to any Determination
Date, the close of business on the day immediately preceding such Determination
Date.
"ACCOUNTANTS' REPORT" means the report of a firm of nationally
recognized independent accountants described in SECTION 4.11 of the Sale and
Servicing Agreement.
"ACCRUAL PERIOD" means a calendar month; provided that the
initial Accrual Period shall be the period from and including the day after the
initial Cutoff Date to and including December 14, 2005.
"ACT" has the meaning specified in SECTION 11.3 of the
Indenture.
"ADDITION NOTICE" means, with respect to any transfer of
Receivables to the Purchaser pursuant to SECTION 2.1 of the Sale and Servicing
Agreement, notice of the Seller's election to transfer Receivables to the
Purchaser, such notice to designate the related Funding Date and the aggregate
principal amount of Receivables to be transferred on such Funding Date,
substantially in the form of EXHIBIT G to the Sale and Servicing Agreement.
"ADVANCE" has the meaning set forth in paragraph 4 of the
recitals to the Note Purchase Agreement.
"ADVANCE AMOUNT" means an amount not less than $2,000,000 and
not more than the lesser of (i) the excess of the Maximum Invested Amount over
the Invested Amount as of such Funding Date and (ii) the excess of the Borrowing
Base over the Invested Amount as of such Funding Date.
"ADVANCE REQUEST" has the meaning set forth in Section 2.03(a)
of the Note Purchase Agreement.
"AFFILIATE" of any Person means any Person who directly or
indirectly controls, is controlled by, or is under direct or indirect common
control with such Person. For purposes of this definition, the term "CONTROL"
when used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling", "CONTROLLED BY" and "UNDER COMMON CONTROL WITH" have meanings
correlative to the foregoing.
"AMOUNT FINANCED" means, with respect to a Receivable, the
aggregate amount advanced under such Receivable toward the purchase price of the
Financed Vehicle and any related costs, including amounts advanced in respect of
accessories, insurance premiums, service and warranty contracts, other items
customarily financed as part of retail automobile installment sale contracts or
promissory notes, and related costs.
"ANNUAL PERCENTAGE RATE" or "APR" of a Receivable means the
annual percentage rate of finance charges or service charges, as stated in the
related Contract.
"APPLICABLE MARGIN" means 2.00%; provided that on any day on
which an Event of Default shall exist, the Applicable Margin shall be the
Default Applicable Margin.
"ASSIGNMENT" means an assignment from the Seller to the
Purchaser with respect to the Receivables and Other Conveyed Property to be
conveyed by the Seller to the Purchaser on any Funding Date, in substantially
the form of EXHIBIT F to the Sale and Servicing Agreement.
50
"ASSUMPTION DATE" has the meaning set forth in SECTION 10.3(A)
of the Sale and Servicing Agreement.
"AUTHORIZED OFFICER" means, with respect to the Servicer or
the Issuer, any officer or agent acting pursuant to a power of attorney of the
Servicer or the Issuer, as the case may be, who is authorized to act therefor
and who is identified on the list of Authorized Officers delivered by such
Person to the Trustee and the Note Purchaser on the Closing Date (as such list
may be modified or supplemented from time to time thereafter).
"AVAILABLE FUNDS" means, for each Settlement Date, the sum of
the following amounts with respect to the preceding Accrual Period, without
duplication: (i) all collections on the Receivables; (ii) all Net Liquidation
Proceeds received during the Accrual Period with respect to Liquidated
Receivables; (iii) the Purchase Amount of each Receivable repurchased by the
Seller or the Purchaser during such Accrual Period; (iv) Investment Earnings for
the related Settlement Date; (v) all amounts received pursuant to Receivable
Insurance Policies with respect to any Financed Vehicles; and (vi) cash received
from a Margin Call.
"BACKUP SERVICER" means Xxxxx Fargo Bank, National
Association in its capacity as Backup Servicer pursuant to the terms of the
Servicing Assumption Agreement or such Person as shall have been appointed
Backup Servicer pursuant to Section 9.3(b) or 9.6 of the Sale and Servicing
Agreement.
"BACKUP SERVICING FEE" means (A) the fee payable to the Backup
Servicer so long as the Seller or any successor Servicer (other than the Backup
Servicer) is the Servicer, on each Settlement Date in the amount equal to $1,800
per monthly data transmission received by the Backup Servicer pursuant to
Section 4.14 of the Sale and Servicing Agreement and (B) any other amounts
payable to the Backup Servicer pursuant to the Fee Schedule.
"BANKRUPTCY CODE" means the Bankruptcy Reform Act of 1978, as
amended from time to time, and as codified as 11 U.S.C. Section 101 ET SEQ.
"BASIC DOCUMENTS" means the Notes, the Indenture, the Sale and
Servicing Agreement, the Lockbox Agreement, the Note Purchase Agreement, the LLC
Agreement, each Assignment, the Pledge Agreement, the Servicing Assumption
Agreement, the Consent and Agreement, the Servicer Termination Side Letter, the
Account Control Agreement and other documents and certificates delivered in
connection therewith.
"BORROWING BASE" means, on any date of determination, the
lesser of (a) an amount equal to the product of (i) the aggregate Principal
Balance (as of such date of determination) of all Eligible Receivables less the
Excess Concentration Amount and (ii) 80.0%, and (b) an amount equal to the
product of (A) 85.0% and (B) the Market Value.
"BORROWING BASE CERTIFICATE" means, with respect to any
transfer of Receivables, the certificate of the Servicer setting forth the
calculation of the Borrowing Base, substantially in the form of EXHIBIT A to the
Note Purchase Agreement.
"BORROWING BASE DEFICIENCY" means, as of any date of
determination, the positive excess, if any, of the Invested Amount over the
Borrowing Base, after application of funds, if any, by the Trustee in reduction
of the Invested Amount as contemplated by Section 3.05 of the Note Purchase
Agreement.
"BUSINESS DAY" means any (i) day other than a Saturday, a
Sunday or other day on which commercial banks located in the states of
Minnesota, California or New York are authorized or obligated to be closed and
(ii) if the applicable Business Day relates to the determination of LIBOR, a day
which is a day for trading by and between banks in the London interbank
eurodollar market.
"CASUALTY" means, with respect to a Financed Vehicle, the
total loss or destruction of such Financed Vehicle.
"CHANGE OF CONTROL" means a change resulting when (i) the
Seller no longer owns 100% of the membership interests in the Purchaser, (ii)
the Seller or the Purchaser merges or consolidates with, or sells all or
substantially all of its assets to any other Person, or (iii) any Unrelated
Person or any Unrelated Persons, acting together, that would constitute a Group
51
together with any Affiliates or Related Persons thereof (in each case also
constituting Unrelated Persons) shall at any time Beneficially Own more than 50%
of the aggregate voting power of all classes of Voting Stock of the Seller. As
used herein, (a) "Beneficially Own" shall mean "beneficially own" as defined in
Rule 13d-3 of the Exchange Act, or any successor provision thereto; provided,
however, that, for purposes of this definition, a Person shall not be deemed to
Beneficially Own securities tendered pursuant to a tender or exchange offer made
by or on behalf of such Person or any of such Person's Affiliates until such
tendered securities are accepted for purchase or exchange; (b) "Group" shall
mean a "group" for purposes of Section 13(d) of the Exchange Act; (c) "Unrelated
Person" shall mean at any time any Person other than the Seller or any of its
Subsidiaries and other than any trust for any employee benefit plan of the
Seller or any of its Subsidiaries; (d) "Related Person" shall mean any other
Person owning (1) 5% or more of the outstanding common stock of such Person, or
(2) 5% or more of the Voting Stock of such Person; and (e) "Voting Stock" of any
Person shall mean the capital stock or other indicia of equity rights of such
Person which at the time has the power to vote for the election of one or more
members of the Board of Directors (or other governing body) of such Person.
