EXHIBIT 4.5
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SALE AND SERVICING
AGREEMENT
AMONG
CPS AUTO RECEIVABLES TRUST 2002-A, AS
ISSUER,
CPS RECEIVABLES CORP., AS
SELLER,
CONSUMER PORTFOLIO SERVICES, INC., AS
SERVICER
SYSTEMS & SERVICES TECHNOLOGIES, INC., AS
BACKUP SERVICER
AND
BANK ONE TRUST COMPANY, N.A., AS
STANDBY SERVICER AND TRUSTEE
DATED AS OF MARCH 1, 2002
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS..............................................................................2
SECTION 1.1 Definitions................................................................2
ARTICLE II CONVEYANCE OF RECEIVABLES.............................................................28
SECTION 2.1 Conveyance of Receivables................................................28
SECTION 2.2 [RESERVED]...............................................................29
SECTION 2.3 Transfers Intended as Sales..............................................33
SECTION 2.4 Further Encumbrance of Trust Property....................................33
ARTICLE III THE RECEIVABLES.......................................................................34
SECTION 3.1 Representations and Warranties of Seller.................................34
SECTION 3.2 Repurchase upon Breach...................................................40
SECTION 3.3 Custody of Receivables Files.............................................42
SECTION 3.4 Acceptance of Receivable Files by Trustee................................42
SECTION 3.5 Access to Receivable Files...............................................44
ARTICLE IV ADMINISTRATION AND SERVICING OF RECEIVABLES...........................................44
SECTION 4.1 Duties of the Servicer...................................................44
SECTION 4.2 Collection of Receivable Payments; Modifications of Receivables;
Lockbox Agreements.......................................................45
SECTION 4.3 Realization Upon Receivables.............................................47
SECTION 4.4 Insurance................................................................47
SECTION 4.5 Maintenance of Security Interests in Vehicles............................48
SECTION 4.6 Additional Covenants of Servicer.........................................49
SECTION 4.7 Purchase of Receivables Upon Breach of Covenant..........................49
SECTION 4.8 Servicing Fee............................................................49
SECTION 4.9 Servicer's Certificate...................................................50
SECTION 4.10 Annual Statement as to Compliance, Notice of Servicer
Termination Event........................................................50
SECTION 4.11 Annual Independent Accountants' Report...................................51
SECTION 4.12 Access to Certain Documentation and Information Regarding
Receivables..............................................................51
SECTION 4.13 Verification of Servicer's Certificate...................................52
SECTION 4.14 Retention and Termination of Servicer....................................53
SECTION 4.15 Fidelity Bond............................................................53
ARTICLE V TRUST ACCOUNTS; DISTRIBUTIONS; STATEMENTS TO SECURITYHOLDERS...........................53
SECTION 5.1 Establishment of Trust Accounts..........................................53
SECTION 5.2 [RESERVED]...............................................................56
SECTION 5.3 Certain Reimbursements to the Servicer...................................56
SECTION 5.4 Application of Collections...............................................57
SECTION 5.5 Withdrawals from Spread Account..........................................57
SECTION 5.6 Additional Deposits......................................................57
SECTION 5.7 Distributions............................................................58
SECTION 5.8 Note Distribution Account................................................60
SECTION 5.9 Certificate Distribution Account.........................................62
SECTION 5.10 [RESERVED]...............................................................64
SECTION 5.11 Statements to Securityholders............................................65
SECTION 5.12 Optional Deposits by the Note Insurer; Notice of Waivers.................67
ARTICLE VI THE NOTE POLICY........................................................................68
SECTION 6.1 Claims Under Note Policy.................................................68
SECTION 6.2 Preference Claims........................................................69
SECTION 6.3 Surrender of Note Policy.................................................70
ARTICLE VII [RESERVED]............................................................................70
ARTICLE VIII THE SELLER...........................................................................70
SECTION 8.1 Representations of Seller................................................70
SECTION 8.2 [RESERVED]...............................................................72
SECTION 8.3 Liability of Seller; Indemnities.........................................72
SECTION 8.4 Merger or Consolidation of, or Assumption of the Obligations of,
Seller...................................................................73
SECTION 8.5 Limitation on Liability of Seller and Others.............................73
SECTION 8.6 Seller May Own Certificates or Notes.....................................73
ARTICLE IX THE SERVICER...........................................................................74
SECTION 9.1 Representations of Servicer..............................................74
SECTION 9.2 Liability of Servicer; Indemnities.......................................75
SECTION 9.3 Merger or Consolidation of, or Assumption of the Obligations of, the
Servicer or Standby Servicer.............................................77
SECTION 9.4 Limitation on Liability of Servicer, Standby Servicer and Others.........78
SECTION 9.5 Delegation of Duties.....................................................79
SECTION 9.6 Servicer and Standby Servicer Not to Resign..............................79
ARTICLE X DEFAULT.................................................................................80
SECTION 10.1 Servicer Termination Event...............................................80
SECTION 10.2 Consequences of a Servicer Termination Event.............................81
SECTION 10.3 Appointment of Successor.................................................82
SECTION 10.4 Notification to Noteholders and Certificateholders.......................84
SECTION 10.5 Waiver of Past Defaults..................................................84
SECTION 10.6 Action Upon Certain Failures of the Servicer.............................84
ARTICLE XI TERMINATION............................................................................84
SECTION 11.1 Optional Purchase of All Receivables.....................................84
ARTICLE XII ADMINISTRATIVE DUTIES OF THE SERVICER................................................85
SECTION 12.1 Administrative Duties....................................................85
SECTION 12.2 Records..................................................................87
SECTION 12.3 Additional Information to be Furnished to the Issuer.....................87
ARTICLE XIII MISCELLANEOUS PROVISIONS............................................................88
SECTION 13.1 Amendment................................................................88
SECTION 13.2 Protection of Title to Trust.............................................89
SECTION 13.3 Notices..................................................................91
SECTION 13.4 Assignment...............................................................92
SECTION 13.5 Limitations on Rights of Others..........................................92
SECTION 13.6 Severability.............................................................92
SECTION 13.7 Separate Counterparts....................................................92
SECTION 13.8 Headings.................................................................93
SECTION 13.9 Governing Law............................................................93
SECTION 13.10 Assignment to Trustee....................................................93
SECTION 13.11 Nonpetition Covenants....................................................93
SECTION 13.12 Limitation of Liability of Owner Trustee and Trustee.....................93
SECTION 13.13 Independence of the Servicer.............................................94
SECTION 13.14 No Joint Venture.........................................................94
SECTION 13.15 Note Insurer as Controlling Party........................................94
SECTION 13.16 Acknowledgment of Roles..................................................95
SCHEDULES
Schedule A-Schedule of Receivables
Schedule B-Location for Delivery of Receivable Files
EXHIBITS
Exhibit A-[Reserved]
Exhibit B-Form of Servicer's Certificate
Exhibit C-Form of Trust Receipt
Exhibit D-Form of Servicing Officer's Certificate
Exhibit E-Form of Monthly Securityholder Statement
Exhibit F-1-Form of Trustee's Certificate Pursuant to
Section 3.2 or 3.4
Exhibit F-2-Form of Trustee's Certificate Pursuant to
Section 4.7 or 11.1
Exhibit G-Form of Investor Certification
SALE AND SERVICING AGREEMENT dated as of March 1, 2002, among CPS AUTO
RECEIVABLES TRUST 2002-A, a Delaware business trust (the "Issuer"), CPS
RECEIVABLES CORP., a California corporation (the "Seller"), CONSUMER PORTFOLIO
SERVICES, INC., a California corporation (the "Servicer"), SYSTEMS & SERVICES
TECHNOLOGIES, INC., as Backup Servicer, and BANK ONE TRUST COMPANY, N.A., a
national banking association, in its capacity as Standby Servicer and Trustee.
WHEREAS the Issuer desires to purchase a portfolio of receivables
arising in connection with motor vehicle retail installment sale contracts
acquired by Consumer Portfolio Services, Inc. through motor vehicle dealers and
independent finance companies;
WHEREAS the Seller has purchased such receivables from Consumer
Portfolio Services, Inc. and is willing to sell such receivables to the Issuer;
WHEREAS the Issuer desires to purchase additional receivables arising
in connection with motor vehicle retail installment sale contracts to be
acquired on or after the Closing Date by Consumer Portfolio Services, Inc.
through motor vehicle dealers and independent finance companies;
WHEREAS the Seller has agreements to purchase such additional
receivables from Consumer Portfolio Services, Inc. and is willing to sell such
receivables to the Issuer; 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
SECTION 1.1 DEFINITIONS. (a) Whenever used in this Agreement, the
following words and phrases shall have the following meanings:
"Accelerated Principal Distribution Amount" means (A) as of any Payment
Date occurring prior to the April 2003 Payment Date, so long as no Insurance
Agreement Event of Default or Insurance Agreement Indenture Cross Default shall
have occurred and no Trigger Event under the Spread Account Supplement has
occurred and the MFN Merger Trigger shall not have occurred, will equal the
lesser of (x) the product of (i) 0.66 and (ii) the excess, if any, of the
amounts eligible to be released from the Spread Account on the Payment Date over
the amounts distributable to the Class B Certificateholders on the Payment Date
pursuant to Section 5.9(a)(i), (ii) and (iii) (such amount, the "Net Excess Cash
Amount") and (y) the then outstanding principal balance of the Class B
Certificates; (B) as of any Payment Date occurring on or after the April 2003
Payment Date, will equal the lesser of (x) the Net Excess Cash Amount and (y)
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the then outstanding principal balance of the Class B Certificates; (C) as of
any Payment Date occurring prior to the April 2003 Payment Date on which a
Trigger Event under the Spread Account Supplement has occurred and is
continuing, will equal the lesser of (x) 100% of the Net Excess Cash Amount and
(y) the then outstanding principal balance of the Class B Certificates; (D) as
of any Payment Date occurring prior to the April 2003 Payment date on or after
which an Insurance Agreement Event of Default or Insurance Agreement Indenture
Cross Default shall have occurred, will equal the lesser of (x) 100% of the Net
Excess Cash Amount and (y) the then outstanding principal balance of the Class B
Certificates; and (E) as of any Payment Date on which the MFN Merger Trigger
Event has occurred, will equal the lesser of (x) 100% of the Net Excess Cash
Amount and (y) the then outstanding principal balance of the Class B
Certificates.
"Accountants' Report" means the report of a firm of nationally
recognized independent accountants described in Section 4.11.
"Addition Notice" means, with respect to any transfer of Subsequent
Receivables to the Trust pursuant to Section 2.2 of this Agreement, notice of
the Seller's election to transfer Subsequent Receivables to the Trust, such
notice to designate the related Subsequent Transfer Date and the approximate
principal amount of Subsequent Receivables to be transferred on such Subsequent
Transfer Date.
"Affiliate" of any Person means any Person who directly or indirectly
controls, is controlled by, or is under direct or indirect common control with
such Person. For purposes of this definition, the term "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling", "controlled
by" and "under common control with" have meanings correlative to the foregoing.
"Aggregate Note Balance" means, as of any date of determination, the
sum of the Class A-1 Note Balance and the Class A-2 Note Balance.
"Aggregate Principal Balance" means, with respect to any date of
determination, the sum of the Principal Balances for all Receivables (other than
(i) any Receivable that became a Liquidated Receivable prior to the end of the
related Collection Period and (ii) any Receivable that became a Purchased
Receivable prior to the end of the related Collection Period) as of the date of
determination.
"Agreement" means this Sale and Servicing Agreement, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms hereof.
"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
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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.
"Assumption Date" shall have the meaning specified in Section 10.3(a).
"Backup Servicer" mean Systems and Services Technologies, Inc., in its
capacity as Backup Servicer pursuant to the terms of the Backup Servicing
Agreement.
"Backup Servicing Agreement" means that certain Backup Servicing
Agreement dated as of March 7, 2002, between Systems & Services Technologies,
Inc., as Backup Servicer and Financial Security Assurance, Inc.
"Backup Servicing Fee" means the fee payable to the Backup Servicer so
long as the Backup Servicer is not the Servicer, on each Payment Date in the
amount specified in the Backup Servicing Agreement.
"Basic Documents" means this Agreement, the Certificate of Trust, the
Trust Agreement, the Indenture, the Receivables Purchase Agreement, each
Subsequent Receivables Purchase Agreement, each Subsequent Transfer Agreement,
the Master Spread Account Agreement, the Spread Account Supplement, the
Insurance Agreement, the Indemnification Agreement, the Lockbox Agreement, the
Placement Agency Agreement, the Notes, the Class B Certificates, the Residual
Certificates and other documents and certificates delivered in connection
therewith.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in the City of New York, the State in which the
Corporate Trust Office is located, the State in which the executive offices of
the Servicer are located and the State in which the principal place of business
of the Note Insurer is located shall be authorized or obligated by law,
executive order, or governmental decree to be closed.
"Casualty" means, with respect to a Financed Vehicle, the total loss or
destruction of such Financed Vehicle.
"Certificate" has the meaning assigned to such term in the Trust
Agreement.
"Certificate Distribution Account" means the account designated as
such, established and maintained pursuant to Section 5.1.
"Certificate Register" has the meaning assigned to such term in the
Trust Agreement.
"Certificateholder" means the person in whose name a Class B
Certificate or a Residual Certificate is registered on the Certificate Register.
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"Class" means the Class A-1 Notes, the Class A-2 Notes, or the Class B
Certificates, as the context requires.
"Class A-1 Interest Rate" means 3.741% per annum.
"Class A-1 Final Scheduled Payment Date" means the January 2006 Payment
Date.
"Class A-1 Note Balance" on the Closing Date will equal the Original
Class A-1 Note Balance and on any date thereafter will equal the Original Class
A-1 Note Balance reduced by all distributions of principal previously made in
respect of the Class A-1 Notes.
"Class A-1 Note Pool Factor" means as of the close of business on any
Payment Date, a seven-digit decimal figure equal to the Class A-1 Note Balance
divided by the Original Class A-1 Note Balance.
"Class A-1 Noteholders' Interest Carryover Shortfall" means, with
respect to any Payment Date, the excess of the Class A-1 Noteholders' Interest
Distributable Amount for the preceding Payment Date over the amount that was
actually deposited in the Note Distribution Account on such preceding Payment
Date on account of the Class A-1 Noteholders' Interest Distributable Amount.
"Class A-1 Noteholders' Interest Distributable Amount" means, with
respect to any Payment Date, the sum of the Class A-1 Noteholders' Monthly
Interest Distributable Amount for such Payment Date and the Class A-1
Noteholders' Interest Carryover Shortfall for such Payment Date, plus interest
on such Class A-1 Noteholders' Interest Carryover Shortfall, to the extent
permitted by law, at the Class A-1 Interest Rate to, but excluding, the current
Payment Date.
"Class A-1 Noteholders' Monthly Interest Distributable Amount" means
(a) for the first Payment Date, an amount equal to the product of (i) the Class
A-1 Interest Rate, (ii) the Original Class A-1 Note Balance and (iii) a
fraction, the numerator of which is the number of days from and including the
Closing Date to and including April 14, 2002 (assuming that there are 30 days in
each month of the year) and the denominator of which is 360; and (b) for any
Payment Date after the first Payment Date, an amount equal to the product of (i)
one-twelfth of the Class A-1 Interest Rate and (ii) the Class A-1 Note Balance
as of the close of the preceding Payment Date (after giving effect to all
distributions on account of principal on such preceding Payment Date).
"Class A-1 Notes" has the meaning assigned to such term in the
Indenture.
"Class A-2 Final Scheduled Payment Date" means the December 2008
Payment Date.
"Class A-2 Interest Rate" means 4.814% per annum.
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"Class A-2 Note Balance" on the Closing Date will equal the Original
Class A-2 Note Balance and on any date thereafter will equal the Original Class
A-2 Note Balance reduced by all distributions of principal previously made in
respect of the Class A-2 Notes.
"Class A-2 Note Pool Factor" means as of the close of business on any
Payment Date, a seven-digit decimal figure equal to the Class A-2 Note Balance
divided by the Original Class A-2 Note Balance.
"Class A-2 Noteholders' Interest Carryover Shortfall" means, with
respect to any Payment Date, the excess of the Class A-2 Noteholders' Interest
Distributable Amount for the preceding Payment Date over the amount that was
actually deposited in the Note Distribution Account on such preceding Payment
Date on account of the Class A-2 Noteholders' Interest Distributable Amount.
"Class A-2 Noteholders' Interest Distributable Amount" means, with
respect to any Payment Date, the sum of the Class A-2 Noteholders' Monthly
Interest Distributable Amount for such Payment Date and the Class A-2
Noteholders' Interest Carryover Shortfall for such Payment Date, plus interest
on such Class A-2 Noteholders' Interest Carryover Shortfall, to the extent
permitted by law, at the Class A-2 Interest Rate to, but excluding, the current
Payment Date.
"Class A-2 Noteholders' Monthly Interest Distributable Amount" means
(a) for the first Payment Date, an amount equal to the product of (i) the Class
A-2 Interest Rate, (ii) the Original Class A-2 Note Balance and (iii) a
fraction, the numerator of which is the number of days from and including the
Closing Date to and including April 14, 2002 (assuming that there are 30 days in
each month of the year) and the denominator of which is 360; and (b) for any
Payment Date after the first Payment Date, an amount equal to the product of (i)
one-twelfth of the Class A-2 Interest Rate and (ii) the Class A-2 Note Balance
as of the close of the preceding Payment Date (after giving effect to all
distributions on account of principal on such preceding Payment Date).
"Class A-2 Notes" has the meaning assigned to such term in the
Indenture.
"Class B Certificate" has the meaning assigned to such term in the
Trust Agreement.
"Class B Certificate Balance" on the Closing Date will equal the
Original Class B Certificate Balance and on any date thereafter will equal the
Original Class B Certificate Balance reduced by all distributions of principal
previously made in respect of the Class B Certificates.
"Class B Certificate Final Scheduled Payment Date" means the Payment
Date occurring in December 15, 2008.
"Class B Certificate Interest Rate" means 12.00% per annum.
6
"Class B Certificate Pool Factor" means as of the close of business on
any Payment Date, a seven-digit decimal figure equal to the Class B Certificate
Balance divided by the Original Class B Certificate Balance.
"Class B Certificateholders' Interest Carryover Shortfall" means, with
respect to any Payment Date, the excess of the Class B Certificateholders'
Interest Distributable Amount for the preceding Payment Date over the amount
that was actually deposited in the Certificate Distribution Account on such
preceding Payment Date on account of the Class B Certificateholders' Interest
Distributable Amount.
"Class B Certificateholders' Interest Distributable Amount" means, with
respect to any Payment Date, the sum of the Class B Certificateholders' Monthly
Interest Distributable Amount for such Payment Date and the Class B
Certificateholders' Interest Carryover Shortfall for such Payment Date, plus
interest on such Class B Certificateholders' Interest Carryover Shortfall, to
the extent permitted by law, at the Class B Certificate Interest Rate to, but
excluding, the current Payment Date.
"Class B Certificateholders' Monthly Interest Distributable Amount"
means (a) for the first Payment Date, an amount equal to the product of (i) the
Class B Certificate Interest Rate, (ii) Original Class B Certificate Balance and
(iii) a fraction, the numerator of which is the actual number of days from and
including the Closing Date to and including April 14, 2002 (assuming that there
are 30 days in each month of the year) and the denominator or which is 360, and
(b) for any Payment Date after the first Payment Date, an amount equal to the
product of (i) one-twelfth of the Class B Certificate Interest Rate and (ii) the
Class B Certificate Balance as of the close of the preceding Payment Date after
giving effect to all distributions on account of the principal on such preceding
Payment Date.
"Class B Certificateholders' Percentage" means (i) for each Payment
Date prior to the Payment Date on which the Class A-2 Note Balance is reduced to
zero, 17%; (ii) on the Payment Date on which the Class A-2 Note Balance is
reduced to zero, (a) 17% until the Class A-2 Note Balance has been reduced to
zero, and (b) with respect to any remaining portion of the Principal
Distributable Amount, 100%; (iii) for each Payment Date after the Payment Date
on which the Class A-2 Note Balance is reduced to zero, 100%; and (iv) on the
Payment Date on which the Class B Certificate Balance is reduced to zero, (a)
100% until the Class B Certificate Balance has been reduced to zero, and (b)
with respect to any remaining portion of the Principal Distributable Amount, 0%.
"Class B Certificateholders' Principal Carryover Shortfall" means, as
of the close business on any Payment Date, the excess of the Class B Certificate
Principal Distributable Amount for such Payment Date over the amount in respect
of principal that is actually deposited in the Certificate Distribution Account
on such Payment Date.
"Class B Certificateholders' Principal Distributable Amount" means, as
of any Payment Date, an amount equal to the sum of (i) the Class B
Certificateholders' Percentage (as of such Payment Date) of the Principal
Distributable Amount and (ii) any principal which was payable in respect of the
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Class B Certificates on a preceding Payment Date but was not so paid. The Class
B Certificateholders' Principal Distributable Amount on the Final Scheduled
Payment Date for the Class B Certificates will equal the lesser of (i) the Class
B Certificate Balance and (ii) the Class B Certificateholders' Percentage of the
Principal Distributable Amount.
"Class B Prepayment Amount" means, as of the Payment Date on or
immediately following the last day of the Funding Period, an amount equal to
17.00% of the Pre-Funded Amount on such Payment Date (after giving effect to any
application thereof to acquire Subsequent Receivables on such Payment Date).
"Closing Date" means March 7, 2002.
"Code" shall have the meaning specified in Section 3.2.
"Collateral" shall have the meaning assigned to such term in the
Indenture.
"Collateral Agent" means either of Bank One Trust Company, N.A. or
Xxxxx Fargo Bank Minnesota, National Association, as applicable, in its capacity
as Collateral Agent under the Master Spread Account Agreement.
"Collateral Agent Fee" means (A) the fee payable to the Collateral
Agent on each Payment Date in an amount equal to the greater of (a) $375 and (b)
one-twelfth of 0.0075% of the Aggregate Note Balance on the last day of the
second preceding Collection Period; provided, however, that on the first Payment
Date the Collateral Agent will be entitled to receive an amount equal to the
greater of (a) $375 and (b) the product of (i) the percentage equivalent of a
fraction the numerator of which is the number of days from the Closing Date to
but excluding the first Payment Date and the denominator of which is 360, (ii)
0.0075% and (iii) the Original Aggregate Note Balance, and (B) any other amounts
payable pursuant to the Fee Schedule.
"Collateral Balance" means, as of any date of determination, the sum of
(i) the Pool Balance as of such date, and (ii) the Pre-Funded Amount as of such
date.
"Collection Account" means the account designated as such, established
and maintained pursuant to Section 5.1.
"Collection Period" means, with respect to each Payment Date, the
calendar month preceding the calendar month in which such Payment Date occurs.
Any amount stated "as of the close of business on the last day of a Collection
Period" shall give effect to the following calculations as determined as of the
end of the day on such last day: (i) all applications of collections, and (ii)
all distributions.
"Contract" means a motor vehicle retail installment sale contract.
"Controlling Party" shall be determined in accordance with the
provisions of Section 13.15.
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"Corporate Trust Office" means (i) with respect to the Owner Trustee,
the principal corporate trust office of the Owner Trustee, which at the time of
execution of this agreement is Xxxxxx Square North, 0000 X. Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000-0000, and (ii) with respect to the Trustee and
Collateral Agent, the principal corporate trust office of the Trustee, which at
the time of execution of this agreement is 000 Xxxxx Xxxxxxx Xxxxxx, 00xx Xxxxx,
Xxxxxxx, Xxxxxxx 00000, Attention: Structured Finance CPS 2002-A.
"CPS" means Consumer Portfolio Services, Inc., a California corporation
and its successors.
"Cram Down Loss" means, with respect to a Receivable (other than a
Liquidated Receivable), if a court of appropriate jurisdiction in an insolvency
proceeding issues a ruling that reduces the amount owed on a Receivable or
otherwise modifies or restructures the Scheduled Receivable Payments to be made
thereon, an amount equal to the sum of (a) the Principal Balance of the
Receivable immediately prior to such order minus the Principal Balance of such
receivable as so reduced, modified or restructured, plus (b) if such court shall
have issued an order reducing the effective rate of interest on such Receivable,
an amount equal to the excess of (i) the net present value (using as a discount
rate a rate equal to the adjusted APR on such Receivable) of the Scheduled
Receivable Payments as so modified or restructured over (ii) the net present
value (using as a discount rate a rate equal to the original APR on such
Receivable) of the Scheduled Receivable Payments as so modified or restructured.
A Cram Down Loss will be deemed to have occurred on the date of issuance of such
order.
"Dealer" means, with respect to a Receivable, the seller of the related
Financed Vehicle, who originated and assigned such Receivable to CPS, who in
turn sold such Receivable to the Seller.
"Deficiency Claim Amount" shall have the meaning set forth in Section
5.5(a).
"Deficiency Claim Date" means, with respect to any Payment Date, the
fourth Business Day immediately preceding such Payment Date.
"Deficiency Notice" shall have the meaning set forth in Section 5.5(a).
"Delegation Notice" shall have the meaning specified in Section 9.5.
"Delivery" means, when used with respect to Trust Account Property:
(terms used in the following provisions that are not otherwise defined are used
as defined in Articles 8 and 9 of the UCC):
(i) in the case of such Trust Account Property consisting of
security entitlements not covered by the following paragraphs in this
definition of Delivery, by (1) causing the Trustee or related
securities intermediary to indicate by book entry that a financial
asset related to such securities entitlement has been credited to the
related Trust Account and (2) causing the Trustee or related securities
9
intermediary to indicate that the Trustee is the sole entitlement
holder of each such securities entitlement and causing the Trustee or
related securities intermediary to agree that it will comply with
entitlement orders originated by the Trustee with respect to each such
security entitlement without further consent by the Issuer;
(ii) in the case of each certificated security (other than a
clearing corporation security (as defined below)) or instrument by: (1)
the delivery of such certificated security or instrument to the Trustee
or related securities intermediary registered in the name of the
Trustee or related securities intermediary or its respective affiliated
nominee or endorsed to the Trustee or related securities intermediary
in blank; (2) causing the Trustee or related securities intermediary to
continuously indicate by book-entry that such certificated security or
instrument is credited to the related Trust Account; and (3) the
Trustee or related securities intermediary maintaining continuous
possession of such certificated security or instrument;
(iii) in the case of each uncertificated security (other than
a clearing corporation security (as defined below)), by causing: (1)
such uncertificated security to be continuously registered in the books
of the issuer thereof to the Trustee or related securities
intermediary; and (2) the Trustee or related securities intermediary to
continuously indicate by book-entry that such uncertificated security
is credited to the related Trust Account;
(iv) in the case of each security in the custody of or
maintained on the books of a clearing corporation (a "clearing
corporation security"), by causing: (1) the relevant clearing
corporation to credit such clearing corporation security to the
securities account of the Trustee or related securities intermediary at
such clearing corporation; and (2) the Trustee or related securities
intermediary to continuously indicate by book-entry that such clearing
corporation security is credited to the related Trust Account;
(v) in the case of each security issued or guaranteed by the
United States of America or agency or instrumentality thereof (other
than a security issued by the Government National Mortgage Association)
representing a full faith and credit obligation of the United States of
America and that is maintained in book-entry records of the Federal
Reserve Bank of New York ("FRBNY") (each such security, a "government
security"), by causing: (1) the creation of a security entitlement to
such government security by the credit of such government security to
the securities account of the Trustee or related securities
intermediary at the FRBNY; and (2) the Trustee or related securities
intermediary to continuously indicate by book-entry that such
government security is credited to the related Trust Account.
(vi) in each case of delivery contemplated pursuant to clauses
(ii) through (v) hereof, the Trustee shall make appropriate notations
on its records, and shall cause the same to be made on the records of
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its nominees, indicating that such Trust Property which constitutes a
security is held in trust pursuant to and as provided in this
Agreement.
"Depositor" shall mean the Seller in its capacity as Depositor under
the Trust Agreement.
"Determination Date" means the earlier of (i) the seventh Business Day
of each calendar month and (ii) the fifth Business Day preceding the related
Payment Date.
"Draw Date" means with respect to any Payment Date, the third Business
Day immediately preceding such Payment Date.
"Eligible Account" means (i) a segregated trust account that is
maintained with a depository institution acceptable to the Note Insurer (so long
as an Insurer Default shall not have occurred and be continuing), or (ii) a
segregated direct deposit account maintained with a depository institution or
trust company organized under the laws of the United States of America, or any
of the States thereof, or the District of Columbia, having a certificate of
deposit, short-term deposit or commercial paper rating of at least "A-1" by
Standard & Poor's and "Prime-1" by Moody's and (so long as an Insurer Default
shall not have occurred and be continuing) acceptable to the Note Insurer.
"Eligible Investments" mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(i) direct obligations of, and obligations fully guaranteed as
to the full and timely payment by, the United States of America;
(ii) demand deposits, time deposits or certificates of deposit
of any depository institution or trust company incorporated under the
laws of the United States of America or any State thereof (or any
domestic branch of a foreign bank) and subject to supervision and
examination by Federal or State banking or depository institution
authorities; provided, however, that at the time of the investment or
contractual commitment to invest therein, the commercial paper or other
short-term unsecured debt obligations (other than such obligations the
rating of which is based on the credit of a Person other than such
depository institution or trust company) thereof shall be rated "A-1+"
by Standard & Poor's and "Prime-1" by Moody's;
(iii) commercial paper that, at the time of the investment or
contractual commitment to invest therein, is rated "A-1+" by Standard &
Poor's and "Prime-1" by Moody's;
(iv) bankers' acceptances issued by any depository institution
or trust company referred to in clause (b) above;
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(v) repurchase obligations with respect to any security that
is a direct obligation of, or fully guaranteed as to the full and
timely payment by, the United States of America or any agency or
instrumentality thereof the obligations of which are backed by the full
faith and credit of the United States of America, in either case
entered into with (i) a depository institution or trust company (acting
as principal) described in clause (b) or (ii) a depository institution
or trust company whose commercial paper or other short term unsecured
debt obligations are rated "A-1+" by Standard & Poor's and "Prime-1" by
Moody's and long term unsecured debt obligations are rated "AAA" by
Standard & Poor's and "Aaa" by Moody's;
(vi) with the prior written consent of the Note Insurer (so
long as an Insurer Default shall not have occurred and be continuing)
money market mutual funds registered under the Investment Company Act
of 1940, as amended, having a rating, at the time of such investment,
from each of the Rating Agencies in the highest investment category
granted thereby; PROVIDED that the Note Insurer shall not be required
to give its prior written consent for the following Bank One Money
Market Funds: Institutional Prime Money Market Fund; and
(vii) any other investment as may be acceptable to the Note
Insurer, as evidenced by a writing to that effect, as may from time to
time be confirmed in writing to the Trustee by the Note Insurer.
