EXHIBIT 10.5
SECOND AMENDED AND RESTATED SALE AND SERVICING AGREEMENT (as may be further
amended, supplemented or otherwise modified from time to time, this "Agreement")
dated as of April 18, 2006, among PAGE FUNDING LLC, a Delaware limited liability
company (in its capacities as Purchaser, the "Purchaser" and as Issuer, the
"Issuer"), CONSUMER PORTFOLIO SERVICES, INC., a California corporation (in its
capacities as Seller, the "Seller" and as Servicer, the "Servicer,"
respectively), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking
association (in its capacities as Backup Servicer, the "Backup Servicer" and as
Trustee, the "Trustee," respectively).
WHEREAS, the Purchaser, the Servicer, the Seller, the Backup Servicer and
the Trustee entered into that Amended and Restated Sale and Servicing Agreement
dated as of June 29, 2005, as amended by Amendment No. 1 thereto dated as of
August 31, 2005, and Amendment No. 2 thereto dated as of February 28, 2006 (as
so amended, the "Amended and Restated Sale and Servicing Agreement"), pursuant
to which the Purchaser purchased, from time to time, receivables arising in
connection with motor vehicle retail installment sale contracts acquired by the
Seller from motor vehicle dealers and independent finance companies; and
WHEREAS, the Purchaser, the Servicer, the Seller, the Backup Servicer, the
Trustee and the Noteholder desire to amend and restate the Amended and Restated
Sale and Servicing Agreement as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
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DEFINITIONS
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SECTION 1.1. Definitions. Capitalized terms used in this Agreement and not
otherwise defined in this Agreement, shall have the meanings set forth in Annex
A attached hereto.
SECTION 1.2. Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any instrument governed hereby and in any certificate
or other document made or delivered pursuant hereto unless otherwise
defined therein.
(b) Accounting terms used but not defined or partly defined in this
Agreement, in any instrument governed hereby or in any certificate or other
document made or delivered pursuant hereto, to the extent not defined,
shall have the respective meanings given to them under GAAP as in effect on
the date of determination or any such instrument, certificate or other
document, as applicable. To the extent that the definitions of accounting
terms in this Agreement or in any such instrument, certificate or other
document are inconsistent with the meanings of such terms under GAAP, the
definitions contained in this Agreement or in any such instrument,
certificate or other document shall control.
(c) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement.
(d) Section, Schedule and Exhibit references contained in this
Agreement are references to Sections, Schedules and Exhibits in or to this
Agreement unless otherwise specified; and the term "including" shall mean
"including without limitation."
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(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means
such agreement, instrument or statute as the same may from time to time be
amended, modified or supplemented in accordance with the terms thereof and
includes (in the case of agreements or instruments) references to all
attachments and instruments associated therewith; all references to a
Person include its permitted successors and assigns.
SECTION 1.3. Calculations. Other than as expressly set forth herein or in
any of the other Basic Documents, all calculations of the amount of the
Servicing Fee, Backup Servicing Fee and the Trustee Fee shall be made on the
basis of a 360-day year consisting of twelve 30-day months. All calculations of
the Unused Facility Fee and the Noteholders' Monthly Interest Distributable
Amount shall be made on the basis of the actual number of days in the Accrual
Period and 360 days in the calendar year. All references to the Principal
Balance of a Receivable as of the last day of an Accrual Period shall refer to
the close of business on such day.
ARTICLE II
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CONVEYANCE OF RECEIVABLES
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SECTION 2.1. Conveyance of Receivables.
(a) In consideration of the Purchaser's delivery to or upon the order
of the Seller on any Funding Date of the Purchase Price therefor, the
Seller does hereby sell, transfer, assign, set over and otherwise convey to
the Purchaser, without recourse (subject to the obligations set forth
herein) all right, title and interest of the Seller, whether now existing
or hereafter arising, in, to and under:
(i) the Receivables listed in Schedule A to each Assignment
executed and delivered by the Seller on such Funding Date;
(ii) all monies received under the Receivables on and after the
related Cutoff Date and all Net Liquidation Proceeds received with
respect to the Receivables on and after the related Cutoff Date;
(iii) the security interests in the Financed Vehicles and any
accessions thereto granted by Obligors pursuant to the related
Contracts and any other interest of the Seller in such Financed
Vehicles, including, without limitation, the certificates of title or,
with respect to such Receivables that finance a vehicle in the States
listed in Annex B, other evidence of title issued by the applicable
Department of Motor Vehicles or similar authority in such States, with
respect to such Financed Vehicles;
(iv) any proceeds from claims on any Receivables Insurance
Policies or certificates relating to the Financed Vehicles securing
the Receivables or the Obligors thereunder;
(v) all proceeds from recourse against Dealers with respect to
the Receivables and all other rights arising out of or with respect to
the Receivables (but none of the obligations) of the Seller under any
agreements with Dealers;
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(vi) refunds for the costs of extended service contracts with
respect to Financed Vehicles securing the Receivables, refunds of
unearned premiums with respect to credit life and credit accident and
health insurance policies or certificates covering an Obligor or
Financed Vehicle under a Receivable or his or her obligations with
respect to a Financed Vehicle and any recourse to Dealers for any of
the foregoing;
(vii) the Receivable File related to each Receivable and all
other documents that the Seller keeps on file in accordance with its
customary procedures relating to the Receivables for Obligors of the
Financed Vehicles;
(viii) all amounts and property from time to time held in or
credited to the Collection Account or the Lockbox Accounts;
(ix) all property (including the right to receive future Net
Liquidation Proceeds) that secures a Receivable that has been acquired
by or on behalf of the Purchaser pursuant to a liquidation of such
Receivable;
(x) the proceeds from any servicer's errors and omissions policy
or fidelity bond, to the extent such proceeds relate to any
Receivable, Financed Vehicle or other Collateral;
(xi) each TFC Assignment; and
(xii) all present and future claims, demands, causes and choses
in action in respect of any or all of the foregoing and all payments
on or under and all proceeds of every kind and nature whatsoever in
respect of any or all of the foregoing, including all proceeds of the
conversion, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts,
insurance proceeds, condemnation awards, rights to payment of any and
every kind and other forms of obligations and receivables, instruments
and other property which at any time constitute all or part of or are
included in the proceeds of any of the foregoing.
