EXHIBIT 10.15
Receivables Transfer Agreement, dated as of November 24, 1997 (this
"Agreement"), between CONSUMER PORTFOLIO SERVICES, INC. (the "Company"), a
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California corporation, and CPS WAREHOUSE CORP., a Delaware corporation ("CWC").
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W I T N E S S E T H:
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WHEREAS, CWC is an Affiliate of the Company;
WHEREAS, CWC has been formed for the sole purpose of purchasing, and
acquiring by capital contribution, and financing such purchases by borrowing
funds from Variable Funding Capital Corporation ("VFCC") and granting to the
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Lenders (as defined in the within-mentioned Funding Agreement) a security
interest in, certain Receivables originated by the Company; and
WHEREAS, the Company intends to sell, or otherwise contribute, and CWC
intends to purchase, or otherwise have contributed to it, such Receivables, from
time to time, as described herein;
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions and Conventions. Unless otherwise defined
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herein, all capitalized terms shall have the meanings set forth in the Funding
Agreement. In addition, the following terms shall have the following meanings:
"Accumulated Funding Deficiency" shall have the meaning provided in Section
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412 of the Code and Section 302 of ERISA, whether or not waived.
"Agreement" means this Receivables Transfer Agreement between the Company
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and CWC.
"Allocation Formula" has the meaning set forth the Consent of General
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Electric Capital Corporation and Redwood Receivables Corporation dated as of
November 24, 1997.
"Annual Percentage Rate" The annual rate of interest applicable to each
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Contract, as disclosed therein.
"Assignment" has the meaning specified in Section 2.01(a).
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"Code" means the Internal Revenue Code of 1986, including, unless the
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context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
"Commonly Controlled Entity" means the Company and any entity, whether or
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not incorporated, affiliated with the Company pursuant to Section 414(b), (c),
(m) or (o) of the Code.
"Company" means Consumer Portfolio Services, Inc., as the transferor and
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seller of Receivables under this Agreement.
"Contributed Receivable" has the meaning specified in Section 2.01(b).
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"CWC" means CPS Warehouse Corp., as the purchaser and transferee of
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Receivables under this Agreement.
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"CWC Secured Obligations" means all obligations of every nature of CWC
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(other than to the Company or Servicer), now or hereafter existing, under the
Funding Agreement and any promissory note or other document or instrument
delivered pursuant to such documents, and all amendments, extensions or renewals
thereof, whether for principal, interest, fees, expenses or otherwise, whether
now existing or hereafter arising, voluntary or involuntary, whether or not
jointly owed with others, direct or indirect, absolute or contingent, liquidated
or unliquidated, and whether or not from time to time decreased or extinguished
and later increased, created or incurred and all or any portion of such
obligations that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from VFCC, the Deal Agent or the
Collateral Agent as a preference, fraudulent transfer or otherwise.
"Disposition Participant" means with respect to a Disposition, the trustee,
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custodian, the rating agencies, the underwriter, the placement agent, the credit
enhancer, whole-loan purchaser, purchaser of securities and/or any other party
necessary or, in the good faith belief of any of the foregoing, desirable to
effect a Disposition.
"Eligible Originator" has the meaning set forth in the Funding Agreement.
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"Eligible Receivable" means each Receivable pursuant to a Contract
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delivered by the Company to or at the direction of CWC which is listed on a
Request Notice delivered to CWC at the same time, and which satisfies each of
the following requirements:
(a) All of the representations and warranties in Section 4.01 are true
with respect to, and all conditions precedent in Section 3.02 have been and
continue to be met with respect to, the Contract, Financed Vehicle,
Obligor, Required Obligor Insurance, and Optional Obligor Insurance.
(b) The first Scheduled Payment is due within forty-five (45) days
after the date of the Contract and the Contract Date is within five (5)
days of the delivery of the Financed Vehicle.
(c) The Contract has a fixed APR and the Finance Charge was computed
using a fixed rate.
(d) The initial term of the Contract does not exceed sixty (60) months
and the Schedule of Payments has equal monthly payments except for the
final payment which must be within 5% of the other equal payments, the
payment obligation is in Dollars, and at the time the Contract as delivered
to the Custodian, there were at least twenty (20) remaining Scheduled
Payments.
(e) The Contract is for the absolute sale of the Financed Vehicle to
the Obligor, and the Financed Vehicle is not on approval or subject to any
agreement between the Obligor and the Dealer for the repurchase or return
of the Financed Vehicle.
(f) The Contract was selected in accordance with the Allocation
Formula from new or used automobile or light truck installment sale
contracts or promissory notes in the Company's portfolio utilizing no
selection procedures adverse to CWC relative to similar new or used
automobile or light truck installment sale contracts or promissory notes in
the Company's Portfolio taken as a whole.
(g) The Dealer has been paid all amounts due for the purchase of the
Contract from the Dealer.
(h) The Obligor is an Eligible Obligor.
(i) The Contract contains the original signature of the Obligor and
the Dealer.
(j) The Contract is the only unsatisfied original executed Contract
for the purchase of the Financed Vehicle and accurately reflects all of the
actual terms and conditions of the Obligor's purchase of the Financed
Vehicle.
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(k) Neither the Company's nor an Affiliate has made any agreement with
the Obligor to reduce the amount owed on the Contract.
(1) Neither the Company nor an Affiliate is required to perform any
additional service for, or perform or incur any additional obligation to,
the Obligor in order for the Company or CWC to enforce the Contract.
(m) The Contract, at the time the Company purchased it, materially
complied with the Credit and Collection Policies; or the Deal Agent
approved any material deviation from the Credit and Collection Policies for
that Contract in writing.
(n) The Obligor's obligations under the Contract are secured by a
validly perfected first priority security interest in the Financed Vehicle
in favor of the Servicer as secured party and such security interest has
been validly assigned to CWC under this Agreement.
(o) The Contract has not been, nor is it designated to be, terminated,
satisfied, canceled, subordinated or rescinded in whole or in part; nor has
the Financed Vehicle been released, or designated for release, from the
security interest granted by the Contract; and all of the holder's
obligations under the Contract have been performed except those which arise
subsequent to the delivery to the Deal Agent.
(p) No provision of the Contract has been waived, extended, altered or
modified in any respect except in accordance with the Credit and Collection
Policies.
(q) The day of the month that Scheduled Payments are due has not been
changed from the original Schedule of Payments except for no more than one
change which did not change the due date in a manner such that there was
more than a thirty (30) day period for which no Scheduled Payment was due.
(r) No claims of rescission, setoff, counterclaim, defense or other
material disputes have been asserted with respect to the Contract or
Financed Vehicle.
(s) There are no unsatisfied liens or claims for taxes, labor,
materials, fines, confiscation, or replevin relating to the Contract or
Financed Vehicle. There is no unsatisfied claim against the Obligor based
on the operation or use of the Financed Vehicle. All taxes due for the
purchase, use and ownership of the Financed Vehicle have been paid. All
taxes due on the transfer of the Contract to CWC have been paid.
(t) The Contract requires Required Obligor Insurance and the Servicer
is a loss payee or insured under the Required Obligor Insurance.
(u) The Company has not repossessed the Vehicle or commenced a
replevin action or other lawsuit against the Obligor or Financed Vehicle.
(v) The model year of the Financed Vehicle is in accordance with the
Credit and Collection Policies at the time the Contract is delivered to the
Custodian.
(w) The obligation of the original Obligor has not been released or
assumed by another Person unless the release or assumption was properly
documented and the Deal Agent consents in writing to it for purposes of the
Contract being an Eligible Contract.
(x) The Obligor Documents exist and have been delivered to or at the
direction of CWC in accordance with Section 2.03.
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(y) As of the date of the initial transfer hereunder, with respect to
such Eligible Receivable, there are not more than two Scheduled Payments
(or any part thereof) due and unpaid, provided, that if the Obligors have
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paid more than 90% of the most overdue Scheduled Payments such Scheduled
Payment shall be deemed paid for purposes hereof.
(z) The cash down payment has been paid in full by the Obligor in
accordance with the Credit and Collection Policies.
(aa) The Contract was purchased by an Eligible Originator from a Vehicle
Dealer in the ordinary course of the Vehicle Dealer's business (or, with
reference to Samco only, from a finance company in the ordinary course of the
finance company's business) within 60 days after the Contract Date.
(bb) The first or second Scheduled Payment (or both) remain(s) unpaid
more than thirty (30) days after its/their scheduled due date(s).
(cc) The Amount Financed does not exceed one hundred fifty percent
(150%) of the net cost, or value, if applicable, shown on the Vehicle
Dealer Invoice.
(dd) The Amount Financed on the Contract Date does not exceed $29,000
and the Vehicle has no more than 85,000 miles on its odometer on the
Contract Date.
(ee) Not more than one hundred eighty (180) days has elapsed since the
date the Contract was sold or contributed to CWC hereunder.
(ff) On or before the date which is 120 days after the Contract Date,
the original Certificate of Title or equivalent title documents issued by
the relevant state motor vehicle authority, if applicable, shall be
delivered to or at the direction of CWC in accordance with Section 2.03.
"Funding Agreement" means the Receivables Funding and Servicing Agreement,
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dated as of the date of this Agreement among CWC, VFCC, as Lender, the Company,
as Servicer, the Investors named therein, the Deal Agent and Liquidity Agent.
"Indemnified Amounts" has the meaning specified in Section 5.01.
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"Indemnified Party" has the meaning specified in Section 5.01.
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"Multiemployer Plan" means a multiemployer plan (within the meaning of
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Section 4001(a)(3) of ERISA) in respect of which a Commonly Controlled Entity
makes contributions or has liability.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
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agency, corporation or instrumentality of the United States to which the duties
and powers of the Pension Benefit Guaranty Corporation are transferred.
"Plan" means any Pension Plan (other than a Multiemployer Plan) covered by
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Title IV of ERISA, which is maintained by a Commonly Controlled Entity or in
respect of which a Commonly Controlled Entity has liability.
"Proceeds" means, with respect to any Receivable, whatever is receivable or
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received when such Receivable is sold, collected, exchanged or otherwise
disposed of, whether such disposition is voluntary or involuntary, and includes
all rights to payment, including returned premiums, with respect to any
insurance relating to such Receivable but excluding the Sale Price and the
Advances.
"Rejected Amount" means, with respect to CWC, the amount of the capital
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contribution which the Company is required to make to CWC (as determined by the
Deal Agent) as a result of breaches of
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representations and warranties with respect to Receivables sold or contributed
to CWC by the Company pursuant to this Agreement.
"Reportable Event" means any of the events set forth in Section 4043(b) of
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ERISA or the regulations thereunder.
"Requested Amount" means the amount which the Company wishes to receive
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from the sale of Receivables on any Sale Date.
"Request Notice" means a notice in the form of a computer print-out, tape
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or other form acceptable to CWC and the Deal Agent, which (a) contains a List of
Contracts identifying all Receivables to be sold or contributed on the
succeeding Sale Date by the Company to CWC, (b) sets forth the amount of
payments received on each Transferred Receivable since the prior Sale Date and
(c) sets forth the Requested Amount for the following Sale Date.
"Request Notice Date" has the meaning set forth in Section 2.01(b).
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"Sale" means any transfer, on any Sale Date, of Receivables from the
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Company to CWC pursuant to this Agreement.
"Sale Date" has the meaning specified in Section 2.01(b).
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"Sale Price" means with respect to the Eligible Receivables to be sold by
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the Company to CWC on any day, price paid to the Vehicle Dealer with respect to
such Eligible Receivable, plus accrued interest at the Annual Percentage Rate.