Any of the foregoing Eligible Investments may be purchased by or
through the Owner Trustee or the Trustee or any of their respective Affiliates.
"Eligible Servicer" means a Person approved to act as "Servicer" under
this Agreement by a Note Majority.
"ERISA" shall have the meaning specified in Section 3.2.
"FDIC" means the Federal Deposit Insurance Corporation.
"Fee Schedule" means that certain (i) Bond Trustee Fee Schedule, and
(ii) Document Custody Fee Schedule, each dated August 7, 2001 and delivered to
Seller by Bank One Trust Company, N.A.
"Final Scheduled Payment Date" means with respect to the Class A-1
Notes, the Class A-1 Final Scheduled Payment Date, with respect to the Class A-2
Notes, the Class A-2 Final Scheduled Payment Date, and with respect to the Class
B Certificates, the Class B Certificate Final Scheduled Payment Date.
"Financed Vehicle" means a new or used automobile, light truck, van or
minivan, together with all accessions thereto, securing an Obligor's
indebtedness under a Receivable.
"Funding Period" means the period beginning on and including the
Closing Date and ending on the first to occur of (a) the first date on which the
amount on deposit in the Pre-Funding Account (after giving effect to any
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transfers therefrom in connection with the transfer of Subsequent Receivables to
the Issuer on such date) is less than $100,000, (b) the date on which an Event
of Default or a Servicer Termination Event occurs, (c) the date on which an
Insolvency Event occurs with respect to the Seller and (d) May 15, 2002.
"Holder" shall have the meaning specified in the Indenture.
"Indemnification Agreement" means the Indemnification Agreement among
the Note Insurer, CPS, the Seller and the Placement Agent, dated as of March 7,
2002, as such agreement may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.
"Indenture" means the Indenture dated as of March 1, 2002, between the
Issuer and Bank One Trust Company, N.A., as Trustee, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.
"Initial Cutoff Date" means the close of business on February 28, 2002.
"Initial Receivable" means each retail installment sale contract for a
Financed Vehicle which, as of the Closing Date, is listed on Schedule A (which
Schedule A may be in the form of microfiche) and all rights and obligations
thereunder except for Initial Receivables that shall have become Purchased
Receivables.
"Initial Spread Account Deposit" shall have the meaning specified in
the Spread Account Supplement.
"Initial Trust Property" means the property and proceeds conveyed
pursuant to Section 2.1, together with certain monies received with respect to
the Initial Receivables after the Initial Cutoff Date, the Insurance Policies,
the Collection Account (including all Eligible Investments therein and all
proceeds therefrom), the Lockbox Account and certain other rights under this
Agreement. Although the Seller has pledged the Series 2002-A Spread Account to
the Collateral Agent pursuant to the Master Spread Account Agreement, the Series
2002-A Spread Account shall not under any circumstances be deemed to be a part
of or otherwise includable in the Trust or the Initial Trust Property.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a petition against such Person or the entry of a decree or order for
relief by a court having jurisdiction in the premises in respect of such Person
or any substantial part of its property in an involuntary case under any
applicable federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official for such Person or for any substantial
part of its property, or ordering the winding-up or liquidation or such Person's
affairs, and such petition, decree or order shall remain unstayed and in effect
for a period of 60 consecutive days; or (b) the commencement by such Person of a
voluntary case under any applicable federal or state bankruptcy, insolvency or
13
other similar law now or hereafter in effect, or the consent by such Person to
the entry of an order for relief in an involuntary case under any such law, or
the consent by such Person to the appointment of or taking possession by, a
receiver, liquidator, assignee, custodian, trustee, sequestrator, or similar
official for such Person or for any substantial part of its property, or the
making by such Person of any general assignment for the benefit of creditors, or
the failure by such Person generally to pay its debts as such debts become due,
or the taking of action by such Person in furtherance of any of the foregoing.
"Insurance Agreement" means the Insurance and Indemnity Agreement among
the Trust, CPS, the Seller, CPS Receivables Funding Trust and the Note Insurer,
dated as of March 1, 2002, as such agreement may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
"Insurance Agreement Event of Default" means an "Event of Default" as
defined in the Insurance Agreement.
"Insurance Policy" means, with respect to a Receivable, any insurance
policy (including the insurance policies described in Section 4.4 hereof)
benefiting the holder of the Receivable providing loss or physical damage,
credit life, credit disability, theft, mechanical breakdown or similar coverage
with respect to the Financed Vehicle or the Obligor.
"Insurer Default" shall mean any one of the following events shall have
occurred and be continuing:
(i) the Note Insurer fails to make a payment required under
the Policy in accordance with its terms;
(ii) the Note Insurer (A) files any petition or commences any
case or proceeding under any provision or chapter of the United States
Bankruptcy Code, the New York Department of Insurance Code or similar
Federal or State law relating to insolvency, bankruptcy,
rehabilitation, liquidation or reorganization, (B) makes a general
assignment for the benefit of its creditors or (C) has an order for
relief entered against it under the United States Bankruptcy Code or
any other similar Federal or State law relating to insolvency,
bankruptcy, rehabilitation, liquidation or reorganization which is
final and nonappealable; or
(iii) a court of competent jurisdiction or the New York
Department of Insurance or other competent regulatory authority enters
a final and nonappealable order, judgment or decree (A) appointing a
custodian, trustee, agent or receiver for the Note Insurer or for all
or any material portion of its property or (B) authorizing the taking
of possession by a custodian, trustee, agent or receiver of the Note
Insurer (or the taking of possession of all or any material portion of
the property of the Note Insurer).
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"Interest Rate" means the Class A-1 Interest Rate, the Class A-2
Interest Rate or the Class B Certificate Interest Rate, as applicable.
"Interest Reserve Account" means the account designated as such,
established and maintained pursuant to Section 5.2.
"Interest Reserve Account Initial Deposit" means $150,240.
"Investment Earnings" means, with respect to any Payment Date and any
Trust Account, the investment earnings on amounts on deposit in such Trust
Account on such Payment Date.
"Issuer" means CPS Auto Receivables Trust 2002-A.
"Lien" means a security interest, lien, charge, pledge, equity, or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Receivable by operation of law.
"Lien Certificate" means, with respect to a Financed Vehicle, an
original certificate of title, certificate of lien or other notification issued
by the Registrar of Titles of the applicable state to a secured party which
indicates that the lien of the secured party on the Financed Vehicle is recorded
on the original certificate of title. In any jurisdiction in which the original
certificate of title is required to be given to the obligor, the term "Lien
Certificate" shall mean only a certificate or notification issued to a secured
party.
"Liquidated Receivable" means any Receivable (i) which has been
liquidated by the Servicer through the sale of the Financed Vehicle or (ii) for
which the related Financed Vehicle has been repossessed and 90 days have elapsed
since the date of such repossession or (iii) as to which an Obligor has failed
to make more than 90% of a Scheduled 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 Collection Period or (iv) with respect to which proceeds
have been received which, in the Servicer's judgment, constitute the final
amounts recoverable in respect of such Receivable. 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.
"Lockbox Account" means an account maintained on behalf of the Trustee
by the Lockbox Bank pursuant to Section 4.2(b).
"Lockbox Agreement" means the Multiparty Agreement Relating to Lockbox
Services, dated as of March 7, 2002, by and among the Lockbox Processor, the
Servicer, the Trust and the Trustee, as such agreement may be amended,
supplemented or otherwise modified from time to time, unless the Trustee shall
cease to be a party thereunder, or such agreement shall be terminated in
accordance with its terms, in which event "Lockbox Agreement" shall mean such
other agreement, in form and substance acceptable to the Controlling Party,
among the Servicer, the Trustee and the Lockbox Processor.
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"Lockbox Bank" means, as of any date, Bank One, N.A. or another
depository institution named by the Servicer and acceptable to the Controlling
Party at which the Lockbox Account is established and maintained as of such
date.
"Lockbox Processor" means Regulus West LLC and its successors and
assigns.
"Mandatory Redemption Date" means the first Payment Date occurring on
or after the last day of the Funding Period.
"Master Spread Account Agreement" means the Master Spread Account
Agreement amended and restated as of December 1, 1998 among the Note Insurer,
the Seller and Xxxxx Fargo Bank Minnesota, National Association, as the same may
be modified, supplemented or otherwise amended in accordance with the terms
thereof.
"MFN" means MFN Financial Corporation.
"MFN Merger Trigger Event" means CPS's merger with MFN shall not have
been consummated on or prior to March 15, 2002.
"Moody's" means Xxxxx'x Investors Service, Inc., or its successor.
"Net Liquidation Proceeds" means, with respect to a Liquidated
Receivable, all amounts realized with respect to such Receivable during the
Collection Period in which such Receivable became a Liquidated 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 (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.
"Non-Certificated Title States" means the states of Arizona, Kansas,
Kentucky, Maine, Maryland, Michigan, Minnesota, Montana, NewYork, Oklahoma,
Wisconsin and such other states in which the applicable Department of Motor
Vehicles or similar authority issues evidence of title to a Financed Vehicle in
a non-certificated form.
"Note" shall have the meaning provided in Section 1.1 of the Indenture.
"Note Balance" means, with respect to the Class A-1 Notes, the Class
A-1 Note Balance and, with respect to the Class A-2 Notes, the Class A-2 Note
Balance.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.1.
"Note Insurer" means Financial Security Assurance Inc., a stock
insurance company organized and created under the laws of the State of New York,
or its successors in interest.
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"Note Majority" means the Holders evidencing more than 50% of the Class
A-1 Note Balance and Holders evidencing more than 50% of the Class A-2 Note
Balance.
"Note Policy" means the Financial Guaranty Insurance Policy issued by
the Note Insurer for the benefit of the Holders of the Notes issued under the
Indenture, including any endorsements thereto.
"Note Policy Claim Amount" with respect to any Payment Date, has the
meaning specified in Section 6.1.
"Note Pool Factor" means, with respect to the Class A-1 Notes, the
Class A-1 Note Pool Factor and with respect to the Class A-2 Notes, the Class
A-2 Note Pool Factor.
"Note Prepayment Amount" means, as of the Payment Date on or
immediately following the last day of the Funding Period, an amount equal to
83.00% of the Pre-Funded Amount on such Payment Date (after giving effect to any
application thereof to acquire Subsequent Receivables on such Payment Date).
"Noteholder" shall have the meaning specified in the Indenture.
"Noteholders' Interest Distributable Amount" means, with respect to any
Payment Date, the sum of (i) the Class A-1 Noteholders' Interest Distributable
Amount for such Payment Date and (ii) the Class A-2 Noteholders' Interest
Distributable Amount for such Payment Date.
"Noteholders' Percentage" means (i) for each Payment Date prior to the
Payment Date on which the outstanding principal balance of the Class B
Certificates is reduced to zero, 83%, (ii) on the Payment Date on which the
outstanding principal balance of the Class B Certificates is reduced to zero,
(a) 83% until the outstanding principal balance of the Class B Certificates is
reduced to zero and (b) with respect to any remaining portion of the Xxxxxxxxx
Xxxxxxxxxxxxx Xxxxxx, 000%, (xxx) for each Payment Date after the Payment Date
on which the outstanding principal balance of the Class B Certificates is
reduced to zero, 100%, and (iv) on the Payment Date on which the Class A-2 Note
Balance is reduced to zero, (a) 100% until the Class A-2 Note Balance is reduced
to zero and (b) with respect to any remaining portion of the Principal
Distributable Amount, 0%.
"Noteholders' Principal Carryover Shortfall" means, with respect to any
Payment Date, the excess of the Noteholders' Principal Distributable Amount for
the preceding Payment Date over the amount that was actually deposited in the
Note Distribution Account on such Payment Date on account of the Noteholders'
Principal Distributable Amount.
"Noteholders' Principal Distributable Amount" means, with respect to
any Payment Date (other than the Final Scheduled Payment Date for any Class of
Notes), the product of (x) the Noteholders' Percentage and (y) the Principal
Distributable Amount. The Noteholders' Principal Distributable Amount on the
17
Final Scheduled Payment Date for a Class of Notes will equal the lesser of (i)
the Note Balance for such Class of Notes and (ii) the product of (x) the
Noteholders' Percentage and (y) the Principal Distributable Amount.
"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 CPS, the Seller or the Servicer,
as appropriate.
"Opinion of Counsel" means a written opinion of counsel who may but
need not be counsel to the Seller or the Servicer, which counsel shall be
reasonably acceptable to the Trustee and the Note Insurer and which opinion
shall be acceptable in form and substance to the Trustee and, if such opinion or
a copy thereof is required by the provisions of this Agreement to be delivered
to the Note Insurer, to the Note Insurer.
"Original Aggregate Note Balance" means $45,650,000.00.
"Original Class A-1 Note Balance" means $26,500,000.00.
"Original Class A-2 Note Balance" means $19,150,000.00.
"Original Class B Certificate Balance" means $9,350,000.
"Original Collateral Balance" means the sum of (i) the Original Pool
Balance, and (ii) the initial Pre-Funded Amount.
"Original Pool Balance" means the Pool Balance as of the Initial Cutoff
Date.
"Other Conveyed Property" means all property conveyed by the Seller to
the Trust pursuant to Sections 2.1(b) through (i) of this Agreement.
"Owner Trust Estate" has the meaning assigned to such term in the Trust
Agreement.
"Owner Trustee" means Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, its successors
in interest or any successor Owner Trustee under the Trust Agreement.
"Payment Date" means, with respect to each Collection Period, the 15th
day of the following calendar month, or if such day is not a Business Day, the
immediately following Business Day, commencing on April 15, 2002.
"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.
18
"Physical Property" has the meaning assigned to such term in the
definition of "Delivery" above.
"Placement Agent" means Greenwich Capital Markets, Inc.
"Pool Balance" means, as of any date of determination, the aggregate
Principal Balance of the Receivables (excluding Purchased Receivables and
Liquidated Receivables).
"Post-Office Box" means the separate post-office box in the name of the
Seller for the benefit of the Securityholders and the Note Insurer, established
and maintained pursuant to Section 4.2.
"Preference Claim" shall have the meaning specified in Section 6.2(b).
"Pre-Funded Amount" means, with respect to any Payment Date, the amount
on deposit in the Pre-Funding Account, (exclusive of Pre-Funding Earnings) which
initially shall be $12,566,542.43.
"Pre-Funding Account" has the meaning specified in Section 5.1.
"Pre-Funding Earnings" means any Investment Earnings on amounts on
deposit in the Pre-Funding Account.
"Principal Balance" of a Receivable, as of the close of business on the
last day of a Collection Period means the Amount Financed minus the sum of the
following amounts without duplication: (i) in the case of a Rule of 78's
Receivable, that portion of all Scheduled Receivable Payments actually received
on or prior to such day allocable to principal using the actuarial or constant
yield method; (ii) in the case of a Simple Interest Receivable, that portion of
all Scheduled Receivable Payments actually received on or prior to such day
allocable to principal using the Simple Interest Method; (iii) any payment of
the Purchase Amount with respect to the Receivable allocable to principal; (iv)
any Cram Down Loss in respect of such Receivable; and (v) any prepayment in full
or any partial prepayment applied to reduce the principal balance of the
Receivable.
"Principal Distributable Amount" means, with respect to any Payment
Date, the sum of (i) collections on Receivables (other than Liquidated
Receivables) allocable to principal including full and partial prepayments
received during the preceding Collection Period; (ii) the portion of the
Purchase Amount allocable to principal of each Receivable that became a
Purchased Receivable as of the last day of the preceding Collection Period and,
at the option of the Note Insurer, the Principal Balance of each Receivable that
was required to be but was not so purchased or repurchased (without duplication
of amounts referred to in clause (i) above); (iii) the Principal Balance of each
Receivable that first became a Liquidated Receivable during the preceding
Collection Period (without duplication of the amounts included in clause (i)
19
above); (iv) the principal portion of any payments made by CPS to the Trust or
the Securityholders pursuant to its indemnification obligations under the Basic
Documents; (v) the aggregate amount of Cram Down Losses with respect to the
Receivables that have occurred during the preceding Collection Period (without
duplication of amounts referred to in clauses (i) through (iv) above); and (vi)
following the acceleration of the Notes pursuant to Section 5.2 of the
Indenture, the amount of money or property collected pursuant to Section 5.4 of
the Indenture since the preceding Determination Date by the Trustee or
Controlling Party for distribution pursuant to Section 5.7 hereof.
"Program" shall have the meaning specified in Section 4.11.
"Purchase Amount" means, with respect to a Receivable, the amount, as
of the close of business on the last day of a Collection Period, required to
prepay in full such Receivable under the terms thereof including interest to the
end of the month of purchase.
"Purchased Receivable" means a Receivable purchased as of the close of
business on the last day of a Collection Period by the Servicer pursuant to
Section 4.7 or repurchased by the Seller or CPS pursuant to Section 3.2 or
Section 11.1(a).
"Rating Agency" means each of Xxxxx'x and Standard & Poor's, and any
successors thereof. If no such organization or successor maintains a rating on
the Securities, "Rating Agency" shall be a nationally recognized statistical
rating organization or other comparable Person designated by the Note Insurer
(so long as an Insurer Default shall not have occurred and be continuing),
notice of which designation shall be given to the Trustee, the Owner Trustee and
the Servicer.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 3 days' (or such shorter period as shall be
acceptable to each Rating Agency) prior notice thereof and that each of the
Rating Agencies shall have notified the Seller, the Servicer, the Note Insurer,
the Owner Trustee and the Trustee in writing that such action will not result in
a reduction or withdrawal of the then current rating of the Class A Notes
(including the ratings on the Class A Notes without giving effect to the Note
Policy).
"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.
"Receivable" means an Initial Receivable or a Subsequent Receivable, as
applicable.
"Receivable Files" means the documents specified in Section 3.3.
"Receivables Purchase Agreement" means the Receivables Purchase
Agreement dated as of March 7, 2002 by and between the Seller and CPS, as such
20
agreement may be amended, supplemented or otherwise modified from time to time
in accordance with the terms thereof, relating to the purchase of the
Receivables by the Seller from CPS.
"Record Date" means, with respect to the first Payment Date, the
Closing Date and with respect to any subsequent Payment Date, the last day of
calendar month preceding the calendar month in which such Payment Date occurs.
"Recoveries" means with respect to a Liquidated Receivable, the monies
collected from whatever source, during any Collection Period following the
Collection Period in which such Receivable became a Liquidated Receivable, net
of the reasonable costs of liquidation plus any amounts required by law to be
remitted to the Obligor (without duplication of amounts netted against the
amounts realized in calculating the Net Liquidation Proceeds).
"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.
"Regulus" means Regulus West LLC and its successors.
"Requisite Reserve Amount" as of any date during the Funding Period
will equal the product of:
(i) 1/360th of the difference between
(A) the sum of (x) the weighted average of each of
the Interest Rates for each class of Notes and the Class B
Certificates (based on the outstanding principal amount or
balance, as applicable, of each such class on such date), (y)
the Trustee fee rate and (z) the premium rate for the Policy;
and
(B) 1.25% per annum;
(ii) the Pre-Funded Amount on such date (after giving effect
to any application thereof to acquire Subsequent Receivables on such
Payment Date); and
(iii) the number of days remaining until the last day of the
Collection Period for the Payment Date in June 2002; provided that,
upon the expiration of the Funding Period, the Requisite Reserve Amount
will be zero.
"Residual Certificate" shall have the meaning specified in the Trust
Agreement.
"Residual Certificateholder" shall have the meaning specified in the
Trust Agreement.
"Responsible Officer" shall have the meaning specified in the Trust
Agreement.
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"Rule of 78's Receivable" means any Receivable under which the portion
of a payment allocable to earned interest (which may be referred to in the
related retail installment sale contract as an add-on finance charge) and the
portion allocable to the Amount Financed is determined according to the method
commonly referred to as the "Rule of 78's" method or the "sum of the months'
digits" method or any equivalent method.
"Schedule of Receivables" means the schedule of all retail installment
sales contracts and promissory notes held as part of the Trust which is attached
hereto as Schedule A, as amended or supplemented from time to time in accordance
with the terms hereof.
"Scheduled Receivable Payment" means, with respect to any Collection
Period for any Receivable, the amount set forth in such Receivable as required
to be paid by the Obligor in such Collection Period (without giving effect to
deferments of payments pursuant to Section 4.2 or any rescheduling of payments
in any insolvency or similar proceedings).
"Securities" means the Notes and the Certificates.
"Securityholders" means the Noteholders and the Certificateholders.
"Seller" means CPS Receivables Corp., a California corporation, and its
successors in interest to the extent permitted hereunder.
"Series 2002-A Spread Account" means the account designated as such,
established and maintained pursuant to the Spread Account Supplement.
"Servicer" means CPS, as the servicer of the Receivables, and each
successor Servicer pursuant to Section 10.3.
"Servicer Termination Event" means an event specified in Section 10.1.
"Servicer's Certificate" means a certificate completed and executed by
a Servicing Officer and delivered pursuant to Section 4.9, substantially in the
form of Exhibit B.
"Servicing and Lockbox Processing Assumption Agreement" means the
Servicing and Lockbox Processing Assumption Agreement, dated as of March 7, 2002
among CPS, the Standby Servicer and the Trustee, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.
"Servicing Fee" has the meaning specified in Section 4.8.
"Servicing Officer" means any Person whose name appears on a list of
Servicing Officers delivered to the Trustee and the Note Insurer, as the same
may be amended from time to time.
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"Simple Interest Method" means the method of allocating a fixed level
payment between principal and interest, pursuant to which the portion of such
payment that is allocated to interest is equal to the product of the APR
multiplied by the unpaid balance multiplied by the period of time (expressed as
a fraction of a year, based on the actual number of days in the calendar month
and the actual number of days in the calendar year) elapsed since the preceding
payment of interest was made and the remainder of such payment is allocable to
principal.
"Simple Interest Receivable" means a Receivable under which the portion
of the payment allocable to interest and the portion allocable to principal is
determined in accordance with the Simple Interest Method.
"Specified Spread Account Requisite Amount" has the meaning specified
in the Spread Account Supplement.
"Spread Account Supplement" means the Series 2002-A Supplement to the
Master Spread Account Agreement dated as of March 1, 2002 among the Note
Insurer, the Seller and the Collateral Agent, as the same may be modified,
supplemented or otherwise amended in accordance with the terms thereof.
"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of The XxXxxx-Xxxx Companies, Inc. or its successor.
"Standby Fee" means (A) the fee payable to the Standby Servicer so long
as CPS is the Servicer, on each Payment Date in an amount equal to the greater
of (a) $1,250 or (b) one-twelfth of 0.025% of the Aggregate Note Balance on the
last day of the second preceding Collection Period; provided, however, that on
the first Payment Date the Standby Servicer will be entitled to receive an
amount equal to the greater of (a) $1,250 or (b) the product of (i) the
percentage equivalent of a fraction the numerator of which is the number days
from the Closing Date to but excluding the first Payment Date and the
denominator of which is 360, (ii) 0.025% and (iii) the Original Aggregate Note
Balance, and (B) any other amounts payable pursuant to the Fee Schedule.
"Standby Servicer" means Bank One Trust Company, N.A., in its capacity
as Standby Servicer pursuant to the terms of the Servicing and Lockbox
Processing Assumption Agreement or such Person as shall have been appointed
Standby Servicer pursuant to Section 10.3.
"Stanwich Case" means IN RE Structured Settlement Litigation, Nos. BC
244111, 244271 & 243787 (Cal. Super. Ct. filed May 9, 2001).
"Subsequent Cutoff Date" means (i) the close of business on the last
day of the month preceding the month in which particular Subsequent Receivables
are conveyed to the Trust pursuant to this Agreement or (ii) if any such
Subsequent Receivable is originated in the month of the related Subsequent
Transfer Date, the date of origination.
23
"Subsequent Receivables" means the Receivables transferred to the
Issuer pursuant to Section 2.2, which shall be listed on Schedule A to the
related Subsequent Transfer Agreement.
"Subsequent Receivables Purchase Agreement" means an agreement by and
between the Seller and CPS pursuant to which the Seller will acquire Subsequent
Receivables.
"Subsequent Spread Account Deposit" means, with respect to each
Subsequent Transfer Date, an amount equal to 3.00% of the aggregate Principal
Balance of related Subsequent Receivables as of the related Subsequent Cutoff
Date transferred to the Trust on such Subsequent Transfer Date.
"Subsequent Stanwich Deposit" means, with respect to each Subsequent
Transfer Date, an amount equal to 4.00% of the aggregate Principal Balance of
related Subsequent Receivables as of the related Subsequent Cutoff Date
transferred to the Trust on such Subsequent Transfer Date.
"Subsequent Transfer Agreement" means an agreement among the Issuer,
the Seller and the Servicer, substantially in the form of Exhibit A.
"Subsequent Transfer Date" means, with respect to Subsequent
Receivables, any date, occurring not more frequently than once per month, during
the Funding Period on which Subsequent Receivables are transferred to the Trust
pursuant to this Agreement.
"Subsequent Trust Property" means the property and proceeds conveyed
pursuant to Section 2.2, together with certain monies received with respect to
the Subsequent Receivables after the related Subsequent Cutoff Date, the
Insurance Policies, the Collection Account (including all Eligible Investments
therein and all proceeds therefrom), the Lockbox Account and certain other
rights under this Agreement. Although the Seller has pledged the Series 2002-A
Spread Account to the Collateral Agent pursuant to the Master Spread Account
Agreement, the Series 2002-A Spread Account shall not under any circumstances be
deemed to be a part of or otherwise includable in the Trust or the Subsequent
Trust Property.
"Total Distribution Amount" means, for each Payment Date, the sum of
the following amounts with respect to the preceding Collection Period: (i) all
collections on the Receivables, (ii) Net Liquidation Proceeds received during
the Collection Period with respect to Liquidated Receivables; (iii) all Purchase
Amounts deposited in the Collection Account during the related Collection
Period, plus the amount of any payments made by CPS pursuant to its
indemnification obligations under the Basic Documents; (iv) all proceeds from
Recoveries with respect to Liquidated Receivables; (v) Investment Earnings for
the related Payment Date; (vi) following the acceleration of the Notes pursuant
to Section 5.2 of the Indenture, the amount of money or property collected
pursuant to Section 5.3 of the Indenture since the preceding Payment Date by the
Trustee or Controlling Party for distribution pursuant to Section 5.6 and
Section 5.8 hereof; and (vii) the proceeds of any purchase or sale of the assets
of the Trust described in Section 11.1 hereof.
24
"Trigger Event" has the meaning assigned thereto in the Spread Account
Supplement.
"Trust" means the Issuer.
"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), and all proceeds of the foregoing.
"Trust Accounts" has the meaning assigned thereto in Section 5.1.
"Trust Agreement" means the Trust Agreement dated as of January 3,
2002, as amended and restated as of March 7, 2002, between the Seller, as
Depositor, and the Owner Trustee, as the same may be further amended or
supplemented from time to time in accordance with the terms thereof.
"Trust Officer" means, (i) in the case of the Trustee, any vice
president, any assistant vice president, any assistant secretary, any assistant
treasurer, any trust officer, or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject, and (ii) in the case of the Owner
Trustee, any officer in the Corporate Trust Office of the Owner Trustee or any
agent of the Owner Trustee under a power of attorney with direct responsibility
for the administration of this Agreement or any of the Basic Documents on behalf
of the Owner Trustee.
"Trust Property" means the Initial Trust Property and the Subsequent
Trust Property, collectively.
"Trust Receipt" has the meaning assigned thereto in Section 3.5.
"Trustee" means the Person acting as Trustee under the Indenture, its
successors in interest and any successor trustee under the Indenture.
"Trustee Fee" means (A) the fee payable to the Trustee on each Payment
Date in an amount equal to the greater of (a) $375 and (b) one-twelfth of
0.0075% of the Aggregate Note Balance on the last day of the second preceding
Collection Period; provided, however, that on the first Payment Date the Trustee
will be entitled to receive an amount equal to the greater of (a) $375 and (b)
the product of (i) the percentage equivalent of a fraction the numerator of
which is the number days from the Closing Date to but excluding the first
Payment Date and the denominator of which is 360, (ii) 0.0075% and (iii) the
Original Aggregate Note Balance, and/or (B) any amounts payable to the Owner
Trustee pursuant to Article VIII of the Trust Agreement or to the Trustee
pursuant to the Fee Schedule, as applicable.
25
"UCC" means the Uniform Commercial Code as in effect in the relevant
jurisdiction on the date of the Agreement.
(b) Capitalized terms used herein and not otherwise defined
herein have the meanings assigned to them in the Indenture or, if not defined
therein, in the Trust Agreement.
(c) 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.
(d) Accounting terms used but not defined or partly defined in
this Agreement, in any instrument governed hereby or in any certificate or other
document made or delivered pursuant hereto, to the extent not defined, shall
have the respective meanings given to them under generally accepted accounting
principles as in effect on the date of this Agreement or any such instrument,
certificate or other document, as applicable. To the extent that the definitions
of accounting terms in this Agreement or in any such instrument, certificate or
other document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement or
in any such instrument, certificate or other document shall control.
(e) 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.
(f) 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."
(g) 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.
(h) Any agreement, instrument or statute defined or referred
to herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as the same may from time to time be
amended, modified or supplemented and includes (in the case of agreements or
instruments) references to all attachments and instruments associated therewith;
all references to a Person include its permitted successors and assigns.
Whenever a determination is to be made under this Agreement as to
whether a given event action, course of conduct or set of facts or circumstances
could or would have a material adverse effect on the Issuer or Noteholders (or
any similar or analogous determination), such determination shall be made
26
without taking into account the insurance provided by the Policy. Whenever a
determination is to be made under this Agreement whether a breach of a
representation, warranty or covenant has or could have a material adverse effect
on a Receivable or the interest therein of the Issuer, the Noteholders or the
Note Insurer (or any similar or analogous determination), such determination
shall be made by the Controlling Party in its sole discretion.