(b) The Seller shall transfer to the Purchaser the Receivables and the
Other Conveyed Property described in paragraph (a) above only upon the
satisfaction of each of the conditions set forth below on or prior to the
related Funding Date. In addition to constituting conditions precedent to
any purchase hereunder and under each Assignment, the following shall also
be conditions precedent to any Advance on any Funding Date under the terms
of the Note Purchase Agreement:
(i) the Seller shall have provided the Purchaser, Trustee, the
Note Purchaser and the Noteholders with an Addition Notice
substantially in the form of Exhibit G hereto (which shall include a
supplement to the Schedule of Receivables) not later than three
Business Days prior to such Funding Date and shall have provided any
information reasonably requested by any of the foregoing with respect
to Issuer, the Servicer and the Related Receivables;
(ii) the Seller shall, to the extent required by Section 4.2 of
this Agreement, have deposited in the Collection Account all
collections received on and after the Cutoff Date in respect of the
Related Receivables to be purchased on such Funding Date;
(iii) as of each Funding Date, (A) the Seller shall not be
insolvent and shall not become insolvent as a result of the transfer
of Related Receivables on such Funding Date, (B) the Seller shall not
intend to incur or believe that it shall incur debts that would be
beyond its ability to pay as such debts mature, (C) such transfer
shall not have been made with actual intent to hinder, delay or
defraud any Person and (D) the assets of the Seller shall not
constitute unreasonably small capital to carry out its business as
then conducted;
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(iv) the Facility Termination Date shall not have occurred;
(v) the Servicer shall have established one or more Lockbox
Accounts acceptable to the Note Purchaser;
(vi) each of the representations and warranties made by the
Seller pursuant to Section 3.1 and the other Basic Documents with
respect to the Related Receivables to be purchased on such Funding
Date shall be true and correct as of the related Funding Date and the
Seller shall have performed all obligations to be performed by it
hereunder or in any Assignment on or prior to such Funding Date;
(vii) the Seller shall, at its own expense, on or prior to the
Funding Date, indicate in its computer files that the Related
Receivables to be purchased on such Funding Date have been sold to the
Purchaser pursuant to this Agreement or an Assignment, as applicable,
and have been pledged by the Purchaser to the Trustee under the
Indenture;
(viii) the Seller shall have taken all action required to
maintain (i) the first priority perfected ownership interest of the
Purchaser in the Related Receivables and Other Conveyed Property and
(ii) the first priority perfected security interest of the Trustee in
the Collateral;
(ix) no selection procedures adverse to the interests of the Note
Purchaser or any Noteholder shall have been utilized in selecting the
Related Receivables to be sold on such Funding Date;
(x) the addition of any such Related Receivables to be purchased
on such Funding Date shall not result in a material adverse tax
consequence to any Noteholder, the Note Purchaser or the Purchaser;
(xi) the Seller shall have delivered to each Noteholder, the Note
Purchaser and the Trustee an Officers' Certificate confirming the
satisfaction of each condition precedent specified in this paragraph
(b);
(xii) no Funding Termination Event, Servicer Termination Event,
or any event that, with the giving of notice or the passage of time,
would constitute a Funding Termination Event or Servicer Termination
Event, shall have occurred and be continuing;
(xiii) the Trustee shall have confirmed receipt of the related
Receivable File for each Related Receivable included in the Borrowing
Base calculation and shall have delivered a copy to the Noteholders
and the Note Purchaser of a Trust Receipt with respect to the
Receivable Files related to the Related Receivables to be purchased on
such Funding Date;
(xiv) the Seller shall have filed or caused to be filed all
necessary UCC-l financing statements (or amendments thereto) necessary
to maintain (in each case assuming for purposes of this clause (xiv)
that such perfection may be achieved by making the appropriate
filings), and taken any other steps necessary to maintain, (1) the
first, priority, perfected ownership interest of Purchaser and (2) the
first priority, perfected security interest of the Trustee, with
respect to the Related Receivables and Other Conveyed Property and the
Collateral, respectively to be transferred on such Funding Date;
(xv) the Seller shall have executed and delivered an Assignment
in the form of Exhibit F with respect to such Related Receivables and
the Other Conveyed Property related thereto; and
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(xvi) each of the conditions to such Advance set forth in this
Agreement, the Indenture and the Note Purchase Agreement shall have
been satisfied.
Unless waived by the Note Purchaser in writing, the Seller covenants that
in the event any of the foregoing conditions precedent are not satisfied with
respect to any Related Receivable on the date required as specified above, the
Seller will immediately repurchase such Related Receivable from the Purchaser,
at a price equal to the Purchase Amount thereof, in the manner specified in
Section 3.2 and Section 4.7. Except with respect to item (xiii) above, the
Trustee may rely on the accuracy of the Officers' Certificate delivered pursuant
to item (xi) above without independent inquiry or verification.
(c) Payment of Purchase Price. In consideration for the sale of the
Related Receivables and Other Conveyed Property described in Section 2.1(a)
or the related Assignment, the Purchaser shall, on each Funding Date on
which Related Receivables are transferred hereunder, pay to or upon the
order of the Seller the applicable Purchase Price in the following manner:
(i) cash in an amount equal to the amount of the Advance received by the
Purchaser under the Notes on such Funding Date and (ii) to the extent the
Purchase Price for the related Receivables and Other Conveyed Property
exceeds the amount of cash described in (i), such excess shall be treated
as a capital contribution by the Seller to the Purchaser. On any Funding
Date on which funds are on deposit in the Principal Funding Account, the
Purchaser may direct the Trustee to withdraw therefrom an amount equal to
the lesser of (i) the Purchase Price to be paid to the Seller for Related
Receivables and Other Conveyed Property to be conveyed to the Purchaser and
pledged to the Trustee on such Funding Date (or a portion thereof) and (ii)
the amount on deposit in the Principal Funding Account, and, subject to the
satisfaction of the conditions set forth in Section 2.1(b) after giving
effect to such withdrawal, pay such amount to or upon the order of the
Seller in consideration for the sale of the Related Receivables and Other
Conveyed Property on such Funding Date.
SECTION 2.2. Transfers Intended as Sales. It is the intention of the Seller
and the Purchaser that each transfer and assignment contemplated by this
Agreement and each Assignment shall constitute a sale of the Related Receivables
and Other Conveyed Property from the Seller to the Purchaser free and clear of
all liens and rights of others and it is intended that the beneficial interest
in and title to the Related Receivables and Other Conveyed Property shall not be
part of the Seller's estate in the event of the filing of a bankruptcy petition
by or against the Seller under any bankruptcy law. In the event that,
notwithstanding the intent of the Seller and the Purchaser, the transfer and
assignment contemplated hereby or by any Assignment is held not to be a sale,
this Agreement and each Assignment shall constitute a security agreement under
applicable law and the Seller hereby grants to the Purchaser a security interest
in the Receivables and Other Conveyed Property, which security interest has been
assigned to the Trustee, acting on behalf of the Noteholders and the Note
Purchaser.
SECTION 2.3. Further Encumbrance of Receivables and Other Conveyed
Property.
(a) Immediately upon the conveyance to the Purchaser by the Seller of
the Related Receivables and any item of the related Other Conveyed Property
pursuant to Section 2.1 and the related Assignment, all right, title and
interest of the Seller in and to such Related Receivables and Other
Conveyed Property shall terminate, and all such right, title and interest
shall vest in the Purchaser.
(b) Immediately upon the vesting of any Related Receivables and the
related Other Conveyed Property in the Purchaser, the Purchaser shall have
the sole right to pledge or otherwise encumber such Related Receivables and
the related Other Conveyed Property. Pursuant to the Indenture, the
Purchaser shall grant a security interest in the Collateral to secure the
repayment of the Notes and other Secured Obligations.
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(c) The Trustee shall, at such time as (i) the Facility Termination
Date has occurred, (ii) the payment in full of the Secured Obligations has
occurred, (iii) the Note Purchase Agreement shall have been terminated
pursuant to its terms, (iv) there is no Note Outstanding, (v) all sums due
to the Trustee pursuant to the Basic Documents have been paid, and (vi) all
other conditions precedent under the Indenture shall have been satisfied,
release any remaining portion of the Collateral to the Purchaser.
ARTICLE III
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THE RECEIVABLES
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SECTION 3.1. Representations and Warranties of Seller. (a) The Seller makes
the following representations and warranties as to the Receivables to the
Purchaser, to the Trustee for the benefit of the Note Purchaser and the
Noteholders, to the Note Purchaser and to the Noteholders, on which the
Purchaser relies in acquiring the Receivables, on which the Trustee relies in
accepting a pledge of the Receivables under the Indenture, on which the
Noteholders have relied in purchasing the Notes and on which the Note Purchaser
will rely in paying the Advance Amount to the Purchaser. Such representations
and warranties speak as of the Original Closing Date, as of the Restatement
Effective Date and as of each Funding Date after the Restatement Effective Date;
provided that to the extent such representations and warranties relate to the
Receivables conveyed on any Funding Date, such representations and warranties
shall speak as of the related Funding Date, but shall survive the sale, transfer
and assignment of the Receivables to the Purchaser and the pledge thereof by the
Purchaser to the Trustee pursuant to the Indenture.
(i) Characteristics of Receivables. Each Receivable (1) has been
originated in the United States of America by a Dealer for the retail
sale of a Financed Vehicle in the ordinary course of such Dealer's
business and without any fraud or misrepresentation on the part of the
Dealer, such Dealer had all necessary licenses and permits to
originate such Receivables in the state where such Dealer was located,
has been fully and properly executed by the parties thereto, has been
purchased by the Seller or TFC directly from the Dealer in connection
with the sale of Financed Vehicles by the Dealers and has been validly
assigned without any intervening assignments by such Dealer to the
Seller or TFC in accordance with its terms, (2) has created a valid,
subsisting, and enforceable first priority perfected security interest
in favor of the Seller in the Financed Vehicle, which security
interest has been validly assigned by the Seller to the Purchaser and
by the Purchaser to the Trustee, (3) contains customary and
enforceable provisions such that the rights and remedies of the holder
or assignee thereof shall be adequate for realization against the
collateral of the benefits of the security including without
limitation a right of repossession following a default, (4) provides
for level weekly, bi-weekly, semi-monthly or monthly payments that
fully amortize the Amount Financed over the original term (except for
the last payment, which may be different from the level payment but in
no event shall exceed three times such level payment) and yields
interest at the Annual Percentage Rate, (5) if such Receivable 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, (6) is a Rule of 78's Receivable or a Simple
Interest Receivable, (7) was originated by a Dealer to an Obligor and
was sold by the Dealer to the Seller or TFC without any fraud or
misrepresentation on the part of such Dealer, the Obligor or the
Seller, (8) is denominated in U.S. dollars, (9) provides, in the case
of prepayment, for the full payment of the Principal Balance thereof
plus accrued interest through the date of prepayment based on the APR
of the Receivable; and (10) contains no obligation to lend more money
to the related Obligor in the future.