"Sold Receivable" has the meaning specified in Section 2.01(b).
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"Transferred Receivable" means any Receivable that is a Contributed
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Receivable or a Sold Receivable.
"Underfunded Plan" means any Plan that has an Underfunding.
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"Underfunding" means, with respect to any Plan, the excess, if any, of (a)
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the present value of all benefits under the Plan (based on the assumptions used
to fund the Plan pursuant to Section 412 of the Code) as of the most recent
valuation date over (b) the fair market value of the assets of such Plan as of
such valuation date.
SECTION 1.02. Other Terms and Interpretation. All accounting terms not
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specifically defined herein shall be construed in accordance with GAAP. All
terms used in Article 9 of the UCC of the State of New York, and not
specifically defined herein, are used herein as defined in such Article 9. All
hourly references herein shall refer to New York City time. Except as otherwise
indicated, all agreements defined in this Agreement refer to the same as from
time to time amended or supplemented or as the terms of such agreements are
waived or modified in accordance with their terms.
ARTICLE II
TRANSFERS OF RECEIVABLES
SECTION 2.01. Agreement to Transfer. (a) On the terms and conditions of
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this Agreement until the Commitment Termination Date, on and after the date of
this Agreement, the Company agrees to make available for sale or, at its option,
to contribute to CWC Eligible Receivables in accordance with the Allocation
Formula originated by the Eligible Originators and deliver the appropriate
Obligor Delivery Documents to or at the direction of CWC. To the extent CWC has
or is able to obtain sufficient funds for the purchase thereof, CWC agrees to
purchase such Eligible Receivables offered for sale by Parent. On or before the
Effective Date, the
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Company and CWC shall enter into a Certificate of Assignment substantially in
the form of Exhibit 1 hereto ("Assignment").
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(b) The Company shall, on the Effective Date and on a date occurring
no less frequently than weekly thereafter (each a "Request Notice Date"),
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deliver to CWC and the Custodian a Request Notice identifying (i) all
outstanding Receivables originated and owned by the Company through such
date, (ii) at its option, a certain number of such Eligible Receivables as
contributed to CWC (the "Contributed Receivables"), and (iii) to the extent
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CWC has available funds to pay the Sale Price thereof, as purchased and
sold all other Eligible Receivables not previously identified as purchased
and sold or contributed (the "Sold Receivables"), in each case in
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accordance with the procedures described in this Section 2.01(b). No later
than the following Business Day (the "Sale Date"), CWC and the Company
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shall identify Eligible Receivables designated in such Request Notice
arising since the last Sale Date which are to be purchased and sold on such
Sale Date. Each such identification shall be made as of the opening of
business of the Servicer on each Sale Date.
(c) The price paid for such Sold Receivables shall be the Sale Price.
Such Sale Price shall be paid by means of an immediate cash payment to the
Company. On each Sale Date the Sold Receivables and Contributed
Receivables shall be assigned, and on such Sale Date CWC shall pay the Sale
Price for such Sold Receivables. The portion of the Sale Price which is
immediately payable in cash shall be payable by wire transfer on the Sale
Date to an account designated by the Company (and approved by the Deal
Agent) on or before the Sale Date.
(d) On and after each Sale Date hereunder, CWC shall own the Sold
Receivables and the Contributed Receivables which have been (assuming
compliance with the terms hereof) identified as being transferred to CWC
under this Section 2.01 and the Company shall not take any action
inconsistent with such ownership and shall not claim any ownership interest
in any such Transferred Receivable.
(e) Until the occurrence of an Event of Servicer Termination or a
resignation pursuant to the Funding Agreement, the Company, as Servicer,
shall conduct the servicing, administration and collection of such
Transferred Receivables and shall take, or cause to be taken, all such
actions as may be necessary or advisable to service, administer and collect
such Transferred Receivable, from time to time, all in accordance with (i)
the terms of the Funding Agreement, (ii) customary and prudent servicing
procedures for trade receivables of a similar type and (iii) all applicable
laws, rules and regulations. Documents relating to Transferred Receivables
shall be held in trust by the Company, as Servicer, for the benefit of CWC
and its assignees as the owners thereof, and possession of any incident
relating to the Transferred Receivables and Contracts so retained is for
the sole purpose of facilitating the servicing of the Transferred
Receivables. Such retention and possession thereof is at the will of CWC
and its assignees and in a custodial capacity for their benefit only.
SECTION 2.02. Grant of Security Interest. It is the intention of the
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parties hereto that each transfer of Transferred Receivables to be made
hereunder shall constitute a purchase and sale or capital contribution and not a
loan. In the event, however, that a court of competent jurisdiction is to hold
that any transaction provided for hereby constitutes a loan and not a purchase
and sale or capital contribution, it is the intention of the parties hereto that
this Agreement shall constitute a security agreement under applicable law and
that the Company shall be deemed to have granted, and the Company does hereby
grant, to CWC a first priority security interest in all of the Company's right,
title and interest in, to and under the Transferred Receivables, all payments of
principal, interest, fees, charges and indemnities on or under such Transferred
Receivables and all Proceeds of any such Transferred Receivables.
SECTION 2.03. Delivery of Obligor Documents. (a) On or before each Sale
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Date, the Company shall deliver to or at the direction of CWC the Obligor
Delivery Documents relating to the Transferred Receivables on such Sale Date.
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(b) On or before the date which is 120 days after the Contract Date,
the Company shall deliver to or at the direction of CWC the original
Certificate of Title or equivalent title documents issued by the relevant
state motor vehicle authority, if applicable.
SECTION 2.04. Company to Facilitate Dispositions of Transferred
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Receivables. In consideration of the Sale Price and other consideration
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received hereunder, in the case of the Sold Receivables, and as an additional
capital contribution, in the case of the Contributed Receivables, the Company
hereby agrees and covenants that in connection with each Disposition it shall:
(i) make such representations and warranties concerning the
Transferred Receivables as of the "cutoff date" of the related Disposition
to such Disposition Participants as may be necessary to effect the
Disposition; provided, that the Company shall not be required to make any
representations or warranties that would increase the scope or substance of
such representations and warranties beyond the substance of those
delineated on Exhibit 2 hereto;
(ii) negotiate in good faith with CWC and other Disposition
Participants to provide such additional representations and warranties
concerning the Transferred Receivables that may be required in the future
by Disposition Participants; provided, however, that the Company shall not
be required to make such representations and warranties concerning the
Transferred Receivables that would materially increase, from the date of
the Company's original transfer to CWC , the probability that it would be
required to repurchase such Transferred Receivables under the related
Disposition;
(iii) supply such information, opinions of counsel, letters from law
and/or accounting firms and other documentation and certificates regarding
the origination and servicing of the Transferred Receivables as CWC or any
Disposition Participant shall reasonably request to effect a Disposition;
(iv) make itself available for and engage in good faith consultation
with CWC and Disposition Participants concerning information to be
contained in any document, agreement, private placement memorandum, or
filing with the Securities and Exchange Commission relating to the Company
or the Transferred Receivables in connection with a Disposition and shall
use reasonable efforts to compile any information and prepare any reports
and certificates, into a form, whether written or electronic, suitable for
inclusion in such documentation;
(v) to implement the foregoing and to otherwise effect a
Disposition, enter into insurance and indemnity servicing agreements,
purchase agreements and any other documentation, all to the extent that the
same are reasonably required of or deemed appropriate by CWC or a
Disposition Participant in order to effect a Disposition; and
(vi) take such further actions as may be reasonably necessary to
effect the foregoing, including without limitation, delivery of additional
Obligor Documents to the Custodian for inclusion with the other Obligor
Delivery Documents.
provided, that notwithstanding anything in this Agreement to the contrary,
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(a) the Company shall have no liability for the Transferred Receivables arising
from or relating to the ongoing ability or willingness of Obligors to pay under
the Transferred Receivables; (b) none of the indemnities hereunder shall
constitute an unconditional guarantee by the Company of collectibility of the
Transferred Receivables; (c) the Company shall have no obligation with respect
to the inability or unwillingness of an Obligor to pay principal, interest or
other amount owing by such Obligor under the Transferred Receivables and (d) the
Company shall only be required to enter into documentation in connection with
Dispositions that is consistent with industry practice with respect to
Dispositions among similarly situated parties.
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SECTION 2.05. Cooperation of CWC. CWC hereby agrees to make such
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representations and warranties concerning the Transferred Receivables to the
Company as the Company may reasonably request in order for it to fulfill its
obligations under Section 2.04.
ARTICLE III
CONDITIONS OF SALE
SECTION 3.01. Conditions Precedent to the Initial Sale. The initial Sale
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hereunder is subject to the following conditions precedent:
(a) that CWC shall have received on or before the date of the initial
Sale under this Agreement, each dated such date (unless otherwise
indicated), in form and substance satisfactory to CWC and the Deal Agent:
(i) an Assignment executed by the Company;
(ii) each of the documents delivered by the Company pursuant to
Section 3.01(d) of the Funding Agreement;
(iii) a certificate of the Secretary or Assistant Secretary of
the Company certifying the names and true signatures of the officers
authorized on its behalf to sign this Agreement, the Assignment, and the
other documents to be delivered by it hereunder (on which certificate CWC
may conclusively rely until such time as CWC shall receive from the Company
a revised certificate meeting the requirements of this Subsection (iii))
and certifying that (A) the charter of the Company has not changed since
the date of the delivery of the last certified charter delivered, (B) that
the Company is qualified as a foreign corporation in all such jurisdictions
and still in good standing in all jurisdictions in which the nature of its
business required it to be qualified, (C) all representations and
warranties made by the Company in this Agreement are true and correct in
every particular and (D) no financing statements or other similar
instruments and documents relating to the Receivables have been filed in
any jurisdiction, other than those financing statements, other similar
instruments and documents shown on the certified copies of the requests for
information or copies (Form UCC-11)(or a similar search report certified by
a party acceptable to the Deal Agent) provided pursuant to clause (vi);
(iv) copies of proper financing statements (Form UCC-1), dated
on or prior to the date of the initial Sale, naming the Company as the
assignor of the Transferred Receivables and CWC as assignee, or other
similar instruments or documents, in form and substance sufficient for
filing under the UCC or any comparable law of any and all jurisdictions as
may be necessary or, in the opinion of the Deal Agent desirable to perfect
CWC's ownership interest in all Transferred Receivables, in each case in
which an interest may be assigned hereunder;
(v) copies of properly executed termination statements or
statements of release (Form UCC-3) or other similar instruments or
documents, if any, in form and substance satisfactory for filing under the
UCC or any comparable law of any and all jurisdictions as may be necessary
or, in the opinion of the Deal Agent, desirable to release all security
interests and similar rights of any Person in the Transferred Receivables
previously granted by the Company;
(vi) certified copies of requests for information or copies (or
a similar search report certified by a party acceptable to the Deal Agent),
dated a date reasonably near and prior to the date of the initial Sale,
listing all effective financing statements and other similar instruments
and documents including those referred to above in subsections (iv) and (v)
which name the Company (under its present name and any previous name) as
debtor and which are filed in the jurisdictions in which filings are to be
made pursuant to such Subsections (iv) and (v) above, together with copies
of such financing statements, none of which, except those filed pursuant to
Subsections (iv) and (v),
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above, together with copies of such financing statements, none of which,
except those filed pursuant to Subsections (iv) and (v), above, shall cover
any Transferred Receivables; and
(vii) Any necessary third party consents to the closing of the
transactions contemplated hereby, in the form and substance satisfactory to the
Deal Agent.