"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.
"CLOSING DATE" means November 15, 2005.
"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 the Indenture.
"COLLECTION ACCOUNT" means the account designated as such,
established and maintained pursuant to SECTION 5.1 of the Sale and Servicing
Agreement.
"COMMISSION" means the United States Securities and Exchange
Commission.
"COMMITMENT" means the obligation of the Note Purchaser to
make Advances to the Issuer pursuant to the terms and subject to the conditions
of the Note Purchase Agreement and the other Basic Documents.
"COMMITMENT FEE" means, with respect to any Settlement Date,
for so long as no Funding Termination Event shall have occurred and be
continuing, a fee in an amount equal to the product of (a) one-twelfth, (b)
twenty-five basis point (0.25%) and (c) the excess, if any, of (i) the Maximum
Invested Amount over (ii) the daily average of the Invested Amount over the
immediately preceding Accrual Period set forth in the related Servicer's
Certificate as and to the extent verified by the Note Purchaser.
"CONCENTRATION LIMITS" means with respect to Eligible
Receivables:
(i) Eligible Receivables that are Section 341 Receivables
shall not at any time represent more than 3% of the aggregate Principal
Balance of Eligible Receivables;
(ii) Eligible Receivables the Obligors of which are
contractually delinquent with respect to more than 10% of a Scheduled
Receivable Payment by more than 30 days, but less than 46 days, shall
not at any time represent more than 4% of the aggregate Principal
Balance of Eligible Receivables;
(iii) Eligible Receivables originated under Seller's "First
Time Buyer Program" and "Mercury/Delta Program" shall not at any time
represent more than 15% of the aggregate Principal Balance of Eligible
Receivables;
(iv) Seasoned Receivables shall not represent more than
$3,000,000 in aggregate Principal Balance of the Eligible Receivables;
52
(v) Unless an Opinion of Counsel, in form and substance
satisfactory to the Note Purchaser, has been delivered to the Trustee
and the Note Purchaser addressing (i) the form of Contract used by
Seller in such State and (ii) the security interest of the Trustee in
the Financed Vehicles titled in such State in the absence of any
retitling of such Financed Vehicles, Eligible Receivables originated in
any one State shall not in the aggregate at any time represent more
than 10% of the aggregate Principal Balance of Eligible Receivables;
"CONSENT AND AGREEMENT" means that Consent and Agreement dated
as of November 15, 2005, made by the Issuer, as such consent and agreement may
be amended, supplemented or otherwise modified from time to time in accordance
with the terms thereof,
"CONSOLIDATED TOTAL ADJUSTED EQUITY" of any Person means, with
respect to any fiscal quarter, the total shareholders' equity of such Person and
its consolidated Subsidiaries that, in accordance with GAAP, is reflected on the
consolidated balance sheet of such Person and its consolidated Subsidiaries for
such fiscal quarter, MINUS the aggregate amount of such Person's and its
consolidated Subsidiaries intangible assets, including without limitation,
goodwill, franchises, licenses, patents, trademarks, tradenames, copyrights and
service marks.
"CONSUMER LAWS" means federal and State usury laws, the
Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the Xxxxxxxx-Xxxx Warranty Act, the Federal Reserve Board's
Regulations B and Z, the Servicemembers Civil Relief Act, the California
Military Reservist Relief Act, the Texas Consumer Credit Code, the California
Automobile Sales Finance Act, State adaptations of the National Consumer Act and
of the Uniform Consumer Credit Code and all other federal, State and local
consumer credit laws and equal credit opportunity and disclosure laws and
regulations thereunder.
"CONTRACT" means a motor vehicle retail installment sale
contract or installment promissory note or security agreement relating to the
sale or refinancing of new or used automobiles, light duty trucks, vans or
minivans, and other writings related thereto from time to time.
"CORPORATE TRUST OFFICE" means with respect to the Trustee,
the principal office of the Trustee at which at any particular time its
corporate trust business shall be administered which office is located at Sixth
Street and Marquette Avenue, MAC N9311-161, Xxxxxxxxxxx, Xxxxxxxxx 00000, or at
such other address as the Trustee may designate from time to time by notice to
the Note Purchaser, the Servicer, the Issuer, or the principal corporate trust
office of any successor Trustee (the address of which the successor Trustee will
notify the Note Purchaser).
"CPS" means Consumer Portfolio Services, Inc., a California
corporation.
"CRAM DOWN LOSS" means, with respect to a Receivable, if a
court of appropriate jurisdiction in an insolvency proceeding shall have issued
an order reducing the amount owed on a Receivable or otherwise modifying or
restructuring Scheduled Receivable Payments to be made on a Receivable, an
amount equal to such reduction in the Principal Balance of such Receivable or
the reduction in the net present value (using as the discount rate the lower of
the contract rate or the rate of interest specified by the court in such order)
of the Scheduled Receivable Payments as so modified or restructured. A "CRAM
DOWN LOSS" shall be deemed to have occurred on the date such order is entered.
"CUTOFF DATE" means, with respect to a Receivable or
Receivables, the date specified as such for such Receivable or Receivables in
the Schedule of Receivables attached to the Sale and Servicing Agreement or to
the applicable Assignment.
"DATA TAPE FIELDS" has the meaning given such term in Section
2.1(b)(i) of the Sale and Servicing Agreement.
"DEALER" means, with respect to a Receivable, the seller of
the related Financed Vehicle, who originated and assigned such Receivable to the
Seller, which Dealer shall not be an Affiliate of the Seller (including, without
limitation, MFN Financial Corporation and TFC Enterprises, Inc.).
53
"DEFAULT" means any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.
"DEFAULT APPLICABLE MARGIN" means 4.00%.
"DEFECTIVE RECEIVABLE" means a Receivable that is subject to
repurchase pursuant to SECTION 3.2 or SECTION 4.7 of the Sale and Servicing
Agreement.
"DEFINITIVE NOTE" has the meaning specified in SECTION 2.5(C)
to the Indenture.