27
ARTICLE II
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CONVEYANCE OF RECEIVABLES
SECTION 2.1 CONVEYANCE OF INITIAL RECEIVABLES. In consideration of the
Issuer's delivery to or upon the order of the Seller on the Closing Date of the
net proceeds from the sale of the Notes and the other amounts to be distributed
from time to time to the Seller in accordance with the terms of this Agreement,
the Seller does hereby sell, transfer, assign, set over and otherwise convey to
the Issuer, without recourse (subject to the obligations set forth herein):
(a) all right, title and interest of the Seller in and to the
Initial Receivables listed in Schedule A hereto and all monies received
thereunder after the Initial Cutoff Date and all Net Liquidation Proceeds and
Recoveries received with respect to such Initial Receivables after the Initial
Cutoff Date;
(b) all right, title and interest of the Seller in and to the
security interests in the Financed Vehicles granted by Obligors pursuant to the
Initial Receivables and any other interest of the Seller in such Financed
Vehicles, including, without limitation, the certificates of title or, with
respect to such Financed Vehicles in the Non-Certificated Title States, all
other evidence of ownership with respect to such Financed Vehicles issued by the
applicable Department of Motor Vehicles or similar authority;
(c) all right, title and interest of the Seller in and to any
proceeds from claims on any physical damage, credit life and credit accident and
health insurance policies or certificates relating to the Financed Vehicles
securing the Initial Receivables or the Obligors thereunder;
(d) all right, title and interest of the Seller in and to the
Receivables Purchase Agreement, including a direct right to cause CPS to
purchase Receivables from the Trust and to indemnify the Trust pursuant to the
Receivables Purchase Agreement under the circumstances specified therein;
(e) all right, title and interest of the Seller in and to
refunds for the costs of extended service contracts with respect to Financed
Vehicles securing the Initial Receivables, refunds of unearned premiums with
respect to credit life and credit accident and health insurance policies or
certificates covering an Obligor or Financed Vehicle under an Initial Receivable
or his or her obligations with respect to a Financed Vehicle and any recourse to
Dealers for any of the foregoing;
(f) the Receivable File related to each Initial Receivable;
28
(g) all amounts and property from time to time held in or
credited to the Collection Account, the Pre-Funding Account, the Interest
Reserve Account or the Lockbox Account;
(h) the proceeds of any and all of the foregoing; and
(i) 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.
SECTION 2.2 CONVEYANCE OF SUBSEQUENT RECEIVABLES.
(a) Subject to the conditions set forth in paragraph (b)
below, in consideration of the Issuer's delivery on each related Subsequent
Transfer Date to or upon the order of the Seller of the amount described in
Section 5.10(a) to be delivered to the Seller, the Seller will, on the related
Subsequent Transfer Date, sell, transfer, assign, set over and otherwise convey
to the Issuer without recourse (subject to the obligations set forth herein):
(i) all right, title and interest of the Seller in and to the
Subsequent Receivables listed in Schedule A to the related Subsequent
Transfer Agreement and all monies received thereunder after the related
Subsequent Cutoff Date and all Net Liquidation Proceeds and Recoveries
received with respect to such Subsequent Receivables after the related
Subsequent Cutoff Date;
(ii) all right, title and interest of the Seller in and to the
security interests in the Financed Vehicles granted by Obligors
pursuant to the Subsequent Receivables and any other interest of the
Seller in such Financed Vehicles, including, without limitation, the
certificates of title or, with respect to such Financed Vehicles in the
Non-Certificated Title States, all other evidence of ownership with
respect to such Financed Vehicles issued by the applicable Department
of Motor Vehicles or similar authority;
(iii) all right, title and interest of the Seller in and to
any proceeds from claims on any physical damage, credit life and credit
accident and health insurance policies or certificates relating to the
Financed Vehicles securing the Subsequent Receivables or the Obligors
thereunder;
(iv) all right, title and interest of the Seller in and to the
related Subsequent Receivables Purchase Agreement, including a direct
right to cause CPS to purchase Subsequent Receivables from the Trust
29
under certain circumstances and to indemnify the Trust pursuant to the
Subsequent Receivables Purchase Agreement;
(v) all right, title and interest of the Seller in and to
refunds for the costs of extended service contracts with respect to
Financed Vehicles securing Subsequent Receivables, refunds of unearned
premiums with respect to credit life and credit accident and health
insurance policies or certificates covering an Obligor or Financed
Vehicle under a Subsequent Receivable or his or her obligations with
respect to a Financed Vehicle and any recourse to Dealers for any of
the foregoing;
(vi) the Receivable File related to each Subsequent
Receivable;
(vii) all amounts and property from time to time held in or
credited to the Collection Account, the Pre-Funding Account, the
Interest Reserve Account or the Lockbox Account;
(viii) the proceeds of any and all of the foregoing; and
(ix) all present and future claims, demands, causes and choses
in action in respect of any or all of the foregoing and all payments on
or under and all proceeds of every kind and nature whatsoever in
respect of any or all of the foregoing, including all proceeds of the
conversion, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every kind
and other forms of obligations and receivables, instruments and other
property which at any time constitute all or part of or are included in
the proceeds of any of the foregoing.
(b) The Seller shall transfer to the Issuer the Subsequent
Receivables and the other property and rights related thereto described in
paragraph (a) above only upon the satisfaction of each of the following
conditions on or prior to the related Subsequent Transfer Date:
(i) the Seller shall have provided the Trustee, the Owner
Trustee, the Note Insurer and the Rating Agencies with an Addition
Notice not later than five Business Days prior to such Subsequent
Transfer Date and shall have provided any information reasonably
requested by any of the foregoing with respect to the related
Subsequent Receivables;
(ii) the Seller shall have delivered to the Owner Trustee and
the Trustee a duly executed Subsequent Transfer Agreement which shall
include supplements to Schedule A, listing the related Subsequent
Receivables;
30
(iii) the Seller shall, to the extent required by Section 4.2
of this Agreement, have deposited in the Collection Account all
collections in respect of the related Subsequent Receivables;
(iv) as of each Subsequent Transfer Date, (A) the Seller shall
not be insolvent and shall not become insolvent as a result of the
transfer of Subsequent Receivables on such Subsequent Transfer Date,
(B) the Seller shall not intend to incur or believe that it shall incur
debts that would be beyond its ability to pay as such debts mature, (C)
such transfer shall not have been made with actual intent to hinder,
delay or defraud any Person and (D) the assets of the Seller shall not
constitute unreasonably small capital to carry out its business as then
conducted;
(v) the Funding Period shall not have terminated;
(vi) after giving effect to any transfer of Subsequent
Receivables on a Subsequent Transfer Date, the Receivables then owned
by the Trust shall meet the following criteria (based on the
characteristics of the Initial Receivables on the Initial Cutoff Date
and the Subsequent Receivables on the related Subsequent Cutoff Dates):
(A) the weighted average APR of such Receivables will be greater than
or equal to 19.50%, (B) the weighted average remaining term of such
Receivables will be within a range of 58 to 72 months, (C) not more
than 90% of the aggregate principal balance of such Receivables will
represent financing of used Financed Vehicles, (D) not more than 1.00%
of the principal balances of such Receivables will have an APR in
excess of 24.00%, (E) each Receivable will have a minimum APR of
14.00%; (F) each Receivable will have an original term of no more than
72 months and no more than 25.00% of the receivables will have an
original term in excess of sixty (60) months; (G) no more than 20.00%
of the Receivables will be originated in Texas; (H) not less than
75.00% of the aggregate Principal Balance of the Receivables will have
been purchased under the Seller's "Alpha", "SUAL", or "Alpha Plus"
programs; (I) none of the Receivables will have been purchased under
the Seller's "First-Time Buyer" program; (J) none of the Receivables
will have been originated by MFN; and (K) the Trust, the Trustee, the
Owner Trustee and the Note Insurer shall have received written
confirmation from a firm of certified independent public accountants as
to the satisfaction of the criteria in clauses (A) through (J) above;
(vii) each of the representations and warranties made by the
Seller pursuant to Section 3.1 with respect to the Subsequent
Receivables to be transferred on such Subsequent Transfer Date shall be
true and correct as of the related Subsequent Transfer Date, and the
Seller shall have performed all obligations to be performed by it
hereunder on or prior to such Subsequent Transfer Date;
(viii) the Seller shall, at its own expense, on or prior to
the Subsequent Transfer Date indicate in its computer files that the
Subsequent Receivables identified in the Subsequent Transfer Agreement
have been sold to the Trust pursuant to this Agreement;
31
(ix) the Seller shall have taken any action required to
maintain the first priority perfected ownership interest of the Issuer
in the Owner Trust Estate and the first priority perfected security
interest of the Trustee in the Collateral;
(x) no selection procedures adverse to the interests of the
Securityholders or the Note Insurer shall have been utilized in
selecting the Subsequent Receivables;
(xi) the addition of any such Subsequent Receivables shall not
result in a material adverse tax consequence to the Trust or the
Noteholders;
(xii) the Seller shall have delivered (A) to the Rating
Agencies and the Note Insurer an Opinion of Counsel with respect to the
transfer of such Subsequent Receivables, which Opinion of Counsel may
be in the form of a "bring down" letter to the Opinion of Counsel
delivered to the Rating Agencies and the Note Insurer on the Closing
Date, and (B) to the Trustee the Opinion of Counsel required by Section
13.2(i)(i), which Opinion of Counsel may be in the form of a "bring
down" letter to the Opinion of Counsel delivered to the Trustee on the
Closing Date;
(xiii) each of the Seller, the Owner Trustee, the Trustee and
the Insurer shall have received verbal verification from the Rating
Agencies that the addition of all such Subsequent Receivables will not
result in a qualification, modification or withdrawal of the then
current rating of each class of Notes without regard to the Policy;
(xiv) the Note Insurer (so long as no Insurer Default shall
have occurred and be continuing), in its absolute and sole discretion,
shall have approved in writing the transfer of such Subsequent
Receivables to the Issuer and the Note Insurer shall have been
reimbursed for any fees and expenses incurred by the Note Insurer in
connection with the granting of such approval;
(xv) the Seller shall simultaneously transfer the Subsequent
Spread Account Deposit and the Subsequent Stanwich Deposit to the
Collateral Agent with respect to the Subsequent Receivables transferred
on such Subsequent Transfer Date; and
(xvi) the Seller shall have delivered to the Note Insurer and
the Trustee an Officers' Certificate confirming the satisfaction of
each condition precedent specified in this paragraph (b).
The Seller covenants that in the event any of the foregoing conditions
precedent are not satisfied with respect to any Subsequent Receivable on the
date required as specified above, the Seller will immediately repurchase such
32
Subsequent Receivable from the Issuer, at a price equal to the Purchase Amount
thereof, in the manner specified in Section 3.2.
SECTION 2.3 TRANSFERS INTENDED AS SALES. It is the intention of the
Seller that the transfer and assignment contemplated by Sections 2.1 and 2.2 of
this Agreement shall constitute a sale of the Receivables and other Trust
Property from the Seller to the Issuer and the beneficial interest in and title
to the Receivables and other Trust Property shall not be part of the Seller's
estate in the event of the filing of a bankruptcy petition by or against the
Seller under any bankruptcy law. In the event that, notwithstanding the intent
of the Seller, the transfer and assignment contemplated hereby is held not to be
a sale, this Agreement shall constitute a grant of a security interest in the
Trust Property to the Trust for the benefit of the Noteholders and the Note
Insurer and this Agreement shall constitute a security agreement under
applicable law. The Seller shall take such actions as are necessary from time to
time in order to maintain the perfection and priority of the Issuer's security
interest in the Trust Property.
SECTION 2.4 FURTHER ENCUMBRANCE OF TRUST PROPERTY.
(a) Immediately upon the conveyance to the Trust by the Seller
of any item of the Trust Property pursuant to Section 2.1 or Section 2.2, all
right, title and interest of the Seller in and to such item of Trust Property
shall terminate, and all such right, title and interest shall vest in the Trust,
in accordance with the Trust Agreement and Sections 3802 and 3805 of the
Business Trust Statute (as defined in the Trust Agreement).
(b) Immediately upon the vesting of the Trust Property in the
Trust, the Trust shall have the sole right to pledge or otherwise encumber, such
Trust Property. Pursuant to the Indenture, the Trust shall grant a security
interest in the Trust Property to secure the repayment of the Notes. The
Certificates shall represent beneficial ownership interests in the Trust
Property, and the Certificateholders shall be entitled to receive distributions
with respect thereto as set forth herein and in the Spread Account Supplement.
(c) Following the payment in full of the Notes and the release
and discharge of the Indenture, all covenants of the Issuer under Article III of
the Indenture shall, until all amounts due in respect of the Certificates have
been paid in full, remain as covenants of the Issuer for the benefit of the
Certificateholders, enforceable by the Certificateholders to the same extent as
such covenants were enforceable by the Noteholders prior to the discharge of the
Indenture. Any rights of the Trustee under Article III of the Indenture,
following the discharge of the Indenture, shall vest in the Certificateholders.
33
(d) The Trustee shall, at such time as there are no Notes
outstanding and all sums due to the Trustee pursuant to the Indenture and this
Agreement, have been paid, release any remaining portion of the Trust Property
to the Certificateholders.
ARTICLE III
-----------
THE RECEIVABLES
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF SELLER. The Seller makes
the following representations and warranties as to the Receivables to the Note
Insurer, the Issuer and to the Trustee for the benefit of the Noteholders on
which the Issuer relies in acquiring the Receivables, and on which the Trustee
is deemed to have relied in executing and performing pursuant to this Agreement,
the Indenture and the other Basic Documents to which it is a party and on which
the Note Insurer relies in issuing the Note Policy. Such representations and
warranties speak as of the execution and delivery of this Agreement and as of
the Closing Date (in the case of the Initial Receivables) or as of the related
Subsequent Transfer Date, in case of the Subsequent Receivables, but shall
survive the sale, transfer and assignment of the Receivables to the Issuer and
the pledge thereof to the Trustee pursuant to the Indenture.
(i) CHARACTERISTICS OF RECEIVABLES. (A) Each Receivable (1)
has been originated in the United States of America by a Dealer for the
retail sale of a Financed Vehicle in the ordinary course of such
Dealer's business, has been fully and properly executed by the parties
thereto and has been purchased by CPS in connection with the sale of
Financed Vehicles by the Dealers, (2) has created a valid, subsisting,
and enforceable first priority perfected security interest in favor of
CPS in the Financed Vehicle, which security interest has been assigned
by CPS to the Seller, which in turn has assigned such security interest
to the Trust which has assigned such security interest to the Trustee,
(3) contains customary and enforceable provisions such that the rights
and remedies of the holder or assignee thereof shall be adequate for
realization against the collateral of the benefits of the security, (4)
provides for level monthly payments that fully amortize the Amount
Financed over the original term (except for the last payment, which may
be different from the level payment) and yield interest at the Annual
Percentage Rate, (5) has an Annual Percentage Rate of not less than
14.000%, (6) that is a Rule of 78's Receivable provides for, in the
event that such contract is prepaid, a prepayment that fully pays the
Principal Balance and includes a full month's interest, in the month of
prepayment, at the Annual Percentage Rate, (7) is a Rule of 78's
Receivable or a Simple Interest Receivable, and (8) was originated by a
Dealer and was sold by the Dealer without any fraud or
misrepresentation on the part of such Dealer. (B) Approximately 84.98%
of the aggregate Principal Balance of the Initial Receivables,
constituting 88.15% of the number of Initial Receivables, as of the
Initial Cutoff Date, represents financing of used automobiles, light
trucks, vans or minivans; the remainder of the Receivables represent
financing of new vehicles; approximately 51.96% of the aggregate
Principal Balance of the Initial Receivables as of the Initial Cutoff
34
Date were originated under the CPS Alpha Program; approximately 7.19%
of the aggregate Principal Balance of the Initial Receivables as of the
Initial Cutoff Date were originated under the CPS Delta Program; none
of the Initial Receivables as of the Initial Cutoff Date were
originated under the CPS First-Time Buyer Program; approximately 16.44%
of the aggregate Principal Balance of the Initial Receivables as of the
Initial Cutoff Date were originated under the CPS Standard Program;
approximately 10.40% of the aggregate Principal Balance of the Initial
Receivables as of the Initial Cutoff Date were originated under the CPS
Super Alpha Program; approximately 14.02% of the aggregate Principal
Balance of the Initial Receivables as of the Initial Cutoff Date were
originated under the Alpha Plus Program; no Initial Receivable has a
payment that is more than 30 days contractually delinquent as of the
Initial Cutoff Date; 0.07% of the aggregate Principal Balance of the
Initial Receivables as of the Initial Cutoff Date are Rule of 78's
Receivables and 99.93% of the aggregate Principal Balance of the
Initial Receivables as of the Initial Cutoff Date are Simple Interest
Receivables; each Initial Receivable has a final scheduled payment due
no later than January 5, 2008; and each Initial Receivable was
originated on or before the Initial Cutoff Date.
(ii) SCHEDULE OF RECEIVABLES. The information with respect to
the Receivables set forth in Schedule A to this Agreement is true and
correct in all material respects as of the close of business on the
Initial Cutoff Date, and no selection procedures adverse to the
Noteholders have been utilized in selecting the Receivables.
(iii) COMPLIANCE WITH LAW. Each Receivable, the sale of the
Financed Vehicle and the sale of any physical damage, credit life and
credit accident and health insurance and any extended warranties or
service contracts complied at the time the related Receivable was
originated or made and at the execution of this Agreement (or the
applicable Subsequent Transfer Agreement) complies in all material
respects with all requirements of applicable Federal, State, and local
laws, and regulations thereunder including, without limitation, usury
laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity
Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices
Act, the Federal Trade Commission Act, the Xxxxxxxx-Xxxx Warranty Act,
the Federal Reserve Board's Regulations B and Z, the Soldiers' and
Sailors' Civil Relief Act of 1940, the Texas Consumer Credit Code, the
California Automobile Sales Finance Act and State adaptations of the
National Consumer Act and of the Uniform Consumer Credit Code, and
other consumer credit laws and equal credit opportunity and disclosure
laws.
(iv) NO GOVERNMENT OBLIGOR. None of the Receivables are due
from the United States of America or any State or from any agency,
department, or instrumentality of the United States of America or any
State.
(v) SECURITY INTEREST IN FINANCED VEHICLE. Immediately
subsequent to the sale, assignment and transfer thereof to the Trust,
each Receivable shall be secured by a validly perfected first priority
35
security interest in the Financed Vehicle in favor of the Trust as
secured party, and such security interest is prior to all other liens
upon and security interests in such Financed Vehicle which now exist or
may hereafter arise or be created (except, as to priority, for any tax
liens or mechanics' liens which may arise after the Closing Date, in
the case of the Initial Receivables, or after the related Subsequent
Transfer Date, in the case of the Subsequent Receivables).
(vi) RECEIVABLES IN FORCE. No Receivable has been satisfied,
subordinated or rescinded, nor has any Financed Vehicle been released
from the lien granted by the related Receivable in whole or in part.
(vii) NO WAIVER. Except as permitted under Section 4.2, no
provision of a Receivable has been waived.
(viii) NO AMENDMENTS. Except as permitted under Section 4.2,
no Receivable has been amended, except as such Receivable may have been
amended to grant extensions which shall not have numbered more than (a)
one extension of one calendar month in any calendar year or (b) three
such extensions in the aggregate.
(ix) NO DEFENSES. No right of rescission, setoff, counterclaim
or defense exists or has been asserted or threatened with respect to
any Receivable. The operation of the terms of any Receivable or the
exercise of any right thereunder will not render such Receivable
unenforceable in whole or in part or subject to any such right of
rescission, setoff, counterclaim, or defense.
(x) NO LIENS. As of the Initial Cutoff Date (with respect to
the Initial Receivables) or the applicable Subsequent Cutoff Date (with
respect to the related Subsequent Receivables), (a) there are no liens
or claims existing or which have been filed for work, labor, storage or
materials relating to a Financed Vehicle that shall be liens prior to,
or equal or coordinate with, the security interest in the Financed
Vehicle granted by the Receivable and (b) there is no lien against the
related Financed Vehicle for delinquent taxes.
(xi) NO DEFAULT; REPOSSESSION. Except for payment
delinquencies continuing for a period of not more than thirty days as
of the Initial Cutoff Date (with respect to the Initial Receivables) or
the applicable Subsequent Cutoff Date (with respect to the Subsequent
Receivables), no default, breach, violation or event permitting
acceleration under the terms of any Receivable has occurred; and no
continuing condition that with notice or the lapse of time would
constitute a default, breach, violation or event permitting
acceleration under the terms of any Receivable has arisen; and the
Seller shall not waive and has not waived any of the foregoing (except
in a manner consistent with Section 4.2); and no Financed Vehicle shall
have been repossessed as of the Initial Cutoff Date (with respect to
the Initial Receivables) or the Subsequent Cutoff Date (with respect to
the Subsequent Receivables).
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(xii) INSURANCE; OTHER. (A) Each Obligor has obtained
insurance covering the Financed Vehicle as of the execution of the
Receivable insuring against loss and damage due to fire, theft,
transportation, collision and other risks generally covered by
comprehensive and collision coverage, and each Receivable requires the
Obligor to obtain and maintain such insurance naming CPS and its
successors and assigns as an additional insured, (B) each Receivable
that finances the cost of premiums for credit life and credit accident
and health insurance is covered by an insurance policy or certificate
of insurance naming CPS as policyholder (creditor) under each such
insurance policy and certificate of insurance and (C) as to each
Receivable that finances the cost of an extended service contract, the
respective Financed Vehicle which secures the Receivable is covered by
an extended service contract.
(xiii) TITLE. It is the intention of the Seller that the
transfer and assignment herein contemplated constitute a sale of the
Receivables from the Seller to the Trust and that the beneficial
interest in and title to such Receivables not be part of the Seller's
estate in the event of the filing of a bankruptcy petition by or
against the Seller under any bankruptcy law. No Receivable has been
sold, transferred, assigned, or pledged by the Seller to any Person
other than the Trust. Immediately prior to the transfer and assignment
herein contemplated, the Seller had good and marketable title to each
Receivable and was the sole owner thereof, free and clear of all liens,
claims, encumbrances, security interests, and rights of others, and,
immediately upon the transfer thereof, the Trust for the benefit of the
Noteholders and the Note Insurer shall have good and marketable title
to each such Receivable and will be the sole owner thereof, free and
clear of all liens, encumbrances, security interests, and rights of
others, and the transfer has been perfected under the UCC.
(xiv) LAWFUL ASSIGNMENT. No Receivable has been originated in,
or is subject to the laws of, any jurisdiction under which the sale,
transfer, and assignment of such Receivable under this Agreement or
pursuant to transfers of the Securities shall be unlawful, void, or
voidable. The Seller has not entered into any agreement with any
account debtor that prohibits, restricts or conditions the assignment
of any portion of the Receivables.
(xv) ALL FILINGS MADE. All filings (including, without
limitation, UCC filings) necessary in any jurisdiction to give the
Trust a first priority perfected ownership interest in the Receivables
and the Other Conveyed Property have been made, taken or performed
within 10 days of the Closing Date.
(xvi) RECEIVABLE FILE; ONE ORIGINAL. CPS has delivered to the
Trustee a complete Receivable File with respect to each Receivable.
There is only one original executed copy of each Receivable.
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(xvii) CHATTEL PAPER. Each Contract constitutes "tangible
chattel paper" under the UCC.
(xviii) TITLE DOCUMENTS. (A) If the Receivable was originated
in a State in which notation of a security interest on the title
document of the related Financed Vehicle is required or permitted to
perfect such security interest, the title document of the related
Financed Vehicle for such Receivable shows, or if a new or replacement
title document is being applied for with respect to such Financed
Vehicle the title document (or, with respect to Receivables originated
in the Non-Certificated Title States, other evidence of title issued by
the applicable Department of Motor Vehicles or similar authority) will
be received within 180 days and will show, CPS named as the original
secured party under the related Receivable as the holder of a first
priority security interest in such Financed Vehicle, and (B) if the
Receivable was originated in a State in which the filing of a financing
statement under the UCC is required to perfect a security interest in
motor vehicles, such filings or recordings have been duly made and show
CPS named as the original secured party under the related Receivable,
and in either case, the Trust has the same rights as such secured party
has or would have (if such secured party were still the owner of the
Receivable) against all parties claiming an interest in such Financed
Vehicle. With respect to each Receivable for which the title document
has not yet been returned from the Registrar of Titles, CPS has
received written evidence from the related Dealer that such title
document showing CPS as first lienholder has been applied for.
(xix) VALID AND BINDING OBLIGATION OF OBLIGOR. Each Receivable
is the legal, valid and binding obligation 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.
(xx) CHARACTERISTICS OF OBLIGORS. As of the date of each
Obligor's application for the loan from which the related Receivable
arises, such Obligor (a) did not have any material past due credit
obligations or any personal or real property repossessed or wages
garnished within one year prior to the date of such application, unless
such amounts have been repaid or discharged through bankruptcy, (b) was
not the subject of any Federal, State or other bankruptcy, insolvency
or similar proceeding pending on the date of application that is not
discharged, (c) had not been the subject of more than one Federal,
State or other bankruptcy, insolvency or similar proceeding, and (d)
was domiciled in the United States.
(xxi) ORIGINATION DATE. Each Receivable has an origination
date on or after February 13, 1997.
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(xxii) MATURITY OF RECEIVABLES. Each Receivable has an
original term to maturity of not more than 72.00 months; the weighted
average original term to maturity of the Initial Receivables was 61.00
months as of the Initial Cutoff Date; the remaining term to maturity of
each Receivable was 72.00 months or less as of the Initial Cutoff Date
(with respect to the Initial Receivables) or the applicable Subsequent
Cutoff Date (with respect to the Subsequent Receivables); the weighted
average remaining term to maturity of the Initial Receivables was 56.45
months as of the Initial Cutoff Date.
(xxiii) SCHEDULED RECEIVABLE PAYMENTS. Each Initial Receivable
had an original principal balance of not less than $4,996.46 nor more
than $26,220.94.
(xxiv) ORIGINATION OF RECEIVABLES. Based on the billing
address of the Obligors and the Principal Balances as of the Initial
Cutoff Date, approximately 12.98% and 8.11% of the aggregate Principal
Balance of the Initial Receivables represents Receivables that were
originated in the States of Texas and North Carolina, respectively.
(xxv) POST-OFFICE BOX. On or prior to the next billing period
after the Initial Cutoff Date (in the case of the Initial Receivables)
or the applicable Subsequent Cutoff Date (in the case of the Subsequent
Receivables), CPS will notify each Obligor to make payments with
respect to its respective Receivables after the Initial Cutoff Date (in
the case of the Initial Receivables) or the applicable Subsequent
Cutoff Date (in the case of the Subsequent Receivables) directly to the
Post-Office Box, and will provide each Obligor with a monthly statement
in order to enable such Obligors to make payments directly to the
Post-Office Box.
(xxvi) LOCATION OF RECEIVABLE FILES. A complete Receivable
File with respect to each Receivable has been or prior to the Closing
Date or the related Subsequent Transfer Date, as applicable, will be
delivered to the Trustee at the location listed in Schedule B.
(xxvii) CASUALTY. No Financed Vehicle has suffered a Casualty.
(xxviii) PRINCIPAL BALANCE/NUMBER OF CONTRACTS. As of the
Initial Cutoff Date, the total aggregate principal balance of the
Initial Receivables was $42,433,457.57. The Initial Receivables are
evidenced by 2,961 Contracts.
(xxix) FULL AMOUNT ADVANCED. The full amount of each
Receivable has been advanced to each Obligor, and there are no
requirements for future advances thereunder. The Obligor with respect
to the Receivable does not have any option under the Receivable to
borrow from any person additional funds secured by the Financed
Vehicle.
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(xxx) CREATION OF SECURITY INTEREST. This Agreement creates a
valid and continuing security interest (as defined in the UCC) in the
Trust Property in favor of the Issuer for the benefit of the
Noteholders and the Note Insurer, which security interest is prior to
all other Liens and is enforceable as such as against creditors of and
purchasers from the Seller.
(xxxi) PERFECTION OF SECURITY INTEREST IN FINANCED VEHICLES.
CPS has taken all steps necessary to perfect its security interest
against the Obligors in the Financed Vehicles securing the Contracts.
(xxxii) PERFECTION OF SECURITY INTEREST IN TRUST PROPERTY. The
Seller has caused or will have caused, within 10 days of the Closing
Date, 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 Trust Property granted to
the Issuer for the benefit of the Noteholders and the Note Insurer
hereunder pursuant to Section 2.3.
(xxxiii) NO OTHER SECURITY INTERESTS. Other than the security
interest granted to the Issuer for the benefit of the Noteholders and
the Note Insurer pursuant to Section 2.3, the Seller has not pledged,
assigned, sold, granted a security interest in, or otherwise conveyed
any of the Trust Property. 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 the Trust Property
other than any financing statement relating to the security interest
granted to the Issuer for the benefit of the Noteholders and the Note
Insurer hereunder or that has been terminated. The Seller is not aware
of any judgment or tax lien filings against the Seller.
(xxxiv) 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 Issuer and/or the Trustee for the
benefit of the Noteholders and the Note Insurer. All financing
statements filed or to be filed against the Seller in favor of the
Issuer in connection herewith describing the Trust Property 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 CPS Auto Receivables Trust 2002-A, as secured party."
The representations and warranties set forth above in paragraphs
(xiii), (xv), (xvii) and paragraphs (xxx) through (xxxiv) shall survive the
termination of this Agreement and may not be waived in whole or in part.
SECTION 3.2 REPURCHASE UPON BREACH.
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(a) The Seller, the Servicer, the Note Insurer, the Trustee or
(upon actual knowledge of a Responsible Officer thereof) the Owner Trustee, as
the case may be, shall inform the other parties to this Agreement promptly, in
writing, upon the discovery of any breach of the Seller's representations and
warranties made pursuant to Section 3.1 (without regard to any limitations
therein as to the Seller's knowledge). Unless the breach shall have been cured
by the last day of the second Collection Period following the discovery thereof
by the Trustee or the Note Insurer or receipt by the Trustee, the Owner Trustee
and the Note Insurer of notice from the Seller or the Servicer of such breach,
CPS (pursuant to the Receivables Purchase Agreement) shall repurchase any
Receivable if the value of such Receivable is materially and adversely affected
by the breach as of the last day of such second Collection Period (or, at CPS's
option, the last day of the first Collection Period following the discovery)
and, in the event that the breach relates to a characteristic of the Receivables
in the aggregate, and if the interests of the Trust or the Noteholders are
materially and adversely affected by such breach, unless the breach shall have
been cured by the last day of such second Collection Period, CPS (pursuant to
the Receivables Purchase Agreement) shall purchase such aggregate Principal
Balance of Receivables, such that following such purchase such representation
shall be true and correct with respect to the remainder of the Receivables in
the aggregate. In consideration of the purchase of the Receivable, CPS shall
remit the Purchase Amount, in the manner specified in Section 5.6. For purposes
of this Section, the Purchase Amount of a Receivable which is not consistent
with the warranty pursuant to Section 3.1(i)(A)(5) or (A)(6) shall include such
additional amount as shall be necessary to provide the full amount of interest
as contemplated therein. The sole remedy of the Issuer, the Owner Trustee, the
Trustee, the Securityholders or the Note Insurer with respect to a breach of
representations and warranties pursuant to Section 3.1 shall be to enforce CPS's
obligation to purchase such Receivables pursuant to the Receivables Purchase
Agreement; provided, however, that CPS shall indemnify the Trustee, the Owner
Trustee, the Standby Servicer, the Collateral Agent, the Note Insurer, the Trust
and the Securityholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third party claims
arising out of the events or facts giving rise to such breach. Upon receipt of
the Purchase Amount and written instructions from the Servicer, the Trustee
shall release to CPS or its designee the related Receivables File and shall
execute and deliver all reasonable instruments of transfer or assignment,
without recourse, as are prepared by the Seller and delivered to the Trustee and
necessary to vest in CPS or such designee title to the Receivable including a
Trustee's Certificate in the form of Exhibit F-1.