SECTION 3.02. Conditions Precedent to All Sales. The obligation of CWC to
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pay for each Sold Receivable on each Sale Date (including the initial Sale Date)
shall be subject to the further conditions precedent (any one of which can be
waived by CWC) that on such Sale Date:
I. The following statements shall be true (and delivery by the
Company of a Request Notice and the acceptance by the Company of the Sale
Price for any Receivables on any Sale Date shall constitute a
representation and warranty by the Company that on such Sale Date such
statements are true):
A. the representations and warranties of the Company contained
in Section 4.01 shall be correct on and as of such Sale Date in all
material respects (except with respect to Section 4.01(b) and those
already so qualified which are true and correct in all respects),
before and after giving effect to such Sale and to the application of
proceeds therefrom, as though made on and as of such date; and
B. no event has occurred, or would result from such Sale or
from the application of the proceeds therefrom, which constitutes a
Termination Event or would constitute a Termination Event but for the
requirement that notice be given or time elapse or both;
C. the Company is in compliance with each of its covenants and
other agreements set forth herein;
D. no event has occurred which constitutes an Event of Servicer
Termination or would constitute an Event of Servicer Termination but
for the requirement that notice be given or time elapse or both;
E. each Transferred Receivable designated as an Eligible
Receivable is an Eligible Receivable; and
F. the Company shall have executed an Assignment of Insurance
Interests substantially in the form attached hereto as Exhibit 3;
II. The Commitment Termination Date shall not have occurred;
III. CWC shall have received an Assignment, dated the related Sale
Date, executed by the Company; and
IV. The Company shall have taken such other action, including
delivery of approvals, consents, opinions, documents and instruments to VFCC and
the Deal Agent, as the Deal Agent may reasonably request; and
V. There shall have been no material adverse change in the
condition (financial or otherwise), business, operations, results of operations
or properties of the Company since the preceding Sale.
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ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 4.01. Representations and Warranties of the Company. The Company
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represents and warrants to CWC as of each Sale Date, which representations and
warranties are or will be true and correct as of such Sale Date, that:
I. With respect to the Company:
A. the Company is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and is duly qualified to do business and is in good
standing in every jurisdiction in which the nature of its business
requires it to be so qualified;
B. the Company has the power and authority to own, pledge,
mortgage, operate and convey all of its properties and assets, to
execute and deliver the Basic Documents and to perform the
transactions contemplated hereby and thereby;
C. the Company is operated in such a manner that CWC would not
be substantively consolidated in the estate of the Company (that is,
such that the separate corporate existence of CWC and the Company
would be disregarded), in the event of a bankruptcy or insolvency of
the Company and in such regard:
(1) CWC is a limited purpose corporation whose activities
are restricted in its respective certificate of incorporation;
(2) except as otherwise contemplated herein or in the other
Basic Documents, neither the Company or any Affiliate of the
Company is involved in the day-to-day management of CWC;
(3) other than the purchase and contribution of
Receivables, other transactions contemplated by this Agreement
and the Funding Agreement, the payment of dividends and the
return of capital, any lease or sub-lease of office space or
equipment, any common officers or other employees, and the
payment of Servicing Fees (as defined in the Funding Agreement)
to the Servicer under the Funding Agreement, CWC does not engage
in any intercorporate transactions with the Company or any
Affiliate of the Company;
(4) CWC maintains separate corporate records and books of
account from the Company, holds regular corporate meetings and
otherwise observes corporate formalities and has a separate
business office from the Company;
(5) all the financial statements and books and records of
CWC and the Company reflect the respective separate corporate
existence of CWC;
(6) CWC maintains its assets separately from the assets of
the Company and any other Affiliate of the Company (including
through the maintenance of separate bank accounts), CWC's funds
and assets, and records relating thereto, have not been, are not
and will not be commingled with those of the Company or any other
Affiliate of the Company and the separate creditors of CWC will
be entitled to be satisfied out of CWC's assets prior to any
value in CWC becoming available to CWC's equity holders;
-10-
(7) neither the Company nor any Affiliate of the Company
(A) pays CWC's expenses; (B) guarantees CWC's obligations, or (C)
advances funds to CWC for the payment of expenses or otherwise;
(8) all business correspondence of CWC and other
communications are conducted in CWC's own name, on its own
stationery and through a separately-listed telephone number;
(9) CWC does not act as agent for the Company or of any of
its Affiliates, but instead presents itself to the public as a
corporation separate from the Company and its Affiliates,
independently engaged in the business of purchasing and financing
Receivables;
(10) CWC maintains a board of directors consisting of at
least three directors, of which one such director is independent
and at all times shall not be a shareholder, director, officer,
employee or associate of the Company or any Affiliate of the
Company (other than as a director of CWC and one or more other
limited purpose subsidiaries of the Company) as provided in its
certificate or articles of incorporation;
(11) CWC is solvent and will not be rendered insolvent by
the transactions contemplated by any of this Agreement or the
other Basic Documents and, after giving effect to such
transactions, CWC will not be left with an unreasonably small
amount of capital with which to engage in its business nor will
CWC have intended to incur, or believe that it has incurred,
debts beyond its ability to pay such debts as they mature;
(12) the Company is the owner of 100% of the voting stock of
CWC;
D. the execution, delivery and performance by the Company of
this Agreement and the other Basic Documents and the transactions
contemplated hereby and thereby (A) have been duly authorized by all
necessary corporate or other action on the part of the Company, (B) do not
contravene or cause the Company to be in default under (1) the Company's
certificate or articles of incorporation or by-laws, (2) any contractual
restriction with respect to any Debt of the Company or contained in any
indenture, loan or credit agreement, lease, mortgage, security agreement,
bond, note, or other agreement or instrument binding on or affecting the
Company, its affiliates or their or its respective property or (3) any law,
rule, regulation, order, writ, judgment, award, injunction or decree
applicable to, binding on or affecting the Company, or its property and (C)
do not result in or require the creation of any Adverse Claim upon or with
respect to any of its properties (other than in favor of CWC with respect
to this Agreement and VFCC and the Collateral Agent under the Funding
Agreement);
E. this Agreement and the other Basic Documents have each been
duly executed and delivered by the Company;
F. no approval or consent of, notice to, filing with or
licenses, permits, qualifications or other action by any Governmental
Authority or any other party, is required or necessary for the conduct of
the Company's business as currently conducted and for the due execution,
delivery and performance by the Company of this Agreement or any of the
other Basic Documents or for the perfection of or the exercise by CWC,
VFCC, the Deal Agent or the Collateral Agent of any of their rights or
remedies thereunder or hereunder, other than approvals, consents, notices,
filings and other actions which have been obtained or made and complete
copies of which have been provided to VFCC, the Deal Agent and the
Collateral Agent;
-11-
G. each of this Agreement, each other Basic Document delivered
by the Company and the respective obligations of the Company thereunder is
the legal, valid and binding obligation of the Company enforceable against
the Company in accordance with its respective terms subject to (i) any
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to or affecting the
enforceability of creditors' rights generally and (ii) general equitable
principles, whether applied in a proceeding at law or in equity;
H. there is no pending or threatened, nor any reasonable basis
for any, action, suit or proceeding against or affecting the Company, its
officers or directors, or the property of the Company, in any court or
tribunal, or before any arbitrator of any kind or before or by any
Governmental Authority (A) asserting the invalidity of this Agreement or
any of the other Basic Documents, (B) seeking to prevent the sale,
transfer, pledge or contribution of any Receivable or the consummation of
any of the transactions contemplated hereby or thereby, (C) seeking any
determination or ruling that might materially and adversely affect (1) the
performance by CWC or the Company of its obligations under this Agreement
or any of the other Basic Documents, (2) the validity or enforceability of
this Agreement or any of the other Basic Documents, (3) the Transferred
Receivables or the Contracts or the interests of CWC or VFCC therein, or
(4) the federal income tax attributes of the contribution, sale or pledge
of the Transferred Receivables or (D) asserting a claim for payment of
money in excess of $500,000 (other than such judgments or orders in respect
of which adequate insurance is maintained by the Company for the payment
thereof);
I. no injunction, writ, restraining order or other order of any
nature adverse to the Company or the conduct of its business or which is
inconsistent with the due consummation of the transactions contemplated by this
Agreement or the other Basic Documents has been issued by a Governmental
Authority nor been sought by any Person;
J. the principal place of business and chief executive office of the
Company are located at the address of the Company referred to on the signature
page of this Agreement and there are now no, and during the past four months
there have not been any, other locations where the Company is located (as that
term is used in the UCC of the jurisdiction where such principal place of
business is located) or keeps Records;
K. the legal name of the Company is as set forth at the beginning of
this Agreement and the Company has not changed its name in the last six years,
and during such period the Company did not use, nor does the Parent now use, any
tradenames, fictitious names, assumed names or "doing business as" names.