"DELIVERY" means, when used with respect to Pledged Account
Property:
(i) the perfection and priority of a security interest in such
Pledged Account Property which is governed by the law of a jurisdiction which
has adopted the 1978 Revision to Article 8 of the UCC (and not the 1994 Revision
to Article 8 of the UCC as referred to in (II) below):
(a) with respect to bankers' acceptances, commercial
paper, negotiable certificates of deposit and other obligations that
constitute "INSTRUMENTS" within the meaning of Section 9-102(a)(47) of
the UCC and are susceptible of physical delivery, transfer thereof to
the Trustee or its nominee or custodian by physical delivery to the
Trustee or its nominee or custodian endorsed to, or registered in the
name of, the Trustee or its nominee or custodian or endorsed in blank,
and, with respect to a certificated security (as defined in Section
8-102 of the UCC), transfer thereof (1) by delivery of such
certificated security endorsed to, or registered in the name of, the
Trustee or its nominee or custodian or endorsed in blank to a financial
intermediary (as defined in Section 8-313 of the UCC) and the making by
such financial intermediary of entries on its books and records
identifying such certificated securities as belonging to the Trustee or
its nominee or custodian and the sending by such financial intermediary
of a confirmation of the purchase of such certificated security by the
Trustee or its nominee or custodian, or (2) by delivery thereof to a
"CLEARING CORPORATION" (as defined in Section 8-102(3) of the UCC) and
the making by such clearing corporation of appropriate entries on its
books reducing the appropriate securities account of the transferor and
increasing the appropriate securities account of a financial
intermediary by the amount of such certificated security, the
identification by the clearing corporation of the certificated
securities for the sole and exclusive account of the financial
intermediary, the maintenance of such certificated securities by such
clearing corporation or a "CUSTODIAN BANK" (as defined in Section
8-102(4) of the UCC) or the nominee of either subject to the clearing
corporation's exclusive control, the sending of a confirmation by the
financial intermediary of the purchase by the Trustee or its nominee or
custodian of such securities and the making by such financial
intermediary of entries on its books and records identifying such
certificated securities as belonging to the Trustee or its nominee or
custodian (all of the foregoing, "PHYSICAL PROPERTY"), and, in any
event, any such Physical Property in registered form shall be in the
name of the Trustee or its nominee or custodian; and such additional or
alternative procedures as may hereafter become appropriate to effect
the complete transfer of ownership of any such Pledged Account Property
to the Trustee or its nominee or custodian, consistent with changes in
applicable law or regulations or the interpretation thereof;
(b) with respect to any security issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or by the Federal
National Mortgage Association that is a book-entry security held
through the Federal Reserve System pursuant to Federal book-entry
regulations, the following procedures, all in accordance with
applicable law, including applicable Federal regulations and Articles 8
and 9 of the UCC: book-entry registration of such Pledged Account
Property to an appropriate book-entry account maintained with a Federal
Reserve Bank by a financial intermediary which is also a "DEPOSITORY"
pursuant to applicable Federal regulations and issuance by such
financial intermediary of a deposit advice or other written
confirmation of such book-entry registration to the Trustee or its
nominee or custodian of the purchase by the Trustee or its nominee or
custodian of such book-entry securities; the making by such financial
intermediary of entries in its books and records identifying such
book-entry security held through the Federal Reserve System pursuant to
Federal book-entry regulations as belonging to the Trustee or its
nominee or custodian and indicating that such custodian holds such
Pledged Account Property solely as agent for the Trustee or its nominee
or custodian; and such additional or alternative procedures as may
hereafter become appropriate to effect complete transfer of ownership
of any such Pledged Account Property to the Trustee or its nominee or
custodian, consistent with changes in applicable law or regulations or
the interpretation thereof; and
54
(c) with respect to any item of Pledged Account
Property that is an uncertificated security under Article 8 of the UCC
and that is not governed by CLAUSE (B) above, registration on the books
and records of the issuer thereof in the name of the financial
intermediary, the sending of a confirmation by the financial
intermediary of the purchase by the Trustee or its nominee or custodian
of such uncertificated security, the making by such financial
intermediary of entries on its books and records identifying such
uncertificated securities as belonging to the Trustee or its nominee or
custodian; or
(ii) the perfection and priority of a security interest in
such Pledged Account Property which is governed by the law of a jurisdiction
which has adopted the 1994 Revision to Article 8 of the UCC:
(a) with respect to bankers' acceptances, commercial
paper, negotiable certificates of deposit and other obligations that
constitute "INSTRUMENTS" within the meaning of Section 9-102(a)(47) of
the UCC (other than certificated securities) and are susceptible of
physical delivery, transfer thereof to the Trustee by physical delivery
to the Trustee, indorsed to, or registered in the name of, the Trustee
or its nominee or indorsed in blank and such additional or alternative
procedures as may hereafter become appropriate to effect the complete
transfer of ownership of any such Pledged Account Property to the
Trustee free and clear of any adverse claims, consistent with changes
in applicable law or regulations or the interpretation thereof;
(b) with respect to a "CERTIFICATED SECURITY" (as
defined in Section 8-102(a)(4) of the UCC), transfer thereof:
(1) by physical delivery of such
certificated security to the Trustee, PROVIDED that if the
certificated security is in registered form, it shall be
indorsed to, or registered in the name of, the Trustee or
indorsed in blank;
(2) by physical delivery of such
certificated security in registered form to a "SECURITIES
INTERMEDIARY" (as defined in Section 8-102(a)(l4) of the UCC)
acting on behalf of the Trustee if the certificated security
has been specially indorsed to the Trustee by an effective
indorsement.
(c) with respect to any security issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or by the Federal
National Mortgage Association that is a book-entry security held
through the Federal Reserve System pursuant to Federal book entry
regulations, the following procedures, all in accordance with
applicable law, including applicable federal regulations and Articles 8
and 9 of the UCC: book-entry registration of such property to an
appropriate book-entry account maintained with a Federal Reserve Bank
by a securities intermediary which is also a "DEPOSITARY" pursuant to
applicable federal regulations and issuance by such securities
intermediary of a deposit advice or other written confirmation of such
book-entry registration to the Trustee of the purchase by the
securities intermediary on behalf of the Trustee of such book-entry
security; the making by such securities intermediary of entries in its
books and records identifying such book-entry security held through the
Federal Reserve System pursuant to Federal book-entry regulations as
belonging to the Trustee and indicating that such securities
intermediary holds such book-entry security solely as agent for the
Trustee; and such additional or alternative procedures as may hereafter
become appropriate to effect complete transfer of ownership of any such
Pledged Account Property to the Trustee free of any adverse claims,
consistent with changes in applicable law or regulations or the
interpretation thereof;
(d) with respect to any item of Pledged Account
Property that is an "UNCERTIFICATED SECURITY" (as defined in Section
8-102(a)(18) of the UCC) and that is not governed by CLAUSE (C) above,
transfer thereof:
55
(1)(A) by registration to the Trustee as the
registered owner thereof, on the books and records of the
issuer thereof;
(B) by another Person (not a securities
intermediary) who either becomes the registered owner of the
uncertificated security on behalf of the Trustee, or having
become the registered owner acknowledges that it holds for the
Trustee;
(2) the issuer thereof has agreed that it
will comply with instructions originated by the Trustee
without further consent of the registered owner thereof;
(e) with respect to a "SECURITY ENTITLEMENT" (as
defined in Section 8-102(a)(17) of the UCC):
(1) if a securities intermediary (A)
indicates by book entry that a "FINANCIAL ASSET" (as defined
in Section 8-102(a)(9) of the UCC) has been credited to the
Trustee's "SECURITIES ACCOUNT" (as defined in Section 8-501(a)
of the UCC), (B) receives a financial asset (as so defined)
from the Trustee or acquires a financial asset for the
Trustee, and in either case, accepts it for credit to the
Trustee's securities account (as so defined), (C) becomes
obligated under other law, regulation or rule to credit a
financial asset to the Trustee's securities account, or (D)
has agreed that it will comply with "ENTITLEMENT ORDERS" (as
defined in Section 8-102(a)(8) of the UCC) originated by the
Trustee, without further consent by the "ENTITLEMENT HOLDER"
(as defined in Section 8-l02(a)(7) of the UCC), of a
confirmation of the purchase and the making by such securities
intermediary of entries on its books and records identifying
as belonging to the Trustee of (I) a specific certificated
security in the securities intermediary's possession, (II) a
quantity of securities that constitute or are part of a
fungible bulk of certificated securities in the securities
intermediary's possession, or (III) a quantity of securities
that constitute or are part of a fungible bulk of securities
shown on the account of the securities intermediary on the
books of another securities intermediary;
(f) in each case of delivery contemplated pursuant to
CLAUSES (A) through (E) of SUBSECTION (II) hereof, the Trustee shall
make appropriate notations on its records, and shall cause the same to
be made on the records of its nominees, indicating that such Trust
Property which constitutes a security is held in trust pursuant to and
as provided in the Sale and Servicing Agreement.
"DEPOSIT ACCOUNT" means that deposit account established
pursuant to the Account Control Agreement.
"DETERMINATION DATE" means, with respect to any Settlement
Date, the fourth Business Day preceding such Settlement Date.