(ii) Additional Receivables Characteristics. As of the related
Funding Date, as applicable:
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(A) each Related Receivable that is a CPS Receivable has (1)
an original term of 24 to 72 months; (2) an original Amount
Financed of at least $3,000 and not more than $35,000; and (3)
had an APR of at least 8% and not more than 30% (subject to
applicable laws);
(B) each Related Receivable that is a TFC Receivable has (1)
an original term of 9 to 60 months; (2) an original Amount
Financed of at least $1,000 and not more than $25,000; (3) had an
APR of at least 9.90% and not more than 30% (subject to
applicable laws); (4) when originated, had an Obligor that was a
member of the U.S. armed forces; and (5) no Obligor that has been
the subject of a Section 341 Meeting.
(C) each Related Receivable is not more than 30 days past
due with respect to more than 10% of any Scheduled Receivable
Payment as of the related Cutoff Date and no funds have been
advanced by the Seller, any Dealer or anyone acting on their
behalf in order to cause any Related Receivable to satisfy such
requirement;
(D) no Related Receivable has been extended beyond its
original term, except in accordance with the applicable Contract
Purchase Guidelines regarding deferments or extensions; and
(E) each Related Receivable satisfies in all material
respects the applicable Contract Purchase Guidelines as in effect
on the Original Closing Date or as otherwise amended from time to
time; provided, that such amendments do not have a material
adverse effect on the Noteholders or the Note Purchaser.
(iii) Schedule of Receivables. The information with respect to
the Related Receivables set forth in Schedule A to the related
Assignment is true and correct in all material respects as of the
close of business on the related Cutoff Date, and no selection
procedures adverse to any Noteholders or the Note Purchaser have been
utilized in selecting the Related Receivables to be sold hereunder and
thereunder.
(iv) Compliance with Law. Each Related Receivable, the sale of
the Financed Vehicle and the sale of any physical damage, credit life
and credit accident and health insurance and any extended warranties
or service contracts complied at the time the Related Receivable was
originated or made and at the execution of the applicable Assignment
complies in all material respects with all requirements of applicable
Federal, State, and local laws, including, without limitation,
Consumer Laws. Each Receivable has been serviced in compliance with
all applicable requirements of law.
(v) No Government Obligor. None of the Related Receivables are
due from the United States of America or any State or from any agency,
department, or instrumentality of the United States of America or any
State.
(vi) No Fleet Sales. None of the Receivables have been included
in a "fleet" sale (i.e., a sale to any single Obligor of more than
five Financed Vehicles).
(vii) Security Interest in Financed Vehicle. Immediately
subsequent to the sale, assignment and transfer thereof to the
Purchaser, each Related Receivable shall be secured by a validly
perfected first priority security interest in the Financed Vehicle in
favor of the Seller as secured party which security interest has been
validly assigned to the Purchaser and subsequently validly pledged to
the Trustee for the benefit of the Noteholders and the Note Purchaser,
and such assigned security interest is prior to all other liens upon
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and security interests in such Financed Vehicle which now exist or may
hereafter arise or be created (except, as to priority, for any tax
liens or mechanics' liens which may arise after the related Funding
Date as a result of an Obligor's failure to pay its obligations, as
applicable).
(viii) Receivables in Force. No Related Receivable has been
satisfied, subordinated or rescinded, nor has any related Financed
Vehicle been released from the lien granted by the related Receivable
in whole or in part.
(ix) No Waiver. Except as permitted under Section 4.2 and clause
(x) below, no provision of a Related Receivable has been waived,
altered or modified in any respect since its origination. No Related
Receivable has been modified as a result of application of the
Servicemembers Civil Relief Act, as amended.
(x) No Amendments. Except as permitted under Section 4.2, no
Related Receivable has been amended, modified, waived or refinanced
except as such Related Receivable may have been amended in accordance
with the Servicing Guidelines.
(xi) No Defenses. No right of rescission, setoff, counterclaim or
defense exists or has been asserted or threatened with respect to any
Related Receivable. The operation of the terms of any Related
Receivable or the exercise of any right thereunder will not render
such Related Receivable unenforceable in whole or in part and such
Receivable is not subject to any such right of rescission, setoff,
counterclaim, or defense.
(xii) No Liens. As of the related Cutoff Date, (a) there are no
liens or claims existing or which have been filed for work, labor,
storage or materials relating to a Financed Vehicle financed under a
Related Receivable that shall be liens prior to, or equal or
coordinate with, the security interest in the Financed Vehicle granted
by the Related Receivable and (b) there is no lien against the
Financed Vehicle financed under a Related Receivable for delinquent
taxes.
(xiii) No Default; Repossession. Except for payment delinquencies
described in Section 3(a)(ii)(C) hereof, no default, breach, violation
or event permitting acceleration under the terms of any Related
Receivable has occurred; and no continuing condition that with notice
or the lapse of time, or both, would constitute a default, breach,
violation or event permitting acceleration under the terms of any
Related Receivable has arisen; and neither the Seller nor TFC shall
waive or has waived any of the foregoing (except in a manner
consistent with Section 4.2) and no Financed Vehicle financed under a
Related Receivable shall have been repossessed.
(xiv) Insurance; Other. (A) Each Obligor under the Related
Receivables has obtained an insurance policy covering the Financed
Vehicle as of the execution of such Receivable insuring against loss
and damage due to fire, theft, transportation, collision and other
risks generally covered by comprehensive and collision coverage, and
either the Seller or TFC, as applicable, and its respective successors
and assigns are named the loss payee or an additional insured of such
insurance policy, such insurance policy is in an amount at least equal
to the lesser of (i) the Financed Vehicle's actual cash value or (ii)
the remaining Principal Balance of the Related Receivable, and each
Related Receivable requires the Obligor to obtain and maintain such
insurance naming either the Seller or TFC, as applicable, and its
respective successors and assigns as loss payee or an additional
insured, (B) each Related Receivable that finances the cost of
premiums for credit life and credit accident and health insurance is
covered by an insurance policy or certificate of insurance naming the
Seller or TFC, as applicable, as policyholder (creditor) under each
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such insurance policy and certificate of insurance and (C) as to each
Related Receivable that finances the cost of an extended service
contract, the respective Financed Vehicle which secures the Related
Receivable is covered by an extended service contract. As of the
related Cutoff Date, no Financed Vehicle is or had previously been
insured under a policy of forced-placed insurance.
(xv) Title. It is the intention of the Seller that each transfer
and assignment herein contemplated constitutes a sale of the Related
Receivables and the related Other Conveyed Property from the Seller to
the Purchaser and that the beneficial interest in and title to such
Related Receivables and related Other Conveyed Property not be part of
the Seller's estate in the event of the filing of a bankruptcy
petition by or against the Seller under any bankruptcy law. No Related
Receivable or related Other Conveyed Property has been sold,
transferred, assigned, or pledged by the Seller to any Person other
than the Purchaser and by the Purchaser to any Person other than the
Trustee. Immediately prior to each transfer and assignment herein
contemplated, the Seller had good and marketable title to each Related
Receivable and related Other Conveyed Property and was the sole owner
thereof, free and clear of all liens, claims, encumbrances, security
interests, and rights of others, and, immediately upon the transfer
thereof to the Purchaser and the Purchaser shall have good and
marketable title to the Receivables and the other Conveyed Property
and shall be the sole owner thereof, free and clear of all Liens and,
immediately upon the pledge thereof to the Trustee under the
Indenture, the Trustee for the benefit of the Noteholders and the Note
Purchaser shall have a valid and enforceable security interest in the
Collateral, free and clear of all liens, encumbrances, security
interests, and rights of others, and each such transfer and pledge has
been perfected under the UCC. No Dealer has a participation in, or
other right to receive, proceeds of any Receivable.