L. the Company is solvent and will not become insolvent after giving
effect to the transactions contemplated by this Agreement and the other Basic
Documents; the Company is paying its Debts as they mature; the Company has not
incurred Debts beyond its ability to pay as they mature; and the Company, after
giving effect to the transactions contemplated by this Agreement and the other
Basic Documents, will have an adequate amount of capital to conduct its business
in the foreseeable future;
M. for federal income tax, reporting and accounting purposes, the
Company will treat (A) the sale of each Sold Receivable sold or assigned
pursuant to this Agreement as a sale of, or absolute assignment of, its full
right, title and ownership interest in such Receivable to CWC and (B) the
contribution of each Contributed Receivable contributed pursuant to this
Agreement as an absolute conveyance and assignment of its full right, title and
interest in such Receivable to CWC (and those Receivables contributed to CWC by
the Company pursuant to this Agreement shall be accounted for as an increase in
the stated capital of CWC), and the
-12-
Company has not in any other respect accounted for or treated the transfers of
Transferred Receivables contemplated by this Agreement or the other Basic
Documents;
N. the Company has complied in all material respects with all applicable
laws, rules, regulations, and orders with respect to it, its business and
properties and all Transferred Receivables and related Contracts (including
without limitation, all applicable environmental, health and safety
requirements) and all restrictions contained in any indenture, loan or credit
agreement, mortgage, security agreement, bond, note or other agreement or
instrument binding on or affecting the Company or its property, and has and
maintains all permits, licenses, authorizations, registrations, approvals and
consents of Governmental Authorities for (A) the activities and business of the
Company and each of its Subsidiaries as currently conducted and as proposed to
be conducted, (B) the ownership, use, operation and maintenance by each of them
of its properties, facilities and assets and (C) the performance by the Company
and CWC of this Agreement and the other Basic Documents (hereinafter referred to
collectively as "Governmental Consents"), with respect to which any
---------------------
noncompliance or failure to maintain such items would, separately or in the
aggregate, have a material adverse effect;
O. no practice, procedure or policy employed or proposed to be employed
by the Company in the conduct of its business violates any law, regulation,
judgment, agreement, order or decree applicable to the Company which, if
enforced, would have a material adverse effect on (1) the performance by CWC or
the Company of its obligations under this Agreement or any of the other Basic
Documents, (2) the validity or enforceability of this Agreement or any of the
other Basic Documents, (3) the Transferred Receivables or the Contracts or the
interests of CWC or VFCC therein, or (4) the federal income tax attributes of
the contribution, sale or pledge of the Transferred Receivables;
P. without limiting the generality of the prior representation, no
condition exists or event has occurred which, in itself or with the giving of
notice or lapse of time or both, would result in the suspension, revocation,
impairment, forfeiture or non-renewal of any Governmental Consent applicable to
the Company or any Subsidiary except where such conditions or events would not,
separately or in the aggregate, have a material adverse effect on (1) the
performance by CWC or the Company of its obligations under this Agreement or any
of the other Basic Documents, (2) the validity or enforceability of this
Agreement or any of the other Basic Documents, (3) the Transferred Receivables
or the Contracts or the interests of CWC or VFCC therein, or (4) the federal
income tax attributes of the contribution, sale or pledge of the Transferred
Receivables;
Q. the Company has filed on a timely basis all tax returns (federal,
state and local) required to be filed and has paid or made adequate provisions
for the payment of all taxes, fees, assessments and other governmental charges
due from the Company, no tax lien or similar Adverse Claim has been filed, and
no claim is being asserted, with respect to any such tax, fee, assessment, or
other governmental charge. Any taxes, fees, assessments and other governmental
charges payable by the Company in connection with the execution and delivery of
this Agreement and the other Basic Documents and the transactions contemplated
hereby or thereby have been paid or shall have been paid when due, at or prior
to such Sale Date;
R. with respect to the Company or any of its Subsidiaries, there has
occurred no event which has or is reasonably likely to have a material adverse
effect on the Company's operations, including its ability to perform its
obligations under this Agreement or the other Basic Documents, as Company,
Servicer or otherwise;
S. the Company is licensed or otherwise has the lawful right to use all
patents, trademarks, servicemarks, tradenames, copyrights, technology, know-how
and processes used in
-13-
or necessary for the conduct of its business as currently conducted which
are material to its financial condition, business, operations and assets,
individually or taken as a whole;
T. (A) the consolidated balance sheets of the Company and its
consolidated Subsidiaries for each of the last three fiscal years prior to
the Balance Sheet Date are delivered prior to such Sale Date, and the
related statements of income and shareholders' equity of the Company and
its consolidated Subsidiaries for such fiscal years, certified without
qualification by the Company's independent certified public accountants,
copies of which have been furnished to VFCC and the Deal Agent, are
complete and correct and fairly present the consolidated financial
condition, business, operations, results of operations and assets of the
Company and its consolidated Subsidiaries as of the last day of such fiscal
years and the consolidated results of the operations of the Company and its
consolidated Subsidiaries for the periods ended on such dates, all in
accordance with GAAP, (B) the unaudited consolidated balance sheets and the
related statements of income and shareholders' equity of the Company and
its consolidated Subsidiaries for each fiscal quarter in the period since
the most recent consolidated balance sheet and related statement of income
and shareholders' equity referred to in clause (A) above and ended at least
45 days prior to such Sale Date, copies of which have been furnished to
VFCC and the Deal Agent, are complete and correct and fairly present the
consolidated financial condition, business and operations of the Company
and its consolidated Subsidiaries as of the last day of such fiscal
quarters and the consolidated results of the operations of the Company and
its consolidated Subsidiaries for the periods ended on such dates, all in
accordance with GAAP, and (C) since the last date for which a balance sheet
of the Company and its consolidated Subsidiaries has been delivered to VFCC
and the Deal Agent, there has, except as already disclosed in writing to
the Deal Agent, been no material adverse change in any such condition,
business, operations or results of operations;
U. each Request Notice contains a complete and accurate list of all
Transferred Receivables contributed or sold by the Company to CWC as of its
date; V. no Obligor of an Eligible Receivable being sold on the related
Sale Date has any claim of a material nature against or affecting the
Company or the property of the Parent;
V. no Obligator of an Eligible Receivable being sold on the related
Sale Date has any claim of a material nature against or affecting the
Company or the property of the Parent;
W. the Company is in compliance with ERISA and has not incurred and
does not expect to incur any liabilities (except for premium payments
arising in the ordinary course of business) to the PBGC under ERISA;
X. each pension plan or profit sharing plan to which the Company or
any Affiliate is a party has been administered and fully funded in
accordance with the obligations of the Company under law and as set forth
in such plan, and the Company has complied with the applicable provisions
of ERISA in effect as of such Sale Date ;
Y. the Company has valid business reasons for selling or contributing
its interests in the Transferred Receivables rather than obtaining a loan
with the Transferred Receivables as collateral;
Z. the Company has not agreed to pay any fee or commission to any
agent, broker, finder or other person for or on account of services
rendered as a broker or finder in connection with this Agreement or the
other Basic Documents or the transactions contemplated hereby or thereby
which would give rise to any valid claim against CWC for any brokerage
commission or finder's fee or like payment;
AA. all information heretofore or hereafter furnished with respect to
the Company to CWC, VFCC, Deal Agent or Collateral Agent in connection with
any transaction contemplated by this Agreement or the other Basic Documents
is and will be true and complete
-14-
in all material respects and does not and will not omit to state a material
fact necessary to make the statements contained herein or therein not
misleading. With respect to the Company or CWC, there has occurred no event
which has or is reasonably likely to have a material adverse effect on such
entity;
BB. no part of the proceeds received by the Company or any Affiliate
from the Sale Price will be used directly or indirectly for the purpose of
purchasing or carrying, or for payment in full or in part of, Debt that was
incurred for the purposes of purchasing or carrying any "margin stock," as
such term is defined in (S) 221.3 of Regulation U of the Board of Governors
of the Federal Reserve System;
CC. there are not now, nor will there be at any time in the future,
any agreement or understanding between the Company and CWC (other than as
expressly set forth herein) providing for the allocation or sharing of
obligations to make payments or otherwise in respect of any taxes, fees,
assessments or other governmental charges;
DD. no transaction contemplated by this Agreement or any of the other
Basic Documents requires compliance with any bulk sales act or similar law;
EE. the Military Assistance Command or, if applicable, each financial
institution making payments on behalf of any Allotment Obligor has been
directed, and is required, to remit all payments with respect to the
Transferred Receivable for deposit in the Lockbox Account;
FF. the Request Notice with respect to such Sale Date is accurate in
all material respects;
GG. each purchase of Receivables under the Receivables Transfer
Agreement will constitute (A) a "current transaction" within the meaning of
Section 3(a)(3) of the Securities Act of 1933, as amended, and (B) a
purchase or other acquisition of notes, drafts, acceptances, open accounts
receivable or other obligations representing part or all of the sales price
of merchandise, insurance or services within the meaning of Section 3(c)(5)
of the Investment Company Act of 1940, as amended;
HH. (A) the Company is not a party to any indenture, loan or credit
agreement or any lease or other agreement or instrument or subject to any
charter or corporation restriction that is reasonably likely to have, and
no provision of applicable law or governmental regulation is reasonably
likely to have, a material adverse effect on the condition (financial or
otherwise), business, operations, results of operations, or properties of
the Company, or could have such an effect on the ability of the Company to
carry out its obligations under this Agreement and the other Basic
Documents to which the Company is a party and (B) the Company is not in
default under or with respect to any contract, agreement, lease or other
instrument to which the Company is a party and which is material to the
Company's condition (financial or otherwise), business, operations, results
of operations or properties, and the Company has not delivered or received
any notice of default thereunder;
II. the Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940,
as amended. The purchase or acquisition of the Transferred Receivables by
CWC, the application of the proceeds and the consummation of the
transactions contemplated by this Agreement and the other Basic Documents
to which the Company is a party will not violate any provision of such Act
or any rule, regulation or order issued by the Securities and Exchange
Commission thereunder;
-15-
JJ. the bylaws or the articles of incorporation of the Company
require it to maintain (A) books and records of account, and (B) minutes of
the meetings and other proceedings of its shareholders and board of
directors; and
KK. each of the representations and warranties of the Company
contained in this Agreement and the other Basic Documents is true and
correct in all material respects and the Company hereby makes each such
representation and warranty to, and for the benefit of, the Collateral
Agent, the Deal Agent and VFCC as if the same were set forth in full
herein.
II. On each Sale Date, and as of the date of each Borrowing Base
Certificate delivered under the Funding Agreement with respect to each
Transferred Receivable:
A. such Receivable is an Eligible Receivable and is a receivable
created by the Company in the ordinary course of its business in a current
transaction;
B. such Receivable was created in accordance with and satisfies in
all material respects all applicable requirements of (A) a Contract and (B)
the Credit and Collection Policies;
C. a copy of any related Contract (if such contract exists in a
reproducible form) to such Receivable to which the Company is a party has
been delivered to the Deal Agent;
D. such Receivable represents the genuine, legal, valid and binding
obligation in writing of the Obligor enforceable by the holder thereof in
accordance with its terms, and neither such Receivable nor its related
Contract has been satisfied, subordinated, rescinded or amended in any
manner, subject to (A) any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting the enforceability of creditors' rights generally
and (B) general equitable principles, whether applied in a proceeding at
law or in equity;
E. neither such Receivable nor its related Contract is or will be
subject to any exercise of any right of rescission, set-off, recoupment,
counterclaim or defense, whether arising out of transactions concerning the
Receivable or otherwise;
F. prior to its sale or contribution to CWC such Receivable was owned
by the Company free and clear of any Adverse Claim or Restrictions on
Transferability, and the Company had the right to contribute, sell, assign
and transfer the same and interests therein as contemplated under this
Agreement and, upon such sale or contribution, CWC acquired good and
marketable title to and a valid and the sole record and beneficial
ownership interest in such Receivable, free and clear of any Adverse Claim
and any other Restriction on Transferability;
G. this Agreement and the Assignment related to such Receivable
constitute a valid sale, contribution, transfer, assignment, setover and
conveyance to CWC of all right, title and interest of the Company in and to
such Receivable;
H. such Receivable is entitled to be paid pursuant to the terms of
the related Contract, has not been paid in full or been compromised,
adjusted, extended, satisfied, subordinated, rescinded or modified, and is
not subject to compromise, adjustment, extension, satisfaction,
subordination, rescission, or modification by the Company;
I. the Company has submitted to the Obligor all necessary
documentation for payment of such Receivable and has fulfilled all its
other obligations in respect thereof;
J. any stated term of such Receivable is not greater than 60 months;
-16-
K. such Receivable is an "account" or "chattel paper" within the
meaning of the UCC of the jurisdiction where the Company's chief
executive office is located;
L. neither such Receivable nor its related Contract contravenes
in any material respect any laws, rules or regulations applicable
thereto (including, without limitation, laws, rules and regulations
relating to usury, consumer protection, truth in lending, fair credit
billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy) and no party to such related
Contract is in violation of any such law, rule or regulation in any
material respect;
M. such Receivable does not arise from a transaction for which
any additional performance by the Company or acceptance or other act
of the Obligor remains to be performed as a condition to any Scheduled
Payment on such Receivable;
N. there are no proceedings or investigations pending or
threatened before any Governmental Authority (A) asserting the
invalidity of such Receivable or such Contract, (B) asserting the
bankruptcy or insolvency of the related Obligor, (C) seeking the
payment of such Receivable or payment and performance of such Contract
or (D) seeking any determination or ruling that might materially and
adversely affect the validity or enforceability of such Receivable or
such Contract;
O. as of the applicable date of transfer hereunder, no Obligor
on such Receivable is bankrupt or insolvent, is unable to make payment
of its obligations when due, is the debtor in a voluntary or
involuntary bankruptcy proceeding, or is the subject of a comparable
receivership or insolvency proceeding, other than Obligors under the
protection of a bankruptcy court or receivership which has approved
payment by any such Obligor of such Receivable;
P. the Company has no knowledge of any fact (including any
defaults by the Obligor on any other accounts) which leads it or
should have led it to expect that any Scheduled Payment on such
Receivable will not be paid in full when due or to expect any other
material adverse effect on (1) the performance by CWC or the Company
of its obligations under this Agreement or any of the Basic Documents,
(2) the validity or enforceability of this Agreement or any of the
Basic Documents, (3) the Transferred Receivables or the Contracts or
the interests of CWC or VFCC therein, or (4) the federal income tax
attributes of the contribution, sale or pledge of the Transferred
Receivables; and
Q. there has been no material adverse change in the condition
(financial or otherwise), business, operations, results of operations
or properties of the Company since the Balance Sheet Date.