"DOLLAR" means lawful money of the United States.
"ELIGIBLE ACCOUNT" means either (i) a segregated trust account
that is maintained with a depository institution acceptable to the Note
Purchaser, or (ii) a segregated direct deposit account maintained with a
depository institution or trust company organized under the laws of the United
States of America, or any of the States thereof, or the District of Columbia,
having a certificate of deposit, short-term deposit or commercial paper rating
of at least "A-1+" by Standard & Poor's and "P-1" by Moody's and acceptable to
the Note Purchaser.
"ELIGIBLE INVESTMENTS" mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully
guaranteed as to the full and timely payment by, the United States of
America;
56
(b) demand deposits, time deposits or certificates of
deposit of any depository institution or trust company incorporated
under the laws of the United States of America or any State thereof (or
any domestic branch of a foreign bank) and subject to supervision and
examination by Federal or State banking or depository institution
authorities; PROVIDED, HOWEVER, that at the time of the investment or
contractual commitment to invest therein, the commercial paper or other
short-term unsecured debt obligations (other than such obligations the
rating of which is based on the credit of a Person other than such
depository institution or trust company) thereof shall be rated "A-1+"
or better by Standard & Poor's and "P-1" by Moody's;
(c) commercial paper that, at the time of the
investment or contractual commitment to invest therein, is rated "A-1+"
or better by Standard & Poor's and "P-1" by Moody's;
(d) bankers' acceptances issued by any depository
institution or trust company referred to in CLAUSE (B) above;
(e) repurchase obligations with respect to any
security that is a direct obligation of, or fully guaranteed as to the
full and timely payment by, the United States of America or any agency
or instrumentality thereof the obligations of which are backed by the
full faith and credit of the United States of America, in either case
entered into with (i) a depository institution or trust company (acting
as principal) described in CLAUSE (B) or (ii) a depository institution
or trust company whose commercial paper or other short term unsecured
debt obligations are rated "A-1+" or better by Standard & Poor's and
"P-1" by Moody's and long term unsecured debt obligations are rated
"AAA" by Standard & Poor's and "AAA" by Moody's;
(f) money market mutual funds registered under the
Investment Company Act of 1940, as amended, having a rating, at the
time of such investment, from each of Standard & Poor's and Moody's in
the highest investment category granted thereby; and
(g) any other investment as may be acceptable to the
Note Purchaser, as evidenced by a writing to that effect, as may from
time to time be confirmed in writing to the Trustee by the Note
Purchaser.
Any of the foregoing Eligible Investments may be purchased by
or through the Trustee or any of its Affiliates.
"ELIGIBLE RECEIVABLES" means, as of any date of determination,
Receivables (a) that have been originated or acquired by the Seller in
accordance with the Seller's Contract Purchase Guidelines; (b) that are secured
by a first-priority perfected security interest in the related Financed Vehicle;
(c) as to which the representations and warranties set forth in Section 3.1 of
the Sale and Servicing Agreement are true and correct; (d) that are not more
than 45 days past due with respect to more than 10% of the Scheduled Receivable
Payment as of such date of determination; (e) as to which the related Obligor
has not been the subject of a bankruptcy proceeding since the origination of the
Receivable (other than any Obligor the related Receivable of which is a Section
341 Receivable); (f) as to which the Servicer has not repossessed the related
Financed Vehicle or charged-off the related Contract; (g) that have not been
owned by the Purchaser and pledged to the Trustee for the benefit of the
Noteholders and Note Purchaser for more than 180 days; and (h) that have not
been otherwise rejected by the Note Purchaser, in its sole discretion, as a
result of deficiencies with respect to such Receivable discovered during the
Note Purchaser's due diligence review, prior to the related Funding thereof.
"ELIGIBLE SERVICER" means a Person approved to act as
"SERVICER" under the Sale and Servicing Agreement by the Note Purchaser.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"EVENT OF DEFAULT" has the meaning specified in SECTION 5.1
of the Indenture.
57
"EXCESS CONCENTRATION AMOUNT" means the aggregate amount by
which (without duplication) the aggregate Principal Balance of Eligible
Receivables sold to the Purchaser under the Sale and Servicing Agreement exceeds
any of the Concentration Limits; provided, however, that in determining which
Receivables to exclude for purposes of complying with any Concentration Limit,
the Purchaser shall exclude Receivables starting with those having the most
oldest origination dates.
"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, Senior Vice President, any Vice President, the Secretary or the
Treasurer of such corporation; with respect to any limited liability company,
the manager and any individuals appointed to any of the preceding offices by the
manager; and with respect to any partnership, any general partner thereof.
"FACILITY TERMINATION DATE" means the earlier of (a) the
Scheduled Maturity Date or (b) the date of the occurrence of an Event of
Default.
"FDIC" means the Federal Deposit Insurance Corporation.
-
"FEE SCHEDULE" means that certain notice captioned "Schedule
of Fees for CPS - Bear Xxxxxxx Warehouse" from Xxxxx Fargo Bank, National
Association, as acknowledged by the Servicer as of November 15, 2005.
"FINANCED VEHICLE" means a new or used automobile, light
truck, van or minivan, together with all accessions thereto, securing an
Obligor's indebtedness under a Receivable.
"FUNDING DATE" means the Business Day on which an Advance
occurs.
"FUNDING TERMINATION EVENT" means the occurrence and
continuance of any one of the following events, unless waived in writing by the
Note Purchaser in its sole discretion: (i) an Event of Default; (ii) CPS is
terminated as servicer under any other warehouse financing facility or term
securitization transaction (other than any warehouse financing facility or term
securitization transaction as to which the receivables related thereto were
originated exclusively by SeaWest, TFC or MFN); (iii) failure by the Issuer or
the Servicer to accept a proposed assignee in accordance with Section
8.03(c)(iii) of the Note Purchase Agreement or (iv) Xxxxxxx Xxxxxxx, Xx. shall
not hold the position of President of CPS.
"GAAP" means U.S. generally accepted accounting principles
occasioned by the promulgation of rules, regulations, pronouncements or opinions
by the Financial Accounting Standards Board, the American Institute of Certified
Public Accountants or the Securities and Exchange Commission (or successors
thereto or agencies with similar functions) from time to time.
"GOVERNMENTAL AUTHORITY" means the United States of America,
any state, local or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory, or administrative
functions thereof pertaining thereto.
"GRANT" means to mortgage, pledge, bargain, sell, warrant,
alienate, remise, release, convey, assign, transfer, create, xxxxx x xxxx upon
and a security interest in and right of set-off against, deposit, set over and
confirm pursuant to the Indenture or the Pledge Agreement, as applicable. A
Grant of the Collateral or Pledged Collateral, as the case may be, 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 (after an Event of Default) to claim for,
collect, receive and give receipt for principal and interest payments in respect
of the Collateral or Pledged Collateral, as the case may be, 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.
58
"HOLDERS" or "NOTEHOLDERS" means the Persons in whose name
the Notes are registered on the Note Register, which shall initially be Bear,
Xxxxxxx International Limited or an Affiliate thereof.
"INDEBTEDNESS" means, with respect to any Person at any time,
any (a) indebtedness or liability of such Person for borrowed money whether or
not evidenced by bonds, debentures, notes, repurchase agreements and similar
arrangements, 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 GAAP, 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 others
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 the Indenture dated as of November 15, 2005,
between the Issuer and Xxxxx Fargo Bank, National Association, as Trustee, as
the same may be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof.