(b) If it is determined that consummation of the transactions
contemplated by this Agreement and the other transaction documents referenced in
this Agreement, the servicing and operation of the Trust pursuant to this
Agreement and such other documents, or the ownership of a Note or Certificate by
a Holder constitutes a violation of the prohibited transaction rules of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or the
Internal Revenue Code of 1986, as amended (the "Code") or any successor statutes
of similar impact, together with the regulations thereunder, to which no
41
statutory exception or administrative exemption applies, such violation shall
not be treated as a breach of the Seller's representations and warranties made
pursuant to Section 3.1 if not otherwise such a breach.
(c) Pursuant to Sections 2.1 and 2.2 of this Agreement, the
Seller has conveyed to the Trust all of the Seller's right, title and interest
in its rights and benefits, but none of its obligations or burdens, under the
Receivables Purchase Agreement and each Subsequent Transfer Agreement, including
the Seller's rights under the Receivables Purchase Agreement and each Subsequent
Transfer Agreement and the delivery requirements, representations and warranties
and the cure, repurchase and indemnity obligations of CPS under the Receivables
Purchase Agreement and each Subsequent Transfer Agreement. The Seller hereby
represents and warrants to the Trust that such assignment is valid, enforceable
and effective to permit the Trust to enforce such obligations of CPS under the
Receivables Purchase Agreement and each Subsequent Transfer Agreement.
SECTION 3.3 CUSTODY OF RECEIVABLES FILES.
(a) In connection with the sale, transfer and assignment of
the Receivables and the Other Conveyed Property to the Trust pursuant to this
Agreement the Trustee shall act as custodian of the following documents or
instruments in its possession which shall be delivered to the Trustee on or
before the Closing Date (with respect to each Initial Receivable) or the
applicable Subsequent Transfer Date (with respect to each Subsequent
Receivable):
(i) The fully executed original of the Receivable (together
with any agreements modifying the Receivable, including without
limitation any extension agreements);
(ii) The original certificate of title in the name of CPS or
such documents that CPS shall keep on file, in accordance with its
customary procedures, evidencing the security interest of CPS in the
Financed Vehicle or, if not yet received, a copy of the application
therefor showing CPS as secured party.
(b) Upon payment in full of any Receivable, the Servicer will
notify the Trustee pursuant to a certificate of an officer of the Servicer
(which certificate shall include a statement to the effect that all amounts
received in connection with such payments which are required to be deposited in
the Collection Account pursuant to Section 4.2 have been so deposited) and shall
request delivery of the Receivable and Receivable File to the Servicer.
SECTION 3.4 ACCEPTANCE OF RECEIVABLE FILES BY TRUSTEE. The Trustee
acknowledges receipt of files which the Seller has represented are the
Receivable Files for the Initial Receivables. The Trustee has reviewed such
Receivable Files and has determined that it has received a file for each Initial
Receivable identified in Schedule A to this Agreement. Not less than four (4)
Business Days prior to each Subsequent Transfer Date, the Seller will cause to
42
be delivered to the Trustee the Receivable Files for the Subsequent Receivables
to be transferred to the Trust on such Subsequent Transfer Date. The Trustee
declares that it holds and will continue to hold such files and any amendments,
replacements or supplements thereto and all other Trust Assets as Trustee in
trust for the use and benefit of all present and future Securityholders. The
Trustee agrees to review each file delivered to it no later than 45 days after
the Closing Date (in the case of the Initial Receivables) or applicable
Subsequent Transfer Date (in the case of the Subsequent Receivables) to
determine whether such Receivable Files contain the documents referred to in
Sections 3.3(a)(i) and (ii). If the Trustee has found or finds that a file for a
Receivable has not been received, or that a file is unrelated to the Receivables
identified in Schedule A to this Agreement or that any of the documents referred
to in Section 3.3(a)(i) or (ii) are not contained in a Receivable File, the
Trustee shall inform CPS, the Seller, the Owner Trustee and the Note Insurer
promptly, in writing, of the failure to receive a file with respect to such
Receivable (or of the failure of any of the aforementioned documents to be
included in the Receivable File) or shall return to CPS as the Seller's designee
any file unrelated to a Receivable identified in Schedule A to this Agreement
(it being understood that the Trustee's obligation to review the contents of any
Receivable File shall be limited as set forth in the preceding sentence). Unless
such defect with respect to such Receivable File shall have been cured by the
last day of the second Collection Period following discovery thereof by the
Trustee, the Trustee shall cause CPS to repurchase any such Receivable as of
such last day pursuant to the Receivables Purchase Agreement. In consideration
of the purchase of the Receivable, CPS shall remit the Purchase Amount, in the
manner specified in Section 5.6. The sole remedy of the Trustee, the Trust, or
the Securityholders with respect to a breach pursuant to this Section 3.4 shall
be to require CPS to purchase the applicable Receivables pursuant to this
Section 3.4; provided, however, that CPS shall indemnify the Trustee, the Owner
Trustee, the Standby Servicer, the Collateral Agent, the Note Insurer, the Trust
and the Securityholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third party claims
arising out of the events or facts giving rise to such breach. Upon receipt of
the Purchase Amount and written instructions from the Servicer, the Trustee
shall release to CPS or its designee the related Receivable File and shall
execute and deliver all reasonable instruments of transfer or assignment,
without recourse, as are prepared by CPS and delivered to the Trustee and are
necessary to vest in CPS or such designee title to the Receivable including a
Trustee's Certificate in the form of Exhibit F-1. The Trustee shall make a list
of Receivables for which an application for a certificate of title but not an
original certificate of title or, with respect to Receivables originated in the
Non-Certificated Title States, another evidence of title issued by the
applicable Department of Motor Vehicles or similar authority, is included in the
Receivable File as of the date of its review of the Receivable Files and deliver
a copy of such list to the Servicer, the Owner Trustee and the Note Insurer. On
the date which is 180 days following the Closing Date (in the case of the
Initial Receivables) or applicable Subsequent Transfer Date (in the case of the
Subsequent Receivables) or, if such day is not a Business Day, the next
succeeding Business Day, the Trustee shall inform CPS and the other parties to
this Agreement and the Note Insurer of any Receivable for which the related
43
Receivable File on such date does not include an original certificate of title
or, with respect to Financed Vehicles in the Non-Certificated Title States, for
which the related Receivable File on such date does not include evidence of
title issued by the applicable Department of Motor Vehicles or similar
authority, and CPS shall repurchase any such Receivable as of the last day of
the current Collection Period.
SECTION 3.5 ACCESS TO RECEIVABLE FILES. The Trustee shall permit the
Servicer and the Note Insurer access to the Receivable Files at all reasonable
times during the Trustee's normal business hours. The Trustee shall, within two
Business Days of the request of the Servicer, the Owner Trustee or the Note
Insurer, execute such documents and instruments as are prepared by the Servicer,
the Owner Trustee or the Note Insurer and delivered to the Trustee, as the
Servicer, the Owner Trustee or the Note Insurer deems necessary to permit the
Servicer, in accordance with its customary servicing procedures, to enforce the
Receivable on behalf of the Trust and any related insurance policies covering
the Obligor, the Receivable or Financed Vehicle so long as such execution in the
Trustee's sole discretion does not conflict with this Agreement and will not
cause it undue risk or liability. The Trustee shall not be obligated to release
any document from any Receivable File unless it receives a trust receipt signed
by a Servicing Officer in the form of Exhibit C hereto (the "TRUST RECEIPT").
Such Trust Receipt shall obligate the Servicer to return such document(s) to the
Trustee when the need therefor no longer exists unless the Receivable shall be
liquidated, in which case, upon receipt of a certificate of a Servicing Officer
substantially in the form of Exhibit D hereto to the effect that all amounts
required to be deposited in the Collection Account with respect to such
Receivable have been so deposited, the Trust Receipt shall be released by the
Trustee to the Servicer.
ARTICLE IV
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ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.1 DUTIES OF THE SERVICER. The Servicer, as agent for the
Trust, the Securityholders and the Note Insurer (to the extent provided herein)
shall manage, service, administer and make collections on the Receivables with
reasonable care, using that degree of skill and attention customary and usual
for institutions which service motor vehicle retail installment contracts
similar to the Receivables and, to the extent more exacting, that the Servicer
exercises with respect to all comparable automotive receivables that it services
for itself or others. The Servicer's duties shall include collection and posting
of all payments, responding to inquiries of Obligors on such Receivables,
investigating delinquencies, sending payment statements to Obligors, reporting
tax information to Obligors, accounting for collections, furnishing monthly and
annual statements to the Trustee, the Owner Trustee and the Note Insurer with
respect to distributions. Without limiting the generality of the foregoing, and
subject to the servicing standards set forth in this Agreement, the Servicer is
authorized and empowered by the Trust to execute and deliver, on behalf of
itself, the Trust or the Securityholders, any and all instruments of
satisfaction or cancellation, or partial or full release or discharge, and all
other comparable instruments, with respect to such Receivables or to the
44
Financed Vehicles securing such Receivables and/or the certificates of title or,
with respect to Financed Vehicles in the Non-Certificated Title States, other
evidence of ownership with respect to such Financed Vehicles issued by the
applicable Department of Motor Vehicles or similar authority. If the Servicer
shall commence a legal proceeding to enforce a Receivable, the Trust shall
thereupon be deemed to have automatically assigned, solely for the purpose of
collection, such Receivable to the Servicer. If in any enforcement suit or legal
proceeding it shall be held that the Servicer may not enforce a Receivable on
the ground that it shall not be a real party in interest or a holder entitled to
enforce such Receivable, the Trust shall, at the Servicer's expense and
direction, take steps to enforce such Receivable, including bringing suit in its
name or the name of the Securityholders. The Servicer shall prepare and furnish,
and the Trustee and the Owner Trustee shall execute, any powers of attorney and
other documents reasonably necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties hereunder.
SECTION 4.2 COLLECTION OF RECEIVABLE PAYMENTS; MODIFICATIONS OF
RECEIVABLES; LOCKBOX AGREEMENTS.
(a) Consistent with the standards, policies and procedures
required by this Agreement, the Servicer shall make reasonable efforts to
collect all payments called for under the terms and provisions of the
Receivables as and when the same shall become due and shall follow such
collection procedures as it follows with respect to all comparable automotive
receivables that it services for itself or others; provided, however, that
promptly after the Closing Date the Servicer shall notify each Obligor to make
all payments with respect to the Receivables to the Post-Office Box. The
Servicer will provide each Obligor with a monthly statement in order to notify
such Obligors to make payments directly to the Post-Office Box. The Servicer
shall allocate collections between principal and interest in accordance with the
customary servicing procedures it follows with respect to all comparable
automotive receivables that it services for itself or others and in accordance
with the terms of this Agreement. Except as provided below, the Servicer, for so
long as CPS is the Servicer, may grant extensions on a Receivable; provided,
however, that the Servicer may not grant more than one extension per calendar
year with respect to a Receivable or grant an extension with respect to a
Receivable for more than one calendar month or grant more than three extensions
in the aggregate with respect to a Receivable without the prior written consent
of the Note Insurer and provided, further, that if the Servicer extends the date
for final payment by the Obligor of any Receivable beyond the last day of the
penultimate Collection Period preceding the Class A-2 Final Scheduled Payment
Date, it shall promptly purchase the Receivable from the Trust in accordance
with the terms of Section 4.7 hereof (and for purposes thereof, the Receivable
shall be deemed to be materially and adversely affected by such breach). If the
Servicer is not CPS, the Servicer may not make any extension on a Receivable
without the prior written consent of the Note Insurer. The Servicer may in its
discretion waive any late payment charge or any other fees that may be collected
in the ordinary course of servicing a Receivable. Notwithstanding anything to
the contrary contained herein, the Servicer shall not agree to any alteration of
the interest rate on any Receivable or of the amount of any Scheduled Receivable
Payment on Receivables.
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(b) The Servicer shall establish the Lockbox Account in the
name of the Trust for the benefit of the Trustee for the further benefit of the
Securityholders and the Note Insurer. Pursuant to the Lockbox Agreement, the
Trustee has authorized the Servicer to direct dispositions of funds on deposit
in the Lockbox Account to the Collection Account (but not to any other account),
and no other Person, save the Lockbox Processor and the Trustee, has authority
to direct disposition of funds on deposit in the Lockbox Account. The Trustee
shall have no liability or responsibility with respect to the Lockbox
Processor's directions or activities as set forth in the preceding sentence. The
Lockbox Account shall be established pursuant to and maintained in accordance
with the Lockbox Agreement and shall be a demand deposit account initially
established and maintained with the Lockbox Bank or, at the request of the Note
Insurer (unless an Insurer Default shall have occurred and be continuing), an
Eligible Account satisfying clause (i) of the definition thereof; provided,
however, that the Trustee shall give the Servicer prior written notice of any
change made at the request of the Note Insurer in the location of the Lockbox
Account. The Trustee shall establish and maintain the Post-Office Box at a
United States Post Office Branch in the name of the Trust for the benefit of the
Securityholders and the Note Insurer.
(c) Notwithstanding any Lockbox Agreement, or any of the
provisions of this Agreement relating to the Lockbox Agreement, the Servicer
shall remain obligated and liable to the Trust, the Trustee and Securityholders
for servicing and administering the Receivables and the Other Conveyed Property
in accordance with the provisions of this Agreement without diminution of such
obligation or liability by virtue thereof.
(d) In the event the Servicer shall for any reason no longer
be acting as such, the Standby Servicer or a successor Servicer shall thereupon
assume all of the rights and obligations of the outgoing Servicer under the
Lockbox Agreement arising from and after such assumption. In such event, the
successor Servicer shall be deemed to have assumed all of the outgoing
Servicer's interest therein and to have replaced the outgoing Servicer as a
party to the Lockbox Agreement to the same extent as if such Lockbox Agreement
had been assigned to the successor Servicer, except that the outgoing Servicer
shall not thereby be relieved of any liability or obligations on the part of the
outgoing Servicer to the Lockbox Bank under such Lockbox Agreement. The outgoing
Servicer shall, upon request of the Trustee, but at the expense of the outgoing
Servicer, deliver to the successor Servicer all documents and records relating
to the Lockbox Agreement and an accounting of amounts collected and held by the
Lockbox Bank and otherwise use its best efforts to effect the orderly and
efficient transfer of any Lockbox Agreement to the successor Servicer. In the
event that the Note Insurer (so long as an Insurer Default shall not have
occurred and be continuing) or Holders of Notes evidencing more than 50% of the
Aggregate Note Balance (if an Insurer Default shall have occurred and be
continuing) shall elect to change the identity of the Lockbox Bank, the
Servicer, at its expense, shall cause the Lockbox Bank to deliver, at the
direction of the Note Insurer (so long as an Insurer Default shall not have
occurred and be continuing) or Holders of Notes evidencing more than 50% of the
Aggregate Note Balance (if an Insurer Default shall have occurred and be
continuing) to the Trustee or a successor Lockbox Bank, all documents and
records relating to the Receivables and all amounts held (or thereafter
received) by the Lockbox Bank (together with an accounting of such amounts) and
shall otherwise use its best efforts to effect the orderly and efficient
transfer of the Lockbox arrangements.
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(e) On each Business Day, pursuant to the Lockbox Agreement,
the Lockbox Processor will transfer any payments from Obligors received in the
Post-Office Box to the Lockbox Account. Within two Business Days of receipt of
funds into the Lockbox Account, the Servicer shall cause the Lockbox Bank to
transfer funds from the Lockbox Account to the Collection Account. In addition,
the Servicer shall remit all payments by or on behalf of the Obligors received
by the Servicer with respect to the Receivables (other than Purchased
Receivables), and all Liquidation Proceeds no later than the Business Day
following receipt directly (without deposit into any intervening account) into
the Lockbox Account or the Collection Account.
SECTION 4.3 REALIZATION UPON RECEIVABLES. On behalf of the Trust, the
Securityholders and the Note Insurer, the Servicer shall use its best efforts,
consistent with the servicing procedures set forth herein, to repossess or
otherwise convert the ownership of the Financed Vehicle securing any Receivable
as to which the Servicer shall have determined eventual payment in full is
unlikely. The Servicer shall commence efforts to repossess or otherwise convert
the ownership of a Financed Vehicle on or prior to the date that an Obligor has
failed to make more than 90% of a Scheduled 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 that such repair and/or repossession
will increase the proceeds ultimately recoverable with respect to such
Receivable by an amount greater than the amount of such expenses.
SECTION 4.4 INSURANCE.
(a) The Servicer, in accordance with the servicing procedures
and standards set forth herein, shall require that (i) each Obligor shall have
obtained insurance covering the Financed Vehicle, as of the date of the
execution of the Receivable, insuring against loss and damage due to fire,
theft, transportation, collision and other risks generally covered by
comprehensive and collision coverage and each Receivable requires the Obligor to
maintain such physical loss and damage insurance naming CPS and its successors
and assigns as an additional insured, (ii) each Receivable that finances the
cost of premiums for credit life and credit accident and health insurance is
covered by an insurance policy or certificate naming CPS as policyholder
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(creditor) and (iii) as to each Receivable that finances the cost of an extended
service contract, the respective Financed Vehicle which secures the Receivable
is covered by an extended service contract.
(b) To the extent applicable, the Servicer shall not take any
action which would result in noncoverage under any of the insurance policies
referred to in Section 4.4(a) which, but for the actions of the Servicer, would
have been covered thereunder. The Servicer, on behalf of the Trust, shall take
such reasonable action as shall be necessary to permit recovery under any of the
foregoing insurance policies. Any amounts collected by the Servicer under any of
the foregoing insurance policies shall be deposited in the Collection Account.
SECTION 4.5 MAINTENANCE OF SECURITY INTERESTS IN VEHICLES.
(a) Consistent with the policies and procedures required by
this Agreement, the Servicer shall take such steps on behalf of the Trust as are
necessary to maintain perfection of the security interest created by each
Receivable in the related Financed Vehicle, including but not limited to
obtaining the execution by the Obligors and the recording, registering, filing,
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 Trust as necessary because
of the relocation of a Financed Vehicle or for any other reason. In the event
that the assignment of a Receivable to the Trust is insufficient, without a
notation on the related Financed Vehicle's certificate of title, or without
fulfilling any additional administrative requirements under the laws of the
state in which the Financed Vehicle is located, to perfect a security interest
in the related Financed Vehicle in favor of the Trust, the Servicer hereby
agrees that CPS's designation as the secured party on the certificate of title
is in its capacity as Servicer as agent of the Trust.
(b) Upon the occurrence of an Insurance Agreement Event of
Default, the Note Insurer may (so long as an Insurer Default shall not have
occurred and be continuing) instruct the Trustee and the Servicer to take or
cause to be taken, or, if an Insurer Default shall have occurred, upon the
occurrence of a Servicer Termination Event, the Trustee and the Servicer shall
take or cause to be taken such action as may, in the opinion of counsel to the
Trustee, which opinion shall not be an expense of the Trustee, be necessary to
perfect or re-perfect the security interests in the Financed Vehicles securing
the Receivables in the name of the Trust by amending the title documents of such
Financed Vehicles or by such other reasonable means as may, in the opinion of
counsel to the Trustee, which opinion shall not be an expense of the Trustee, be
necessary or prudent. The Servicer hereby agrees to pay all expenses related to
such perfection or re-perfection and to take all action necessary therefor. In
addition, prior to the occurrence of an Insurance Agreement Event of Default,
the Controlling Party may instruct the Trustee and the Servicer to take or cause
to be taken such action as may, in the opinion of counsel to the Controlling
Party, be necessary to perfect or re-perfect the security interest in the
Financed Vehicles underlying the Receivables in the name of the Trust, including
48
by amending the title documents of such Financed Vehicles or by such other
reasonable means as may, in the opinion of counsel to the Controlling Party, be
necessary or prudent; provided, however, that if the Controlling Party requests
that the title documents be amended prior to the occurrence of an Insurance
Agreement Event of Default, the out-of-pocket expenses of the Servicer or the
Trustee in connection with such action shall be reimbursed to the Servicer or
the Trustee, as applicable, by the Controlling Party.
SECTION 4.6 ADDITIONAL COVENANTS OF SERVICER. The Servicer shall not
release the Financed Vehicle securing each Receivable from the security interest
granted by such Receivable in whole or in part except in the event of payment in
full by the Obligor thereunder or repossession, nor shall the Servicer impair
the rights of the Securityholders in such Receivables, nor shall the Servicer
amend a Receivable, except that extensions and waivers may be granted in
accordance with Section 4.2. The Servicer shall take such actions as are
necessary from time to time in order to maintain the perfection and priority of
the Issuer's security interest in the Trust Property.
SECTION 4.7 PURCHASE OF RECEIVABLES UPON BREACH OF COVENANT. Upon
discovery by any of the Servicer, the Note Insurer, the Owner Trustee or the
Trustee of a breach of any of the covenants set forth in Section 4.2(a), 4.4,
4.5 or 4.6, the party discovering such breach shall give prompt written notice
to the others; provided, however, that the failure to give any such notice shall
not affect any obligation of the Servicer under this Section 4.7. Unless the
breach shall have been cured by the last day of the second Collection Period
following such discovery (or, at the Servicer's election, the last day of the
first following Collection Period), the Servicer shall purchase any Receivable
materially and adversely affected by such breach. In consideration of the
purchase of such Receivable, the Servicer shall remit the Purchase Amount in the
manner specified in Section 5.6. The sole remedy of the Trustee, the Trust, the
Owner Trustee, the Note Insurer or the Securityholders with respect to a breach
of Section 4.2(a), 4.4, 4.5 or 4.6 shall be to require the Servicer to
repurchase Receivables pursuant to this Section 4.7; provided, however, that the
Servicer shall indemnify the Trustee, the Standby Servicer, the Collateral
Agent, the Note Insurer, the Owner Trustee, the Trust and the Securityholders
against all costs, expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel, which may be asserted against or
incurred by any of them as a result of third party claims arising out of the
events or facts giving rise to such breach. If it is determined that the
management, administration and servicing of the Receivables and operation of the
Trust pursuant to this Agreement constitutes a violation of the prohibited
transaction rules of ERISA or the Code to which no statutory exception or
administrative exemption applies, such violation shall not be treated as a
breach of Section 4.2(a), 4.4, 4.5 or 4.6 if not otherwise such a breach.
SECTION 4.8 SERVICING FEE. The "Servicing Fee" for each Payment Date
shall be equal to the result of one twelfth times 2.50% of the Pool Balance as
of the close of business on the last day of the second preceding Collection
Period; provided, however, that with respect to the first Payment Date the
Servicer will be entitled to receive a Servicing Fee equal to the product of
one-twelfth times 2.50% of the Pool Balance as of the Initial Cutoff Date. The
Servicing Fee shall also include all late fees, prepayment charges including, in
49
the case of a Rule of 78's Receivable that is prepaid in full, to the extent not
required by law to be remitted to the related Obligor, the difference between
the Principal Balance of such Rule of 78's Receivable (plus accrued interest to
the date of prepayment) and the principal balance of such Receivable computed
according to the "Rule of 78's", and other administrative fees or similar
charges allowed by applicable law with respect to Receivables, collected (from
whatever source) on the Receivables. If the Standby Servicer becomes the
successor Servicer, the "Servicing Fee" payable to the Standby Servicer as
successor Servicer shall be determined in accordance with the Servicing and
Lockbox Processing Assumption Agreement.
SECTION 4.9 SERVICER'S CERTIFICATE. By 9:00 a.m., Phoenix time, on each
Determination Date, the Servicer shall deliver to the Trustee, the Owner
Trustee, the Note Insurer, the Rating Agencies and the Seller a Servicer's
Certificate containing all information necessary to make the distributions
pursuant to Sections 5.7 and 5.9 (including, if required, withdrawals from the
Spread Account) for the Collection Period preceding the date of such Servicer's
Certificate and all information necessary for the Trustee to send statements to
the Securityholders and the Note Insurer pursuant to Section 5.8(b). Receivables
to be purchased by the Servicer or to be purchased by CPS shall be identified by
the Servicer by account number with respect to such Receivable (as specified in
Schedule A).
SECTION 4.10 ANNUAL STATEMENT AS TO COMPLIANCE, NOTICE OF SERVICER
TERMINATION EVENT.
(a) The Servicer shall deliver to the Owner Trustee, the
Trustee, the Standby Servicer, the Note Insurer and each Rating Agency, on or
before March 31 of each year beginning March 31, 2003, 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 and of its
performance under this Agreement has been made under such officer's supervision
and (ii) to the best of such officer's knowledge, based on such review, the
Servicer has fulfilled all its obligations under this Agreement throughout such
year (or, in the case of the first such certificate, such shorter period), or,
if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof. The Trustee shall send a copy of such certificate and the report
referred to in Section 4.11 to the Rating Agencies. The Trustee shall forward a
copy of such certificate as well as the report referred to in Section 4.11 to
each Noteholder and the Owner Trustee shall forward a copy to each
Certificateholder.
(b) The Servicer shall deliver to the Owner Trustee, the
Trustee, the Standby Servicer, the Note Insurer, the Collateral Agent, and each
Rating Agency, promptly after having obtained knowledge thereof, but in no event
later than two (2) Business Days thereafter, written notice in an Officer's
Certificate of any event which with the giving of notice or lapse of time, or
both, would become a Servicer Termination Event under Section 10.1.
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SECTION 4.11 ANNUAL INDEPENDENT ACCOUNTANTS' REPORT. The Servicer shall
cause a firm of nationally recognized independent certified public accountants
(the "Independent Accountants"), who may also render other services to the
Servicer or to the Seller, to deliver to the Trustee, the Owner Trustee, the
Standby Servicer, the Note Insurer and each Rating Agency, on or before March 31
of each year beginning March 31, 2003, a report dated as of December 31 of the
previous year (the "Accountants' Report") and reviewing the Servicer's
activities during the preceding 12-month period, addressed to the Board of
Directors of the Servicer, to the Owner Trustee, the Trustee, the Standby
Servicer and to the Note Insurer, to the effect that such firm has examined the
financial statements of the Servicer and issued its report therefor and that
such examination (1) was made in accordance with generally accepted auditing
standards, and accordingly included such tests of the accounting records and
such other auditing procedures as such firm considered necessary in the
circumstances; (2) included tests relating to auto loans serviced for others in
accordance with the requirements of the Uniform Single Attestation Program for
Mortgage Bankers (the "Program"), to the extent the procedures in the Program
are applicable to the servicing obligations set forth in this Agreement; (3)
included an examination of the delinquency and loss statistics relating to the
Servicer's portfolio of automobile and light truck installment sales contracts;
and (4) except as described in the report, disclosed no exceptions or errors in
the records relating to automobile and light truck loans serviced for others
that, in the firm's opinion, paragraph four of the Program requires such firm to
report. The accountant's report shall further state that (1) a review in
accordance with agreed upon procedures was made of three randomly selected
Servicer Certificates; (2) except as disclosed in the report, no exceptions or
errors in the Servicer Certificates were found; and (3) the delinquency and loss
information relating to the Receivables and the stated amount of Liquidated
Receivables, if any, contained in the Servicer Certificates were found to be
accurate. In the event such firm requires the Trustee, the Owner Trustee and/or
the Standby Servicer to agree to the procedures performed by such firm, the
Servicer shall direct the Trustee, the Owner Trustee and/or the Standby
Servicer, as applicable, in writing to so agree; it being understood and agreed
that the Trustee, the Owner Trustee and/or the Standby Servicer will deliver
such letter of agreement in conclusive reliance upon the direction of the
Servicer, and neither the Trustee, the Owner Trustee nor the Standby Servicer
makes any independent inquiry or investigation as to, and shall have no
obligation or liability in respect of, the sufficiency, validity or correctness
of such procedures.
The Report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
SECTION 4.12 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
RECEIVABLES. The Servicer shall provide to representatives of the Trustee, the
Owner Trustee, the Standby Servicer and the Note Insurer reasonable access to
the documentation regarding the Receivables. In each case, such access shall be
afforded without charge but only upon reasonable request and during normal
business hours. Nothing in this Section shall derogate from the obligation of
the Servicer to observe any applicable law prohibiting disclosure of information
51
regarding the Obligors, and the failure of the Servicer to provide access as
provided in this Section as a result of such obligation shall not constitute a
breach of this Section.
SECTION 4.13 VERIFICATION OF SERVICER'S CERTIFICATE.
(a) On or before the fifth calendar day of each month, the
Servicer will deliver to the Trustee and the Standby Servicer a computer
diskette (or other electronic transmission) in a format acceptable to the
Trustee and the Standby Servicer containing information with respect to the
Receivables as of the close of business on the last day of the preceding
Collection Period which information is necessary for preparation of the
Servicer's Certificate. The Standby Servicer shall use such computer diskette
(or other electronic transmission) to verify certain information specified in
Section 4.13(b) contained in the Servicer's Certificate delivered by the
Servicer, and the Standby Servicer shall notify the Servicer and the Note
Insurer of any discrepancies on or before the second Business Day following the
Determination Date. In the event that the Standby Servicer reports any
discrepancies, the Servicer and the Standby Servicer shall attempt to reconcile
such discrepancies prior to the second Business Day prior to the related Payment
Date, but in the absence of a reconciliation, the Servicer's Certificate shall
control for the purpose of calculations and distributions with respect to the
related Payment Date. In the event that the Standby Servicer and the Servicer
are unable to reconcile discrepancies with respect to a Servicer's Certificate
by the related Payment Date, the Servicer shall cause a firm of independent
certified public accountants, at the Servicer's expense, to audit the Servicer's
Certificate and, prior to the fifth calendar day of the following month,
reconcile the discrepancies. The effect, if any, of such reconciliation shall be
reflected in the Servicer's Certificate for such next succeeding Determination
Date. Other than the duties specifically set forth in this Agreement, the
Standby Servicer shall have no obligations hereunder, including, without
limitation, to supervise, verify, monitor or administer the performance of the
Servicer. The Standby Servicer shall have no liability for any actions taken or
omitted by the Servicer. The duties and obligations of the Standby Servicer
shall be determined solely by the express provisions of this Agreement and no
implied covenants or obligations shall be read into this Agreement against the
Standby Servicer.