It is understood and agreed that the representations and warranties
described in this Section 4.01 shall survive the sale or contribution of the
Transferred Receivables to CWC, any subsequent assignment of the Transferred
Receivables by CWC (including its grant of a first priority perfected security
interest in, to and under the Transferred Receivables, pursuant to the Funding
Agreement, in order to secure the due payment and performance by CWC of CWC
Secured Obligations), and the termination of this Agreement and the Funding
Agreement and shall continue so long as any Transferred Receivable shall remain
outstanding.
SECTION 4.02. Covenants of the Company.
------------------------
I. Offices and Records. The Company shall keep its chief place of
-------------------
business and chief executive offices and the office where it keeps its Records
at the respective locations specified in Section 4.01(a)(x) or, upon thirty (30)
days prior written notice to CWC and the Collateral Agent, at such other
location in a jurisdiction where all action required by Section 4.02(f) shall
have been taken with respect to the Transferred Receivables. The Company shall,
for not less than three years or for such longer period as may be required by
law, from the
-17-
date on which any Transferred Receivable arose, maintain the Records with
respect to each Transferred Receivable, including records of all payments
received, credits granted and merchandise returned. The Company will permit
representatives of CWC, the Servicer, the Deal Agent or the Collateral Agent at
any time and from time to time during normal business hours, and at such times
outside of normal business hours as CWC, the Servicer, the Deal Agent or the
Collateral Agent shall reasonably request, (i) to inspect and make copies of and
abstracts from such records, and (ii) to visit the properties of the Company
utilized in connection with the collection, processing or servicing of the
Transferred Receivables for the purpose of examining such Records, and to
discuss matters relating to the Transferred Receivables or the Company's
performance under this Agreement or the affairs, finances and accounts of the
Company with any of its officers, directors, employees, representatives or
agents and with its independent certified accountants and advise such
accountants that CWC, the Deal Agent, the Servicer and the Collateral Agent have
been authorized to review and discuss with such accountants any and all
financial statements and other information of any kind that they may have with
respect to the Company and direct such accountants to comply with any request of
CWC, the Deal Agent, the Servicer or the Collateral Agent for such information
with any officer or employee of the Company having knowledge of such matters. In
connection therewith, CWC, the Deal Agent or the Collateral Agent may institute
procedures to permit it to confirm the Obligor outstanding balances in respect
of any Transferred Receivables. The Company agrees to render to CWC, the Deal
Agent and the Collateral Agent, at the Company's own cost and expense, such
clerical and other assistance as may be reasonably requested with regard to the
foregoing. If a Termination Event under the Funding Agreement shall have
occurred and be continuing, promptly upon request therefor, the Company shall
assist CWC in delivering to the Deal Agent records reflecting activity through
the close of business on the immediately preceding Business Day.
II. Collection of Transferred Receivables. The Company will deposit or
-------------------------------------
cause to be deposited in the Collection Account all cash, checks, money orders,
wire transfers or moneygrams or other Proceeds of Collateral received in respect
of Transferred Receivables within two Business Days of the receipt thereof.
Until so deposited, all such Proceeds shall be held in trust for the Collateral
Agent by the Company.
III. Maintain Records of Transferred Receivables. The Company as Servicer
-------------------------------------------
shall, at its own cost and expense, maintain satisfactory and complete records
of the Transferred Receivables, including a record of all payments received and
all credits granted with respect to the Transferred Receivables and all other
dealings with the Transferred Receivables. The Company as Servicer will mark
conspicuously with a legend, in form and substance satisfactory to the Deal
Agent, its records, computer tapes, computer disks and credit files pertaining
to the Transferred Receivables, and its file cabinets or other storage
facilities where it maintains information pertaining to the Transferred
Receivables, to evidence this Agreement, the transfers hereunder and that
ownership of each Transferred Receivable is held by CWC or its assignee. Upon
the occurrence and during the continuation of a Termination Event, the Company
as Servicer shall (i) provide to the Deal Agent or its representatives with
access to, at any time on demand of the Deal Agent, all of the Company's
facilities, personnel, books and records pertaining to the Transferred
Receivables, including all Records, and (ii) allow the Deal Agent to occupy the
premises of the Company where such books and Records are maintained, and utilize
such premises, the equipment thereon and any personnel of the Company that
either such party may wish to employ to administer, service and collect the
Transferred Receivables.
IV. Compliance With Credit and Collection Policies. The Company shall
----------------------------------------------
comply in all material respects with the Credit and Collection Policies with
regard to each Transferred Receivable and the related Contracts, and with the
terms of such Receivables and Contracts.
V. Notice of Adverse Claim. The Company shall advise CWC, the Deal
-----------------------
Agent and the Collateral Agent promptly, in reasonable detail, (i) of any
Adverse Claim known to it made or asserted against any of the Transferred
Receivables, (ii) of any determination that a Sold Receivable, or any other
Receivable designated as an Eligible Receivable in a Request Notice or
otherwise, was not an Eligible Receivable at such time and (iii) of the
occurrence of any event which would have a material adverse effect on the
aggregate value of the Transferred Receivables or on the validity of the
transfers in this Agreement.
-18-
VI. Further Assurances; Financing Statements. (i) The Company agrees
----------------------------------------
that at any time and from time to time, at its expense, it shall promptly
execute and deliver all further instruments and documents, and take all further
action, that may be necessary or desirable or that CWC, the Deal Agent or the
Collateral Agent may reasonably request to perfect, preserve, continue and
maintain fully and protect the transfers made and the right, title and interests
(including any security interests) granted to CWC by this Agreement or to enable
CWC, the Deal Agent or the Collateral Agent to exercise and enforce its rights
and remedies under this Agreement or any of the Basic Documents with respect to
any Transferred Receivables. Without limiting the generality of the foregoing,
the Company shall execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices as may be necessary or
desirable or that CWC, the Deal Agent or the Collateral Agent may request to
protect and preserve and perfect the transfers and security interests granted by
this Agreement, free and clear of all Adverse Claims and Restrictions on
Transferability. In addition, the Company and the Deal Agent agree to cooperate
with S&P and Moody's in connection with any review of the transactions
contemplated hereby or by the Basic Documents which may be undertaken by S&P and
Moody's after the date hereof.
(ii) The Company hereby authorizes CWC and the Collateral Agent to
file one or more financing or continuation statements, and amendments thereto,
relating to all or any part of the Transferred Receivables without the signature
of the Company where permitted by law. A carbon, photographic or other
reproduction of this Agreement or any notice or financing statement covering the
Transferred Receivables or any part thereof shall be sufficient as a notice or
financing statement where permitted by law.
VII. Assignment. The Company acknowledges and agrees that, pursuant to
----------
the Funding Agreement, CWC may assign all of its right, title and interest in,
to and under the Transferred Receivables and its rights, title and interest
under this Agreement, including its right to exercise the remedies created by
Section 4.04 hereof to VFCC and the Collateral Agent. The Company agrees that,
upon such assignment, the assignee may enforce directly, without joinder of CWC,
the repurchase obligations of the Company set forth in Section 4.04 hereof with
respect to breaches of the representations and warranties or covenants set forth
in Section 4.01 and 4.02 of this Agreement.
VIII. Compliance With Agreements and Applicable Laws. The Company shall
----------------------------------------------
perform each of its obligations under this Agreement and the other Basic
Documents and comply with all material requirements of any law, rule or
regulation applicable to it.
IX. Notice of Material Event. The Company shall promptly inform CWC in
------------------------
writing of the occurrence of any of the following:
A. the submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation
against the Company or with respect to or in connection with all or
any portion of the Transferred Receivables, involving potential
damages or penalties in an uninsured amount in excess of $100,000 in
any one instance or $500,000 in the aggregate;
B. any change in the location of Company's principal office or
any change in the location of the Company's books and records;
C. the occurrence of any Termination Event or event which, upon
the giving of notice or the passage of time, or both, would become a
Termination Event;
D. the commencement or threat of any rule making or disciplinary
proceedings or any proceedings instituted by or against the Company
in any federal, state or local court or before any governmental body
or agency, or before any arbitration board, or the promulgation of
any proceeding or any proposed or final rule which, if adversely
determined, would have a material adverse effect with respect to the
Company;
-19-
E. the commencement of any proceedings by or against the Company
under any applicable bankruptcy, reorganization, liquidation,
rehabilitation, insolvency or other similar law now or hereafter in
effect or of any proceeding in which a receiver, liquidator,
conservator, trustee or similar official shall have been, or may be,
appointed or requested for the Company or any of its assets;
F. the receipt of notice that (A) the Company is being placed
under regulatory supervision, (B) any license, permit, charter,
registration or approval necessary for the conduct of the Company's
business is to be, or may be, suspended or revoked, or (C) the
Company is to cease and desist any practice, procedure or policy
employed by the Company in the conduct of its business, and such
cessation may have a material adverse effect with respect to the
Company; or
G. any other event, circumstance or condition that has had, or
has a material possibility of having, a material adverse effect in
respect of the Company.
X. Maintenance of Licenses. The Company shall maintain all licenses,
-----------------------
permits, charters and registrations which are material to the conduct of its
business.
XI. Separate Identity.
-----------------
A. The Company shall maintain corporate records and books of
account separate from those of CWC.
B. The annual financial statements of the Company shall disclose
the effects of the Company's transactions in accordance with GAAP
and the annual financial statements of the Company shall disclose
that the assets of CWC are not available to pay creditors of the
Company or any other Affiliate of the Company.
C. The annual financial statements of the Company and its
consolidated subsidiaries (including CWC) will contain footnotes or
other information to the effect that with respect to CWC: (a) CWC's
business consists of the purchase of the Receivables from the
Company, (b) CWC is a separate corporate entity with its own
separate creditors, which upon its liquidation will be entitled to
be satisfied out of CWC's assets prior to any value in the Company
becoming available to CWC's equity holders and (c) the Transferred
Receivables have been sold or contributed to CWC.
D. The resolutions, agreements and other instruments underlying
the transactions described in this Agreement shall be continuously
maintained by the Company as official records.
E. The Company shall use its best efforts to maintain an arm's-
length relationship with CWC and will not hold itself out as being
liable for the debts of CWC.
F. The Company shall use its best efforts to keep its assets and
its liabilities wholly separate from those of CWC.
G. The Company will conduct its business solely in its own name
through its duly authorized officers or agents so as not to mislead
others as to the identity of the Company.
H. The Company will use its best efforts to avoid the appearance
of conducting business on behalf of CWC or that the assets of the
Company are available to pay the creditors of CWC.
-20-
I. The Company will cause operating expenses and liabilities of
CWC to be paid from CWC's funds.
XII. ERISA. The Company shall give the Deal Agent prompt notice of each
-----
of the following events (but in no event more than 30 days after the occurrence
of the event): (i) an Accumulated Funding Deficiency, (ii) the failure to make a
material required contribution to a Plan or Multiemployer Plan (but in no event
will a contribution failure sufficient to give rise to a lien under (S)302(f) of
ERISA be considered immaterial), (iii) a Reportable Event, (iv) any action by a
Commonly Controlled Entity to terminate any Plan or withdraw from any
Multiemployer Plan, (v) any action by the PBGC to terminate or appoint a trustee
to administer a Plan, (vi) the reorganization or insolvency of any Multiemployer
Plan and (vii) an aggregate Underfunding for all Underfunded Plans in excess of
$100,000.