"INDEPENDENT" means, when used with respect to any specified
Person, that the person (a) is in fact independent of the Issuer, the Seller,
the Purchaser, the Servicer 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, the Seller, the Purchaser, the Servicer or any
Affiliate of any of the foregoing Persons and (c) is not connected with the
Issuer, the Seller, the Purchaser, the Servicer or any Affiliate of any of the
foregoing Persons as an officer, employee, promoter, underwriter, trustee,
partner, director or Person performing similar functions.
"INELIGIBLE RECEIVABLE" means any Receivable other than an
Eligible Receivable.
"INITIAL ADVANCE" means the first Advance that is funded on or
after the Closing Date.
"INSOLVENCY EVENT" means, with respect to a specified Person,
(a) the institution of a proceeding or the filing of a petition against such
Person seeking the entry of a decree or order for relief by a court having
jurisdiction in the premises in respect of such Person or any substantial part
of its property in an involuntary case under any applicable federal or state
bankruptcy, insolvency or other similar law now or hereafter in effect, seeking
the appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for such Person or for any substantial part of
its property, or ordering the winding-up or liquidation of such Person's
affairs, and such proceeding or petition, decree or order shall remain unstayed
or undismissed for a period of 60 consecutive days or an order or decree for the
requested relief is earlier entered or issued; or (b) the commencement by such
Person of a voluntary case under any applicable federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or the consent by
such Person to the entry of an order for relief in an involuntary case under any
such law, or the consent by such Person to the appointment of or taking
possession by, a receiver, liquidator, assignee, custodian, trustee,
sequestrator, or similar official for such Person or for any substantial part of
its property, or the making by such Person of any general assignment for the
benefit of creditors, or the failure by such Person generally to pay its debts
as such debts become due, or the taking of action by such Person in furtherance
of any of the foregoing.
"INTEREST PERIOD" means, with respect to the Notes and any
Settlement Date, the period from, and including, the immediately preceding
Settlement Date (or from and including the Closing Date, in the case of the
first Settlement Date) to, but excluding, such Settlement Date.
"INVESTED AMOUNT" means, with respect to any date of
determination, the aggregate principal amount (including all Advance Amounts as
of such date) of the Notes at such date of determination.
59
"INVESTMENT COMPANY ACT" has the meaning set forth in SECTION
5.01(D) of the Note Purchase Agreement.
"INVESTMENT EARNINGS" means, with respect to any Settlement
Date and any Pledged Account, the investment earnings on Pledged Account
Property and deposited into such Pledged Account during the related Accrual
Period pursuant to SECTION 5.1(D) of the Sale and Servicing Agreement.
"ISSUER" means Page Three Funding LLC until a successor
replaces it in accordance with the terms of the Indenture and, thereafter, means
the successor and, for purposes of any provision contained herein, 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.
"LIBOR" means, with respect to any Interest Period, the rate
for one-month deposits in U.S. dollars determined on the related LIBOR
Determination Date by the Note Purchaser by reference to the London Inter-Bank
Offered Rate, as such rate appears as "BBBAM - Page DE8 4a" on Bloomberg (or
such other publicly-available service or services publishing such rates selected
by Note Purchaser in its reasonable discretion and communicated to the Issuer)
at or about 11 a.m. New York City time; PROVIDED FURTHER, that if no rate
appears on Bloomberg, on any such date of determination LIBOR shall be
determined as follows:
LIBOR will be determined at approximately 11:00 a.m., New York
City time, on the related LIBOR Determination Date on the basis of (a) the
arithmetic mean of the rates at which one-month deposits in U.S. dollars are
offered to prime banks in the London interbank market by four (4) major banks in
the London interbank market selected by the Note Purchaser and in a principal
amount of not less than $150,000,000 that is representative for a single
transaction in such market at such time, if at least two (2) such quotations are
provided, or (b) if fewer than two (2) quotations are provided as described in
the preceding clause (a), the arithmetic mean of the rates, as requested by the
Note Purchaser, quoted by three (3) major banks in New York City, selected by
the Note Purchaser, at approximately 11:00 A.M., New York City time, on such
LIBOR Determination Date, one-month deposits in United States dollars to leading
European banks and in a principal amount of not less than $150,000,000 that is
representative for a single transaction in such market at such time.
"LIBOR BUSINESS DAY" means any day on which banks in London,
England and The City of New York are open and conducting transactions in foreign
currency and exchange.
"LIBOR DETERMINATION DATE" means, with respect to any Interest
Period, the second LIBOR Business Day immediately preceding the first day of
such Interest Period.
"LIEN" means a security interest, lien, charge, pledge,
equity, or encumbrance of any kind, other than tax liens, mechanics' liens and
any liens that attach to the respective Receivable by operation of law as a
result of an Obligor's failure to pay an obligation.
"LIEN CERTIFICATE" means, with respect to a Financed Vehicle,
an original certificate of title, certificate of lien or other notification
issued by the Registrar of Titles of the applicable state to a secured party
which indicates that the lien of the secured party on the Financed Vehicle is
recorded on the original certificate of title. In any jurisdiction in which the
original certificate of title is required to be given to the obligor, the term
"LIEN CERTIFICATE" shall mean only a certificate or notification issued to a
secured party.
"LIQUIDATED RECEIVABLE" means any Receivable (i) which has
been liquidated by the Servicer through the sale of the Financed Vehicle or (ii)
for which the related Financed Vehicle has been repossessed and 90 days have
elapsed since the date of such repossession or (iii) as to which an Obligor has
failed to make more than 90% of a Scheduled Receivable Payment of more than ten
dollars for 120 (or, if the related Financed Vehicle has been repossessed, 210)
or more days as of the end of a Accrual Period or (iv) with respect to which
proceeds have been received which, in the Servicer's judgment, constitute the
final amounts recoverable in respect of such Receivable. For purposes of this
definition, a Receivable shall be deemed a "Liquidated Receivable" upon the
first to occur of the events specified in items (i) through (iv) of the previous
sentence.
60
"LLC AGREEMENT" means the Limited Liability Company Agreement
of Page Three Funding, LLC dated as of October 27, 2005, entered into by CPS, as
such agreement may be amended, supplemented or otherwise modified from time to
time in accordance with the terms thereof.
"LOCKBOX ACCOUNT" means an account established and maintained
in the name of the Issuer for the benefit of Trustee for the further benefit of
the Noteholders and the Note Purchaser by the Lockbox Bank pursuant to SECTION
4.2(B) of the Sale and Servicing Agreement.
"LOCKBOX AGREEMENT" means the Multiparty Agreement Relating to
Lockbox Services, dated as of November 15, 2005, by and among the Lockbox
Processor, the Purchaser, the Servicer and the Trustee, as such agreement may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof, unless the Trustee shall cease to be a party thereunder, or
such agreement shall be terminated in accordance with its terms, in which event
"LOCKBOX AGREEMENT" shall mean such other agreement, in form and substance
acceptable to the Note Purchaser, among the Servicer, the Purchaser, and the
Lockbox Processor and any other appropriate parties.
"LOCKBOX BANK" means as of any date a depository institution
named by the Servicer and acceptable to the Majority Noteholders and the Note
Purchaser at which the Lockbox Account is established and maintained as of such
date.
"LOCKBOX PROCESSOR" means Xxxxx Fargo Bank, National
Association and its successors and assigns.
"MAJORITY NOTEHOLDERS" means Holders of Notes that in the
aggregate constitute more than 50% of the Percentage Interests.
"MARGIN CALL" has the meaning given to such term in Section
3.05 of the Note Purchase
Agreement.
"MARKET VALUE" means, on any Business Day, the value of the
Receivables as determined by the daily-run structured arb report as calculated
by the Note Purchaser in its sole discretion.