(b) Standby Servicer shall review each Servicer's Certificate
delivered pursuant to Section 4.13(a) and shall:
(i) confirm that such Servicer's Certificate is complete on
its face;
(ii) load the computer diskette (which shall be in a format
acceptable to the Standby Servicer) received from the Servicer pursuant
to Section 4.13(a) hereof, confirm that such computer diskette is in a
readable form and calculate and confirm the Principal Balance of each
Receivable for the most recent Payment Date;
(iii) confirm that the Total Distribution Amount, the
Principal Distributable Amount, the Noteholders' Principal
Distributable Amount, the Class A-1 Noteholders' Interest Distributable
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Amount, the Class A-2 Noteholders' Interest Distributable Amount, the
Note Prepayment Amount, the Class B Certificateholders' Interest
Distributable Amount, the Class B Certificateholders' Principal
Distributable Amount, the Class B Prepayment Amount, the Standby Fee,
the Servicing Fee, the Trustee Fee, the Collateral Agent Fee, the
amount on deposit in the Spread Account, and the Premium in the
Servicer's Certificate are accurate based solely on the recalculation
of the Servicer's Certificate; and
(iv) confirm the calculation of the performance tests set
forth in the Spread Account Agreement.
SECTION 4.14 RETENTION AND TERMINATION OF SERVICER. The Servicer hereby
covenants and agrees to act as such under this Agreement for an initial term
commencing on the Closing Date and ending on March 31, 2002, which term shall be
extendible by the Note Insurer for successive quarterly terms ending on each
successive June 30, September 30, December 31 and March 31 (or, at the
discretion of the Note Insurer exercised pursuant to revocable written standing
instructions from time to time to the Servicer and the Trustee, for any
specified number of terms greater than one), until such time as the Notes have
been paid in full, all amounts due to the Certificateholders have been paid and
until the termination of the Trust. Each such notice (including each notice
pursuant to standing instructions, which shall be deemed delivered at the end of
successive terms for so long as such instructions are in effect) (a "Servicer
Extension Notice") shall be delivered by the Note Insurer to the Trustee and the
Servicer. The Servicer hereby agrees that, upon its receipt of any such Servicer
Extension Notice, the Servicer shall become bound, for the duration of the term
covered by such Servicer Extension Notice, to continue as the Servicer subject
to and in accordance with the other provisions of this Agreement. If an Insurer
Default has occurred and is continuing, the term of the Servicer's appointment
hereunder shall be deemed to have been extended until such time, if any, as such
Insurer Default has been cured unless such appointment is terminated sooner in
accordance with the terms of this Agreement. Until such time as an Insurer
Default shall have occurred and be continuing, the Trustee agrees that if as of
the fifteenth day prior to the last day of any term of the Servicer, the Trustee
shall not have received any Servicer Extension Notice from the Note Insurer, the
Trustee shall, within five days thereafter, give written notice of such
non-receipt to the Note Insurer.
SECTION 4.15 FIDELITY BOND. The Servicer shall maintain a fidelity bond
in such form and amount as is customary for entities acting as custodian of
funds and documents in respect of consumer contracts on behalf of institutional
investors.
ARTICLE V
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TRUST ACCOUNTS; DISTRIBUTIONS; STATEMENTS TO SECURITYHOLDERS
SECTION 5.1 ESTABLISHMENT OF TRUST ACCOUNTS.
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(a) (i) The Trustee, on behalf of the Securityholders and the
Note Insurer, shall establish and maintain in its own name an Eligible Account
(the "Collection Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Trustee on behalf of the
Securityholders and the Note Insurer. On the Closing Date, the Servicer will
deposit, on behalf of the Seller, in the Collection Account, an amount equal to
$173,529.50, such amount representing all collections on the Receivables
received from and including the day after the Initial Cutoff Date through March
6, 2002, and with respect to Rule of 78's Receivables, all monies due or to
become due thereon after the Initial Cutoff Date (including Scheduled Payments
due after the Initial Cutoff Date (including principal prepayments relating to
such Schedule Payments) but received by the Seller or CPS on or before the
Initial Cutoff Date).
(ii) The Trustee, on behalf of the Noteholders, shall
establish and maintain in its own name an Eligible Account (the "Note
Distribution Account"), bearing a designation clearly indicating that
the funds deposited therein are held for the benefit of the Trustee on
behalf of the Noteholders and the Note Insurer. The Note Distribution
Account shall initially be established with the Trustee.
(iii) The Trustee, on behalf of the Noteholders and
the Note Insurer, shall establish and maintain in its own name an
Eligible Account (the "Pre-Funding Account"), bearing a designation
clearly indicating that the funds deposited therein are held for the
benefit of the Trustee on behalf of the Noteholders and the Note
Insurer.
(iv) The Trustee, on behalf of the
Certificateholders, shall establish and maintain in its own name an
Eligible Account (the "Certificate Distribution Account"), bearing a
designation clearly indicating that the funds deposited therein are
held for the benefit of the Trustee on behalf of the
Certificateholders. The Certificate Distribution Account shall
initially be established with the Trustee.
Funds on deposit in the Collection Account, the Note
Distribution Account, the Pre-Funding Account, the Interest Reserve
Account and the Certificate Distribution Account (collectively, the
"Trust Accounts") shall be invested by the Trustee (or any custodian
with respect to funds on deposit in any such account) in Eligible
Investments selected in writing by the Servicer (pursuant to standing
instructions or otherwise). All such Eligible Investments shall be held
by or on behalf of the Trustee for the benefit of the Noteholders
and/or the Certificateholders and the Note Insurer, as applicable.
Other than as permitted by the Rating Agencies and the Note Insurer,
funds on deposit in any Trust Account shall be invested in Eligible
Investments that will mature so that such funds will be available at
the close of business on the Business Day immediately preceding the
following Payment Date. Funds deposited in a Trust Account on the day
immediately preceding a Payment Date upon the maturity of any Eligible
Investments are not required to be invested overnight. All Eligible
Investments will be held to maturity.
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(b) All investment earnings of moneys deposited in the Trust
Accounts shall be deposited (or caused to be deposited) by the Trustee in the
Collection Account for distribution pursuant to Section 5.7, and any loss
resulting from such investments shall be charged to such account. The Servicer
will not direct the Trustee to make any investment of any funds held in any of
the Trust Accounts unless the security interest granted and perfected in such
account will continue to be perfected in such investment, in either case without
any further action by any Person, and, in connection with any direction to the
Trustee to make any such investment, if requested by the Trustee, the Servicer
shall deliver to the Trustee an Opinion of Counsel, acceptable to the Trustee,
to such effect.
(c) The Trustee shall not in any way be held liable by reason
of any insufficiency in any of the Trust Accounts resulting from any loss on any
Eligible Investment included therein except for losses attributable to the
Trustee's negligence or bad faith or its failure to make payments on such
Eligible Investments issued by the Trustee, in its commercial capacity as
principal obligor and not as trustee, in accordance with their terms.
(d) If (i) the Servicer shall have failed to give investment
directions for any funds on deposit in the Trust Accounts to the Trustee by 1:00
p.m. Eastern Time (or such other time as may be agreed by the Issuer 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 such Notes shall have been declared due and
payable following an Event of Default, amounts collected or receivable from the
Trust Property are being applied as if there had not been such a declaration;
then the Trustee shall, to the fullest extent practicable, invest and reinvest
funds in the Trust Accounts in one or more Eligible Investments described in
paragraph (o) of the definition thereof.
(e) The Trustee shall possess all right, title and interest in
all funds on deposit from time to time in the Trust Accounts and in all proceeds
thereof (including all Investment Earnings on the Trust Accounts) and all such
funds, investments, proceeds and income shall be part of the Trust Property.
Except as otherwise provided herein, the Trust Accounts shall be under the sole
dominion and control of the Trustee for the benefit of the Noteholders and/or
the Certificateholders, as the case may be, and the Note Insurer. If at any time
any of the Trust Accounts ceases to be an Eligible Account, the Servicer with
the consent of the Note Insurer shall within five Business Days establish a new
Trust Account as an Eligible Account and shall transfer any cash and/or any
investments to such new Trust Account. The Servicer shall promptly notify the
Rating Agencies and the Owner Trustee of any change in the location of any of
the aforementioned accounts. In connection with the foregoing, the Servicer
agrees that, in the event that any of the Trust Accounts are not accounts with
the Trustee, the Servicer shall notify the Trustee in writing promptly upon any
of such Trust Accounts ceasing to be an Eligible Account.
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(f) 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 Trust Account shall be the State of New York.
(g) With respect to the Trust Account Property, the Trustee
agrees that:
(A) any Trust Account Property that is held in
deposit accounts shall be held solely in an Eligible Account;
and, 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
(B) any other Trust Account Property shall be
delivered to the Trustee in accordance with the definition of
"Delivery".
SECTION 5.2 INTEREST RESERVE ACCOUNT.
(a) Servicer shall cause the Trustee to establish and maintain
an Eligible Account (the "INTEREST RESERVE ACCOUNT") with the Trustee, bearing a
designation clearly indicating that the funds deposited therein are held in
trust for the benefit of the Noteholders and the Note Insurer.
(b) On or prior to the Closing Date, the Seller shall deposit
an amount equal to the Interest Reserve Account Initial Deposit into the
Interest Reserve Account.
(c) On the Determination Date for each of the April, May and
June 2002 Payment Dates, to the extent that the Servicer's Certificate indicates
that the funds on deposit in the Interest Reserve Account are in excess of the
Requisite Reserve Amount for such Payment Date, the Trustee shall withdraw such
excess from the Interest Reserve Account and deposit such amount in the
Collection Account for distribution pursuant to Section 5.7(a) on the related
Payment Date. Any amounts remaining in the Interest Reserve Account on the first
Payment Date occurring on or after last day of the Collection Period for the
Payment Date in June 2002 shall be remitted by the Trustee to the Seller. Upon
any such distribution to the Seller, the Noteholders, the Certificateholders and
the Note Insurer will have no further rights in, or claims to, such amounts.
SECTION 5.3 CERTAIN REIMBURSEMENTS TO THE SERVICER. The Servicer will
be entitled to be reimbursed from amounts on deposit in the Collection Account
with respect to a Collection Period for amounts previously deposited in the
Collection Account but later determined by the Servicer to have resulted from
mistaken deposits or postings or checks returned for insufficient funds. The
amount to be reimbursed hereunder shall be paid to the Servicer on the related
Payment Date pursuant to Section 5.7(a)(iii) or 5.7(a)(x), as applicable, upon
certification by the Servicer of such amounts and the provision of such
information to the Trustee and the Note Insurer as may be necessary in the
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opinion of the Note Insurer to verify the accuracy of such certification;
provided, however, that the Servicer must provide such certification within
three months of its becoming aware of such mistaken deposit, posting or returned
check. In the event that the Note Insurer has not received evidence satisfactory
to it of the Servicer's entitlement to reimbursement pursuant to this Section,
the Note Insurer shall (unless an Insurer Default shall have occurred and be
continuing) give the Trustee notice to such effect, following receipt of which
the Trustee shall not make a distribution to the Servicer in respect of such
amount pursuant to Section 5.7(a)(iii) or 5.7(a)(x), as applicable, or if prior
thereto the Servicer has been reimbursed pursuant to Section 5.7(a)(iii) or
5.7(a)(x), as applicable, the Trustee shall withhold such amounts from amounts
otherwise distributable to the Servicer on the next succeeding Payment Date.
SECTION 5.4 APPLICATION OF COLLECTIONS. All collections for each
Collection Period shall be applied by the Servicer as follows:
With respect to each Receivable (other than a Purchased Receivable),
payments by or on behalf of the Obligor shall be applied, in the case of a Rule
of 78's Receivable, first, to the Scheduled Receivable Payment of such Rule of
78's Receivable and, second, to any late fees accrued with respect to such Rule
of 78's Receivable and, in the case of a Simple Interest Receivable, to interest
and principal in accordance with the Simple Interest Method.
SECTION 5.5 WITHDRAWALS FROM SPREAD ACCOUNT.
(a) In the event that the Servicer's Certificate with respect
to any Determination Date shall state that the Total Distribution Amount with
respect to such Determination Date is insufficient to make the payments required
to be made on the related Payment Date pursuant to Sections 5.7(a)(i) through
(x) (such deficiency being a "DEFICIENCY CLAIM AMOUNT"), then on the fourth
Business Day immediately preceding the related Payment Date, the Trustee shall
deliver to the Collateral Agent, the Owner Trustee, the Note Insurer, and the
Servicer, by hand delivery, telex or facsimile transmission, a written notice (a
"DEFICIENCY NOTICE") specifying the Deficiency Claim Amount for such Payment
Date. Such Deficiency Notice shall direct the Collateral Agent to remit such
Deficiency Claim Amount (to the extent of the funds available to be distributed
pursuant to the Spread Account Agreement) to the Trustee for deposit in the
Collection Account and distribution pursuant to Sections 5.7(a)(i) through (x),
as applicable.
(b) Deficiency Notice shall be delivered by 3:00 p.m., New
York City time, on the fourth Business Day preceding such Payment Date. The
amounts distributed by the Collateral Agent to the Trustee pursuant to a
Deficiency Notice shall be deposited by the Trustee into the Collection Account
pursuant to Section 5.6.
SECTION 5.6 ADDITIONAL DEPOSITS.
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(a) The Servicer or CPS, as the case may be, shall deposit or
cause to be deposited in the Collection Account the aggregate Purchase Amount
with respect to Purchased Receivables and all amounts to be paid by CPS pursuant
to its indemnification obligations under the Basic Documents and the Servicer
shall deposit or cause to be deposited therein all amounts to be paid under
Section 11.1. All such deposits shall be made, in immediately available funds,
on the Business Day preceding the Determination Date. On or before the third
Business Day preceding each Payment Date, the Trustee shall remit to the
Collection Account any amounts delivered to the Trustee by the Collateral Agent
pursuant to Section 5.5.
SECTION 5.7 DISTRIBUTIONS.
(a) On each Payment Date, the Trustee (based on the
information contained in the Servicer's Certificate delivered on the related
Determination Date) shall make the following distributions in the following
order of priority:
(i) to the Standby Servicer, from the Total Distribution
Amount, any amount deposited in the Collection Account pursuant to
Section 5.5(a) and any amount deposited in the Collection Amount
pursuant to Section 5.12(a) in respect of Standby Fees, so long as CPS
is the Servicer and Bank One Trust Company, N.A. is the Standby
Servicer, the Standby Fee and all unpaid Standby Fees from prior
Collection Periods;
(ii) to the Backup Servicer, from the Total Distribution
Amount (as such Total Distribution Amount has been reduced by payments
pursuant to clause (i) above), any amount deposited in the Collection
Account pursuant to Section 5.5(a) and any amount deposited in the
Collection Amount pursuant to Section 5.12(a) in respect of Backup
Servicing Fees, so long as the Backup Servicer is not the Servicer, the
Backup Servicing Fee and all unpaid Backup Servicing Fees from prior
Collection Periods;
(iii) to the Servicer, from the Total Distribution Amount (as
such Total Distribution Amount has been reduced by payments pursuant to
clauses (i) and (ii) above), any amount deposited in the Collection
Account pursuant to Section 5.5(a) and any amount deposited in the
Collection Account pursuant to Section 5.12(a) in respect of Servicing
Fees, the Servicing Fee and all unpaid Servicing Fees from prior
Collection Periods and all reimbursements to which the Servicer is
entitled pursuant to Section 5.3;
(iv) if the Standby Servicer or the Backup Servicer becomes
the successor Servicer, to the Standby Servicer or Backup Servicer, as
applicable, from the Total Distribution Amount (as such Total
Distribution Amount has been reduced by payments pursuant to clauses
(i) through (iii) above), any amount deposited in the Collection
Account pursuant to Section 5.5(a) and any amount deposited in the
Collection Account pursuant to Section 5.12(a) in respect of Servicing
Fees, to the extent not previously paid by the predecessor Servicer
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pursuant to this Agreement, reasonable transition expenses (up to a
maximum of $50,000 for all such expenses) incurred in becoming the
successor Servicer;
(v) to the Trustee and the Owner Trustee, pro rata, from the
Total Distribution Amount (as such Total Distribution Amount has been
reduced by payments pursuant to clauses (i) through (iv) above), any
amount deposited in the Collection Account pursuant to Section 5.5(a)
and any amount deposited in the Collection Account pursuant to Section
5.12(a) in respect of Trustee Fees, the Trustee Fees and reasonable
out-of-pocket expenses thereof (including counsel fees and expenses)
and all unpaid Trustee Fees and unpaid reasonable out-of-pocket
expenses (including counsel fees and expenses) from prior Collection
Periods; provided, however, that unless an Event of Default, a Servicer
Termination Event or an Insurance Agreement Event of Default shall have
occurred and be continuing, expenses payable to the Trustee and the
Owner Trustee pursuant to this clause (v) and expenses payable to the
Collateral Agent pursuant to clause (vi) below shall be limited to a
total of $50,000 per annum;
(vi) to the Collateral Agent, from the Total Distribution
Amount (as such Total Distribution Amount has been reduced by payments
pursuant to clauses (i) through (v) above), any amount deposited in the
Collection Account pursuant to Section 5.5(a) and any amount deposited
in the Collection Account pursuant to Section 5.12(a) in respect of
Collateral Agent Fees and reasonable expenses of the Collateral Agent,
all Collateral Agent Fees and reasonable expenses payable to the
Collateral Agent with respect to such Payment Date;
(vii) to the Note Distribution Account, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) through (vi) above) and any amount
deposited in the Collection Account pursuant to Section 5.5(a) and
Sections 5.12(a)(iii), the Noteholders' Interest Distributable Amount
for such Payment Date;
(viii) to the Note Distribution Account from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) through (vii) above) and any amount
deposited in the Collection Account pursuant to Section 5.5(a) and
Section 5.12(a)(ii) and (iii), the Noteholders' Principal Distributable
Amount plus the Noteholders' Principal Carryover Shortfall, if any;
(ix) to the Note Insurer, from the Total Distribution Amount
(as such Total Distribution Amount has been reduced by payments made
pursuant to clauses (i) through (viii) above) and any amount deposited
in the Collection Account pursuant to Section 5.5(a), any amounts owing
to the Note Insurer under this Agreement and the Insurance Agreement
and not paid;
(x) if any Person other than the Standby Servicer or the
Backup Servicer becomes the successor Servicer, to such successor
Servicer from the Total Distribution Amount (as such Total Distribution
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Amount has been reduced by payments pursuant to clauses (i) through
(ix) above), any amount deposited in the Collection Account pursuant to
Section 5.5(a) and any amount deposited in the Collection Account
pursuant to Section 5.12(a) in respect of Servicing Fees, to the extent
not previously paid by the predecessor Servicer pursuant to this
Agreement, reasonable transition expenses (up to a maximum of $50,000
for all such expenses) incurred in becoming the successor Servicer;
(xi) to the Collateral Agent, from the Total Distribution
Amount (as such Total Distribution Amount has been reduced by payments
made pursuant to clauses (i) through (x) above) for deposit into the
Spread Account (or if the Spread Account has been terminated in
accordance with the Spread Account Supplement, into the Certificate
Distribution Account), the remaining Total Distribution Amount, if any;
provided, however, that, (A) following an acceleration of the Notes or,
(B) if an Insurer Default shall have occurred and be continuing and an Event of
Default pursuant to Sections 5.1(a)(i), 5.1(a)(ii), 5.1(a)(iv), 5.1(a)(v) or
5.1(a)(vi) of the Indenture shall have occurred and be continuing, the Total
Distribution Amount shall be paid pursuant to Section 5.6(a) of the Indenture.
(b) In the event that the Collection Account is maintained
with an institution other than the Trustee, the Servicer shall instruct and
cause such institution to make all deposits and distributions pursuant to
Section 5.7(b) on the related Payment Date.
SECTION 5.8 NOTE DISTRIBUTION ACCOUNT.
(a) On each Payment Date, the Trustee shall distribute all
amounts on deposit in the Note Distribution Account to Noteholders in respect of
the Notes to the extent of amounts due and unpaid on the Notes for principal and
interest in the following amounts and in the following order of priority:
(i) to the Holders of the Notes the Class A Interest
Distributable Amount; provided that if there are not sufficient funds
in the Note Distribution Account to pay the entire amount then due on
each Class of Notes, the amount in the Note Distribution Account shall
be applied to the payment of such interest on each Class of Notes pro
rata on the basis of the amount of accrued and unpaid interest due on
each Class of Notes;
(ii) concurrently to the Class A-1 and Class A-2 Noteholders
on the Payment Date on or immediately following the last day of the
Funding Period, pro rata, on the basis of each class's share of the
Aggregate Note Balance, the Note Prepayment Amount;
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(iii) to the Holders of the Class A-1 Notes, the Noteholders'
Principal Distributable Amount until the Class A-1 Note Balance is
reduced to zero; and then
(iv) to the Holders of the Class A-2 Notes, the Noteholders'
Principal Distributable Amount (as reduced by any distributions on such
Payment Date pursuant to clause (iii) above) until the Class A-2 Note
Balance is reduced to zero.
(b) On each Payment Date, the Trustee shall provide or make
available electronically (or, upon written request, by first class mail or
facsimile) send to each Securityholder the statement or statements provided to
the Trustee by the Servicer pursuant to Section 5.11 hereof on such Payment
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.
(c) In the event that any withholding tax is imposed on the
Trust's payment (or allocations of income) to a Noteholder, such tax shall
reduce the amount otherwise distributable to the Noteholder in accordance with
this Section 5.8. The Trustee is hereby authorized and directed to retain from
amounts otherwise distributable to the Noteholders sufficient funds for the
payment of any tax that is legally owed by the Trust (but such authorization
shall not prevent the Trustee from contesting any such tax in appropriate
proceedings, and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings). The amount of any withholding tax imposed with
respect to a Noteholder shall be treated as cash distributed to such Noteholder
at the time it is withheld by the Trust and remitted to the appropriate taxing
authority. If, after consultations with experienced counsel, the Trustee
determines that there is a reasonable likelihood that withholding tax is payable
with respect to a distribution (such as a distribution to a non-U.S.
Noteholder), the Trustee may in its sole discretion withhold such amounts in
accordance with this clause (c). In the event that a Noteholder wishes to apply
for a refund of any such withholding tax, the Trustee shall reasonably cooperate
with such Noteholder in making such claim so long as such Noteholder agrees to
reimburse the Trustee for any out-of-pocket expenses incurred.
(d) Distributions required to be made to Noteholders on any
Payment Date shall be made to each Noteholder of record on the preceding Record
Date either by wire transfer, in immediately available funds, to the account of
such Holder at a bank or other entity having appropriate facilities therefor, if
(i) such Noteholder shall have provided to the Note Registrar appropriate
written instructions at least five Business Days prior to such Payment Date and
such Holder's Notes in the aggregate evidence a denomination of not less than
$1,000,000 or (ii) such Noteholder is the Seller, or an Affiliate thereof, or,
if not, by check mailed to such Noteholder at the address of such holder
appearing in the Note Register; provided, however, that, unless Definitive Notes
have been issued pursuant to Section 2.12 of the Indenture, with respect to
Notes registered on the Record Date in the name of the nominee of the Clearing
Agency (initially, such nominee to be Cede & Co.), distributions will be made by
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wire transfer in immediately available funds to the account designated by such
nominee. Notwithstanding the foregoing, the final distribution in respect of any
Note (whether on the Final Scheduled Payment Date or otherwise) will be payable
only upon presentation and surrender of such Note at the office or agency
maintained for that purpose by the Note Registrar pursuant to Section 2.4 of the
Indenture.
SECTION 5.9 CERTIFICATE DISTRIBUTION ACCOUNT.
(a) On each Payment Date, the Trustee shall make the following
distributions in the specified order of priority from the amounts on deposit in
the Certificate Distribution Account, if any, in the following amounts and in
the following order of priority:
(i) to the Class B Certificateholders, the Class B
Certificateholders' Interest Distributable Amount;
(ii) to the Class B Certificateholders, on the Payment Date on
or immediately following the last day of the Funding Period, to the
Class B Certificateholders, the Class B Prepayment Amount;
(iii) to the Class B Certificateholders, the Class B
Certificateholders' Principal Distributable Amount until the Class B
Certificate Balance is reduced to zero;
(iv) to the Class B Certificateholders, the Accelerated
Principal Distribution Amount until the Class B Certificate Balance is
reduced to zero; and
(v) to the Residual Certificateholder, the remaining amount of
any funds on deposit in the Certificate Distribution Account after the
distributions pursuant to clauses (i) through (iv) have been made.
(b) On each Payment Date, the Trustee shall provide or make
available electronically (or, upon written request, by first class mail or
facsimile) to each Certificateholder the statement or statements provided to the
Trustee by the Servicer pursuant to Section 5.11 hereof on such Payment Date;
PROVIDED, HOWEVER, the Trustee shall have no obligation to provide such
information described in this Section 5.9(b) until it has received the requisite
information from the Servicer.
(c) In the event that any withholding tax is imposed on the
Trust's payment (or allocations of income) to a Certificateholder, such tax
shall reduce the amount otherwise distributable to the Certificateholder in
accordance with this Section 5.9. The Trustee is hereby authorized and directed
to retain from amounts otherwise distributable to the Certificateholders
sufficient funds for the payment of any tax that is legally owed by the Trust
(but such authorization shall not prevent the Trustee from contesting any such
tax in appropriate proceedings, and withholding payment of such tax, if
permitted by law, pending the outcome of such proceedings). The amount of any
withholding tax imposed with respect to a Certificateholder shall be treated as
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cash distributed to such Certificateholder at the time it is withheld by the
Trust and remitted to the appropriate taxing authority. If, after consultations
with experienced counsel, the Trustee determines that there is a reasonable
likelihood that withholding tax is payable with respect to a distribution (such
as a distribution to a non-U.S. Certificateholder), the Trustee may in its sole
discretion withhold such amounts in accordance with this clause (c). In the
event that a Certificateholder wishes to apply for a refund of any such
withholding tax, the Trustee shall reasonably cooperate with such
Certificateholder in making such claim so long as such Certificateholder agrees
to reimburse the Trustee for any out-of-pocket expenses incurred.
(d) Distributions required to be made to Certificateholders on
any Payment Date shall be made to each Certificateholder of record on the
preceding Record Date either by wire transfer, in immediately available funds,
to the account of such Certificateholder at a bank or other entity having
appropriate facilities therefor, if (i) such Certificateholder shall have
provided to the Certificate Registrar appropriate written instructions at least
five Business Days prior to such Payment Date and such Certificateholder's
Certificates in the aggregate evidence a denomination of not less than
$1,000,000 or (ii) such Certificateholder is the Seller or an Affiliate thereof,
or, if not, by check mailed to such Certificateholder at the address of such
holder appearing in the Certificate Register. Notwithstanding the foregoing, the
final distribution in respect of any Certificate (whether on the Final Scheduled
Payment Date or otherwise) will be payable only upon presentation and surrender
of such Certificate at the office or agency maintained for that purpose by the
Certificate Registrar pursuant to Section 3.8 of the Trust Agreement.
Each Noteholder, by its acceptance of its Note, will be deemed to have
consented to the provisions of Sections 5.7, 5.8 and 5.9 relating to the
priority of payments, and will be further deemed to have acknowledged that no
property rights in any amount or the proceeds of any such amount shall vest in
such Noteholder until such amounts have been distributed to such Noteholder
pursuant to such provisions; PROVIDED, that the foregoing shall not restrict the
right of any Noteholder, upon compliance with the provisions hereof from seeking
to compel the performance of the provisions hereof by the parties hereto. Each
Noteholder, by its acceptance of its Note, will be deemed to have further agreed
that withdrawals of funds by the Collateral Agent from the Spread Account for
application hereunder, shall be made in accordance with the provisions of the
Spread Account Agreement.
In furtherance of and not in limitation of the foregoing, each Class B
Certificateholder by its acceptance of a Class B Certificate, specifically
acknowledges that (A) interest pursuant to Section 5.9 will be subordinated to
the prior payment in full of all amounts payable pursuant to Section 5.7 and (B)
no amounts shall be applied as principal on the Class B Certificate, unless and
until such amounts have been distributed to such Class B Certificateholder
pursuant to the priorities set forth in Section 5.9.
In furtherance and not in limitation of the foregoing, the Residual
Certificateholder by acceptance of the Residual Certificate, specifically
acknowledges that no amounts shall be received by it, nor shall it have any
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right to receive any amounts, unless and until such amounts have been
distributed pursuant to Section 5.9 above. Each Class B Certificateholder, by
its acceptance of a Class B Certificate, and the Residual Certificateholder, by
its acceptance of the Residual Certificate, further specifically acknowledges
that it has no right to or interest in any moneys at any time held pursuant to
the Spread Account Agreement prior to the release of such moneys as aforesaid,
such moneys being held in trust for the benefit of the Noteholders and the Note
Insurer as their interests may appear prior to such release. Notwithstanding the
foregoing, in the event that it is ever determined that any property held in the
Spread Account constitute a pledge of collateral, then the provisions of this
Agreement and the Spread Account Agreement shall be considered to constitute a
security agreement and the Class B Certificateholder and the Residual
Certificateholder hereby grant to the Collateral Agent and to the Trust
Collateral Agent, respectively, a first priority perfected security interest in
such amounts, to be applied as set forth in Section 3.03(b) of the Spread
Account Agreement. In addition, the Residual Certificateholder, by acceptance of
the Residual Certificate, hereby appoints the Class B Certificateholder as its
agent to pledge a first priority perfected security interest in the Spread
Account, and any property held therein from time to time to the Collateral Agent
for the benefit of the Trust Collateral Agent and the Note Insurer pursuant to
the Spread Account Agreement and agrees to execute and deliver such instruments
of conveyance, assignment, grant, confirmation, etc., as well as any financing
statements, in each case as the Note Insurer shall consider reasonably necessary
in order to perfect the Collateral Agent's Security Interest in the Collateral
(as such terms are defined in the Spread Account Agreement).