XIII. Cooperation With Requests for Information or Documents. The Company
------------------------------------------------------
will cooperate fully with all reasonable requests of CWC regarding the provision
of any information or documents, necessary, including the provision of such
information or documents in electronic or machine-readable format, or desirable
to allow each of VFCC, the Deal Agent and the Collateral Agent to carry out its
responsibilities under the Basic Documents.
XIV. Payment, Performance and Discharge of Obligations. The Company will
-------------------------------------------------
pay, perform and discharge all of its obligations and liabilities, including,
without limitation, all taxes, assessments and governmental charges upon its
income and properties when due the non-payment, performance or discharge of
which would have a material adverse effect, unless and to the extent only that
such obligations, liabilities, taxes, assessments and governmental charges shall
be contested in good faith and by appropriate proceedings and that, to the
extent required by GAAP, proper and adequate book reserves relating thereto are
established by the Company and then only to the extent that a bond is filed in
cases where the filing of a bond is necessary to avoid the creation of an
Adverse Claim against any of its properties.
SECTION 4.03. Negative Covenants of the Company. The Company shall not,
---------------------------------
without the written consent of CWC, the Deal Agent and the Collateral Agent:
I. sell, assign (by operation of law or otherwise) or otherwise dispose
of, or create or suffer to exist any Adverse Claim upon or with respect to, or
assign any right to receive income in respect of any Transferred Receivable or
related Contract with respect thereto, or upon or with respect to the account in
which any Collections of any Transferred Receivables are deposited;
II. extend, amend, forgive, discharge, compromise, cancel or otherwise
modify the terms of any Transferred Receivable, or amend, modify or waive any
term or condition of any Contract related thereto, except in compliance with the
Credit and Collection Policies;
III. make any change in its instructions to Obligors regarding payments
to be made to CWC or payments to be deposited to the account into which any
Collections in respect of any Transferred Receivables are deposited;
IV. merge with or into, consolidate with or into, convey, transfer,
lease or, otherwise dispose of all or substantially all of its assets (whether
now owned or hereafter acquired) to, or acquire all or substantially all of the
assets or capital stock or other ownership interest of, any Person (whether in
one transaction or in a series of transactions), provided, however, that the
-------- -------
Company may, without the consent of the Deal Agent, invest not more than 25% of
its Net Worth to acquire all or substantially all of the assets or capital stock
or other ownership interest of another Person;
V. make statements or disclosures or prepare any financial statements
which shall account for the transactions contemplated by this Agreement in any
manner other than as a sale or contribution of the Transferred Receivables to
CWC, or in any other respect account for or treat the transactions contemplated
hereby (including
-21-
but not limited to, for accounting, tax and reporting purposes) in any manner
other than as a sale or absolute assignment of the Transferred Receivables;
VI. amend, supplement or otherwise modify its certificate of
incorporation or bylaws (or permit any of the foregoing);
VII. (i) take any action, or fail to take any action, if such action or
failure to take action may interfere with the enforcement of any rights under
this Agreement or the Basic Documents that are material to the rights, benefits
or obligations of CWC or VFCC (however, nothing herein shall be construed to
constitute a guarantee of collectability by the Company); (ii) take any action,
or fail to take any action, if such action or failure to take action may
interfere with the enforcement of any rights with respect to the Transferred
Receivables; or (iii) fail to pay any tax, assessment, charge, fee or other
obligation of the Company with respect to the Transferred Receivables, or fail
to defend any action, if such failure to pay or defend may adversely affect the
priority or enforceability of the first priority perfected interest of CWC in
the Transferred Receivables or the Company's right, title or interest in the
Transferred Receivables;
VIII. neither the Company nor any Commonly Controlled Entity will:
A. terminate any Plan so as to incur any material liability to
the PBGC;
B. knowingly participate in any "prohibited transaction" (as
defined in ERISA) involving any Plan or Multiemployer Plan or any
trust created thereunder which would subject any of them to a
material tax or penalty on prohibited transactions imposed under
Section 4975 of the Code or ERISA;
C. fail to pay to any Plan or Multiemployer Plan any
contribution which it is obligated to pay under the terms of such
Plan or Multiemployer Plan, if such failure would cause such plan to
have any material Accumulated Funding Deficiency, whether or not
waived; or
D. allow or suffer to exist any occurrence of a Reportable
Event, or any other event or condition, which presents a material
risk of termination by the PBGC on any Plan or Multiemployer Plan,
to the extent that the occurrence or nonoccurrence of such
Reportable Event or other event or condition is within the control
of it or any Commonly Controlled Entity;
IX. make any material change to the Credit and Collection Policies
without the prior written consent of Deal Agent; or
X. take or permit (other than with respect to actions taken or to be
taken solely by a government or governmental authority) to be taken any action
which would have the effect directly or indirectly of subjecting interest on any
of the Advances or the Commercial Paper to withholding taxation in the hands of,
respectively, CWC, VFCC or holders of the Commercial Paper generally who are
residents of the United States, and will perform all of its obligations under
this Agreement and the Basic Documents to prevent or cure any default by the
Company which would have the effect, directly or indirectly, of subjecting
interest on any of the Advances or the Commercial Paper to withholding taxation.
SECTION 4.04. Breach of Representations, Warranties or Covenants. Upon
--------------------------------------------------
discovery by the Company, CWC, the Deal Agent, VFCC, the Collateral Agent or any
assignee of either of CWC's rights hereunder, of a breach of any of the
representations, warranties or covenants described in Section 4.01, 4.02 or 4.03
hereof which is reasonably likely to have a material adverse effect on the value
of a Transferred Receivable or the interests of CWC, VFCC or the Collateral
Agent therein, the party discovering such breach shall give prompt written
notice to the other parties. Thereafter, if requested by notice from CWC or any
assignee of CWC, the Company shall, on the next succeeding Business Day, either
(i) repurchase such Transferred Receivable from CWC in consideration of cash or
additional Eligible Receivables at a price equal to the Sale Price
-22-
therefor plus accrued and unpaid interest thereon, less principal payments
actually received prior to the date of such purchase, (ii) transfer ownership of
a new Eligible Receivable or new Eligible Receivables on such Business Day in an
amount equal to the face amount of such Transferred Receivable; or (iii) make a
capital contribution of the Rejected Amount in cash to CWC, by remitting the
amount of such capital contribution to the Collection Account in accordance with
the terms of the Funding Agreement, in each case in an amount equal to the
Contract Principal Balance of such Transferred Receivable.
ARTICLE V
INDEMNIFICATION
SECTION 5.01. Indemnification. (a) Without limiting any other rights that
---------------
CWC, VFCC, the Collateral Agent or any of their shareholders, officers or
agents, or any assignee of CWC's rights hereunder or such assignee's
shareholders, officers, employees or agents (each, an "Indemnified Party") may
-----------------
have hereunder or under applicable law, the Company hereby agrees to indemnify
each Indemnified Party from and against any and all claims, losses, liabilities,
obligations, damages, penalties, actions, judgments, suits, and related costs
and expenses of any nature whatsoever, including reasonable attorneys' fees and
disbursements (all of the foregoing being collectively referred to as
"Indemnified Amounts") which may be imposed on, incurred by or asserted against
-------------------
an Indemnified Party in any way arising out of or resulting from this Agreement
or the other Basic Documents or the use by the Company of proceeds of any
purchase or assignment hereunder or in respect of any Transferred Receivable or
any Contract, excluding, however, (a) Indemnified Amounts to the extent
resulting solely from gross negligence, acts of bad faith or willful misconduct
on the part of such Indemnified Party or (b) recourse for uncollectible or
uncollected Transferred Receivables. Without limiting or being limited by the
foregoing, the Company shall pay on demand to each Indemnified Party any and all
Indemnified Amounts necessary to indemnify such Indemnified Party from and
against any and all Indemnified Amounts relating to or resulting from:
(i) reliance on any representation or warranty made or deemed
made by the Company (or any of its officers) under or in connection
with this Agreement or the other Basic Documents, any report or any
other information delivered by the Company pursuant hereto, which
shall have been incorrect in any material respect when made or deemed
made or delivered;
(ii) the failure by the Company to comply with any term,
provision or covenant contained in this Agreement or the other Basic
Documents, or any agreement executed in connection with this Agreement
or with any applicable law, rule or regulation with respect to any
Transferred Receivable or the related Contract, or the nonconformity
of any Transferred Receivable or the related Contract with any such
applicable law, rule or regulation; or
(iii) the failure to vest and maintain vested in CWC, or to
transfer to CWC, legal and equitable title to and ownership of the
Receivables which are, or are purported to be, Transferred
Receivables, together with all Collections and Proceeds in respect
thereof, free and clear of any Adverse Claim or Restrictions on
Transferability (except as permitted hereunder) whether existing at
the time of the proposed sale of such Receivable or at any time
thereafter.
SECTION 5.02. Assignment of Indemnities. The Company acknowledges that,
-------------------------
pursuant to the Funding Agreement, CWC may assign its rights of indemnity
granted hereunder to VFCC, the Collateral Agent and the Lenders upon such
assignment, VFCC, the Collateral Agent or the Lenders, as applicable, shall have
all rights of CWC hereunder and may in turn assign such rights. The Company
agrees that, upon such assignment, VFCC, the Collateral Agent or the Lenders or
the assignee of either VFCC, the Collateral Agent or the Lenders, as applicable,
may enforce directly, without joinder of CWC, the indemnities set forth in this
Article V.
-23-
ARTICLE VI [RESERVED]
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Notices, Etc. All notices and other communications provided
------------
for hereunder shall, unless otherwise stated herein, be in writing (including
facsimile, telex and express mail) and mailed or telecommunicated, or delivered
as to each party hereto, at its address set forth under its name on the
signature page hereof or at such other address as shall be designated by such
party in a written notice to the other parties hereto. All such notices and
communications shall not be effective until received by the party to whom such
notice or communication is addressed.
SECTION 7.02. No Waiver; Remedies. No failure on the part of the Company
-------------------
or CWC or any assignee of CWC to exercise, and no delay in exercising, any right
hereunder or under any Assignment shall operate as a waiver thereof; nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any other remedies provided
by law.
SECTION 7.03. Binding Effect; Assignability. This Agreement shall be
-----------------------------
binding upon and inure to the benefit of the Company and CWC, and their
respective successors and permitted assigns. Except as contemplated herein,
none of the parties may assign any of its rights and obligations hereunder or
any interest herein without the prior written consent of the other parties.
This Agreement shall create and constitute the continuing obligations of the
parties hereto in accordance with its terms, and shall remain in full force and
effect until its termination; provided, that the rights and remedies pursuant to
--------
Section 4.04 with respect to any breach of any representation, warranty or
covenants made by the Company pursuant to Sections 4.01, 4.02 and 4.03 and the
indemnification and payment provisions of Article IV shall be continuing and
shall survive any termination of this Agreement.
SECTION 7.04. No Proceedings. The Company hereby agrees that it will not,
--------------
directly or indirectly, institute, or cause to be instituted, against CWC any
proceeding of the type referred to in the definition of Event of Bankruptcy in
the Funding Agreement until one year and one day shall have elapsed since the
last day on which any Commercial Paper issued by VFCC under the Funding
Agreement remains outstanding.