"MATERIAL ADVERSE CHANGE" means (a) in respect of any Person,
a material adverse change in (i) the business, financial condition, results of
operations, prospects or properties of such Person, or (ii) the ability of such
Person to perform its obligations under any of the Basic Documents to which it
is a party, in each case in a manner that materially and adversely affects the
Noteholders, the Note Purchaser or the value, collectibility or marketability of
the Notes, (b) in respect of any Receivable, a material adverse change in (i)
the value or marketability of such Receivable, or (ii) the probability that
amounts now or hereafter due in respect of such Receivable will be collected on
a timely basis, in each case in a manner that materially and adversely affects
the Noteholders, the Note Purchaser or the value, collectibility or
marketability of the Notes, or the ability of the Trustee on behalf of the
Noteholders and the Note Purchaser to realize the benefits of the security
afforded under the Basic Documents.
"MATERIAL ADVERSE EFFECT" means an effect on (a) the value or
marketability of the Receivables or any of the other Collateral (including,
without limitation, the enforceability or collectibility of the Receivables);
(b) the business, operations, properties, condition (financial or otherwise) or
prospects of the Seller, the Servicer, the Purchaser or the Issuer, in each
case, individually or taken as a whole; (c) the validity or enforceability of
this or any of the other Basic Documents or the rights or remedies of the
Trustee, the Note Purchaser or the Noteholders hereunder or thereunder or the
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validity, perfection or priority of any Lien in favor of the Trustee, the Note
Purchaser or the Noteholders granted thereunder; (d) the timely payment of the
principal of or interest on any Advances or other amounts payable under the
Basic Documents; or (e) the ability of the Seller, the Servicer, the Purchaser
or the Issuer to perform its obligations under any Basic Document to which it is
a party, in each case that materially and adversely affects the Noteholders, the
Note Purchaser or the value, collectability or marketability of the Notes.
"MAXIMUM INVESTED AMOUNT" means $150,000,000.
"MFN" means MFN Financial Corporation, a Delaware corporation.
"MINIMUM PLACEMENT FEE" means, for the Term, the product of
(i) 0.40% and (ii) $300,000,000 (representing the minimum amount of investment
grade notes to be placed by the Note Purchaser or any of its Affiliates on
behalf of CPS and its Affiliates prior to the Minimum Placement Fee Payment
Date), as such amount may reduced by amounts paid in respect of the Minimum
Placement Fee pursuant to Section 3.01(d) of the Note Purchase Agreement,
Section 5.8(a)(v) of the Sale and Servicing Agreement and Section 10.1 of the
Indenture.
"MINIMUM PLACEMENT FEE PAYMENT DATE" means the earliest to
occur of (a) the closing date for the second securitization of Eligible
Receivables contemplated by Section 3.01(d) of the Note Purchase Agreement, (b)
the date which occurs 15 calendar days immediately prior to the Scheduled
Maturity Date and (c) the Facility Termination Date.
"MOODY'S" means Xxxxx'x Investors Service, Inc., or its
successor.
"MULTIEMPLOYER PLAN" means a Plan which is a multiemployer
plan as defined in Xxxxxxx 0000(x)(0) of ERISA.
"NET ACQUISITION FEE" means, for any Receivable, (a) the sum
of (i) PLAUSA3 and (ii) PLASFE less (b) PLTDIF, in each case, as reflected in
the Data Tape Fields delivered prior to each Funding Date pursuant to Section
2.1(b)(i) of the Sale and Servicing Agreement, which amount shall represent the
difference between the original Principal Balance of the related Receivable and
the amount paid by the Seller to the Dealer for such Receivable (without giving
effect to the Seller netting from such amount the first payment due with respect
to such Receivable).
"NET LIQUIDATION PROCEEDS" means, with respect to a Liquidated
Receivable, all amounts realized with respect to such Receivable net of (i)
reasonable expenses incurred by the Servicer in connection with the collection
of such Receivable and the repossession and disposition of the Financed Vehicle
and the reasonable cost of legal counsel with the enforcement of a Liquidated
Receivable and (ii) amounts that are required to be refunded to the Obligor on
such Receivable; PROVIDED, HOWEVER, that the Net Liquidation Proceeds with
respect to any Receivable shall in no event be less than zero.
"NOTES" means the Floating Rate Variable Funding Notes, each
substantially in the form of the Note set forth in EXHIBIT A-1 to the Indenture.
"NOTE DISTRIBUTION ACCOUNT" means the account designated as
such, established and maintained pursuant to SECTION 5.1(B) of the Sale and
Servicing Agreement.
"NOTE INTEREST RATE" means for any day during any Interest
Period the sum of (i) LIBOR calculated as of the related LIBOR Determination
Date and (ii) the Applicable Margin for such day; PROVIDED, HOWEVER, that the
Note Interest Rate will in no event be higher than the maximum rate permitted by
law.
"NOTE PAYING AGENT" means the Trustee or any other Person that
meets the eligibility standards for the Trustee specified in SECTION 6.11 of the
Indenture 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 Note on behalf of the
Issuer.
"NOTE PURCHASE AGREEMENT" means the Note Purchase Agreement
dated as of November 15, 2005 among Bear, Xxxxxxx International Limited, the
Issuer, the Purchaser, the Seller and the Servicer, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.
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"NOTE PURCHASER" means Bear, Xxxxxxx International Limited and
its successors and permitted assigns.
"NOTE REGISTER" and "NOTE REGISTRAR" have the respective
meanings specified in Section 2.4 of the Indenture.
"NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL" means, with
respect to any Settlement Date, the excess of the Noteholders' Interest
Distributable Amount for the preceding Settlement Date over the amount that was
actually deposited in the Note Distribution Account on such preceding Settlement
Date on account of the Noteholders' Interest Distributable Amount.
"NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means, with
respect to any Settlement Date, the sum of the Noteholders' Monthly Interest
Distributable Amount for such Settlement Date and the Noteholders' Interest
Carryover Shortfall for such Settlement Date, if any, plus interest on the
Noteholders' Interest Carryover Shortfall, to the extent permitted by law, at
the Note Interest Rate for the related interest Period(s), from and including
the preceding Settlement Date to, but excluding, the current Settlement Date.
"NOTEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means,
with respect to any Settlement Date, the sum of the interest amounts accrued on
the Notes on each day during the related Interest Period. The interest amount
accrued on the Notes on any day during any Interest Period shall equal the
product of (i) the Note Interest Rate for such day and (ii) the Invested Amount
on such day and (iii) 1/360.
"NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means, with
respect to any Settlement Date (A) prior to the Facility Termination Date, the
Borrowing Base Deficiency, if any, and (B) upon and after the Facility
Termination Date, the aggregate outstanding principal amount of the Note.
"OBLIGOR" on a Receivable means the purchaser or
co-purchasers of the Financed Vehicle and any other Person who owes payments
under the Receivable.
"OFFICER'S CERTIFICATE" means a certificate signed by the
chairman of the board, the president, any vice chairman of the board, any vice
president, the treasurer, the controller or assistant treasurer or any assistant
controller, secretary or assistant secretary of the Seller, the Purchaser or the
Servicer, as appropriate.
"OPINION COLLATERAL" has the meaning set forth in Section
3.6(a) of the Indenture.
"OPINION OF COUNSEL" means a written opinion of counsel who
may be but need not be counsel to the Purchaser, the Seller or the Servicer,
which counsel shall be reasonably acceptable to the Trustee and the Note
Purchaser and which opinion shall be acceptable in form and substance to the
Trustee and to the Note Purchaser.
"OTHER CONVEYED PROPERTY" means all property conveyed by the
Seller to the Purchaser pursuant to SECTIONS 2.1 (A)(II) through (XI) of the
Sale and Servicing Agreement and Section 2 of each Assignment.