SECTION 5.10 PRE-FUNDING ACCOUNT.
(a) On the Closing Date, the Trustee will deposit, on behalf
of the Seller, in the Pre-Funding Account $12,566,542.43 from the proceeds of
the sale of the Notes. On each Subsequent Transfer Date, the Servicer shall
instruct the Trustee to withdraw from the Pre-Funding Account (i) an amount
equal to the Principal Balance of the Subsequent Receivables transferred to the
Issuer on such Subsequent Transfer Date and to distribute such amount to or upon
the order of the Seller upon satisfaction of the conditions set forth in this
Agreement with respect to such transfer and (ii) an amount equal to the
Subsequent Spread Account Deposit on such Subsequent Transfer Date upon
satisfaction of the conditions set forth in this Agreement with respect to such
transfer.
(b) If the Pre-Funded Amount has not been reduced to zero on
the date on which the Funding Period ends, after giving effect to any reductions
in the Pre-Funded Amount on such date, the Servicer shall instruct the Trustee
to withdraw from the Pre-Funding Account on the Mandatory Redemption Date the
Pre-Funded Amount (exclusive of any Pre-Funding Earnings) and deposit an amount
equal to the Note Prepayment Amount into the Note Distribution Account and an
amount equal to the Class B Prepayment Amount into the Spread Account.
(c) All Pre-Funding Earnings will be deposited in the
Collection Account on each Payment Date and deemed to be part of the Total
Distribution Amount.
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SECTION 5.11 STATEMENTS TO SECURITYHOLDERS.
(a) On or prior to each Payment Date, the Servicer shall
provide to the Trustee and the Owner Trustee (with a copy to the Note Insurer
and the Rating Agencies) for the Trustee and Owner Trustee to forward to each
Securityholder of record (in the case of the Trustee, pursuant to Section 5.8(b)
and Section 5.9(b) hereof) the statement or statements provided by the Servicer
pursuant to Section 5.11 hereof setting forth at least the following information
as to the Notes and the Certificates to the extent applicable:
(i) the amount of such distribution allocable to principal of
the Class A-1 Notes, the Class A-2 Notes and the Class B Certificates,
respectively;
(ii) the amount of such distribution allocable to interest on
or with respect to the Class A-1 Notes, the Class A-2 Notes and the
Class B Certificates, respectively;
(iii) the Pool Balance as of the close of business on the last
day of the preceding Collection Period;
(iv) the Note Balance and Note Pool Factor for each Class of
Notes and the Class B Certificate Balance and the Class B Certificate
Pool Factor for the Class B Certificates, each after giving effect to
payments allocated to principal reported under clause (i) above;
(v) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period, and the amount of any unpaid
Servicing Fees and the change in such amount from the prior Payment
Date;
(vi) the amount of each of the Standby Fee, the Trustee Fee
and the Collateral Agent Fee paid to the Standby Servicer, the Trustee,
the Owner Trustee and the Collateral Agent, as applicable, with respect
to the related Collection Period, and the amount of any unpaid Standby
Fees, Trustee Fees and Collateral Agent Fees and the change in such
amount from the prior Payment Date;
(vii) the Class A-1 Noteholders' Interest Carryover Shortfall,
the Class A-2 Noteholders' Interest Carryover Shortfall, the Class B
Certificateholders' Interest Carryover Shortfall, the Noteholders'
Principal Carryover Shortfall and the Class B Certificateholders'
Principal Carryover Shortfall;
(viii) the Accelerated Principal Distribution Amount for such
Payment Date;
(ix) the amount paid to the Noteholders under the Policy or
from the Spread Account for such Payment Date;
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(x) the amount distributable to the Insurer on such Payment
Date;
(xi) the aggregate amount in the Spread Account and the change
in such amount from the previous Payment Date and the requisite Spread
Account Amount for such Payment Date;
(xii) 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 59 days, (b) 60 to 89 days,
(c) 90 to 119 days, (d) 120 to 149 days, (e) 150 to 179 days, (f) 180
to 209 days and (g) 210 days or more;
(xiii) the aggregate amount in the Interest Reserve Account
and the change in such amount from the previous Payment Date and the
Requisite Reserve Amount for such payment date;
(xiv) the number and the aggregate Purchase Amounts for
Receivables purchased by CPS or purchased by the Servicer during the
related Collection Period and summary information as to losses and
delinquencies with respect to such Receivables;
(xv) the Principal Balance of all Receivables that have become
Liquidated Receivables, net of Recoveries, during the related
Collection Period;
(xvi) the cumulative Principal Balance of all Receivables that
have become Liquidated receivables, net of Recoveries, during the
period from the Initial Cutoff Date (in the case of the Initial
Receivables) or the related Subsequent Cutoff Date (in the case of the
Subsequent Receivables) to the last day of the related Collection
Period;
(xvii) for any Payment Date during the Funding Period, the
Pre-Funded Amount and the change in such amount from the Previous
Payment Date;
(xviii) for the Mandatory Redemption Date, the amount of any
remaining Pre-Funded Amount that was not used to fund the purchase of
Subsequent Receivables; and
(xix) the amount, if any, paid by the Note Insurer to the
Trustee for deposit into the Collection Account pursuant to Section
5.12.
Each amount set forth pursuant to paragraphs (i), (ii), (iv), (v),
(vi), (vii), (viii) and (ix) above shall be expressed as a dollar amount per
$1,000 of the initial principal balance of the Notes (or Class thereof) or Class
B Certificates, as applicable.
(b) Within 60 days after the end of each calendar year, the
Servicer shall deliver to the Trustee a statement setting forth the amounts paid
during such preceding calendar year in respect of paragraphs (i), (ii), (v) and
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(vi) above. The Trustee shall mail a copy of such statement to each person who
at any time during such preceding calendar year shall have been a Securityholder
of record and received any payment in respect of the Securities.
(c) The Trustee may make available to the Securityholders, 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 or its agent to such Person
upon receipt by the Trustee from such Person of a certification in the form of
Exhibit G; PROVIDED, HOWEVER, that the Trustee or its agent shall provide such
password to the parties to this Agreement, the Note Insurer, the Placement Agent
and each Rating Agency without requiring such certification. The Trustee will
make no representation or warranties as to the accuracy or completeness of such
documents and will assume no responsibility therefor.
The Trustee's Internet Website shall be initially located at
"xxx.XXXXxx.xxx" or at such other address as shall be specified by the Trustee
from time to time in writing to the Securityholders. 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 5.12 OPTIONAL DEPOSITS BY THE NOTE INSURER; NOTICE OF WAIVERS.
(a) The Note Insurer shall at any time, and from time to time,
with respect to a Payment Date, have the option (but shall not be required,
except as provided in Section 6.1(a)) to deliver amounts to the Trustee for
deposit into the Collection Account for any of the following purposes: (i) to
provide funds in respect of the payment of fees or expenses of any provider of
services to the Trust with respect to such Payment Date, (ii) to distribute as a
component of the Noteholders' Principal Distributable Amount to the extent that
the principal balance of the Notes as of the Determination Date preceding such
Payment Date exceeds the Noteholders' Percentage of the Collateral Balance as of
such Determination Date, or (iii) to include such amount as part of the Total
Distribution Amount for such Payment Date to the extent that without such amount
a draw would be required to be made on the Policy.
(b) If the Note Insurer waives the satisfaction of any of the
events that might trigger an event of default under the Insurance Agreement and
so notifies the Trustee in writing pursuant to Section 5.02(d) of the Insurance
Agreement, the Trustee shall notify Xxxxx'x of such waiver.
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ARTICLE VI
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THE NOTE POLICY
SECTION 6.1 CLAIMS UNDER NOTE POLICY.
(a) In the event that the Trustee has delivered a Deficiency
Notice with respect to any Determination Date pursuant to Section 5.5 hereof,
the Trustee shall on the related Draw Date determine whether the application of
funds in accordance with Section 5.7, together with any amounts deposited by the
Note Insurer pursuant to Section 5.12 and the application of any Deficiency
Claim Amount pursuant to Section 5.5 would result in a shortfall in amounts
distributable pursuant to Sections 5.7(a)(vii) and 5.7(a)(viii) on any Payment
Date (any such shortfall, a "Note Policy Claim Amount"). If the Note Policy
Claim Amount for such Payment Date is greater than zero, the Trustee shall
furnish to the Note Insurer no later than 12:00 noon New York City time on the
related Draw Date a completed Notice of Claim (as defined in clause (b) below)
in the amount of the Note Policy Claim Amount. Amounts paid by the Note Insurer
pursuant to a claim submitted under this Section 6.1 shall be deposited by the
Trustee into the Note Distribution Account for payment to Noteholders on the
related Payment Date.
(b) Any notice delivered by the Trustee to the Note Insurer
pursuant to Section 6.1(a) shall specify the Note Policy Claim Amount claimed
under the Note Policy and shall constitute a "Notice of Claim" (as defined in
the Note Policy) under the Note Policy. In accordance with the provisions of the
Note Policy, the Note Insurer is required to pay to the Trustee the Note Policy
Claim Amount properly claimed thereunder by 12:00 noon, New York City time, on
the later of (i) the third Business Day (as defined in the Note Policy)
following receipt on a Business Day of the Notice of Claim, and (ii) the
applicable Payment Date. Any payment made under the Note Policy by the Note
Insurer shall be applied solely to the payment of the Notes, and for no other
purpose.
(c) The Trustee shall (i) receive as attorney-in-fact of each
Noteholder any Note Policy Claim Amount from the Note Insurer and (ii) deposit
the same in the Note Distribution Account for distribution to Noteholders. Any
and all Note Policy Claim Amounts disbursed by the Trustee from claims made
under the Note Policy shall not be considered payment by the Trust or from the
Series 2002-A Spread Account with respect to such Notes, and shall not discharge
the obligations of the Trust with respect thereto. The Note Insurer shall, to
the extent it makes any payment with respect to the Notes, become subrogated to
the rights of the recipients of such payments to the extent of such payments.
Subject to and conditioned upon any payment with respect to the Notes by or on
behalf of the Note Insurer, the Trustee and the Noteholders shall assign to the
Note Insurer all rights to the payment of interest or principal with respect to
the Notes which are then due for payment to the extent of all payments made by
the Note Insurer, and the Note Insurer may exercise any option, vote, right,
power or the like with respect to the Notes to the extent that it has made
payment pursuant to the Note Policy. To evidence such subrogation, the Note
Registrar (as defined in the Indenture) shall note the Note Insurer's rights as
subrogee upon the register of Noteholders upon receipt from the Note Insurer of
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proof of payment by the Note Insurer of any Noteholders' Interest Distributable
Amount or Noteholders' Principal Distributable Amount. The foregoing subrogation
shall in all cases be subject to the rights of the Noteholders to receive all
Scheduled Payments (as defined in the Note Policy) in respect of the Notes.
(d) The Trustee shall keep a complete and accurate record of
all funds deposited by the Note Insurer into the Note Distribution Account and
the allocation of such funds to payment of interest on and principal paid in
respect of any Note. The Note Insurer shall have the right to inspect such
records at reasonable times upon one Business Day's prior notice to the Trustee.
(e) The Trustee shall be entitled to enforce on behalf of the
Noteholders the obligations of the Note Insurer under the Note Policy.
Notwithstanding any other provision of this Agreement or any Basic Documents,
the Noteholders are not entitled to make any claims under the Note Policy or
institute proceedings directly against the Note Insurer.
SECTION 6.2 PREFERENCE CLAIMS.
(a) In the event that the Trustee has received a certified
copy of an order of the appropriate court that any Scheduled Payment (as defined
in the Note Policy) paid on a Note has been avoided in whole or in part as a
preference payment under applicable bankruptcy law, the Trustee shall so notify
the Note Insurer, shall comply with the provisions of the Note Policy to obtain
payment by the Note Insurer of such avoided payment, and shall, at the time it
provides notice to the Note Insurer, notify Holders of the Notes by mail that,
in the event that any Noteholder's payment is so recoverable, such Noteholder
will be entitled to payment pursuant to the terms of the Note Policy. The
Trustee shall furnish to the Note Insurer its records evidencing the payments of
principal of and interest on Notes, if any, which have been made by the Trustee
and subsequently recovered from Noteholders, and the dates on which such
payments were made. Pursuant to the terms of the Note Policy, the Note Insurer
will make such payment on behalf of the Noteholder to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the order (as defined in
the Note Policy) and not to the Trustee or any Noteholder directly (unless a
Noteholder has previously paid such payment to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy, in which case the Note Insurer
will make such payment to the Trustee for distribution to such Noteholder upon
proof of such payment reasonably satisfactory to the Note Insurer).
(b) The Trustee shall promptly notify the Note Insurer of any
proceeding or the institution of any action (of which the Trustee has actual
knowledge) seeking the avoidance as a preferential transfer under applicable
bankruptcy, insolvency, receivership, rehabilitation or similar law (a
"Preference Claim") of any distribution made with respect to the Notes. Each
Holder, by its purchase of Notes, and the Trustee hereby agrees that so long as
an Insurer Default shall not have occurred and be continuing, the Note Insurer
may at any time during the continuation of any proceeding relating to a
Preference Claim direct all matters relating to such Preference Claim including,
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without limitation, (i) the direction of any appeal of any order relating to any
Preference Claim and (ii) the posting of any surety, supersedeas or performance
bond pending any such appeal at the expense of the Note Insurer, but subject to
reimbursement as provided in the Insurance Agreement. In addition, and without
limitation of the foregoing, as set forth in Section 6.1(c), the Note Insurer
shall be subrogated to, and each Noteholder and the Trustee hereby delegate and
assign, to the fullest extent permitted by law, the rights of the trustee and
each Noteholder in the conduct of any proceeding with respect to a Preference
Claim, including, without limitation, all rights of any party to an adversary
proceeding action with respect to any court order issued in connection with any
such Preference Claim.
SECTION 6.3 SURRENDER OF NOTE POLICY. The Trustee shall surrender the
Note Policy to the Note Insurer for cancellation upon the expiration of such
policy in accordance with the terms thereof.
ARTICLE VII
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[RESERVED]
ARTICLE VIII
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THE SELLER
SECTION 8.1 REPRESENTATIONS OF SELLER. The Seller makes the following
representations on which the Note Insurer shall be deemed to have relied in
executing and delivering the Note Policy, on which the Issuer is deemed to have
relied in acquiring the Receivables and on which the Trustee is deemed to have
relied in executing and performing pursuant to this Agreement, the Indenture and
the other Basic Documents to which it is a party. The representations speak as
of the execution and delivery of this Agreement and as of the Closing Date, and
shall survive the sale of the Receivables to the Issuer and the pledge thereof
to the Trustee pursuant to the Indenture and the issuance of the Notes.
(a) ORGANIZATION AND GOOD STANDING. The Seller has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of California, with power and authority to own its properties
and to conduct its business as such properties are currently owned and such
business is currently conducted, and had at all relevant times, and now has,
power, authority and legal right to acquire, own and sell the Receivables and
the Other Conveyed Property transferred to the Trust.
(b) DUE QUALIFICATION. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals in all jurisdictions in which the ownership or
lease of property or the conduct of its business shall require such
qualifications.
(c) POWER AND AUTHORITY. The Seller has the power and
authority to execute and deliver this Agreement and the Basic Documents to which
it is a party and to carry out its terms and their terms, respectively; the
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Seller has full power and authority to sell and assign the Receivables and the
Other Conveyed Property to be sold and assigned to and deposited with the Trust
by it and has duly authorized such sale and assignment to the Trust by all
necessary corporate action; and the execution, delivery and performance of this
Agreement and the Basic Documents to which the Seller is a party have been duly
authorized by the Seller by all necessary corporate action.
(d) VALID SALE, BINDING OBLIGATIONS. This Agreement effects a
valid sale, transfer and assignment of the Receivables and the Other Conveyed
Property, enforceable against the Seller and creditors of and purchasers from
the Seller; and this Agreement and the Basic Documents to which the Seller is a
party, when duly executed and delivered, shall constitute legal, valid and
binding obligations of the Seller enforceable in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by equitable limitations on the availability of
specific remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(e) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the Basic Documents and the fulfillment of
the terms of this Agreement and the Basic Documents shall not conflict with,
result in any breach of any of the terms and provisions of or constitute (with
or without notice, lapse of time or both) a default under the certificate of
incorporation or by-laws of the Seller, or any indenture, agreement, mortgage,
deed of trust or other instrument to which the Seller is a party or by which it
is bound, or result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement, mortgage,
deed of trust or other instrument, other than the Basic Documents, or violate
any law, order, rule or regulation applicable to the Seller of any court or of
any federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Seller or any of its
properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the Seller's knowledge, threatened against the Seller, before any
court, regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Seller or its properties (A)
asserting the invalidity of this Agreement, the Securities or any of the Basic
Documents, (B) seeking to prevent the issuance of the Securities or the
consummation of any of the transactions contemplated by this Agreement or any of
the Basic Documents, (C) seeking any determination or ruling that might
materially and adversely affect the performance by the Seller of its obligations
under, or the validity or enforceability of, this Agreement or any of the Basic
Documents, or (D) relating to the Seller and which might adversely affect the
federal or state income, excise, franchise or similar tax attributes of the
Securities.
(g) NO CONSENTS. No consent, approval, authorization or order
of or declaration or filing with any governmental authority is required for the
issuance or sale of the Securities or the consummation of the other transactions
contemplated by this Agreement, except such as have been duly made or obtained.
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(h) TAX RETURNS. The Seller has filed on a timely basis all
tax returns required to be filed by it and paid all taxes, to the extent that
such taxes have become due.
(i) CHIEF EXECUTIVE OFFICE. The chief executive office of the
Seller is at 00000 Xxxxxx Xxxxxx, Xxxxxx, XX 00000.
SECTION 8.2 [RESERVED].
SECTION 8.3 LIABILITY OF SELLER; INDEMNITIES. The Seller shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement.
(a) The Seller shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Note Insurer, the Noteholders, the Standby
Servicer and the Trustee from and against any taxes that may at any time be
asserted against any such Person with respect to the transactions contemplated
in this Agreement and any of the Basic Documents (except any income taxes
arising out of fees paid to the Owner Trustee, the Trustee, the Standby Servicer
and the Note Insurer and except any taxes to which the Owner Trustee, or 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 Issuer and the Noteholders, not including any
taxes asserted with respect to federal or other income taxes arising out of
distributions on the Notes and the Certificates) and costs and expenses in
defending against the same.
(b) The Seller shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Trustee, the Note Insurer and the Securityholders
from and against any loss, liability or expense incurred by reason of (i) the
Seller's willful misfeasance, bad faith or negligence in the performance of its
duties under this Agreement, or by reason of reckless disregard of its
obligations and duties under this Agreement and (ii) the Seller's or the
Issuer's violation of Federal or state securities laws in connection with the
offering and sale of the Notes and the Certificates.
(c) The Seller shall indemnify, defend and hold harmless the
Owner Trustee, the Trustee, and the Standby Servicer and its officers,
directors, employees and agents from and against any and all costs, expenses,
losses, claims, damages and liabilities arising out of, or incurred in
connection with the acceptance or performance of the trusts and duties set forth
herein and in the Basic Documents except to the extent that such cost, expense,
loss, claim, damage or liability shall be due to the willful misfeasance, bad
faith or negligence (except for errors in judgment) of the Owner Trustee.
Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Trustee and the termination of this
Agreement or the Indenture or the Trust Agreement, as applicable, and shall
include reasonable fees and expenses of counsel and other expenses of
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litigation. If the Seller shall have made any indemnity payments pursuant to
this Section and the Person to or on behalf of whom such payments are made
thereafter shall collect any of such amounts from others, such Person shall
promptly repay such amounts to the Seller, without interest.
SECTION 8.4 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SELLER. Any Person (a) into which the Seller may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Seller shall be a party or (c) which may succeed to the properties and assets of
the Seller substantially as a whole, which Person in any of the foregoing cases
executes an agreement of assumption to perform every obligation of the Seller
under this Agreement, shall be the successor to the Seller hereunder without the
execution or filing of any document or any further act by any of the parties to
this Agreement; provided, however, that (i) the Seller shall have received the
written consent of the Note Insurer prior to entering into any such transaction,
(ii) immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 3.1 shall have been breached and no Servicer
Termination Event, and no event which, after notice or lapse of time, or both,
would become a Servicer Termination Event shall have occurred and be continuing,
(iii) the Seller shall have delivered to the Owner Trustee, the Trustee and the
Note Insurer an Officers' Certificate and an Opinion of Counsel each stating
that such consolidation, merger or succession and such agreement of assumption
comply with this Section and that all conditions precedent, if any, provided for
in this Agreement relating to such transaction have been complied with, (iv) the
Rating Agency Condition shall have been satisfied with respect to such
transaction and (v) the Seller shall have delivered to the Owner Trustee, the
Trustee and the Note Insurer an Opinion of Counsel stating that, in the opinion
of such counsel, either (A) all financing statements and continuation statements
and amendments thereto have been executed and filed that are necessary fully to
preserve and protect the interest of the Owner Trustee and the Trustee,
respectively, in the Receivables and the Other Conveyed Property and reciting
the details of such filings or (B) no such action shall be necessary to preserve
and protect such interest. Notwithstanding anything herein to the contrary, the
execution of the foregoing agreement of assumption and compliance with clauses
(i), (ii), (iii), (iv) and (v) above shall be conditions to the consummation of
the transactions referred to in clauses (a), (b) or (c) above.
SECTION 8.5 LIMITATION ON LIABILITY OF SELLER AND OTHERS. The Seller
and any director or officer or employee or agent of the Seller may rely in good
faith on the advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
under any Basic Document. The Seller shall not be under any obligation to appear
in, prosecute or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
SECTION 8.6 SELLER MAY OWN CERTIFICATES OR NOTES. The Seller and any
Affiliate thereof may in its individual or any other capacity become the owner
or pledgee of Certificates or Notes with the same rights as it would have if it
were not the Seller or an Affiliate thereof, except as expressly provided herein
or in any Basic Document. Notes or Certificates so owned by the Seller or such
73
Affiliate shall have an equal and proportionate benefit under the provisions of
the Basic Documents, without preference, priority or distinction as among all of
the Notes or Certificates; provided, however, that any Notes owned by the Seller
or any Affiliate thereof, during the time such Notes are so owned by them, shall
be without voting rights for any purpose set forth in the Basic Documents and
the Notes shall not be entitled to the benefits of the Note Policy. The Seller
shall notify the Owner Trustee, the Trustee and the Note Insurer promptly after
it or any of its Affiliates become the owner of a Certificate or a Note.
ARTICLE IX
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THE SERVICER
SECTION 9.1 REPRESENTATIONS OF SERVICER. The Servicer makes the
following representations on which the Note Insurer shall be deemed to have
relied in executing and delivering the Note Policy, on which the Issuer is
deemed to have relied in acquiring the Receivables and on which the Trustee is
deemed to have relied in executing and performing pursuant to this Agreement,
the Indenture and the other Basic Documents to which it is a party. The
representations speak as of the execution and delivery of this Agreement and as
of the Closing Date, and shall survive the sale of the Receivables to the Issuer
and the pledge thereof to the Trustee pursuant to the Indenture.
(a) ORGANIZATION AND GOOD STANDING. The Servicer has been duly
organized and is validly existing 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.
(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.
(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
74
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 Securities or the
consummation of any of the transactions contemplated by this Agreement or any of
the Basic Documents, or (C) other than the Stanwich Case seeking any
determination or ruling that might materially and adversely affect the
performance by the Servicer of its obligations under, or the validity or
enforceability of, this Agreement, the Securities or any of the Basic Documents
or (D) relating to the Servicer and which might adversely affect the federal or
state income, excise, franchise or similar tax attributes of the Securities.
(g) NO CONSENTS. No consent, approval, authorization or order
of or declaration or filing with any governmental authority is required for the
issuance or sale of the Securities or the consummation of the other transactions
contemplated by this Agreement, except such as have been duly made or obtained.
(h) TAXES. The Servicer has filed on a timely basis all tax
returns required to be filed by it and paid all taxes, to the extent that such
taxes have become due.
(i) CHIEF EXECUTIVE OFFICE. The Servicer hereby represents and
warrants to the Trustee that the Servicer's principal place of business and
chief executive office is, and for the four months preceding the date of this
Agreement has been, located at: 00000 Xxxxxx Xxxxxx, Xxxxxx, XX 00000.
SECTION 9.2 LIABILITY OF SERVICER; INDEMNITIES.
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(a) The Servicer (in its capacity as such) shall be liable
hereunder only to the extent of the obligations in this Agreement specifically
undertaken by the Servicer and the representations made by the Servicer.
(i) The Servicer shall defend, indemnify and hold harmless the
Trust, the Trustee, the Owner Trustee, the Standby Servicer, the
Collateral Agent, the Note Insurer, and the Noteholders 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 thereof of
any Financed Vehicle;
(ii) The Servicer shall indemnify, defend and hold harmless
the Trust, the Trustee, the Owner Trustee, the Standby Servicer, the
Collateral Agent, the Note Insurer, and the Noteholders from and
against any taxes that may at any time be asserted against any of such
parties with respect to the transactions contemplated in this
Agreement, including, without limitation, any sales, gross receipts,
general corporation, tangible personal property, privilege or license
taxes (but not including any federal or other income taxes, including
franchise taxes asserted with respect to, and as of the date of, the
sale of the Receivables and the Other Conveyed Property to the Trust or
the issuance and original sale of the Notes) and costs and expenses in
defending against the same;
(iii) The Servicer shall indemnify, defend and hold harmless
the Trust, the Trustee, the Owner Trustee, the Standby Servicer, the
Collateral Agent, the Note Insurer, the Placement Agent, their
respective officers, directors, agents and employees and the
Noteholders from and against any and all costs, expenses, losses,
claims, damages, and liabilities to the extent that such cost, expense,
loss, claim, damage, or liability arose out of, or was imposed upon the
Trust, the Trustee, the Owner Trustee, the Standby Servicer, the Note
Insurer, the Placement Agent or the Noteholders or such officers,
directors, agents or employees through the negligence, willful
misfeasance or bad faith of the Servicer in the performance of its
duties under this Agreement, by reason of reckless disregard of its
obligations and duties under this Agreement or as a result of a breach
of any representation or warranty made by the Servicer in this
Agreement (without regard to any exception relating to the Stanwich
Case).
(iv) The Servicer shall indemnify, defend, and hold harmless
the Trustee, the Owner Trustee, the Standby Servicer and the Collateral
Agent from and against all costs, expenses, losses, claims, damages,
and liabilities arising out of or incurred in connection with the
acceptance or performance of the trusts and duties herein contained or
in the Trust Agreement, if any, except to the extent that such cost,
expense, loss, claim, damage or liability: (A) shall be due to the
willful misfeasance, bad faith, or negligence (except for errors in
judgment) of the Trustee, the Owner Trustee, the Standby Servicer or
the Collateral Agent, as applicable or (B) relates to any tax other
76
than the taxes with respect to which the Servicer shall be required to
indemnify the Trustee, the Owner Trustee, the Standby Servicer or the
Collateral Agent.
(v) CPS shall defend, indemnify and hold harmless the Trust,
the Trustee, the Owner Trustee, the Standby Servicer, the Collateral
Agent, the Note Insurer and the Noteholders against any and all costs,
expenses, losses, damages, claims and liabilities arising out of or
resulting from CPS's involvement in, or the effect on any Receivable as
a result of, the Stanwich Case and any other litigation arising out of
or based on the same set of facts.
(b) Notwithstanding the foregoing, the Servicer shall not be
obligated to defend, indemnify, and hold harmless any Noteholders for any
losses, claims, damages or liabilities incurred by any Securityholders arising
out of claims, complaints, actions and allegations relating to Section 406 of
ERISA or Section 4975 of the Code as a result of the purchase or holding of a
Security by such Noteholder with the assets of a plan subject to such provisions
of ERISA or the Code or the servicing, management and operation of the Trust.
(c) For purposes of this Section 9.2, in the event of the
termination of the rights and obligations of the Servicer (or any successor
thereto pursuant to Section 9.3) as Servicer pursuant to Section 10.1, or a
resignation by such Servicer pursuant to this Agreement, such Servicer shall be
deemed to be the Servicer pending appointment of a successor Servicer pursuant
to Section 10.2. The provisions of this Section 9.2(c) shall in no way affect
the survival pursuant to Section 9.2(d) of the indemnification by the Servicer
provided by Section 9.2(a).
(d) Indemnification under this Section 9.2 shall survive the
termination of this Agreement and any resignation or removal of CPS as Servicer
and shall include reasonable fees and expenses of counsel and expenses of
litigation. If the Servicer shall have made any indemnity payments pursuant to
this Section and the recipient thereafter collects any of such amounts from
others, the recipient shall promptly repay such amounts to the Servicer, without
interest.
SECTION 9.3 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, THE SERVICER OR STANDBY SERVICER.
(a) CPS shall not merge or consolidate with any other person,
convey, transfer or lease substantially all its assets as an entirety to another
Person, or permit any other Person to become the successor to CPS's business
unless, after the merger, consolidation, conveyance, transfer, lease or
succession, the successor or surviving entity shall be capable of fulfilling the
duties of CPS contained in this Agreement. Any corporation (i) into which CPS
may be merged or consolidated, (ii) resulting from any merger or consolidation
to which CPS shall be a party, (iii) which acquires by conveyance, transfer, or
lease substantially all of the assets of CPS, or (iv) succeeding to the business
of CPS, in any of the foregoing cases shall execute an agreement of assumption
to perform every obligation of CPS under this Agreement and, whether or not such
77
assumption agreement is executed, shall be the successor to CPS under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties to this Agreement, anything in this Agreement to the
contrary notwithstanding; provided, however, that nothing contained herein shall
be deemed to release CPS from any obligation. CPS shall provide notice of any
merger, consolidation or succession pursuant to this Section to the Owner
Trustee, the Trustee, the Securityholders, the Note Insurer and each Rating
Agency. Notwithstanding the foregoing, CPS shall not merge or consolidate with
any other Person or permit any other Person to become a successor to CPS's
business, unless (x) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Section 9.1 shall have been breached
(for purposes hereof, such representations and warranties shall 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 Insurance Agreement Event of
Default shall have occurred and be continuing, (y) CPS shall have delivered to
the Owner Trustee, the Trustee, the Rating Agencies and the Note Insurer an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply with
this Section and that all conditions precedent, if any, provided for in this
Agreement relating to such transaction have been complied with, and (z) CPS
shall have delivered to the Owner Trustee, the Trustee, the Rating Agencies and
the Note Insurer an Opinion of Counsel, stating in the opinion of such counsel,
either (A) all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary to preserve and protect
the interest of the Owner Trustee and the Trustee, respectively, in the
Receivables and the Other Conveyed Property and reciting the details of the
filings or (B) no such action shall be necessary to preserve and protect such
interest.