(xvi) Lawful Assignment; No Consent Required. No Related
Receivable has been originated in, or is subject to the laws of, any
jurisdiction under which the sale, transfer, and assignment of such
Related Receivable under this Agreement or the pledge of such Related
Receivable under the Indenture or pursuant to transfers of the Notes
shall be unlawful, void, or voidable. Neither the Seller nor TFC has
entered into any agreement with any account debtor that prohibits,
restricts or conditions the assignment of any portion of the Related
Receivables. For the validity of such sales, transfers, assignments
and pledges, no consent by any Dealer, Obligor or any other Person is
required under any agreement or applicable law.
(xvii) All Filings Made. All filings (including, without
limitation, UCC filings or other actions) necessary in any
jurisdiction to give: (a) the Purchaser a first priority perfected
ownership interest in the Receivables and the Other Conveyed Property,
including, without limitation, the proceeds of the Receivables (to the
extent that the Purchaser can obtain such first priority perfected
security interest pursuant to one or more filings) and (b) the
Trustee, for the benefit of the Noteholders and the Note Purchaser, a
first priority perfected security interest in the Collateral, have
been made, taken or performed.
(xviii) Receivable File; One Original. The Seller has delivered
to the Trustee, at the location specified in Schedule B hereto, a
complete Receivable File with respect to each Related Receivable, and
the Trustee has delivered to the Purchaser, the Note Purchaser and the
Noteholders a copy of the Trust Receipt therefor. There is only one
original executed copy of each Receivable. The Servicer has in its
possession all other relevant documents with respect to the
Receivables, including without limitation the related credit
application and verification of insurance.
(xix) Chattel Paper. Each Related Receivable constitutes
"tangible chattel paper" under the UCC.
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(xx) Title Documents. (A) If the Related Receivable was
originated in a State in which notation of a security interest on the
title document of the related Financed Vehicle is required or
permitted to perfect such security interest, the title document of the
related Financed Vehicle for such Related Receivable shows, or if a
new or replacement title document is being applied for with respect to
such Financed Vehicle the title document (or, with respect to Related
Receivables that finance a vehicle in the States listed in Annex B,
other evidence of title issued by the applicable Department of Motor
Vehicles or similar authority in such States) will be received within
180 days of the origination date and will show, the Seller (or, in the
case of a TFC Receivable, TFC) named as the original secured party
under the Related Receivable as the holder of a first priority
security interest in such Financed Vehicle, and (B) if the Related
Receivable was originated in a State in which the filing of a
financing statement under the UCC is required to perfect a security
interest in motor vehicles, such filings or recordings have been duly
made and show the Seller (or, in the case of a TFC Receivable, TFC)
named as the original secured party under the Related Receivable, and
in either case, the Trustee has the same rights as such secured party
has or would have (if such secured party were still the owner of the
Receivable) against all parties claiming an interest in such Financed
Vehicle, and such rights have been validly pledged to the Trustee for
the benefit of the Noteholders and the Note Purchaser pursuant to the
Indenture. With respect to each Related Receivable for which the title
document has not yet been returned from the Registrar of Titles, the
Seller has received written evidence from the related Dealer that such
title document showing the Seller (or, in the case of a TFC
Receivable, TFC) as first lienholder has been applied for.
(xxi) Valid and Binding Obligation of Obligor. Each Related
Receivable is the legal, valid and binding obligation in writing of
the Obligor thereunder and is enforceable in accordance with its
terms, except only as such enforcement may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors'
rights generally, and all parties to such contract had full legal
capacity to execute and deliver such contract and all other documents
related thereto and to grant the security interest purported to be
granted thereby. Each Related Receivable is not subject to any right
of set-off by the Obligor.
(xxii) Characteristics of Obligors. As of the date of each
Obligor's application for credit from which the Related Receivable
that is a CPS Receivable arises, such Obligor (a) did not have any
material past due credit obligations or any personal or real property
repossessed or wages garnished within one year prior to the date of
such application, unless such amounts have been repaid or discharged
through bankruptcy, (b) was not the subject of any Federal, State or
other bankruptcy, insolvency or similar proceeding pending on the date
of application that has not been discharged, (c) had not been the
subject of more than one Federal, State or other bankruptcy,
insolvency or similar proceeding that has not completed a Section 341
Meeting, (d) was domiciled in the United States and (e) was not
self-employed. During the period from the date of each Obligor's
application for financing of the Financed Vehicle from which the
related Receivable arises to the applicable Funding Date, no Obligor
is or has been the subject of any Federal, State or other bankruptcy,
insolvency or similar proceeding that has not completed a Section 341
Meeting.
(xxiii) Post-Office Box. On or prior to the next billing period
after the related Cutoff Date, the Servicer will notify each Obligor
to make payments with respect to its respective Related Receivables
after the related Cutoff Date directly to the Post-Office Box, and
will provide each Obligor with a monthly statement in order to enable
such Obligor to make payments directly to the Post-Office Box.
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(xxiv) Casualty and Impounding. No Financed Vehicle financed
under a Related Receivable has suffered a Casualty and the Seller has
not received any notice that any Financed Vehicle has been impounded.
(xxv) No Agreement to Lend. The Obligor with respect to each
Related Receivable does not have any option under the Receivable to
borrow from any person any funds secured by the Financed Vehicle.
(xxvi) Obligation to Dealers or Others. The Purchaser and its
assignees will assume no obligation to Dealers or other originators or
holders of the Related Receivables (including, but not limited to
under dealer reserves) as a result of its purchase of the Related
Receivables.
(xxvii) No Impairment. Neither Seller nor the Purchaser has done
anything to convey any right to any Person that would result in such
Person having a right to payments due under any Related Receivables or
otherwise to impair the rights of the Purchaser, the Trustee, the
Noteholders or the Note Purchaser in any Related Receivable or the
proceeds thereof.
(xxviii) Receivables Not Assumable. No Related Receivable is
assumable by another Person in a manner which would release the
Obligor thereof from such Obligor's obligations to the Purchaser or
Seller with respect to such Related Receivable.
(xxix) Servicing. The servicing of each Related Receivable and
the collection practices relating thereto have been lawful and in
accordance with the standards set forth in this Agreement; and other
than Seller, TFC and the Back-up Servicer pursuant to the Basic
Documents, no other person has the right to service the Receivable.
(xxx) Creation of Security Interest. This Agreement creates a
valid and continuing security interest (as defined in the UCC) in the
Receivables and the Other Conveyed Property in favor of the Purchaser,
which security interest is prior to all other Liens (other than the
Lien of the Trustee under the Indenture) and is enforceable as such as
against creditors of and purchasers from the Seller. The Indenture
creates a valid and continuing security interest (as defined in the
UCC) in the Collateral in favor of the Trustee for the benefit of the
Noteholders and the Note Purchaser, which security interest is prior
to all other Liens and is enforceable as such as against creditors of
and purchasers from the Issuer.
(xxxi) Perfection of Security Interest in the Receivables and
Other Conveyed Property. The Seller has caused the filing of all
appropriate financing statements in the proper filing office in the
appropriate jurisdictions under applicable law in order to perfect the
security interest in the Receivables and the Other Conveyed Property
granted to the Purchaser hereunder pursuant to Section 2.1 and the
related Assignment.
(xxxii) Perfection of Security Interest in Trust Estate. The
Purchaser has caused the filing of all appropriate financing
statements in the proper filing office in the appropriate
jurisdictions under applicable law in order to perfect the security
interest in the Receivables and the other Collateral granted to the
Trustee for the benefit of the Noteholders and the Note Purchaser
under the Indenture.
(xxxiii) Perfection of Security Interest in Financed Vehicles in
Trust Estate. The Seller has taken all steps necessary to perfect its
security interest against the Obligors in the Financed Vehicles
securing the Receivables and such security interest has been validly
assigned by the Seller to the Purchaser and pledged by the Purchaser
to the Trustee for the benefit of the Noteholders and the Note
Purchaser.