SECTION 7.05. Amendments; Consents and Waivers. No modification,
--------------------------------
amendment or waiver of, or with respect to, any provision of this Agreement, and
all other agreements, instruments and documents delivered thereto, nor consent
to any departure by the Company or CWC from any of the terms or conditions
thereof shall be effective unless it shall be in writing and signed by each of
the parties hereto, and prior written consent is given by VFCC and the
Collateral Agent. Any waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No consent or demand in any case
shall, in itself, entitle any party to any other consent or further notice or
demand in similar or other circumstances. This Agreement and the documents
referred to herein embody the entire agreement of the Company and CWC with
respect to the Transferred Receivables and supersede all prior agreements and
understandings relating to the subject hereof.
SECTION 7.06. GOVERNING LAW; WAIVER OF JURY TRIAL. (a) THIS AGREEMENT
-----------------------------------
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS
OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE OF NEW YORK.
(b) THE COMPANY AND CWC EACH HEREBY WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH THIS
AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH
TRIAL WITHOUT A JURY.
-24-
SECTION 7.07. Execution in Counterparts; Severability. This Agreement may
---------------------------------------
be executed by the parties hereto in separate counterparts, each of which when
so executed shall be deemed to be an original and both of which when taken
together shall constitute one and the same agreement. In case any provision in
or obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations in any jurisdiction, or of such provision or
obligation in any jurisdiction, shall not in any way be affected or impaired
thereby.
SECTION 7.08. Descriptive Headings. The descriptive headings of the
--------------------
various sections of this Agreement are inserted for convenience of reference
only and shall not be deemed to affect the meaning or construction of any of the
provisions hereof.
SECTION 7.09. No Setoff. The Company's obligations under this Agreement
---------
shall not be affected by any right of setoff, counterclaim, recoupment, defense
or other right the Company might have against CWC, VFCC, the Deal Agent, any
Lender or any assignee, all of which rights are hereby waived by the Company.
SECTION 7.10. Further Assurances. The Company agrees to do such further
------------------
acts and things and to execute and deliver to CWC, VFCC, the Deal Agent, any
Lender or any assignee such additional assignments, agreements, powers and
instruments as such Person or any assignee may require or deem advisable to
carry into effect the purposes of this Agreement or to better assure and confirm
unto any such party its respective rights, powers and remedies hereunder.
SECTION 7.11. Confidentiality. Except to the extent otherwise required by
---------------
applicable law or as required to be filed publicly with the Securities and
Exchange Commission or unless the Affected Party shall otherwise consent in
writing, the Company and CWC agree to maintain the confidentiality of this
Agreement (and all drafts of this agreement and documents ancillary to this
Agreement) in its communications with third parties other than any Affected
Party or any Indemnified Party and otherwise and not to disclose, deliver or
otherwise make available to any third party (other than its directors, officers,
employees, accountants or counsel) the original or any copy of all or any part
of this Agreement (or any draft of this Agreement and documents ancillary to
this Agreement) except to an Affected Party or an Indemnified Party.
SECTION 7.12. Assignment of Agreement. The Company acknowledges that,
-----------------------
pursuant to the Funding Agreement, CWC may assign its rights granted hereunder,
including any rights in the Collateral granted under Article II, to the
Collateral Agent on behalf of the Secured Parties and upon such assignment, the
Collateral Agent shall have all rights of CWC hereunder and may in turn assign
such rights. The Company agrees that, upon such assignment, the Collateral
Agent may enforce directly, without joinder of CWC the rights set forth in this
Agreement.
IN WITNESS WHEREOF, the parties have caused this Receivables Transfer Agreement
to be executed by their respective officers thereunto duly authorized, as of the
date first above written.
Telephone (714) 753-6816
CONSUMER PORTFOLIO SERVICES, INC. Facsimile: (714) 753-6816
By:_________________________________ CPS WAREHOUSE CORP
Name:
Title: By:_____________________________
Name:
Address: Consumer Portfolio Services Title:
Inc.
2 Ada, Suite 100 Address: CPS Warehouse Corp,
Irvine, CA 92618 2 Ada, Suite 100
Attention: Chief Financial Officer Irvine, CA 92618
-25-
Attention: James L. Stock
Telephone (714) 753-6935
Facsimile: (714) 450-3972
-26-
EXHIBIT 1
---------
FORM OF ASSIGNMENT
ASSIGNMENT, dated as of _______ between Consumer Portfolio Services,
Inc. (the "Company") and CPS WAREHOUSE CORP. ("CWC").
------- ---
1. We refer to the Receivables Transfer Agreement (the "Transfer
-------------
Agreement") dated as of November 24, 1997 between the Company and CWC. All
- ----------
provisions of such Transfer Agreement are incorporated herein by reference. All
capitalized terms shall have the meanings set forth in the Transfer Agreement.
2. The Company does hereby sell, or contribute to CWC, without
recourse, as of ________________ (the "Cutoff Date"), except with respect to its
-------------
obligations pursuant to Section 4.04 of the Transfer Agreement, all of the
Company's right, title and interest in and to the following, in each case
whether now or hereafter existing or in which Company now has or hereafter
acquires an interest and wherever the same may be located (collectively, the
"Conveyed Property"):
- -------------------
(a) all Transferred Receivables listed on the attached Request Notice
and related Contracts and Collections received on or after the Cutoff Date
(collectively, the "Conveyed Receivables") and the Company's right of
--------------------
foreclosure as lienholder of the vehicles underlying the Conveyed Receivables;
(b) to the extent arising from or relating to the Conveyed
Receivables, all of the following (the "Company Account Property"):
--------------------------
(i) all funds held in each Lockbox Account and the Lockboxes
and all certificates and instruments, if any, from time to time
representing or evidencing each Lockbox Account, the Lockboxes or such
funds,
(ii) all Investments from time to time of amounts in each
Lockbox Account, and all certificates and instruments, if any, from
time to time representing or evidencing such Investments,
(iii) all notes, certificates of deposit and other instruments
from time to time delivered to or otherwise possessed by CWC or any
assignee or agent on behalf of each Lender in substitution for or in
addition to any of the then existing Company Account Property, and
(iv) all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any and all of the then
existing Company Account Property;
(d) To the extent arising from or relating to the Conveyed
Receivables, all additional property that may from time to time be acquired by
CWC or by anyone on its behalf under the Transfer Agreement on or after the
Cutoff Date, including the deposit with CWC, the Deal Agent or the Collateral
Agent of additional moneys by the Company; and
(e) All Proceeds, accessions, substitutions, rents and profits of any
and all of the foregoing Company Property (including Proceeds that constitute
property of the types described in sections (a) through (d) above) and, to the
extent not otherwise included, all payments under insurance (whether or not CWC
or any assignee or agent on behalf of CWC is the loss payee thereof or any
indemnity, warranty or guaranty payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Company Property which are
received on or after the Cutoff Date.
1-1
3. Each Sale and/or contribution made from the Company under the
Transfer Agreement shall be endorsed by CWC on the grid attached hereto which is
a part of this Certificate of Assignment, and such endorsement shall evidence
the ownership of the Transferred Receivables resulting from such Sale and/or
contribution thereof.
4. THIS CERTIFICATE OF ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
CPS WAREHOUSE CORP. CONSUMER PORTFOLIO SERVICES, INC.
By:____________________________ By:______________________________
Name: Name:
Title: Title:
[ATTACH REQUEST NOTICE]
1-2
EXHIBIT 2
---------
FORM OF COMPANY'S REPRESENTATIONS
AND WARRANTIES REGARDING THE PURCHASED ASSETS
The Seller makes the following representations and warranties as to the
Receivables to the Note Insurer, the Issuer and to the Trustee on which the
Issuer relies in acquiring the Receivables and on which the Note Insurer relies
in issuing the Note Policy. Such representations and warranties speak as of the
execution and delivery of this Agreement and as of the Closing Date, in the case
of the Initial Receivables, and as of the related Subsequent Transfer Date, in
case of the Subsequent Receivables, but shall survive the sale, transfer and
assignment of the Receivables to the Issuer and the pledge thereof to the
Trustee pursuant to the Indenture.
(i) Characteristics of Receivables. (A) Each Receivable (1) has been
originated in the United States of America by a Dealer for the retail sale of a
Financed Vehicle in the ordinary course of such Dealer's business, has been
fully and properly executed by the parties thereto and has been purchased by CPS
(or, with respect to the Samco Receivables, Samco) in connection with the sale
of Financed Vehicles by the Dealers, (2) has created a valid, subsisting, and
enforceable first priority perfected security interest in favor of CPS (or, with
respect to the Samco Receivables, Samco) in the Financed Vehicle, which security
interest has been assigned by CPS (or, with respect to the Samco Receivables,
Samco) to the Seller, which in turn has assigned such security interest to the
Trustee, (3) contains customary and enforceable provisions such that the rights
and remedies of the holder or assignee thereof shall be adequate for realization
against the collateral of the benefits of the security, (4) provides for level
monthly payments that fully amortize the Amount Financed over the original term
(except for the last payment, which may be different from the level payment) and
yield interest at the Annual Percentage Rate, (5) has an Annual Percentage Rate
of not less than ____%, (6) that is a Rule of 78's Receivable provides for, in
the event that such contract is prepaid, a prepayment that fully pays the
Principal Balance and includes a full month's interest, in the month of
prepayment, at the Annual Percentage Rate, (7) is a Rule of 78's Receivable or a
Simple Interest Receivable, and (8) was originated by a Dealer and was sold by
the Dealer without any fraud or misrepresentation on the part of such Dealer.
(B) Approximately ____% of the aggregate Principal Balance of the
Receivables, constituting ____% of the number of contracts, as of the Cutoff
Date, represents financing of used automobiles, light trucks, vans or minivans;
the remainder of the Receivables represent financing of new automobiles, light
trucks, vans or minivans; approximately ____% of the aggregate Principal Balance
of the Receivables as of the Cutoff Date were originated in the State of
California; approximately ____% of the aggregate Principal Balance of the
Receivables as of the Cutoff Date were originated under the CPS alpha program;
approximately ____% of the aggregate Principal Balance of the Receivables as of
the Cutoff Date were originated under the CPS delta program; approximately ____%
of the aggregate Principal Balance of the Receivables as of the Cutoff Date were
originated under the CPS first time buyer program; approximately ____% of the
aggregate Principal Balance of the Receivables were originated under the CPS
standard program; the remaining ____% of the aggregate Principal Balance of the
Receivables as of the Cutoff Date were acquired by CPS from unaffiliated
parties; approximately ____% of the aggregate Principal Balance of the
Receivables are Samco Receivables; no Receivable shall have a payment that is
more than 30 days overdue as of the Cutoff Date; ____% of the aggregate
Principal Balance of the Receivables are Rule of 78's Receivables and ____% of
the aggregate Principal Balance of the Receivables are Simple Interest
Receivables; each Receivable shall have a final scheduled payment due no later
than ____________, ____; each Receivable has an original term to maturity of not
more than ___ months and a weighted average original term to maturity of ___
months and a remaining term to maturity of not more than ___ months and a
weighted average remaining term to maturity of ___ months; and each Receivable
was originated on or before the Cutoff Date.
(ii) Schedule of Receivables. The information with respect to the
Receivables set forth in Schedule A to this Agreement is true and correct in all
material respects as of the close of business on the Cutoff Date, and no
selection procedures adverse to the Noteholders have been utilized in selecting
the Receivables.