(b) Any corporation (i) into which the Standby Servicer may be
merged or consolidated, (ii) resulting from any merger or consolidation to which
the Standby Servicer shall be a party, (iii) which acquires by conveyance,
transfer or lease substantially all of the assets of the Standby Servicer, or
(iv) succeeding to the business of the Standby Servicer, in any of the foregoing
cases shall execute an agreement of assumption to perform every obligation of
the Standby Servicer under this Agreement and, whether or not such assumption
agreement is executed, shall be the successor to the Standby Servicer under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties to this Agreement, anything in this Agreement to the
contrary notwithstanding; provided, however, that nothing contained herein shall
be deemed to release the Standby Servicer from any obligation.
SECTION 9.4 LIMITATION ON LIABILITY OF SERVICER, STANDBY SERVICER AND
OTHERS.
Neither the Servicer, the Standby Servicer nor any of the directors or
officers or employees or agents of the Servicer or Standby Servicer shall be
under any liability to the Trust or the Securityholders, except as provided in
this Agreement, for any action taken or for refraining from the taking of any
action pursuant to this Agreement; provided, however, that this provision shall
not protect the Servicer, the Standby Servicer or any such person against any
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liability that would otherwise be imposed by reason of a breach of this
Agreement or willful misfeasance, bad faith or negligence in the performance of
duties. CPS, the Standby Servicer and any director, officer, employee or agent
of CPS or the Standby Servicer may rely in good faith on the written advice of
counsel or on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising under this Agreement. In
addition, the Standby Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
SECTION 9.5 DELEGATION OF DUTIES. The Servicer may at any time delegate
duties under this Agreement to sub-contractors who are in the business of
servicing automotive receivables with the prior written consent of the
Controlling Party as determined pursuant to Section 13.15; provided, however,
that no such delegation or sub-contracting of duties by the Servicer shall
relieve the Servicer of its responsibility with respect to such duties.
SECTION 9.6 SERVICER AND STANDBY SERVICER NOT TO RESIGN. Subject to the
provisions of Section 9.3, neither the Servicer nor the Standby Servicer shall
resign from the obligations and duties imposed on it by this Agreement as
Servicer or Standby Servicer except (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 Standby Servicer, as
the case may be, and the Note Insurer (so long as an Insurer Default shall not
have occurred and be continuing) or a Note Majority (if an Insurer Default shall
have occurred and be continuing) does not elect to waive the obligations of the
Servicer or the Standby Servicer, as the case may be, to perform the duties
which render it legally unable to act or to delegate those duties to another
Person or, (ii) in the case of the Standby Servicer, upon the prior written
consent of the Note Insurer. Any such determination permitting the resignation
of the Servicer or Standby Servicer shall be evidenced by an Opinion of Counsel
to such effect delivered and acceptable to the Trustee, the Owner Trustee and
the Note Insurer (unless an Insurer Default shall have occurred and be
continuing). No resignation of the Servicer shall become effective until, so
long as no Insurer Default shall have occurred and be continuing, the Standby
Servicer or an entity acceptable to the Note Insurer shall have assumed the
responsibilities and obligations of the Servicer or, if an Insurer Default shall
have occurred and be continuing, the Standby Servicer or a successor Servicer
that is an Eligible Servicer shall have assumed the responsibilities and
obligations of the Standby Servicer. No resignation of the Standby Servicer
shall become effective until, so long as no Insurer Default shall have occurred
and be continuing, an entity acceptable to the Note Insurer shall have assumed
the responsibilities and obligations of the Standby Servicer or, if an Insurer
Default shall have occurred and be continuing a Person that is an Eligible
Servicer shall have assumed the responsibilities and obligations of the Standby
Servicer; provided, however, that in the event a successor Standby Servicer is
not appointed within 60 days after the Standby Servicer has given notice of its
resignation and has provided the Opinion of Counsel required by this Section
9.6, the Standby Servicer may petition a court for its removal.
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ARTICLE X
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DEFAULT
SECTION 10.1 SERVICER TERMINATION EVENT. For purposes of this
Agreement, each of the following shall constitute a "SERVICER TERMINATION
EVENT":
(a) Any failure by the Servicer to deliver to the Trustee for
distribution to Securityholders any proceeds or payment required to be so
delivered or deposited in the Spread Account under the terms of this Agreement
that continues unremedied for a period of two Business Days (one Business Day
with respect to payment of Purchase Amounts) after written notice is received by
the Servicer from the Trustee or the Note Insurer (unless an Insurer Default
shall have occurred and be continuing in, which case by a Note Majority) or
after discovery of such failure by a Responsible officer of the Servicer; or
(b) Failure by the Servicer to deliver to the Trustee and the
Note Insurer (so long as an Insurer Default shall not have occurred and be
continuing), the Servicer's Certificate within five days after the date on which
such Servicer's Certificate is required to be delivered, or failure on the part
of the Servicer to observe its covenants and agreements set forth in Section
9.3(a); or
(c) Failure on the part of the Servicer duly to observe or
perform any other covenants or agreements of the Servicer set forth in this
Agreement, which failure (i) materially and adversely affects the rights of
Noteholders (determined without regard to the availability of funds under the
Policy), or of the Note Insurer (unless an Insurer Default shall have occurred
and be continuing), and (ii) continues unremedied for a period of 30 days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given (1) to the Servicer by the Trustee or the Note
Insurer or (2) to the Servicer, the Trustee and the Note Insurer by each of the
Holders of Notes evidencing not less than 25% of the Class A-1 Note Balance and
the Holders of Notes evidencing not less than 25% of the Class A-2 Note Balance
or, after the Notes have been paid in full and all outstanding Reimbursement
Obligations and other amounts due to the Note Insurer have been paid in full, by
the Holders of Class B Certificates evidencing not less than 25% of the Class B
Certificate Balance; or
(d) The entry of a decree or order by a court or agency or
supervisory authority having jurisdiction in the premises for the appointment of
a conservator, receiver, or liquidator for the Servicer or the Seller (or, so
long as CPS is Servicer, any of the Servicer's Affiliates) in any bankruptcy,
insolvency, readjustment of debt, marshaling of assets and liabilities, or
similar proceedings, or for the winding up or liquidation of its affairs, and
the continuance of any such decree or order unstayed and in effect for a period
of 60 consecutive days; or
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(e) The consent by the Servicer or the Seller (or, so long as
CPS is Servicer, any of the Servicer's Affiliates) to the appointment of a
conservator, trustee, receiver or liquidator in any bankruptcy, insolvency,
readjustment of debt, marshalling of assets and liabilities, or similar
proceedings of or relating to the Servicer or the Seller (or, so long as CPS is
Servicer, any of the Servicer's Affiliates) of or relating to substantially all
of its property; or the Servicer or the Seller (or, so long as CPS is Servicer,
any of the Servicer's Affiliates) or the Seller shall admit in writing its
inability to pay its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors, or voluntarily suspend payment of
its obligations; or
(f) Any representation, warranty or statement of the Servicer
made in this Agreement (without regard to any exception relating to the Stanwich
Case) or any certificate, report or other writing delivered pursuant hereto
shall prove to be incorrect in any material respect as of the time when the same
shall have been made (excluding, however, any representation or warranty set
forth in this Agreement relating to the characteristics of the Receivables), and
the incorrectness of such representation, warranty or statement has a material
adverse effect on the Trust or the Noteholders and, within 30 days after written
notice thereof shall have been given (1) to the Servicer by the Trustee or the
Note Insurer or (2) to the Servicer and to the Trustee and the Note Insurer by
each of the Holders of Notes evidencing not less than 25% of the Class A-Note
Balance and the Holders of Notes evidencing not less than 25% of the Class A-2
Note Balance or, after the Notes have been paid in full and all outstanding
Reimbursement Obligations and other amounts due to the Note Insurer have been
paid in full, by the Holders of Class B Certificates evidencing not less than
25% of the Class B Certificate Balance, the circumstances or condition in
respect of which such representation, warranty or statement was incorrect shall
not have been eliminated or otherwise cured; or
(g) So long as an Insurer Default shall not have occurred and
be continuing, the Note Insurer shall not have delivered a Servicer Extension
Notice pursuant to Section 4.14; or
(h) So long as an Insurer Default shall not have occurred and
be continuing, an Insurance Agreement Event of Default shall have occurred; or
(i) A claim is made under the Note Policy.
SECTION 10.2 CONSEQUENCES OF A SERVICER TERMINATION EVENT. If a
Servicer Termination Event shall occur and be continuing, the Note Insurer (or,
if an Insurer Default shall have occurred and be continuing either the Trustee
(to the extent it has knowledge thereof) or Holders of Notes evidencing not less
than 25% of each of the Class A-1 Note Balance and the Class A-2 Note Balance,
by notice given in writing to the Servicer (and to the Trustee if given by the
Note Insurer or the Noteholders) or by non-extension of the term of the Servicer
as referred to in Section 4.14 may terminate all of the rights and obligations
of the Servicer under this Agreement. The Servicer shall be entitled to its pro
rata share of the Servicing Fee for the number of days in the Collection Period
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prior to the effective date of its termination. On or after the receipt by the
Servicer of such written notice or upon termination of the term of the Servicer,
all authority, power, obligations and responsibilities of the Servicer under
this Agreement, whether with respect to the Notes, the Certificates or the Other
Conveyed Property or otherwise, automatically shall pass to, be vested in and
become obligations and responsibilities of the Standby Servicer (or such other
successor Servicer appointed by the Controlling Party under Section 10.3);
provided, however, that the successor Servicer shall have no liability with
respect to any obligation which was required to be performed by the terminated
Servicer prior to the date that the successor Servicer becomes the Servicer or
any claim of a third party based on any alleged action or inaction of the
terminated Servicer. The successor Servicer is authorized and empowered by this
Agreement to execute and deliver, on behalf of the terminated Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement of the Receivables and the Other Conveyed Property and related
documents to show the Trust as lienholder or secured party on the related Lien
Certificates, or otherwise. The terminated Servicer agrees to cooperate with the
successor Servicer in effecting the termination of the responsibilities and
rights of the terminated Servicer under this Agreement, including, without
limitation, the transfer to the successor Servicer for administration by it of
all cash amounts that shall at the time be held by the terminated Servicer for
deposit, or have been deposited by the terminated Servicer, in the Collection
Account or thereafter received with respect to the Receivables and the delivery
to the successor Servicer of all Receivable Files that shall at the time be held
by the terminated 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 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 Servicer
Termination Event, the Trustee shall give notice thereof to the Rating Agencies.
If requested by the Controlling Party, the successor Servicer shall terminate
the Lockbox Agreement and direct the Obligors to make all payments under the
Receivables directly to the successor Servicer (in which event the successor
Servicer shall process such payments in accordance with Section 4.2(e)), or to a
lockbox established by the successor Servicer at the direction of the
Controlling Party, at the successor Servicer's expense. The terminated Servicer
shall grant the Trustee, the successor Servicer and the Controlling Party
reasonable access to the terminated Servicer's premises at the terminated
Servicer's expense.
SECTION 10.3 APPOINTMENT OF SUCCESSOR.
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(a) On and after the time the Servicer receives a notice of
termination pursuant to Section 10.2, upon non-extension of the servicing term
as referred to in Section 4.14, or upon the resignation of the Servicer pursuant
to Section 9.6, the predecessor Servicer shall continue to perform its functions
as Servicer under this Agreement, in the case of termination, only until the
date specified in such termination notice or, if no such date is specified in a
notice of termination, until receipt of such notice and, in the case of
expiration and non-renewal of the term of the Servicer upon the expiration of
such term, and, in the case of resignation, until the later of (x) the date 45
days from the delivery to the Trustee of written notice of such resignation (or
written confirmation of such notice) in accordance with the terms of this
Agreement and (y) the date upon which the predecessor Servicer shall become
unable to act as Servicer, as specified in the notice of resignation and
accompanying Opinion of Counsel. In the event of termination of the Servicer,
Bank One Trust Company, N.A., as Standby Servicer, shall assume the obligations
of Servicer hereunder on the date specified in such written notice (the
"Assumption Date") pursuant to the Servicing and Lockbox Processing Assumption
Agreement or, in the event that the Note Insurer shall have determined that a
Person other than the Standby Servicer shall be the successor Servicer in
accordance with Section 10.2, on the date of the execution of a written
assumption agreement by such Person to serve as successor Servicer.
Notwithstanding the Standby Servicer's assumption of, and its agreement to
perform and observe, all duties, responsibilities and obligations of CPS as
Servicer under this Agreement arising on and after the Assumption Date, the
Standby Servicer shall not be deemed to have assumed or to become liable for, or
otherwise have any liability for any duties, responsibilities, obligations or
liabilities of CPS or any predecessor Servicer arising 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 (i) of CPS or any
predecessor Servicer arising on or before the Assumption Date under Section 4.7
or 9.2 of this Agreement, regardless of when the liability, duty, responsibility
or obligation of CPS or any predecessor Servicer therefor arose, whether
provided by the terms of this Agreement, arising by operation of law or
otherwise, or (ii) under Section 9.2(a)(ii), (iv) or (v). Notwithstanding the
above, if the Standby Servicer shall be legally unable or unwilling to act as
Servicer, and an Insurer Default shall have occurred and be continuing, the
Standby Servicer, the Trustee or a Note Majority may petition a court of
competent jurisdiction to appoint any Eligible Servicer as the successor to the
Servicer. Pending appointment pursuant to the preceding sentence, the Standby
Servicer shall act as successor Servicer unless it is legally unable to do so,
in which event the outgoing Servicer shall continue to act as Servicer until a
successor has been appointed and accepted such appointment. Subject to Section
9.6, no provision of this Agreement shall be construed as relieving the Standby
Servicer of its obligation to succeed as successor Servicer upon the termination
of the Servicer pursuant to Section 10.2, the resignation of the Servicer
pursuant to Section 9.6 or the non-extension of the servicing term of the
Servicer, as referred to in Section 4.14. If upon the termination of the
Servicer pursuant to Section 10.2 or the resignation of the Servicer pursuant to
Section 9.6, the Controlling Party appoints a successor Servicer other than the
Standby Servicer, the Standby Servicer shall not be relieved of its duties as
Standby Servicer hereunder.
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(b) Any successor Servicer shall be entitled to such
compensation (whether payable out of the Collection Account or otherwise) as the
Servicer would have been entitled to under this Agreement if the Servicer had
not resigned or been terminated hereunder.
SECTION 10.4 NOTIFICATION TO NOTEHOLDERS AND CERTIFICATEHOLDERS. Upon
any termination of, or appointment of a successor to, the Servicer, the Trustee
shall give prompt written notice thereof to each Securityholder, the Owner
Trustee and to the Rating Agencies.
SECTION 10.5 WAIVER OF PAST DEFAULTS. Subject to the approval of the
Note Insurer (unless an Insurer Default shall have occurred and be continuing),
a Note Majority may, on behalf of all the Securityholders, waive any default by
the Servicer in the performance of its obligations under this Agreement and the
consequences thereof (except a default in making any required deposits to or
payments from any of the Trust Accounts in accordance with the terms of this
Agreement. Upon any such waiver of a past default, such default shall cease to
exist, and any Servicer Termination Event arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement). No such waiver shall
extend to any subsequent or other default or impair any right consequent
thereto.
SECTION 10.6 ACTION UPON CERTAIN FAILURES OF THE SERVICER. In the event
that the Trustee shall have knowledge of any failure of the Servicer specified
in Section 10.1 which would give rise to a right of termination under such
Section upon the Servicer's failure to remedy the same after notice, the Trustee
shall give notice thereof to the Servicer and the Note Insurer. For all purposes
of this Agreement (including, without limitation, Section 6.2(b) and this
Section 10.6), the Trustee shall not be deemed to have knowledge of any failure
of the Servicer as specified in Sections 10.1(c) though (i) unless notified
thereof in writing by the Servicer, the Note Insurer or by a Securityholder. The
Trustee shall be under no duty or obligation to investigate or inquire as to any
potential failure of the Servicer specified in Section 10.1.
ARTICLE XI
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TERMINATION
SECTION 11.1 OPTIONAL PURCHASE OF ALL RECEIVABLES.
(a) (i) On the last day of any Collection Period as of which
the Collateral Balance shall be less than or equal to 10% of the Original
Collateral Balance, the Servicer shall have the option to purchase the Owner
Trust Estate, other than the Trust Accounts (with the consent of the Note
Insurer if such purchase would result in a claim on the Note Policy or would
result in any amount owing to the Note Insurer under the Insurance Agreement
remaining unpaid). To exercise such option, the Servicer shall (subject to the
proviso below) deposit in the Collection Account pursuant to Section 5.6 an
amount equal to the aggregate Purchase Amount for the Receivables (including
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Liquidated Receivables), plus the appraised value of any other property held by
the Trust, such value to be determined by an appraiser mutually agreed upon by
the Servicer, the Note Insurer and the Trustee, and shall succeed to all
interests in and to the Trust; provided, however, that the amount to be paid for
such purchase shall be sufficient to pay the full amount of principal and
accrued interest, if any, then due and payable on the Notes and Class B
Certificates and the costs and expenses of the Trust including without express
limitation, expenses incurred by the Trust in connection with such optional
purchase.
(b) Notice of any termination of the Trust shall be given by
the Servicer, which notice shall include, among other things, the items
specified in Section 9.1(c) of the Trust Agreement, to the Owner Trustee, the
Trustee, the Note Insurer and the Rating Agencies as soon as practicable after
the Servicer has received notice thereof.
(c) Following the satisfaction and discharge of the Indenture
and the payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder and
the Owner Trustee will succeed to the rights of, and assume the obligations of,
the Trustee under this Agreement.
ARTICLE XII
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ADMINISTRATIVE DUTIES OF THE SERVICER
SECTION 12.1 ADMINISTRATIVE DUTIES.
(a) DUTIES WITH RESPECT TO THE INDENTURE. The Servicer shall
perform all its duties and the duties of the Issuer under the Indenture. In
addition, the Servicer shall consult with the Owner Trustee as the Servicer
deems appropriate regarding the duties of the Issuer under the Indenture. The
Servicer shall monitor the performance of the Issuer and shall advise the Owner
Trustee when action is necessary to comply with the Issuer's duties under the
Indenture. The Servicer shall prepare for execution by the Issuer or shall cause
the preparation by other appropriate Persons of all such documents, reports,
filings, instruments, certificates and opinions as it shall be the duty of the
Issuer to prepare, file or deliver pursuant to the Indenture. In furtherance of
the foregoing, the Servicer shall take all necessary action that is the duty of
the Issuer to take pursuant to the Indenture, including, without limitation,
pursuant to Sections 2.7, 3.5, 3.6, 3.7, 3.9, 3.10, 3.17, 5.1(b), 7.3, 8.3, 9.2,
9.3, 11.1 and 11.15 of the Indenture.
(b) DUTIES WITH RESPECT TO THE ISSUER.
(i) In addition to the duties of the Servicer set forth in
this Agreement or any of the Basic Documents, the Servicer shall
perform such calculations and shall prepare for execution by the Issuer
or the Owner Trustee or shall cause the preparation by other
appropriate Persons of all such documents, reports, filings,
instruments, certificates and opinions as it shall be the duty of the
Issuer or the Owner Trustee to prepare, file or deliver pursuant to
this Agreement or any of the Basic Documents or under state and federal
tax and securities laws, and at the request of the Owner Trustee shall
85
take all appropriate action that it is the duty of the Issuer to take
pursuant to this Agreement or any of the Basic Documents, including,
without limitation, pursuant to Sections 2.6 and 2.10 of the Trust
Agreement. In accordance with the directions of the Issuer or the Owner
Trustee, the Servicer shall administer, perform or supervise the
performance of such other activities in connection with the Collateral
(including the Basic Documents) as are not covered by any of the
foregoing provisions and as are expressly requested by the Issuer or
the Owner Trustee and are reasonably within the capability of the
Servicer.
(ii) Notwithstanding anything in this Agreement or any of the
Basic Documents to the contrary, the Servicer shall be responsible for
promptly notifying the Owner Trustee and the Trustee in the event that
any withholding tax is imposed on the Issuer's payments (or allocations
of income) to a Noteholder as contemplated this Agreement. Any such
notice shall be in writing and specify the amount of any withholding
tax required to be withheld by the Owner Trustee or the Trustee
pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the Basic
Documents to the contrary, the Servicer shall be responsible for
performance of the duties of the Issuer or the Seller set forth in
Section 5.1 of the Trust Agreement with respect to, among other things,
accounting and reports to Certificateholders; provided, however, that
once prepared by the Servicer the Owner Trustee shall retain
responsibility for the distribution of the Schedule K-1s necessary to
enable each Certificateholder to prepare its federal and state income
tax returns.
(iv) The Servicer shall perform the duties of the Servicer
specified in Section 10.2 of the Trust Agreement required to be
performed in connection with the resignation or removal of the Owner
Trustee, and any other duties expressly required to be performed by the
Servicer under this Agreement or any of the Basic Documents.
(v) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Servicer may enter into
transactions with or otherwise deal with any of its Affiliates;
provided, however, that the terms of any such transactions or dealings
shall be in accordance with any directions received from the Issuer and
shall be, in the Servicer's opinion, no less favorable to the Issuer in
any material respect.
(c) TAX MATTERS. The Servicer shall prepare and file, on
behalf of the Seller, all tax returns, tax elections, financial statements and
such annual or other reports of the Issuer as are necessary for preparation of
tax reports as provided in Article V of the Trust Agreement, including without
limitation, IRS forms 1099 and 1066. All tax returns will be signed by the
Seller.
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(d) NON-MINISTERIAL MATTERS. With respect to matters that in
the reasonable judgment of the Servicer are non-ministerial, the Servicer shall
not take any action pursuant to this Article XII unless within a reasonable time
before the taking of such action, the Servicer shall have notified the Owner
Trustee and the Trustee of the proposed action and the Owner Trustee and, with
respect to items (i), (ii), (iii) and (iv) below, the Trustee shall not have
withheld consent or provided an alternative direction. For the purpose of the
preceding sentence, "non-ministerial matters" shall include:
(i) the amendment of or any supplement to the Indenture;
(ii) the initiation of any claim or lawsuit by the Issuer and
the compromise of any action, claim or lawsuit brought by or against
the Issuer (other than in connection with the collection of the
Receivables);
(iii) the amendment, change or modification of this Agreement
or any of the Basic Documents;
(iv) the appointment of successor Note Registrars, successor
Paying Agents and successor Trustees pursuant to the Indenture or the
appointment of Successor Servicers or the consent to the assignment by
the Note Registrar, Paying Agent or Trustee of its obligations under
the Indenture; and
(v) the removal of the Trustee.
(e) EXCEPTIONS. Notwithstanding anything to the contrary in
this Agreement except as expressly provided herein or in the other Basic
Documents, the Servicer, in its capacity as such hereunder, shall not be
obligated to, and shall not, (1) make any payments to the Noteholders or
Certificateholders under the Basic Documents, (2) sell the Trust Estate pursuant
to Section 5.4 of the Indenture, (3) take any other action that the Issuer
directs the Servicer not to take on its behalf or (4) in connection with its
duties hereunder assume any indemnification obligation of any other Person.
(f) LIMITATION OF STANDBY SERVICER'S OBLIGATIONS. The Standby
Servicer shall not be responsible for any obligations or duties of the Servicer
under this Section 12.1.
SECTION 12.2 RECORDS. The Servicer shall maintain appropriate books of
account and records relating to services performed under this Agreement, which
books of account and records shall be accessible for inspection by the Issuer,
the Trustee and the Note Insurer at any time during normal business hours.
SECTION 12.3 ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER. The
Servicer shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
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ARTICLE XIII
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MISCELLANEOUS PROVISIONS
SECTION 13.1 AMENDMENT.
(a) This Agreement may be amended from time to time by the
parties hereto, with the consent of the Trustee (which consent may not be
unreasonably withheld), with the prior written consent of the Note Insurer (so
long as no Insurer Default has occurred and is continuing) but without the
consent of any of the Noteholders or the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions in this Agreement, to comply
with any changes in the Code, or to make any other provisions with respect to
matters or questions arising under this Agreement which shall not be
inconsistent with the provisions of this Agreement or the Insurance Agreement;
provided, however, that such action shall not, as evidenced by an Opinion of
Counsel delivered to the Owner Trustee and the Trustee, adversely affect in any
material respect the interests of any Noteholder or Certificateholder; provided
further that if an Insurer Default has occurred and is continuing, such action
shall not materially adversely affect the interests of the Note Insurer.
This Agreement may also be amended from time to time by the parties
hereto, with the consent of the Note Insurer, the Trustee, and a Note Majority
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Noteholders or the Certificateholders; provided,
however, that no such amendment shall (a) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on
Receivables or distributions that shall be required to be made for the benefit
of the Noteholders or the Certificateholders or (b) reduce the aforesaid
percentage of the Class A-1 Note Balance, the Class A-2 Note Balance or the
Class B Certificate Balance, the Holders of which are required to consent to any
such amendment, without the consent of the Holders of all the outstanding Notes
affected thereby and the Holders (as defined in the Trust Agreement) of all the
outstanding Class B Certificates affected thereby; provided further, that if an
Insurer Default has occurred and is continuing, such action shall not materially
adversely affect the interests of the Note Insurer.
Promptly after the execution of any such amendment or consent, the
Trustee shall furnish written notification of the substance of such amendment or
consent to each Securityholder and the Rating Agencies.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents (and any
other consents of Noteholders or Certificateholders provided for in this
Agreement) and of evidencing the authorization of any action by Noteholders or
Certificateholders shall be subject to such reasonable requirements as the
Trustee or the Owner Trustee, as applicable, may prescribe.
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Prior to the execution of any amendment to this Agreement, the Owner
Trustee and the Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or permitted
by this Agreement and the Opinion of Counsel referred to in Section 13.2(i)(i)
has been delivered. The Owner Trustee, the Standby Servicer and the Trustee may,
but shall not be obligated to, enter into any such amendment which affects the
Issuer's, the Owner Trustee's, the Standby Servicer's or the Trustee's, as
applicable, own rights, duties or immunities under this Agreement or otherwise.
(b) Notwithstanding anything to the contrary contained in
Section 13.1(a) above, the provisions of this Agreement relating to (i) the
Spread Account Supplement, the Spread Account, the Requisite Amount (as defined
in the Master Spread Account Agreement or the Spread Account Supplement), a
Trigger Event or any component definition of a Trigger Event and (ii) any
additional sources of funds which may be added to the Spread Account or uses of
funds on deposit in the Spread Account may be amended in any respect by the
Seller, the Servicer, the Note Insurer and the Collateral Agent (the consent of
which shall not be withheld or delayed with respect to any amendment that does
not adversely affect the Collateral Agent) without the consent of, or notice to,
the Noteholders or the Certificateholders.
(c) 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 Backup Servicing Agreement shall become
part of this Agreement as if this Agreement was amended to reflect such changes
in accordance with this Section 13.1.
SECTION 13.2 PROTECTION OF TITLE TO TRUST.
(a) The Seller or Servicer or both shall execute and file such
financing statements and cause to be executed and filed such continuation
statements, all in such manner and in such places as may be required by law
fully to preserve, maintain and protect the interest of the Issuer and the
interests of the Trustee in the Receivables and in the proceeds thereof. The
Seller shall deliver (or cause to be delivered) to the Note Insurer, the Owner
Trustee and the Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing.
(b) Neither the Seller nor the Servicer shall change its name,
identity, jurisdiction 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 Note
Insurer, the Owner Trustee and the Trustee at least five days' prior written
notice thereof and shall have promptly filed appropriate amendments to all
previously filed financing statements or continuation statements. Promptly upon
such filing, the Seller or the Servicer, as the case may be, shall deliver an
Opinion of Counsel to the Issuer, the Owner Trustee, the Trustee and the Note
Insurer, in form and substance reasonably satisfactory to the Note Insurer,
stating either (A) all financing statements and continuation statements have
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been executed and filed that are necessary fully to preserve and protect the
interest of the Trust and the Trustee in the Receivables, and reciting the
details of such filings or referring to prior Opinions of Counsel in which such
details are given, or (B) no such action shall be necessary to preserve and
protect such interest.
(c) Each of the Seller and the Servicer shall have an
obligation to give the Note Insurer, the Owner Trustee and the Trustee at least
60 days' prior written notice of any change in its jurisdiction of organization
if, as a result of such 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 and shall promptly file
any such amendment. The Servicer shall at all times maintain its jurisdiction of
organization within the United States of America. Each of the Seller and
Servicer shall at all times be organized solely under the laws of one state.
(d) The Servicer shall maintain accounts and records as to
each Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Receivable, including payments
and recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection Account
in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that,
from and after the time of sale under this Agreement of the Receivables to the
Issuer, the Servicer's master computer records (including any backup archives)
that refer to a Receivable shall indicate clearly the interest of the Trust in
such Receivable and that such Receivable is owned by the Trust. Indication of
the Trust's interest in a Receivable shall be deleted from or modified on the
Servicer's computer systems when, and only when, the related Receivable shall
have been paid in full or repurchased.
(f) If at any time the Seller or the Servicer shall propose to
sell, grant a security interest in or otherwise transfer any interest in
automotive receivables to any prospective purchaser, lender or other transferee,
the Servicer shall give to such prospective purchaser, lender or other
transferee computer tapes, records or printouts (including any restored from
backup archives) that, if they shall refer in any manner whatsoever to any
Receivable, shall indicate clearly that such Receivable has been sold and is
owned by the Trust.
(g) The Servicer shall permit the Trustee, the Standby
Servicer and the Note Insurer and its agents at any time during normal business
hours to inspect, audit, and make copies of and abstracts from the Servicer's
records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Note
Insurer, the Owner Trustee or to the Trustee, within five Business Days, a list
of all Receivables (by contract number and name of Obligor) then held as part of
the Trust, together with a reconciliation of such list to the Schedule of
Receivables and to each of the Servicer's Certificates furnished before such
request indicating removal of Receivables from the Trust.