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(xxxiv) No Other Security Interests - Seller. Other than the
security interest granted to the Purchaser pursuant to Section 2.1 and
the related Assignment, the Seller has not pledged, assigned, sold,
granted a security interest in, or otherwise conveyed any of the
Receivables or the Other Conveyed Property, other than such security
interests as are released at or before the conveyance thereof. The
Seller has not authorized the filing of and is not aware of any
financing statements filed against the Seller that include a
description of collateral covering any portion of the Receivables and
the Other Conveyed Property other than any financing statement
relating to the security interest granted to the Purchaser hereunder
or that has been terminated or released as to the Receivables and the
Other Conveyed Property. The Seller is not aware of any judgment or
tax lien filings against the Seller.
(xxxv) No Other Security Interests - Purchaser. Other than the
security interest granted to the Trustee for the benefit of the
Noteholders and Note Purchaser pursuant to the Indenture, the
Purchaser has not pledged, assigned, sold, granted a security interest
in, or otherwise conveyed any of the Collateral. The Purchaser has not
authorized the filing of and is not aware of any financing statements
filed against the Purchaser that include a description of collateral
covering any portion of the Collateral other than any financing
statement relating to the security interest granted to the Trustee for
the benefit of the Noteholders and Note Purchaser under the Indenture
or that has been terminated or released as to the Collateral. The
Purchaser is not aware of any judgment or tax lien filings against the
Purchaser.
(xxxvi) Notations on Contracts; Financing Statement Disclosure.
The Servicer has in its possession copies of all Contracts that
constitute or evidence the Receivables. The Contracts that constitute
or evidence the Receivables do not have any marks or notations
indicating that they have been pledged, assigned or otherwise conveyed
to any Person other than the Purchaser and/or the Trustee for the
benefit of the Noteholders and the Note Purchaser. All financing
statements filed or to be filed against the Seller in favor of the
Purchaser in connection herewith describing the Trust Estate contain a
statement to the following effect: "A purchase of or security interest
in any collateral described in this financing statement will violate
the rights of the secured party."
(xxxvii) Records. On or prior to each Funding Date, the Seller
will have caused its records (including electronic ledgers) relating
to each Related Receivable to be conveyed by it on such Funding Date
to be clearly and unambiguously marked to reflect that such Related
Receivable was conveyed by it to the Purchaser and pledged by the
Purchaser to the Trustee for benefit of the Noteholders and the Note
Purchaser.
(xxxviii) Computer Information. The computer diskette, computer
tape or other electronic transmission made available by the Seller to
the Purchaser on each Funding Date is, as of the related Cutoff Date,
complete and accurate and includes a description of the same
Receivables described in Schedule A to the related Assignment.
(xxxix) Remaining Principal Balance. As of the related Cutoff
Date, each Related Receivable has a remaining Principal Balance of at
least $3,000 and the Principal Balance of each Receivable set forth in
Schedule A to the related Assignment is true and accurate in all
respects.
(xl) Delivery of Receivable Files. A complete Receivable File
(other than, if applicable, a certificate of title missing from the
related Receivable File as described in Section 3.4(b)) with respect
to each Receivable has been, prior to the Funding Date, delivered to
the Trustee at the location listed in Schedule B hereof.
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(xli) Full Amount Advanced. Each Financed Vehicle related to a
Related Receivable has been delivered to the related Obligor, and
there are no requirements for future advances thereunder.
(xlii) SeaWest Receivables. None of the Related Receivables were
originated by SeaWest Financial Corporation or any of its
subsidiaries.
(xliii) Illinois Receivables. (a) The Seller does not own a
substantial interest in the business of a Dealer within the meaning of
Illinois Sales Finance Agency Act Rules and Regulations, Section
160.230(1) and (b) with respect to each Receivable originated in the
State of Illinois, (i) the printed or typed portion of the related
Form of Receivable complies with the requirements of 815 ILCS 375/3(b)
and (ii) the Seller has not, and for so long as such Receivable is
outstanding shall not, place or cause to be placed on the related
Financed Vehicle any collateral protection insurance in violation of
815 ILCS 180/10.
SECTION 3.2. Repurchase upon Breach; Section 341 Meetings.
(a) The Seller, the Servicer, any Noteholder or the Trustee, as the
case may be, shall inform the other parties to this Agreement and the Note
Purchaser promptly, in writing, upon the discovery of any breach of the
Seller's representations and warranties made pursuant to Section 3.1
(without regard to any limitations therein as to the Seller's knowledge).
Unless the breach shall have been cured by the last day of the next Accrual
Period following the discovery thereof by the Trustee or receipt by the
Trustee of notice from the Seller or the Servicer of such breach, the
Seller shall repurchase any Receivable if the value of such Receivable is
materially and adversely affected by the breach as of the last day of such
next Accrual Period (or, at the Seller's option, the last day of the first
Accrual Period following the discovery). In consideration of the purchase
of any Receivable, the Seller shall remit the Purchase Amount, in the
manner specified in Section 5.6. The sole remedy of the Purchaser, the
Trustee, the Note Purchaser or the Noteholders with respect to a breach of
representations and warranties pursuant to Section 3.1 shall be to enforce
the Seller's obligation to purchase such Receivables and the indemnity
provided by Section 8.3(e). Upon receipt of the Purchase Amount in respect
of any Defective Receivables and written instructions from the Servicer,
the Trustee shall release to the Seller or its designee the related
Receivable File and shall execute and deliver all reasonable instruments of
transfer or assignment, without recourse, as are prepared by the Seller and
delivered to the Trustee and necessary to vest in the Seller or such
designee title to such Defective Receivables. The parties hereto hereby
acknowledge that the Note Purchaser and the Majority Noteholders shall each
have the right to enforce directly against the Seller the Seller's
repurchase and indemnity obligations pursuant to this Section 3.2 and
Section 8.3(e).
(b) If the Insolvency Event related to a Section 341 Meeting has not
been discharged by the bankruptcy court or other similar court presiding
over such Insolvency Event within 90 days of the conveyance of the related
Receivable by the Seller to the Purchaser pursuant to Section 2.1(a), the
Seller shall repurchase such Receivable as of the last day of such next
Accrual Period.
SECTION 3.3. Custody of Receivable Files.
(a) In connection with each sale, transfer and assignment of
Receivables and related Other Conveyed Property to the Purchaser pursuant
to this Agreement and each Assignment, and each pledge thereof by the
Purchaser to the Trustee pursuant to the Indenture, the Trustee shall act
as custodian of the following documents or instruments in its possession
which shall be delivered to the Trustee on or before the Original Closing
Date or the related Funding Date in accordance with Section 3.4 (with
respect to each Receivable):
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(i) The fully executed original of the Receivable (together with
any agreements modifying or assigning the Receivable, including
without limitation any extension agreements); and
(ii) The original certificate of title in the name of the Obligor
with a notation on such certificate of title evidencing the Seller's
or TFC's security interest therein, or such documents that the Seller
shall keep on file, in accordance with its customary procedures,
evidencing the security interest of the Seller or TFC, respectively,
in the Financed Vehicle or, if not yet received, a copy of the
application therefor showing the Seller or TFC, as applicable, as
secured party, or a dealer guarantee of title.
(b) Upon payment in full of any Receivable, the Servicer will notify
the Trustee pursuant to a certificate of a Servicing Officer in the form of
Exhibit C and shall request delivery of the Receivable and Receivable File
to the Servicer.