"OUTSTANDING" means, as of the date of determination, the
Notes theretofore authenticated and delivered under the Indenture except:
(i) Notes theretofore canceled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes 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 prepaid, notice of such prepayment has been
duly given pursuant to the Indenture, satisfactory to the Trustee); and
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(iii) Notes in exchange for or in lieu of one or more other
Notes which have been authenticated and delivered pursuant to the
Indenture unless proof satisfactory to the Trustee is presented that
any such Note is held by a bona fide purchaser.
"PERCENTAGE INTEREST" means, with respect to any Note, the
percentage interest as specified on the face of such Note, which when multiplied
by the Invested Amount outstanding on any date of determination shall equal the
principal amount outstanding on such Note as of such date.
"PERSON" means any individual, corporation, estate,
partnership, limited liability company, joint venture, association, joint stock
company, trust (including any beneficiary thereof), unincorporated organization
or government or any agency or political subdivision thereof.
"PHYSICAL PROPERTY" has the meaning assigned to such term in
the definition of "Delivery" above.
"PLAN" means any Person that is (i) an "employee benefit plan"
(as defined in Section 3(3) of ERISA) that is subject to the provisions of Title
I of ERISA, (ii) a "plan" (as defined in Section 4975(e)(1) of the Code) that is
subject to Section 4975 of the Code or (ii) any entity whose underlying assets
include assets of a plan described in (i) or (ii) above by reason of such plan's
investment in the entity.
"PLEDGE AGREEMENT" means the Pledge and Security Agreement
dated as of November 15, 2005, among CPS and the Note Purchaser, as such
agreement may be amended, supplemented or otherwise modified from time to time
in accordance with the terms thereof.
"PLEDGED ACCOUNT PROPERTY" means the Pledged Accounts, all
amounts and investments held from time to time in any Pledged Account (whether
in the form of deposit accounts, Physical Property, book-entry securities,
uncertificated securities or otherwise), and all proceeds of the foregoing.
"PLEDGED ACCOUNTS" has the meaning assigned thereto in SECTION
5.1(C) of the Sale and Servicing Agreement.
"PLEDGED COLLATERAL" has the meaning assigned thereto in the
Pledge Agreement.
"POST-OFFICE BOX" means the separate post-office box
established and maintained by the Servicer in the name of the Purchaser for the
benefit of the Trustee for the further benefit of the Noteholders and the Note
Purchaser, established and maintained pursuant to SECTION 4.2 of the Sale and
Servicing Agreement.
"PRINCIPAL BALANCE" of a Receivable means the Amount Financed
minus the sum of the following amounts without duplication: (i) that portion of
all Scheduled Receivable Payments actually received on or prior to such day
allocable to principal using the Simple Interest Method; (ii) any Cram Down Loss
in respect of such Receivable; and (iii) any prepayment in full or any partial
prepayment applied to reduce the principal balance of the Receivable, all
measured as of the close of business on such day.
"PROCEEDING" means any suit in equity, action at law or other
judicial or administrative proceeding.
"PROGRAM" has the meaning specified in SECTION 4.11 of the
Sale and Servicing Agreement.
"PURCHASE AMOUNT" means, on any date with respect to a
Defective Receivable, the sum of (a) the Principal Balance of such Receivable as
of the date of purchase of such Receivable, and (b) all accrued and unpaid
interest on the Receivable.
"PURCHASE PRICE" means, with respect to each Receivable and
related Other Conveyed Property transferred to the Purchaser on the Closing Date
or on any Funding Date, an amount equal to the Principal Balance of such
Receivable as of the Closing Date or such Funding Date, as applicable.
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"PURCHASED RECEIVABLE" means a Receivable purchased by the
Servicer pursuant to SECTION 4.7 of the Sale and Servicing Agreement or
repurchased by the Seller pursuant to SECTION 3.2 of the Sale and Servicing
Agreement.
"PURCHASER" means Page Three Funding LLC.
"PURCHASER PROPERTY" means the Receivables and Other Conveyed
Property, together with certain monies received after the related Cutoff Date,
the Receivables Insurance Policies, the Collection Account (including all
Eligible Investments therein and all proceeds therefrom), the Lockbox Account
and certain other rights under the Sale and Servicing Agreement.
"REALIZED LOSSES" means, with respect to any Receivable that
becomes a Liquidated Receivable, the excess of the Principal Balance of such
Liquidated Receivable over Net Liquidation Proceeds allocable to principal
thereof.
"RECEIVABLE" means each retail installment sale contract for a
Financed Vehicle which is listed on the Schedule of Receivables and all rights
and obligations thereunder, except for Receivables that shall have become
Purchased Receivables, and, for the avoidance of doubt, shall include all
Related Receivables (other than Related Receivables that shall have become
Purchased Receivables).
"RECEIVABLE FILES" means the documents specified in SECTION
3.3(A) of the Sale and Servicing Agreement.
"RECEIVABLES INSURANCE POLICY" means, with respect to a
Receivable, any insurance policy (including the insurance policies described in
SECTION 4.4 of the Sale and Servicing Agreement) benefiting the holder of the
Receivable providing loss or physical damage, credit life, credit accident,
health, credit disability, theft, mechanical breakdown or similar coverage with
respect to the Financed Vehicle or the Obligor, including without limitation any
GAP, vendor's single interest or other collateral protection insurance policy or
coverage;.
"RECORD DATE" means, with respect to a Settlement Date, the
close of business on the day immediately preceding such Settlement Date.
"REGISTRAR OF TITLES" means, with respect to any state, the
governmental agency or body responsible for the registration of, and the
issuance of certificates of title relating to, motor vehicles and liens thereon.
"RELATED RECEIVABLES" means, with respect to a Funding Date,
the Receivables listed on SCHEDULE A to the applicable Assignment executed and
delivered by the Seller with respect to such Funding Date.
"RELEASE REQUEST" has the meaning specified in SECTION 3.5 of
the Sale and Servicing Agreement.
"REPOSSESSED RECEIVABLE" means a Receivable with respect to
which the earliest of the following shall have occurred: (i) the date the
Financed Vehicle is actually repossessed and (ii) 30 days after the date the
Financed Vehicle is authorized for repossession.
"RESPONSIBLE OFFICER" means, in the case of the Trustee, the
chairman or vice-chairman of the board of directors, the chairman or
vice-chairman of the executive committee of the board of directors, the
president, vice-president, assistant vice-president or managing director, the
secretary, and 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 means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.
"RULE 144A INFORMATION" has the meaning set forth in SECTION
3.26 of the Indenture.
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"SALE AND SERVICING AGREEMENT" means the Sale and Servicing
Agreement dated as of November 15, 2005, among the Page Three Funding LLC, as
Purchaser and Issuer, CPS, as Seller and Servicer, and Xxxxx Fargo Bank,
National Association, as the Backup Servicer and the Trustee, as the same may be
amended or supplemented from time to time in accordance with the terms thereof.
"SCHEDULED MATURITY DATE" means November 14, 2006 or such
later date as agreed upon pursuant to SECTION 2.05 of the Note Purchase
Agreement.
"SCHEDULED RECEIVABLE PAYMENT" means, with respect to any
Accrual Period for any Receivable, the amount set forth in such Receivable as
required to be paid by the Obligor in such Accrual Period. If after the Closing
Date, the Obligor's obligation under a Receivable with respect to an Accrual
Period has been modified so as to differ from the amount specified in such
Receivable (i) as a result of the order of a court in an insolvency proceeding
involving the Obligor, (ii) pursuant to the Servicemembers Civil Relief Act, or
(iii) as a result of modifications or extensions of the Receivable permitted by
Section 4.2 of the Sale and Servicing Agreement, the Scheduled Receivable
Payment with respect to such Accrual Period shall refer to the Obligor's payment
obligation with respect to such Accrual Period as so modified.