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(iii) Compliance with Law. Each Receivable, the sale of the Financed
Vehicle and the sale of any physical damage, credit life and credit accident and
health insurance and any extended service contracts complied at the time the
related Receivable was originated or made and at the execution of this Agreement
complies in all material respects with all requirements of applicable Federal,
State, and local laws, and regulations thereunder including, without limitation,
usury laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act,
the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the
Federal Trade Commission Act, the Magnuson-Moss Warranty Act, the Federal
Reserve Board's Regulations B and Z, the Soldiers' and Sailors' Civil Relief Act
of 1940, the Texas Consumer Credit Code, the California Automobile Sales Finance
Act and State adaptations of the National Consumer Act and of the Uniform
Consumer Credit Code, and other consumer credit laws and equal credit
opportunity and disclosure laws.
(iv) No Government Obligor. None of the Receivables are due from the
United States of America or any State or from any agency, department, or
instrumentality of the United States of America or any State.
(v) Security Interest in Financed Vehicle. Immediately subsequent to the
sale, assignment and transfer thereof to the Trust, each Receivable shall be
secured by a validly perfected first priority security interest in the Financed
Vehicle in favor of the Trust as secured party, and such security interest is
prior to all other liens upon and security interests in such Financed Vehicle
which now exist or may hereafter arise or be created (except, as to priority,
for any tax liens or mechanics' liens which may arise after the Closing Date).
(vi) Receivables in Force. No Receivable has been satisfied, subordinated
or rescinded, nor has any Financed Vehicle been released from the lien granted
by the related Receivable in whole or in part.
(vii) No Waiver. No provision of a Receivable has been waived.
(viii) No Amendments. No Receivable has been amended, except as such
Receivable may have been amended to grant extensions which shall not have
numbered more than (a) one extension of one calendar month in any calendar year
or (b) three such extensions in the aggregate.
(ix) No Defenses. No right of rescission, setoff, counterclaim or defense
exists or has been asserted or threatened with respect to any Receivable. The
operation of the terms of any Receivable or the exercise of any right thereunder
will not render such Receivable unenforceable in whole or in part or subject to
any such right of rescission, setoff, counterclaim, or defense.
(x) No Liens. As of the Cutoff Date there are no liens or claims
existing or which have been filed for work, labor, storage or materials relating
to a Financed Vehicle that shall be liens prior to, or equal or coordinate with,
the security interest in the Financed Vehicle granted by the Receivable.
(xi) No Default; Repossession. Except for payment delinquencies
continuing for a period of not more than thirty days as of the Cutoff Date, no
default, breach, violation or event permitting acceleration under the terms of
any Receivable has occurred; and no continuing condition that with notice or the
lapse of time would constitute a default, breach, violation or event permitting
acceleration under the terms of any Receivable has arisen; and the Seller shall
not waive and has not waived any of the foregoing; and no Financed Vehicle shall
have been repossessed as of the Cutoff Date.
(xii) Insurance; Other. (A) Each Obligor has obtained insurance covering
the Financed Vehicle as of the execution of the Receivable insuring against loss
and damage due to fire, theft, transportation, collision and other risks
generally covered by comprehensive and collision coverage, and each Receivable
requires the Obligor to obtain and maintain such insurance naming CPS (or, with
respect to the Samco Receivables, Samco) and its successors and assigns as an
additional insured, (B) each Receivable that finances the cost of premiums for
credit life and credit accident and health insurance is covered by an insurance
policy or certificate of insurance naming CPS (or with respect to the Samco
Receivables, Samco) as policyholder (creditor) under each such insurance policy
and certificate of insurance and (C) as to each Receivable that finances the
cost of an extended service
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contract, the respective Financed Vehicle which secures the Receivable is
covered by an extended service contract.
(xiii) Title. It is the intention of the Seller that the transfer and
assignment herein contemplated constitute a sale of the Receivables from the
Seller to the Trust and that the beneficial interest in and title to such
Receivables not be part of the Seller's estate in the event of the filing of a
bankruptcy petition by or against the Seller under any bankruptcy law. No
Receivable has been sold, transferred, assigned, or pledged by the Seller to any
Person other than the Trust. Immediately prior to the transfer and assignment
herein contemplated, the Seller had good and marketable title to each Receivable
and was the sole owner thereof, free and clear of all liens, claims,
encumbrances, security interests, and rights of others, and, immediately upon
the transfer thereof, the Trust for the benefit of the Noteholders and the Note
Insurer shall have good and marketable title to each such Receivable and will be
the sole owner thereof, free and clear of all liens, encumbrances, security
interests, and rights of others, and the transfer has been perfected under the
UCC.
(xiv) Lawful Assignment. No Receivable has been originated in, or is
subject to the laws of, any jurisdiction under which the sale, transfer, and
assignment of such Receivable under this Agreement or pursuant to transfers of
the Securities shall be unlawful, void, or voidable. The Seller has not entered
into any agreement with any account debtor that prohibits, restricts or
conditions the assignment of any portion of the Receivables.
(xv) All Filings Made. All filings (including, without limitation, UCC
filings) necessary in any jurisdiction to give the Trust a first priority
perfected ownership interest in the Receivables and the proceeds thereof and the
other Conveyed Property have been made, taken or performed.
(xvi) Receivable File; One Original. CPS has delivered to the Trustee a
complete Receivable File with respect to each Receivable. There is only one
original executed copy of each Receivable.
(xvii) Chattel Paper. Each Receivable constitutes "chattel paper" under
the UCC.
(xviii) Title Documents. (A) If the Receivable was originated in a State
in which notation of a security interest on the title document of the related
Financed Vehicle is required or permitted to perfect such security interest, the
title document of the related Financed Vehicle for such Receivable shows, or if
a new or replacement title document is being applied for with respect to such
Financed Vehicle the title document (or, with respect to Receivables originated
in the State of Michigan, all other evidence of ownership with respect to such
Financed Vehicle) will be received within 180 days and will show, CPS (or, with
respect to the Samco Receivables, Samco) named as the original secured party
under the related Receivable as the holder of a first priority security interest
in such Financed Vehicle, and (B) if the Receivable was originated in a State in
which the filing of a financing statement under the UCC is required to perfect a
security interest in motor vehicles, such filings or recordings have been duly
made and show CPS (or, with respect to the Samco Receivables, Samco) named as
the original secured party under the related Receivable, and in either case, the
Trust has the same rights as such secured party has or would have (if such
secured party were still the owner of the Receivable) against all parties
claiming an interest in such Financed Vehicle. With respect to each Receivable
for which the title document of the related Financed Vehicle has not yet been
returned from the Registrar of Titles, CPS has received written evidence from
the related Dealer that such title document showing CPS (or, with respect to the
Samco Receivables, Samco) as first lienholder has been applied for.
(xix) Valid and Binding Obligation of Obligor. Each Receivable is the
legal, valid and binding obligation of the Obligor thereunder and is enforceable
in accordance with its terms, except only as such enforcement may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally, and all parties to such contract had full legal capacity to
execute and deliver such contract and all other documents related thereto and to
grant the security interest purported to be granted thereby.
(xx) Tax Liens. As of the Cutoff Date, there is no lien against the
related Financed Vehicle for delinquent taxes.
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(xxi) Characteristics of Obligors. As of the date of each Obligor's
application for the loan from which the related Receivable arises, such Obligor
(a) did not have any material past due credit obligations or any personal or
real property repossessed or wages garnished within one year prior to the date
of such application, unless such amounts have been repaid or discharged through
bankruptcy, (b) was not the subject of any Federal, State or other bankruptcy,
insolvency or similar proceeding pending on the date of application that is not
discharged, (c) had not been the subject of more than one Federal, State or
other bankruptcy, insolvency or similar proceeding, and (d) was domiciled in the
United States.
(xxii) Origination Date. Each Receivable has an origination date on or
after April 10, 1995.
(xxiii) Maturity of Receivables. Each Receivable has an original term to
maturity of not less than [ ] months and not more than 60 months; the weighted
average original term to maturity of the Receivables is 57 months as of the
Cutoff Date; the remaining term to maturity of each Receivable was 60 months or
less as of the Cutoff Date; the weighted average remaining term to maturity of
the Receivables was 56 months as of the Cutoff Date.
(xxiv) Scheduled Payments. Each Receivable had an original principal
balance of not less than $_____ nor more than $________ had an outstanding
principal balance as of the Cutoff Date of not less than $_____ nor more than
$________ and has a first Scheduled Payment due on or prior to __________,
_____.
(xxv) Origination of Receivables. Based on the billing address of the
Obligors and the Principal Balances as of the Cutoff Date, approximately ____%
of the aggregate Principal Balance of the Receivables represents Receivables
that were originated in California, approximately ____% of the aggregate
Principal Balance of the Receivables represents Receivables that were originated
in Louisiana, approximately ____% of the aggregate Principal Balance of the
Receivables represents Receivables that were originated in Texas, approximately
____% of the aggregate Principal Balance of the Receivables represents
Receivables that were originated in Pennsylvania and the remaining ____% of the
aggregate Principal Balance of the Receivables represents Receivables that were
originated in other States.
(xxvi) Post-Office Box. On or prior to the next billing period after the
Cutoff Date, CPS will notify each Obligor to make payments with respect to its
respective Receivables after the Cutoff Date directly to the Post-Office Box,
and will provide each Obligor with a monthly statement in order to enable such
Obligors to make payments directly to the Post-Office Box.
(xxvii) Location of Receivable Files. A complete Receivable File with
respect to each Receivable has been or prior to the Closing Date will be
delivered to the Trustee at the location listed in Schedule B.
(xxviii) Casualty. No Financed Vehicle has suffered a Casualty.
(xxix) Principal Balance/Number of Contracts. As of the Cutoff Date, the
total aggregate principal balance of the Receivables was $____________. The
Receivables are evidenced by ______ Contracts.
(xxx) Full Amount Advanced. The full amount of each Receivable has been
advanced to each Obligor, and there are no requirements for future advances
thereunder. The Obligor with respect to the Receivable does not have any option
under the Receivable to borrow from any person additional funds secured by the
Financed Vehicle.
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EXHIBIT 3
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FORM OF ASSIGNMENT OF INSURANCE INTERESTS
Consumer Portfolio Services, Inc. ("Assignor") hereby absolutely and irrevocably
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assigns to First Union National Bank. ("FUNB") all of Assignor's right, title
----
and interest in, under, and with respect to all insurance and service contracts
which provide any of the following coverages with respect to installment
contracts which Assignor has pledged to FUNB and FUNB continues to have a
security interest in:
1. credit life, credit disability, or credit accident and health;
2. casualty, damage, theft, loss or liability;
3. involuntary unemployment;
4. mechanical breakdown, warranty, maintenance, or servicing;
5. lender protection, vendor/lender single interest, skip, repossessed vehicle
casualty (including damage, theft, and loss), confiscation, nonfiling, or
failure of lien perfection; or
6. any other coverage assigned in writing by Assignor to FUNB.
Without limiting the rights included in this assignment, this assignment
entitles FUNB to claim and collect all benefits, refunds, and other amounts with
respect to all coverages that Assignor would be entitled to claim and collect,
and to make such claims and collections in its name or Assignor's name.
Assignor hereby authorizes FUNB to sign Assignor's name on all such claims and
collections FUNB makes, and to endorse Assignor's name on all such payments it
receives. Assignor hereby instructs and authorizes all providers of the
foregoing coverage to rely on this Assignment and any statement or instruction
in writing by FUNB with respect to the operation and effect of this Assignment
and the installment contracts covered by it. Assignor hereby agrees that the
providers of the coverages who so rely shall have no liability to Assignor for
complying with this Assignment and such statements and instructions by FUNB.
Dated: November ___, 1997 CONSUMER PORTFOLIO SERVICES, INC. [SEAL]
By:__________________________________
Name:
Title:
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