SECTION 3.4. Acceptance of Receivable Files by Trustee(a) . In connection
with any Funding Date, the Seller shall cause to be delivered to the Trustee the
Receivable Files for the Related Receivables to be purchased on such Funding
Date not less than four Business Days prior to the related Funding Date. The
Trustee declares that it will hold and will continue to hold such files and any
amendments, replacements or supplements thereto and all Other Conveyed Property
as Trustee, custodian, agent and bailee in trust for the use and benefit of the
Noteholders and the Note Purchaser. The Trustee shall within three Business Days
after receipt of such files, execute and deliver to the Noteholders and the Note
Purchaser, a receipt substantially in the form of Exhibit B hereto (a "Trust
Receipt") for the Receivable Files received by the Trustee. By its delivery of a
Trust Receipt, the Trustee shall be deemed to have (a) acknowledged receipt of
the files (or the Receivables) which the Seller has represented are and contain
the Receivable Files for the Related Receivables to be purchased by the
Purchaser on the related Funding Date as indicated on Schedule A to the Addition
Notice, (b) reviewed such files or Receivables and (c) determined that it has
received the items referred to in Section 3.3(a)(i) and (ii) for each Related
Receivable identified on Schedule A to the Addition Notice, except, in each
case, as may otherwise be noted in Schedule I to the Trust Receipt. Unless such
defect noted on Schedule I of the related Trust Receipt with respect to such
Receivable to be transferred on the related Funding Date shall have been cured
by the Seller or waived by the Note Purchaser, in its sole discretion, and the
Trustee shall have executed a Trust Receipt reflecting that such Receivable is
no longer on Schedule I thereto prior to 11 a.m. New York time on the related
Funding Date, the Purchaser shall not purchase such Receivable from the Seller
on such Funding Date. The Trustee shall return to, or otherwise handle at the
direction of, the Seller those files relating to any Receivable not so purchased
on the Funding Date and any file unrelated to a Receivable identified in
Schedule A to the related Addition Notice (it being understood that the
Trustee's obligation to review the contents of any Receivable File shall be
limited as set forth in the preceding sentence).
(b) The Trustee shall make a list of Receivables for which an
application for a certificate of title but not an original certificate of
title or, with respect to Receivables that finance a vehicle in the States
listed in Annex B, other evidence of title issued by the applicable
Department of Motor Vehicles or similar authority in such States, is
included in the Receivable File as of the date of its review of the
Receivable Files and deliver a copy of such list to the Servicer, the
Noteholders and the Note Purchaser. On the date which is 180 days following
the related Funding Date, and monthly thereafter, the Trustee shall inform
the Seller, the Purchaser, the Noteholders and the Note Purchaser of any
Receivable for which the related Receivable File on such date does not
include an original certificate of title or, with respect to Financed
Vehicles in the States listed in Annex B, other evidence of title issued by
the applicable Department of Motor Vehicles or similar authority in such
States, and the Seller shall repurchase any such Receivable as of the last
Business Day of the Accrual Period in which the expiration of such 180 days
occurs. In consideration of the purchase of the Receivable, the Seller
shall remit the Purchase Amount for such Receivable, in the manner
specified in Section 5.6. Upon receipt of the Purchase Amount for a
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Receivable and written instructions from the Servicer, the Trustee shall
release to the Seller or its designee the related Receivable File and shall
execute and deliver all reasonable instruments of transfer or assignment,
without recourse, as are prepared by the Seller and delivered to the
Trustee and are necessary to vest in the Seller or such designee title to
the Receivable.
(c) For those Receivable Files that do not contain an original
certificate of title or, with respect to Receivables that finance a vehicle
in the States listed in Annex B, other evidence of title issued by the
applicable Department of Motor Vehicles or similar authority in such
States, upon receipt of such original title documents, the Seller shall
promptly deliver or cause to be delivered to the Trustee such original
title documents to the Trustee to place in the applicable Receivable File.
SECTION 3.5. Access to Receivable Files. The Trustee shall permit the
Servicer, the Note Purchaser and the Noteholders access to the Receivable Files
at all reasonable times during the Trustee's normal business hours. The Trustee
shall, within two Business Days of the request of the Servicer, the Note
Purchaser or any Noteholder, execute such documents and instruments as are
prepared by the Servicer, the Note Purchaser or such Noteholder and delivered to
the Trustee, as the Servicer, the Note Purchaser or such Noteholder deems
necessary to permit the Servicer, in accordance with its customary servicing
procedures, to enforce the Receivable on behalf of the Purchaser and any related
insurance policies covering the Obligor, the Receivable or Financed Vehicle so
long as such execution in the Trustee's sole discretion does not conflict with
the Indenture or any other Basic Document and will not cause it undue risk or
liability. The Trustee shall not be obligated to release any document from any
Receivable File unless it receives a release request signed by a Servicing
Officer in the form of Exhibit C hereto (the "Release Request"); provided,
however, if a Servicer Termination Event or Event of Default shall have occurred
and is continuing, the Trustee shall not release any such Receivable File to the
Servicer without the prior written consent of the Note Purchaser. Such Release
Request shall obligate the Servicer to return such document(s) to the Trustee
when the need therefor no longer exists unless the Receivable shall be
liquidated, in which case, the Servicer shall certify in the Release Request
that all amounts required to be deposited in the Collection Account with respect
to such Receivable have been so deposited.
SECTION 3.6. Trustee to Obtain Fidelity Insurance. The Trustee shall
maintain a fidelity bond in the form and amount as is customary for entities
acting as a trustee of funds and documents in respect of consumer contracts on
behalf of institutional investors.
SECTION 3.7. Trustee to Maintain Secure Facilities. The Trustee shall
maintain or cause to be maintained continuous custody of the Receivable Files in
secure and fire resistant facilities in accordance with customary standards for
such custody.
ARTICLE IV
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ADMINISTRATION AND SERVICING OF RECEIVABLES
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SECTION 4.1. Duties of the Servicer. The Servicer, as agent for the
Purchaser, the Note Purchaser and the Noteholders shall manage, service,
administer and make collections on the Receivables with reasonable care, using
that degree of skill and attention customary and usual for institutions which
service motor vehicle retail installment sale contracts similar to the
Receivables and, to the extent more exacting, that the Servicer exercises with
respect to all comparable automotive receivables that it services for itself or
others. In performing such duties, the Servicer shall comply with its current
servicing policies and procedures, as such servicing policies and procedures may
be amended from time to time, so long as such amendments will not materially
adversely affect the interests of the Note Purchaser or the Noteholders, or
otherwise with the prior written consent of the Note Purchaser and the
Noteholders (which consent shall not be unreasonably withheld), and notice of
such amendments is given to the Note Purchaser and the Noteholders prior to the
effectiveness thereof. The Servicer's duties shall include, without limitation,
collection and posting of all payments, responding to inquiries of Obligors on
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such Receivables, investigating delinquencies, sending payment statements to
Obligors, reporting tax information to Obligors, accounting for collections,
furnishing monthly and annual statements to the Trustee and the Noteholders with
respect to distributions. Without limiting the generality of the foregoing, and
subject to the servicing standards set forth in this Agreement including,
without limitation, the restrictions set forth in Section 4.6, the Servicer is
authorized and empowered by the Purchaser to execute and deliver, on behalf of
itself, the Purchaser, the Note Purchaser or the Noteholders, any and all
instruments of satisfaction or cancellation, or partial or full release or
discharge, and all other comparable instruments, with respect to such
Receivables or to the Financed Vehicles securing such Receivables and/or the
certificates of title or, with respect to Financed Vehicles in the States listed
in Annex B, other evidence of title issued by the applicable Department of Motor
Vehicles or similar authority in such States with respect to such Financed
Vehicles. If the Servicer shall commence a legal proceeding to enforce a
Receivable, the Purchaser shall thereupon be deemed to have automatically
assigned, solely for the purpose of collection, such Receivable to the Servicer.
If in any enforcement suit or legal proceeding it shall be held that the
Servicer may not enforce a Receivable on the ground that it shall not be a real
party in interest or a holder entitled to enforce such Receivable, the Purchaser
shall, at the Servicer's expense and direction, take steps to enforce such
Receivable, including bringing suit in its name or the name of Note Purchaser or
the Noteholders. The Servicer shall prepare and furnish, and the Trustee shall
execute, any powers of attorney and other documents reasonably necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties hereunder.
SECTION 4.2. Collection of Receivable Payments; Modifications of
Receivables; Lockbox Agreements.