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(i) The Servicer shall deliver to the Note Insurer, the Owner
Trustee and the Trustee:
(i) promptly after the execution and delivery of this
Agreement and, if required pursuant to Section 13.1, of each amendment,
an Opinion of Counsel, in form and substance satisfactory to the Note
Insurer, stating that, in the opinion of such counsel, either (A) all
financing statements and continuation statements have been executed and
filed that are necessary fully to preserve and protect the interest of
the Trust and the Trustee in the Receivables, and reciting the details
of such filings or referring to prior Opinions of Counsel in which such
details are given, or (B) no such action shall be necessary to preserve
and protect such interest; 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 Initial Cutoff Date, an Opinion of Counsel, dated as of a
date during such 90-day period, stating that, in the opinion of such
counsel, either (A) all financing statements and continuation
statements have been executed and filed that are necessary fully to
preserve and protect the interest of the Trust and the Trustee in the
Receivables, and reciting the details of such filings or referring to
prior Opinions of Counsel in which such details are given, or (B) no
such action shall be necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (i) or (ii) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
SECTION 13.3 NOTICES. All demands, notices and communications upon or
to the Seller, the Backup Servicer, the Servicer, the Owner Trustee, the Trustee
or the Rating Agencies under this Agreement shall be in writing, personally
delivered, or mailed by certified mail, return receipt requested, and shall be
deemed to have been duly given upon receipt (a) in the case of the Seller to CPS
Receivables Funding Corp., 00000 Xxxxxx Xxxxxx, Xxxxxx, XX 00000, (b) in the
case of the Servicer to Consumer Portfolio Services, Inc.,16355 Laguna Canyon,
Xxxxxx, XX 00000, Attention: Chief Financial officer, (c) in the case of the
Issuer or the Owner Trustee, at the Corporate Trust Office of the Owner Trustee,
(d) in the case of the Trustee or the Collateral Agent, at the Corporate Trust
Office, (e) in the case of the Note Insurer, to 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 Attention: Senior Vice President, Surveillance (Telecopy: (212)
339-3547); (f) in the case of Moody's, to Xxxxx'x Investors Service, Inc., ABS
Monitoring Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; (g) in the
case of the Backup Servicer to Systems & Services Technologies, Inc. at 0000
Xxxxxxx Xxxx, Xx. Xxxxxx, Xxxxxxxx 00000, Attention: Xxxxxx X. Xxxx, General
Counsel and Xxxx X Xxxxxxxx, President; and (h) in the case of Standard & Poor's
Ratings Group, to Standard & Poor's, a Division of The McGraw Hill Companies, 25
00
Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Asset Backed
Surveillance Department. Any notice required or permitted to be mailed to a
Noteholder or Certificateholder shall be given by first class mail, postage
prepaid, at the address of such Holder as shown in the Certificate Register or
Note Register, as applicable. Any notice so mailed within the time prescribed in
the Agreement shall be conclusively presumed to have been duly given, whether or
not the Certificateholder or Noteholder shall receive such notice.
SECTION 13.4 ASSIGNMENT. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
permitted assigns. Notwithstanding anything to the contrary contained herein,
except as provided in Sections 8.4 and 9.3 and as provided in the provisions of
this Agreement concerning the resignation of the Servicer, this Agreement may
not be assigned by the Seller or the Servicer without the prior written consent
of the Owner Trustee, the Trustee, the Standby Servicer, the Trustee and the
Note Insurer (or if an Insurer Default shall have occurred and be continuing the
Holders of Notes evidencing not less than 66% of the principal amount of the
outstanding Notes.
SECTION 13.5 LIMITATIONS ON RIGHTS OF OTHERS. The provisions of this
Agreement are solely for the benefit of the parties hereto and for the benefit
of the Owner Trustee, the Certificateholders (including the Seller), the Trustee
and the Noteholders, as third-party beneficiaries. The Note Insurer and its
successors and assigns shall be a third-party beneficiary to the provisions of
this Agreement, and shall be entitled to rely upon and directly enforce such
provisions of this Agreement so long as no Insurer Default shall have occurred
and be continuing. Except as expressly stated otherwise, any right of the Note
Insurer to direct, appoint, consent to, approve of, or take any action under
this Agreement, shall be a right exercised by the Note Insurer in its sole and
absolute discretion. The Note Insurer may disclaim any of its rights and powers
under this Agreement (but not its duties and obligations under the Note Policy)
upon delivery of a written notice to the Owner Trustee and the Trustee. Nothing
in this Agreement, whether express or implied, shall be construed to give to any
other Person any legal or equitable right, remedy or claim in the Owner Trust
Estate or under or in respect of this Agreement or any covenants, conditions or
provisions contained herein.
SECTION 13.6 SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 13.7 SEPARATE COUNTERPARTS. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
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SECTION 13.8 HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 13.9 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 13.10 ASSIGNMENT TO TRUSTEE. The Seller hereby acknowledges and
consents to any mortgage, pledge, assignment and grant of a security interest by
the Issuer to the Trustee pursuant to the Indenture for the benefit of the
Noteholders of all right, title and interest of the Issuer in, to and under the
Receivables and/or the assignment of any or all of the Issuer's rights and
obligations hereunder to the Trustee.
SECTION 13.11 NONPETITION COVENANTS.
(a) Notwithstanding any prior termination of this Agreement,
the Servicer and the Seller shall not, prior to the date which is one year and
one day after the termination of this Agreement with respect to the Issuer,
acquiesce, petition or otherwise invoke or cause the Issuer to invoke the
process of any court or government authority for the purpose of commencing or
sustaining a case against the Issuer under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Issuer or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Issuer.
(b) Notwithstanding any prior termination of this Agreement,
the Servicer shall not, prior to the date that is one year and one day after the
termination of this Agreement with respect to the Seller, acquiesce to, petition
or otherwise invoke or cause the Seller to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case against
the Seller under any federal or state bankruptcy, insolvency or similar law,
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator,
or other similar official of the Seller or any substantial part of its property,
or ordering the winding up or liquidation of the affairs of the Seller.
SECTION 13.12 LIMITATION OF LIABILITY OF OWNER TRUSTEE AND TRUSTEE.
(a) Notwithstanding anything contained herein to the contrary,
this Agreement has been countersigned by Wilmington Trust Company not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Wilmington Trust Company in its individual capacity or,
except as expressly provided in the Trust Agreement, as Owner Trustee have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Issuer hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto, as to all of which recourse shall be had
solely to the assets of the Issuer. For all purposes of this Agreement, in the
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performance of its duties or obligations hereunder or in the performance of any
duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary,
this Agreement has been executed and delivered by Bank One Trust Company, N.A.,
not in its individual capacity but solely as Trustee and Standby Servicer and in
no event shall Bank One Trust Company, N.A., have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the assets
of the Issuer.
(c) In no event shall Bank One Trust Company, N.A., in any of
its capacities hereunder, be deemed to have assumed any duties of the Owner
Trustee under the Delaware Business Trust Statute, common law, or the Trust
Agreement.
SECTION 13.13 INDEPENDENCE OF THE SERVICER. For all purposes of this
Agreement, the Servicer shall be an independent contractor and shall not be
subject to the supervision of the Issuer, the Trustee and Standby Servicer or
the Owner Trustee with respect to the manner in which it accomplishes the
performance of its obligations hereunder. Unless expressly authorized by this
Agreement, the Servicer shall have no authority to act for or represent the
Issuer or the Owner Trustee in any way and shall not otherwise be deemed an
agent of the Issuer or the Owner Trustee.
SECTION 13.14 NO JOINT VENTURE. Nothing contained in this Agreement (i)
shall constitute the Servicer and either of the Issuer or the Owner Trustee as
members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
SECTION 13.15 NOTE INSURER AS CONTROLLING PARTY. Each Noteholder by
purchase of the Notes held by it acknowledges that the Trustee, as partial
consideration of the issuance of the Note Policy, has agreed that the Note
Insurer shall have certain rights hereunder for so long as no Insurer Default
shall have occurred and be continuing. So long as no Insurer Default has
occurred and is continuing, except as otherwise specifically provided herein,
whenever Noteholder action, consent or approval is required under this
Agreement, such action, consent or approval shall be deemed taken or given on
behalf of, and shall be binding upon, all Noteholders if the Insurer agrees to
take such action or give such consent or approval. So long as an Insurer Default
has occurred and is continuing, any provision giving the Note Insurer the right
to direct, appoint or consent to, approve of, or take any action under this
Agreement shall be inoperative during the period of such Insurer Default and
such right shall instead vest in the Trustee acting, unless otherwise specified,
at the direction of a Note Majority. From and after such time as the Notes have
been paid in full and no amounts are owing to the Insurer under the Insurance
94
Agreement, any provision giving the Note Insurer or the Noteholders the right to
direct, appoint or consent to, approve of, or take any action under this
Agreement shall be inoperative and such right shall instead vest in the Trustee
acting at the direction of the holders of the Certificates, unless otherwise
specified. The Note Insurer may disclaim any of its rights and powers under this
Agreement (but not its duties and obligations under the Policy) upon delivery of
a written notice to the Trustee. The Note Insurer may give or withhold any
consent hereunder in its sole and absolute discretion.
SECTION 13.16 ACKNOWLEDGMENT OF ROLES
The parties expressly acknowledge and consent to Bank One Trust
Company, N.A. acting in the multiple capacities of Standby Servicer, Collateral
Agent and Trustee. The parties agree that Bank One Trust Company, N.A. 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 Bank
One Trust Company, N.A. of any other such capacity or capacities in accordance
with this Agreement or any other Basic Documents to which it is a party.
95
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective duly authorized officers as of
the day and the year first above written.
CPS AUTO RECEIVABLES TRUST 2002-A
By: WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as Owner
Trustee on behalf of the Trust
By:_________________________________________
Title:______________________________________
CPS RECEIVABLES CORP., as Seller
By:_________________________________________
Title:______________________________________
CONSUMER PORTFOLIO SERVICES, INC.,
as Servicer
By:_________________________________________
Title:______________________________________
BANK ONE TRUST COMPANY, N.A., not in its
individual capacity, but solely as Standby
Servicer and Trustee
By:_________________________________________
Title:______________________________________
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SYSTEMS AND SERVICES TECHNOLOGIES, INC.,
as Backup Servicer
By__________________________________________
Title:______________________________________
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SCHEDULE A
SCHEDULE OF RECEIVABLES
[AVAILABLE UPON REQUEST TO THE TRUSTEE]
SCHEDULE B
LOCATION FOR DELIVERY OF RECEIVABLE FILES
[AVAILABLE UPON REQUEST TO THE TRUSTEE]
EXHIBIT A
SUBSEQUENT TRANSFER AGREEMENT
TRANSFER No. __ of Subsequent Receivables pursuant to the Sale and
Servicing Agreement, dated as of March 1, 2002, among CPS AUTO RECEIVABLES TRUST
2002-A, a Delaware business trust (the "Issuer"), CPS RECEIVABLES CORP., a
California corporation (the "Seller"), CONSUMER PORTFOLIO SERVICES, INC. a
California corporation (the "Servicer"), SYSTEMS & SERVICES TECHNOLOGIES, INC.,
as Backup Servicer (the "Backup Servicer") and BANK ONE TRUST COMPANY, N.A., a
national banking association, in its capacity as Trustee (the "Trustee").
W I T N E S S E T H:
WHEREAS pursuant to the Sale and Servicing Agreement, the Seller wishes
to convey to the Issuer the Subsequent Receivables listed on Schedule A hereto;
and
WHEREAS the Issuer is willing to accept such conveyance subject to the
terms and conditions hereof.
NOW, THEREFORE, the Issuer, the Seller, the Servicer and the Trustee
hereby agree as follows:
SECTION 1. DEFINED TERMS. Capitalized terms used herein shall have the
meanings ascribed to them in the Sale and Servicing Agreement unless otherwise
defined herein.
"Subsequent Cutoff Date" shall mean, with respect to the Subsequent
Receivables conveyed hereby, _____________, 2002.
"Subsequent Transfer Date" shall mean, with respect to the Subsequent
Receivables conveyed hereby, _____________, 2002.
SECTION 2. SCHEDULE OF RECEIVABLES. Annexed hereto is a supplement to
Schedule A to the Sale and Servicing Agreement listing the Receivables that
constitute the Subsequent Receivables to be conveyed pursuant to this Subsequent
Transfer agreement on the Subsequent Transfer Date.
SECTION 3. CONVEYANCE OF SUBSEQUENT RECEIVABLES. In consideration of
the Issuer's delivery to or upon the order of the Seller of $____________, the
Seller does hereby sell, transfer, assign, set over and otherwise convey to the
Issuer, without recourse (except as expressly provided in the Sale and Servicing
Agreement), all right, title and interest of the Seller in and to:
(a) all right, title and interest of the Seller in and to the
Subsequent Receivables listed in Schedule A to this Subsequent Transfer
Agreement and all monies received thereunder after the Subsequent Cutoff Date
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and all Net Liquidation Proceeds received with respect to such Subsequent
Receivables after the Subsequent Cutoff Date;
(b) all right, title and interest of the Seller in and to the
security interests in the Financed Vehicles granted by Obligors pursuant to the
Subsequent Receivables and any other interest of the Seller in such Financed
Vehicles, including, without limitation, the certificates of title or, with
respect to such Financed Vehicles in the Non-Certificated Title States, all
other evidence of ownership with respect to such Financed Vehicles issued by the
applicable Department of Motor Vehicles or similar authority;
(c) all right, title and interest of the Seller in and to any
proceeds from claims on any physical damage, credit life and credit accident and
health insurance policies or certificates relating to the Financed Vehicles
securing the Subsequent Receivables or the Obligors thereunder;
(d) all right, title and interest of the Seller in and to the
related Subsequent Receivables Purchase Agreement, including a direct right to
cause CPS to purchase Receivables from the Trust under certain circumstances and
to indemnify the Trust pursuant to the Receivables Purchase Agreement;
(e) all right, title and interest of the Seller in and to
refunds for the costs of extended service contracts with respect to Financed
Vehicles securing Subsequent Receivables, refunds of unearned premiums with
respect to credit life and credit accident and health insurance policies or
certificates covering an Obligor or Financed Vehicle under a Subsequent
Receivable or his or her obligations with respect to a Financed Vehicle and any
recourse to Dealers for any of the foregoing;
(f) the Receivable File related to each Subsequent Receivable;
(g) all amounts and property from time to time held in or
credited to the Collection Account, the Pre-Funding Account, the Interest
Reserve Account or the Lockbox Account;
(h) the proceeds of any and all of the foregoing; and
(i) 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.
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It is the intention of the Seller that the transfer and assignment
contemplated by this Subsequent Transfer Agreement shall constitute a sale of
the Subsequent Receivables and Other Conveyed Property from the Seller to the
Issuer and the beneficial interest in and title to the Subsequent Receivables
and the Other Conveyed Property shall not be part of the Seller's estate in the
event of the filing of a bankruptcy petition by or against the Seller under any
bankruptcy law. In the event that, notwithstanding the intent of the Seller, the
transfer and assignment contemplated hereby is held not to be a sale, this
Subsequent Transfer Agreement shall constitute a grant of a security interest in
the property referred to in this Section 3 for the benefit of the
Securityholders and the Note Insurer.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SELLER. In addition to
the representations and warranties set forth in Section 3.1 of the Sale and
Servicing Agreement, the Seller hereby represents and warrants to the Issuer as
of the date of this Agreement and as of the Subsequent Transfer Date that:
(a) ORGANIZATION AND GOOD STANDING. The Seller has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of California, with power and authority to own its properties
and to conduct its business as such properties are currently owned and such
business is currently conducted, and had at all relevant times, and now has,
power, authority and legal right to acquire, own and sell the Subsequent
Receivables and the related Other Conveyed Property transferred to the Trust.
(b) DUE QUALIFICATION. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals in all jurisdictions in which the ownership or
lease of property or the conduct of its business shall require such
qualifications.
(c) POWER AND AUTHORITY. The Seller has the power and
authority to execute and deliver this Subsequent Transfer Agreement and the
Basic Documents to which it is a party and to carry out its terms and their
terms, respectively; the Seller has full power and authority to sell and assign
the Subsequent Receivables and the related Other Conveyed Property to be sold
and assigned to and deposited with the Trust by it and has duly authorized such
sale and assignment to the Trust by all necessary corporate action; and the
execution, delivery and performance of this Subsequent Transfer 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 Subsequent Transfer
Agreement effects a valid sale, transfer and assignment of the Subsequent
Receivables and the related Other Conveyed Property, enforceable against the
Seller and creditors of and purchasers from the Seller; and this Subsequent
Transfer 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,
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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 Subsequent Transfer Agreement and the Basic Documents and
the fulfillment of the terms of this Subsequent Transfer Agreement and the Basic
Documents shall not conflict with, result in any breach of any of the terms and
provisions of or constitute (with or without notice, lapse of time or both) a
default under the certificate of incorporation or by-laws of the Seller, or any
indenture, agreement, mortgage, deed of trust or other instrument to which the
Seller is a party or by which it is bound, or result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of any
such indenture, agreement, mortgage, deed of trust or other instrument, other
than the Basic Documents, or violate any law, order, rule or regulation
applicable to the Seller of any court or of any federal or state regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Seller or any of its properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the Seller's knowledge, threatened against the Seller, before any
court, regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Seller or its properties (A)
asserting the invalidity of this Subsequent Transfer Agreement, the Securities
or any of the Basic Documents, (B) seeking to prevent the consummation of any of
the transactions contemplated by this Subsequent Transfer Agreement or any of
the Basic Documents, (C) seeking any determination or ruling that might
materially and adversely affect the performance by the Seller of its obligations
under, or the validity or enforceability of, this Subsequent Transfer Agreement
or any of the Basic Documents, or (D) relating to the Seller and which might
adversely affect the federal or state income, excise, franchise or similar tax
attributes of the Securities.
(g) NO CONSENTS. No consent, approval, authorization or order
of or declaration or filing with any governmental authority is required for the
issuance or sale of the Securities or the consummation of the other transactions
contemplated by this Agreement, except such as have been duly made or obtained.
(h) TAX RETURNS. The Seller has filed on a timely basis all
tax returns required to be filed by it and paid all taxes, to the extent that
such taxes have become due.
(i) CHIEF EXECUTIVE OFFICE. The chief executive office of the
Seller is at 00000 Xxxxxx Xxxxxx, Xxxxxx, XX 00000.
(j) PRINCIPAL BALANCE. The aggregate Principal Balance of the
Subsequent Receivables listed on the supplement to Schedule A annexed hereto and
conveyed to the Issuer pursuant to this Subsequent Transfer Agreement as of the
Subsequent Cutoff Date is $____________.
A-4
SECTION 5. CONDITIONS PRECEDENT. The obligation of the Issuer to
acquire the Subsequent Receivables hereunder is subject to the satisfaction, on
or prior to the Subsequent Transfer Date, of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Seller in Section 4 of this
Subsequent Transfer Agreement and with respect to the Subsequent Receivables in
Section 3.1 of the Sale and Servicing Agreement shall be true and correct as of
the date of this Agreement and as of the Subsequent Transfer Date.
(b) SALE AND SERVICING AGREEMENT CONDITIONS. Each of the
conditions set forth in Section 2.2(b) of the Sale and Servicing Agreement shall
have been satisfied.
(c) ADDITIONAL INFORMATION. The Seller shall have delivered to
the Issuer such information as was reasonably requested by the Issuer to satisfy
itself as to (i) the accuracy of the representations and warranties set forth in
Section 4 of this Agreement and with respect to the Subsequent Receivables in
Section 3.1 of the Sale and Servicing Agreement and (ii) the satisfaction of the
conditions set forth in this Section 5.
SECTION 6. ACCEPTANCE OF RECEIVABLE FILES BY TRUSTEE. The Trustee
acknowledges receipt of files which the Seller has represented are the
Receivable Files for the Subsequent Receivables. The Trustee has reviewed such
Receivable Files and has determined that it has received a file for each
Subsequent Receivable identified in Schedule A to this Subsequent Transfer
Agreement. The Trustee declares that it holds and will continue to hold such
files and any amendments, replacements or supplements thereto and all other
Trust Assets as Trustee in trust for the use and benefit of all present and
future Securityholders.
SECTION 7. RATIFICATION OF AGREEMENT. As supplemented by this
Agreement, the Sale and Servicing Agreement is in all respects ratified and
confirmed and the Sale and Servicing Agreement as so supplemented by this
Agreement shall be read, taken and construed as one and the same instrument.
SECTION 8. COUNTERPARTS. This Agreement may be executed in two or more
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the same
instrument.
SECTION 9. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
A-5
IN WITNESS WHEREOF, the Issuer, the Seller and the Servicer have caused
this Agreement to be duly executed and delivered by their respective duly
authorized officers as of the day and year first above written.
CPS AUTO RECEIVABLES TRUST 2002-A
by WILMINGTON TRUST COMPANY,not in its
individual capacity, but solely as Owner
Trustee on behalf of the Trust
By:_________________________________________
Name:_______________________________________
Title:______________________________________
CPS RECEIVABLES CORP., Seller
By:_________________________________________
Name:_______________________________________
Title:______________________________________
CONSUMER PORTFOLIO SERVICES, INC., Servicer
By:_________________________________________
Name:_______________________________________
Title:______________________________________
BANK ONE TRUST COMPANY, N.A., not in its
individual capacity, but solely as Trustee
By:_________________________________________
Name:_______________________________________
Title:______________________________________
A-6
SYSTEMS & SERVICES TECHNOLOGIES, INC.,
as Backup Servicer
By:_________________________________________
Name:_______________________________________
Title:______________________________________
A-7
EXHIBIT B
SERVICER'S CERTIFICATE
B-1
EXHIBIT C
TRUST RECEIPT
PURSUANT TO SECTION 3.5 OF
THE SALE AND SERVICING AGREEMENT
Consumer Portfolio Services, Inc., as Servicer (the "Servicer") of the
CPS Auto Receivables Trust 2002-A (the "Trust") under the Sale and Servicing
Agreement (the "Sale and Servicing Agreement"), dated as of March 1, 2002, among
CPS Auto Receivables Trust 2002-A, CPS Receivables Corp., as Seller, Consumer
Portfolio Services, Inc., as Servicer, Systems and Services Technologies, Inc.,
as Backup Servicer and Bank One Trust Company, N.A., as Trustee and Standby
Servicer, does hereby acknowledge receipt of the documents relating to the
Receivables, each of which documents and the Receivables to which they are
related are listed on the attached Schedule 1 hereto. The Servicer furthermore
agrees to return such documents to the Trustee in accordance with the terms of
the Sale and Servicing Agreement.
IN WITNESS WHEREOF I have hereunto set my hand this __ day of ____,
20__.
CONSUMER PORTFOLIO SERVICES, INC.,
as Servicer
By:_______________________________
Name:_____________________________
Title:____________________________
Acknowledged By:
BANK ONE TRUST COMPANY, N.A.,
as Trustee
By:_______________________________
Name:_____________________________
Title:____________________________
C-1
EXHIBIT D
SERVICING OFFICER'S CERTIFICATE
PURSUANT TO SECTION 3.5
OF THE SALE AND SERVICING AGREEMENT
The undersigned, ______________, hereby certifies that (s)he is a duly
elected and qualified officer of the Servicer, and hereby further certifies as
follows:
The Receivable described below has been fully liquidated and all
amounts required to be deposited in the Collection Account with respect to the
Receivable and the Obligor described below have been so deposited.
Servicer
Loan No.:
Obligor's Name:
Capitalized terms used herein which are not defined herein shall have
the meanings ascribed to them in the Sale and Servicing Agreement dated as of
March 1, 2002 among CPS Auto Receivables Trust 2002-A, Consumer Portfolio
Services, Inc., as servicer, CPS Receivables Corp., as seller, Systems and
Services Technologies, Inc., as Backup Servicer, and Bank One Trust Company,
N.A., as trustee and Standby Servicer.
IN WITNESS WHEREOF, I have hereunto set my hand on and as of this ___
day of ______________, 20___.
By:_______________________________
Name:_____________________________
Title:____________________________
D-1
EXHIBIT E
FORM OF MONTHLY SECURITYHOLDER STATEMENT
[AVAILABLE UPON REQUEST TO THE TRUSTEE]
E-1
EXHIBIT F-1
TRUSTEE'S CERTIFICATE
PURSUANT TO SECTIONS 3.2 OR 3.4 OF
THE SALE AND SERVICING AGREEMENT
Bank One Trust Company, N.A., as trustee (the "Trustee") of the CPS
Auto Receivables Trust 2002-A (the "Trust") under the Sale and Servicing
Agreement (the "Sale and Servicing Agreement"), dated as of March 1, 2002, among
the Trust, CPS Receivables Corp., as Seller, Consumer Portfolio Services, Inc.,
as Servicer, Systems and Services Technologies, Inc., as Backup Servicer, and
Bank One Trust Company, N.A., as Trustee and Standby Servicer, does hereby sell,
transfer, assign, and otherwise convey to Consumer Portfolio Services, Inc.,
without recourse, representation, or warranty, all of the Trustee's right,
title, and interest in and to all of the Receivables (as defined in the Sale and
Servicing Agreement) identified in the attached Servicer's Certificate as
"Purchased Receivables," which are to be repurchased by Consumer Portfolio
Services, Inc. pursuant to Section 3.2 or Section 3.4 of the Sale and Servicing
Agreement and all security and documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this __ day of ____,
20__.
BANK ONE TRUST COMPANY, N.A., as Trustee
By:_______________________________________
Name:_____________________________________
Title:____________________________________
F-1-1
EXHIBIT F-2
TRUSTEE'S CERTIFICATE
PURSUANT TO SECTIONS 4.7 OR 11.1 OF
THE SALE AND SERVICING AGREEMENT
Bank One Trust Company, N.A., as trustee (the "Trustee") of the CPS
Auto Receivables Trust 2002-A (the "Trust") under the Sale and Servicing
Agreement (the "Sale and Servicing Agreement"), dated as of March 1, 2002, among
the Trust, CPS Receivables Corp., as Seller, Consumer Portfolio Services, Inc.,
as Servicer (the "Servicer"), Systems and Services Technologies, Inc., as Backup
Servicer, and Bank One Trust Company, N.A., as Trustee and Standby Servicer,
does hereby sell, transfer, assign, and otherwise convey to the Servicer,
without recourse, representation, or warranty, all of the Trustee's right,
title, and interest in and to all of the Receivables (as defined in the Sale and
Servicing Agreement) identified in the attached Servicer's Certificate as
"Purchased Receivables," which are to be repurchased by the Servicer pursuant to
Section 4.7 or Section 11.1 of the Sale and Servicing Agreement and all security
and documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this __ day of ____,
20__.
BANK ONE TRUST COMPANY, N.A., as Trustee
By:_________________________________________
Name:_______________________________________
Title:______________________________________
F-2-1
EXHIBIT G
INVESTOR CERTIFICATION
Date:
Bank One Trust Company, N.A.
000 Xxxx Xxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxx, Xxxx 00000
Attention: Global Corporate Trust Services
_______________________________________________________________
[Insert description of Certificate/Note here]
In accordance with Section 5.11(c) of the Sale and Servicing Agreement
dated as of March 1, 2002 (the "AGREEMENT"), with respect to the [insert
description of Certificates/Notes here] (the "[CERTIFICATES/NOTES]"), the
undersigned hereby certifies and agrees as follows:
1. ___________________________(the
["Certificateholder"]["Noteholder"]) is the beneficial owner or Nominee
or Advisor of $_________ of original principal amount of the
Certificates, and the --------------
Certificateholder's/Nominee's/Advisor's DTC Participant Number (if
applicable) is ____________________.
2. The Certificateholder hereby provides the following contact
information:
(complete either Section A or B)
ARTICLE XIV a. Execution by Beneficial Owner
The undersigned Beneficial Owner of the Certificates hereby represents
and warrants that it is duly authorized to execute this form and that such power
has not been granted or assigned to any other person.
Name of Beneficial Owner:_______________________________________________________
(Print Name of Authorized Signature):___________________________________________
Signature:______________________________________________________________________
Address:________________________________________________________________________
Phone:__________________________________________________________________________
FAX:____________________________________________________________________________
E-Mail Address: ________________________________________________________________
G-1
Name of Nominee/Custodian: _____________________________________________________
Total Original Principal Amount Owned:__________________________________________
Total Current Principal Amount Owned:___________________________________________
B. EXECUTION BY NOMINEE OR ADVISOR
The undersigned hereby represents and warrants that it is the Nominee
or Advisor for the Beneficial Owner indicated, and that the Beneficial Owner has
granted to the undersigned the power and authority to act on behalf of the
Beneficial Owner.
Name of Nominee or Advisor:_____________________________________________________
(Print Name of Authorized Signature):___________________________________________
Signature:______________________________________________________________________
Address:________________________________________________________________________
Phone:__________________________________________________________________________
FAX:____________________________________________________________________________
E-Mail Address: _______________________________________________________________
Name of Beneficial Owner:_______________________________________________________
Total Original Principal Amount with Respect
to Which Direction is Made:_____________________________________________________
Total Current Principal Amount with
Respect to Which Direction is Made:_____________________________________________
3. The undersigned is requesting a password pursuant to
Section 5.11(c) of the Agreement for access to certain information (the
"INFORMATION") on the Trustee's website.
4. In consideration of the Trustee's disclosure to the
undersigned of the Information, or the password in connection
therewith, the undersigned will keep the Information confidential
(except from such outside persons as are assisting it in connection
with the related [Certificates/Notes], from its accountants and
attorneys, and otherwise from such governmental or banking authorities
or agencies to which the undersigned is subject), and such Information
will not, without the prior written consent of the Trustee, be
otherwise disclosed by the undersigned or by its officers, directors,
partners, employees, agents or representatives (collectively, the
"REPRESENTATIVES") in any manner whatsoever, in whole or in part.
5. The undersigned will not use or disclose the Information in
any manner which could result in a violation of any provision of the
Securities Act of 1933, as amended (the "SECURITIES ACT"), or the
Securities Exchange Act of 1934, as amended, or would require
registration of any Certificate pursuant to Section 5 of the Securities
Act.
G-2
6. The undersigned shall be fully liable for any breach of
this agreement by itself or any of its Representatives and shall
indemnify the Owner Trustee, the Seller, the Servicer, the Backup
Servicer the Standby Servicer and the Trustee, for any loss, liability
or expense incurred thereby with respect to any such breach by the
undersigned or any of its Representatives.
7. Capitalized terms used but not defined herein shall have
the respective meanings assigned thereto in the Agreement.
IN WITNESS WHEREOF, the undersigned has caused its name to be
signed hereby by its duly authorized officer, as of the day and year written
above.
____________________________________
Beneficial Owner/Nominee/Advisor
By:_________________________________
Title:______________________________
Company:____________________________
Phone:______________________________
G-3