"SCHEDULE OF RECEIVABLES" means the schedule of all
Receivables purchased by the Purchaser pursuant to the Sale and Servicing
Agreement and each Assignment, which is attached as Schedule A to the Sale and
Servicing Agreement, as amended or supplemented from time to time upon each
Assignment of Receivables or in accordance with the terms of the Sale and
Servicing Agreement.
"SEASONED RECEIVABLE" shall mean an Eligible Receivable that
was sold to the Purchaser and pledged to the Trustee for the benefit of the
Noteholders and the Note Purchaser more than 31 days after the Seller's paid the
related Dealer for such Eligible Receivable.
"SEAWEST" means SeaWest Financial Corporation, a California
corporation.
"SECTION 341 MEETING" means a meeting held pursuant to Section 341(a)
of the United States Bankruptcy Code (as the same may be amended from time to
time) in which an Obligor subject to a Insolvency Event under Chapter 7 of the
United States Bankruptcy Code has presented his/her plan to the bankruptcy court
and all of his/her creditors.
"SECTION 341 RECEIVABLE" means a Receivable, the Obligor of
which has completed a Section 341 Meeting as of the applicable Cutoff Date.
"SECURED OBLIGATIONS" means all amounts and obligations which
the Issuer or Purchaser may at any time owe under the Basic Documents to, or on
behalf of the Noteholders, the Note Purchaser and/or the Trustee for the benefit
of the Noteholders and the Note Purchaser.
"SECURED PARTIES" means each of the Noteholders, the Note
Purchaser and the Trustee for the benefit of the Noteholders and the Note
Purchaser, in respect of the Secured Obligations.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER" means Consumer Portfolio Services, Inc., and its
successors in interest to the extent permitted hereunder.
"SELLER'S CONTRACT PURCHASE GUIDELINES" means CPS's
established "Contract Purchase Guidelines", as the same may be amended from time
to time in accordance with Section 8.2(c) of the Sale and Servicing Agreement.
"SERVICER" means, initially, Consumer Portfolio Services,
Inc., as the servicer of the Receivables, and each successor Servicer pursuant
to SECTION 10.3 of the Sale and Servicing Agreement.
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"SERVICER DELINQUENCY RATIO" means, as of the end of any
Accrual Period, a percentage equal to (i) the aggregate outstanding principal
balance as of the end of any Accrual Period of all automobile receivables
serviced by the Servicer or any Affiliate thereof (excluding automobile
receivables acquired or originated by MFN, TFC or SeaWest) as to which more than
10% of the scheduled receivable payment is more than 30 days contractually
delinquent as of the end of the immediately preceding Accrual Period, including
all receivables for which the related financed vehicle has been repossessed and
the proceeds thereof have not yet been realized by the Servicer divided by (ii)
the aggregate outstanding principal balance of all automobile receivables
serviced by the Servicer or any Affiliate thereof as of the end of the relevant
Accrual Period (excluding automobile receivables acquired or originated by MFN,
TFC or SeaWest).
"SERVICER EXTENSION NOTICE" has the meaning specified in
SECTION 4.15 of the Sale and Servicing Agreement.
"SERVICER LOSS RATIO" means, as of any date, the average of
the loss ratios (expressed as a percentage) for the three Accrual Periods
immediately preceding such date, as computed based on the methodology set forth
in the Servicer's then most recent report on Form 10-Q or Form 10-K, as
applicable, for calculation of net losses on automobile receivables originated
and serviced by the Servicer (excluding all automobile receivables originated or
acquired by MFN, TFC or SeaWest).
"SERVICER TERMINATION EVENT" means an event specified in
SECTION 10.1 of the Sale and Servicing Agreement.
"SERVICER TERMINATION SIDE LETTER" means the Servicer
Termination Side Letter dated November 15, 2005, from the Note Purchaser to the
Servicer, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.
"SERVICER'S CERTIFICATE" means a certificate completed and
executed by a Servicing Officer and delivered pursuant to SECTION 4.9 of the
Sale and Servicing Agreement, substantially in the form of EXHIBIT A to the Sale
and Servicing Agreement.
"SERVICING ASSUMPTION AGREEMENT" means the Servicing
Assumption Agreement, dated as of November 15, 2005, among Consumer Portfolio
Services, Inc., as Seller and Servicer, the Backup Servicer and the Trustee, as
the same may be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof.
"SERVICING FEE" has the meaning specified in SECTION 4.8 of
the Sale and Servicing Agreement.
"SERVICING FEE PERCENTAGE" means 2.50%, provided that if
Backup Servicer is the Servicer, the Servicing Fee Percentage shall be
determined in accordance with Servicing and Lockbox Processing Assumption
Agreement.
"SERVICING GUIDELINES" means CPS's established servicing
guidelines, as the same may be amended from time to time in accordance with
Section 9.1(k) of the Sale and Servicing Agreement.
"SERVICING OFFICER" means any Person whose name appears on a
list of Servicing Officers delivered to the Trustee and the Note Purchaser, as
the same may be amended, modified or supplemented from time to time.
"SETTLEMENT DATE" means, with respect to each Accrual Period,
the 15th day of the following calendar month, or if such day is not a Business
Day, the immediately following Business Day, commencing on December 15, 2005.
"SIMPLE INTEREST METHOD" means the method of allocating a
fixed level payment between principal and interest, pursuant to which the
portion of such payment that is allocated to interest is equal to the product of
the APR multiplied by the unpaid balance multiplied by the period of time
(expressed as a fraction of a year, based on the actual number of days in the
calendar month and the actual number of days in the calendar year) elapsed since
the preceding payment of interest was made and the remainder of such payment is
allocable to principal.
"SIMPLE INTEREST RECEIVABLE" means a Receivable under which
the portion of the payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
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"STANDARD & POOR'S" means Standard & Poor's Ratings Services,
a division of The XxXxxx-Xxxx Companies, Inc., or its successor.
"STATE" means any one of the 50 states of the United States of
America or the District of Columbia.
"SUBSIDIARY" means, with respect to any Person, any
corporation, partnership, association or other business entity of which a
majority of the outstanding shares of capital stock or other equity interests
having ordinary voting power for the election of directors or their equivalent
is at the time owned by such Person directly or through one or more
Subsidiaries.
"TAXES" has the meaning set forth in SECTION 3.04 of the Note
Purchase Agreement.
"TERM" has the meaning set forth in SECTION 2.05 of the Note
Purchase Agreement.
"TERMINATION DATE" means the date on which the Trustee shall
have received payment and performance of all Secured Obligations and disbursed
such payments in accordance with the Basic Documents.
"TFC" means The Finance Company, Inc., a Virginia corporation.
"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 the Indenture for the benefit of the Noteholders (including all
Collateral Granted to the Trustee) and the Note Purchaser, including all
proceeds thereof.
"TRUST RECEIPT" means a trust receipt in substantially the
form of EXHIBIT B to the Sale and Servicing Agreement.
"TRUSTEE" means Xxxxx Fargo Bank, National Association, a
national banking association, not in its individual capacity but as trustee
under the Indenture, or any successor trustee under the Indenture.
"TRUSTEE FEE" means (A) the fee payable to the Trustee on each
Settlement Date in an amount equal to the greater of $2,000 and (b) one-twelfth
of 0.04% of the aggregate outstanding principal amount of the Notes on the first
day of the related Accrual Period, and (B) any other amounts payable to the
Trustee pursuant to the Fee Schedule, including Custodial Fees.
"UCC" means the Uniform Commercial Code as in effect in the
relevant jurisdiction, as amended from time to time.
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