(a) Consistent with the standards, policies and procedures required by
this Agreement, the Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Receivables as
and when the same shall become due and shall follow such collection
procedures as it follows with respect to all comparable automotive
receivables that it services for itself or others; provided, however, that
promptly after the Original Closing Date (or the related Funding Date, as
applicable) the Servicer shall notify each Obligor to make all payments
with respect to the Receivables to the applicable Post-Office Box. The
Servicer will provide each Obligor with a monthly statement in order to
notify such Obligors to make payments directly to the applicable
Post-Office Box. The Servicer shall allocate collections between principal
and interest in accordance with the customary servicing procedures it
follows with respect to all comparable automotive receivables that it
services for itself or others and in accordance with the terms of this
Agreement. Except as provided below, the Servicer, for as long as the
Seller is the Servicer, may grant extensions on a Receivable in accordance
with the applicable Contract Purchase Guidelines, if any; provided,
however, that the Servicer may not grant (x) more than one (1) extension
per calendar year with respect to a CPS Receivable or grant an extension
with respect to a CPS Receivable for more than one (1) calendar month or
grant more than four (4) extensions in the aggregate with respect to a CPS
Receivable and (y) more than two (2) extensions per calendar year with
respect to a TFC Receivable or grant an extension with respect to a TFC
Receivable for more than one (1) calendar month or grant more than four (4)
extensions in the aggregate with respect to a TFC Receivable, in each case
without the prior written consent of the Note Purchaser (which shall not be
unreasonably withheld). In no event shall the principal balance of a
Receivable be reduced, except in connection with a settlement in the event
the Receivable becomes a Defaulted Receivable. If the Servicer is not the
Seller or the Backup Servicer, the Servicer may not make any extension on a
Receivable without the prior written consent of the Note Purchaser. The
Servicer may in its discretion waive any prepayment charge, late payment
charge or any other similar fees that may be collected in the ordinary
course of servicing a Receivable. Notwithstanding anything to the contrary
contained herein, the Servicer shall not agree to any alteration of the
interest rate on any Receivable or of the amount of any Scheduled
Receivable Payment on Receivables, other than to the extent that such
alteration is required by applicable law.
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(b) The Servicer shall maintain each Lockbox Account in the name of
the Purchaser for the benefit of the Trustee, acting on behalf of the
Noteholders and the Note Purchaser. Pursuant to each Lockbox Agreement, the
Trustee has authorized the Servicer to direct dispositions of funds on
deposit in the related Lockbox Account to the Collection Account (but not
to any other account), and no other Person, except the Lockbox Processor
and the Trustee, has authority to direct disposition of funds on deposit in
such Lockbox Account. However, each Lockbox Agreement shall provide that
the Lockbox Bank will comply with instructions originated by the Trustee
relating to the disposition of the funds in the related Lockbox Account
without further consent by the Seller, the Servicer or the Purchaser. The
Trustee shall have no liability or responsibility with respect to the
Lockbox Processor's directions or activities as set forth in the preceding
sentence. Each Lockbox Account shall be established pursuant to and
maintained in accordance with the related Lockbox Agreement and shall be a
demand deposit account initially established and maintained with Bank One,
N.A., or at the request of the Note Purchaser an Eligible Account
satisfying clause (i) of the definition thereof; provided, however, that
the Trustee shall give the Servicer prior written notice of any change made
at the request of the Note Purchaser in the location of a Lockbox Account.
The Servicer shall maintain each Post-Office Box at a United States Post
Office Branch in the name of the Trustee for the benefit of the Noteholders
and Note Purchaser.
(c) Notwithstanding any Lockbox Agreement, or any of the provisions of
this Agreement relating to a Lockbox Agreement, the Servicer shall remain
obligated and liable to the Purchaser, the Trustee, the Note Purchaser and
the Noteholders for servicing and administering the Receivables and the
Other Conveyed Property in accordance with the provisions of this Agreement
without diminution of such obligation or liability by virtue thereof.
(d) In the event the Seller shall for any reason no longer be acting
as the Servicer hereunder, the Backup Servicer or another successor
Servicer shall thereupon assume all of the rights and obligations of the
outgoing Servicer under each Lockbox Agreement. In such event, the Backup
Servicer or such other successor Servicer shall be deemed to have assumed
all of the outgoing Servicer's interest therein and to have replaced the
outgoing Servicer as a party to a Lockbox Agreement to the same extent as
if such Lockbox Agreement had been assigned to the Backup Servicer or a
successor Servicer, except that the outgoing Servicer shall not thereby be
relieved of any liability or obligations on the part of the outgoing
Servicer to the Lockbox Bank under such Lockbox Agreement. The outgoing
Servicer shall, upon request of the Note Purchaser or the Trustee, but at
the expense of the outgoing Servicer, deliver to the Backup Servicer or
such other successor Servicer all documents and records relating to the
Lockbox Agreements and an accounting of amounts collected and held by the
Lockbox Bank and otherwise use its best efforts to effect the orderly and
efficient assignment of the Lockbox Agreements to the Backup Servicer or
such other successor Servicer. In the event that the Note Purchaser shall
elect to change the identity of the Lockbox Bank, the Servicer, at its
expense, shall cause the Lockbox Bank to deliver, at the direction of the
Note Purchaser, to the Trustee or a successor Lockbox Bank, all documents
and records relating to the Receivables and all amounts held (or thereafter
received) by the Lockbox Bank (together with an accounting of such amounts)
and shall otherwise use its best efforts to effect the orderly and
efficient transfer of the Lockbox arrangements.
(e) On each Business Day, pursuant to the Lockbox Agreements, the
Lockbox Processor will transfer any payments from Obligors received in the
Post-Office Box to the applicable Lockbox Account. The Servicer shall cause
the Lockbox Bank to transfer cleared funds from the Lockbox Accounts to the
Collection Account. In addition, the Servicer shall remit all payments by
or on behalf of the Obligors received by the Servicer with respect to the
Receivables (other than Purchased Receivables) and all Net Liquidation
Proceeds no later than two Business Days following receipt directly
(without deposit into any intervening account) into the related Lockbox
Account or the Collection Account. The Servicer shall not commingle its
assets and funds with those on deposit in the Lockbox Accounts.
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SECTION 4.3. Realization Upon Receivables. On behalf of the Purchaser, the
Trustee, the Note Purchaser and the Noteholders, the Servicer shall use its best
efforts, consistent with the servicing procedures set forth herein, to repossess
or otherwise convert the ownership of the Financed Vehicle securing any
Receivable as to which the Servicer shall have determined eventual payment in
full is unlikely. The Servicer shall commence efforts to repossess or otherwise
convert the ownership of a Financed Vehicle on or prior to the date that an
Obligor has failed to make more than 90% of a Scheduled Receivable Payment
thereon in excess of $10 for 120 days or more; provided, however, that the
Servicer may elect not to commence such efforts within such time period if in
its good faith judgment it determines either that it would be impracticable to
do so or that the proceeds ultimately recoverable with respect to such
Receivable would be increased by forbearance. The Servicer shall follow such
customary and usual practices and procedures as it shall deem necessary or
advisable in its servicing of automotive receivables, consistent with the
standards of care set forth in Section 4.2, which may include reasonable efforts
to realize upon any recourse to Dealers and selling the Financed Vehicle at
public or private sale. The foregoing shall be subject to the provision that, in
any case in which the Financed Vehicle shall have suffered damage, the Servicer
shall not expend funds in connection with the repair or the repossession of such
Financed Vehicle unless it shall determine in its discretion that such repair
and/or repossession will increase the proceeds ultimately recoverable with
respect to such Receivable by an amount greater than the amount of such
expenses.
SECTION 4.4. Insurance.
(a) The Servicer, in accordance with the servicing procedures and
standards set forth herein, shall require that (i) each Obligor shall have
obtained insurance covering the Financed Vehicle, as of the date of the
execution of the Receivable, insuring against loss and damage due to fire,
theft, transportation, collision and other risks generally covered by
comprehensive and collision coverage and each Receivable requires the
Obligor to maintain such physical loss and damage insurance naming the
Seller and its successors and assigns as an additional insured, (ii) each
Receivable that finances the cost of premiums for credit life and credit
accident and health insurance is covered by an insurance policy or
certificate naming the Seller as policyholder (creditor) and (iii) as to
each Receivable that finances the cost of an extended service contract, the
respective Financed Vehicle which secures the Receivable is covered by an
extended service contract (each, a "Receivables Insurance Policy").
(b) To the extent applicable, the Servicer shall not take any action
which would result in noncoverage under any Receivables Insurance Policy
which, but for the actions of the Servicer, would have been covered
thereunder. The Servicer, on behalf of the Purchaser, the Note Purchaser
and the Noteholders, shall take such reasonable action as shall be
necessary to permit recovery under each Receivables Insurance Policy. Any
amounts collected by the Servicer under any Receivables Insurance Policy,
including, without limitation, proceeds thereof, shall be deposited in the
Collection Account within two (2) Business Days of receipt.
SECTION 4.5. Maintenance of Security Interests in Vehicles.
(a) Consistent with the policies and procedures required by this
Agreement, the Servicer shall take such steps on behalf of the Purchaser as
are necessary to maintain perfection of the security interest created by
each Receivable in the related Financed Vehicle, including but not limited
to obtaining the authorization or execution by the Obligors and the
recording, registering, filing, re-recording, re-registering and refiling
of all security agreements, financing statements and continuation
statements or instruments as are necessary to maintain the security
interest granted by the Obligors under the respective Receivables. The
Trustee hereby authorizes the Servicer, and the Servicer agrees, to take
any and all steps necessary to re-perfect or continue the perfection of
such security interest on behalf of the Purchaser and the Trustee for the
benefit of the Noteholders and the Note Purchaser as necessary because of
the relocation of a Financed Vehicle or for any other reason. In the event
that the assignment of a Receivable to the Purchaser, and the pledge
thereof by the Purchaser to the Trustee is insufficient, without a notation
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on the related Financed Vehicle's certificate of title, or without
fulfilling any additional administrative requirements under the laws of the
state in which the Financed Vehicle is located, to perfect a security
interest in the related Financed Vehicle in favor of the Trustee for the
benefit of the Noteholders and the Note Purchaser, each of the Trustee and
the Seller hereby agrees that the designation of the Seller or TFC, as
applicable, as the secured party on the certificate of title is in respect
of the Seller's capacity as Servicer and TFC's capacity as subservicer, as
applicable, as agent of the Trustee for the benefit of the Noteholders and
the Note Purchaser.
(b) Upon the occurrence and continuance of a Servicer Termination
Event, the Trustee and the Servicer shall take or cause to be taken such
action as may, in the opinion of counsel to the Trustee, which opinion
shall be an expense of the Servicer and shall not be an expense of the
Trustee, be necessary to perfect or re-perfect the security interests in
the Financed Vehicles securing the Receivables in the name of the Trustee
on behalf of the Noteholders and Note Purchaser by amending the title
documents of such Financed Vehicles or by such other reasonable means as
may, in the opinion of counsel to the Trustee, which opinion shall be an
expense of the Servicer and shall not be an expense of the Trustee, be
necessary or prudent.
(c) The Seller hereby agrees to pay all expenses related to such
perfection or re-perfection in accordance with clauses (a) and (b) above
and to take all action necessary therefor. In addition, the Note Purchaser
or the Trustee may instruct the Servicer to take or cause to be taken, and
the Servicer shall take or cause to be taken, such action as may, in the
judgment of the Trustee or the Note Purchaser, be necessary to perfect or
re-perfect the security interest in the Financed Vehicles underlying the
Receivables in the name of the Trustee on behalf of the Noteholders and the
Note Purchaser, including by amending the title documents of such Financed
Vehicles or by such other reasonable means as may, in the judgment of the
Trustee or the Note Purchaser, be necessary or prudent; provided, however,
that if the Note Purchaser or the Trustee requests that the title documents
be amended prior to the occurrence of a Servicer Termination Event, the
Servicer shall carry out such action only to the extent that the
out-of-pocket expenses of the Servicer shall be reimbursed by the Note
Purchaser or the Noteholders, respectively.
SECTION 4.6. Additional Covenants of Servicer.
(a) The Servicer shall not release the Financed Vehicle securing any
Receivable from the security interest granted by such Receivable in whole
or in part except in the event of payment in full by the Obligor thereunder
or repossession or other liquidation of the Financed Vehicle, nor shall the
Servicer impair the rights of the Noteholders, the Note Purchaser or the
Trustee in such Receivables, nor shall the Servicer amend or otherwise
modify a Receivable, except as permitted in accordance with Section 4.2.
(b) The Servicer shall obtain and/or maintain all necessary licenses,
approvals, authorizations, orders or other actions of any person,
corporation or other organization, or of any court, governmental agency or
body or official, required in connection with the execution, delivery and
performance of this Agreement and the other Basic Documents.
(c) The Servicer shall not make any material changes to its collection
policies unless the Note Purchaser expressly consents in writing prior to
such changes (which consent shall not be unreasonably withheld).
(d) The Servicer shall provide written notice to the Noteholders and
the Note Purchaser of any default, event of default or servicer termination
event under any other warehouse financing facility or securitization that
has occurred and which default, event of default or servicer termination
shall not have been waived or otherwise cured within the applicable cure
period.
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(e) The Servicer shall reimburse the Note Purchaser and the
Noteholders for any and all fees or expenses that the Note Purchaser or
such Noteholders, as applicable, pay to a bank arising out of a return of
payments from the Purchaser or the Seller deposited for collection by or
for the benefit of the Note Purchaser or the Noteholders, as applicable.
(f) The Servicer will not (i) create, incur or suffer to exist, or
agree to create, incur or suffer to exist, or consent to cause or permit in
the future (upon the happening of a contingency or otherwise) the creation,
incurrence or existence of any lien, security interest, charge, pledge,
equity, encumbrance or restriction on transferability of the Receivables
and the Other Conveyed Property except (x) for the lien in favor of the
Trustee for the benefit of the Noteholders and the Note Purchaser and the
restrictions on transferability imposed by this Agreement or any other
Basic Document or (y) with respect to any portion of the Receivables and
the Other Conveyed Property released in a manner permitted by the Basic
Documents from the lien in favor of the Trustee for the benefit of the
Noteholders and the Note Purchaser, or (ii) sign or file under the UCC of
any jurisdiction any financing statement which names the Seller, the
Servicer or the Purchaser as a debtor, or sign any security agreement
authorizing any secured party thereunder to file such financing statement,
with respect to the Receivables and Other Conveyed Property, except in each
case any such instrument solely securing the rights and preserving the lien
of the Trustee for the benefit of the Noteholders and the Note Purchaser.
SECTION 4.7. Purchase of Receivables Upon Breach of Covenant. Upon
discovery by any of the Servicer, the Purchaser, the Trustee, the Note Purchaser
or any Noteholder of a breach of any of the covenants of the Servicer set forth
in Sections 4.2(a), 4.4, 4.5 or 4.6, the party discovering such breach shall
give prompt written notice to the others; provided, however, that the failure to
give any such notice shall not affect any obligation of the Servicer under this
Section 4.7. Unless the breach shall have been cured by the last day of the next
Accrual Period following such discovery, the Servicer shall purchase any
Receivable materially and adversely affected by such breach. In consideration of
the purchase of such Receivable, the Servicer shall remit the Purchase Amount
for such Receivable in the manner specified in Section 5.6. The sole remedy of
the Trustee, the Purchaser, the Note Purchaser or the Noteholders hereunder with
respect to a breach of Sections 4.2(a), 4.4, 4.5 or 4.6 shall be to require the
Servicer to repurchase Receivables pursuant to this Section 4.7; provided,
however, that the Servicer shall indemnify the Trustee, the Backup Servicer, the
Purchaser, the Note Purchaser and the Noteholders against all costs, expenses,
losses, damages, claims and liabilities, including reasonable fees and expenses
of counsel, which may be asserted against or incurred by any of them as a result
of third party claims arising out of the events or facts giving rise to such
breach.
SECTION 4.8. Servicing Fee. The "Servicing Fee" for each Settlement Date
shall be equal to the product of one-twelfth times the Servicing Fee Percentage
times the average of the Aggregate Principal Balance of the Eligible Receivables
on the first day of the related Accrual Period and on the last day of such
Accrual Period. The Servicing Fee shall also include all late fees, prepayment
charges including, in the case of a Rule of 78's Receivable that is prepaid in
full, to the extent not required by law to be remitted to the related Obligor,
the difference between the Principal Balance of such Rule of 78's Receivable
(plus accrued interest to the date of prepayment) and the principal balance of
such Receivable computed according to the "Rule of 78's", and other
administrative fees or similar charges allowed by applicable law with respect to
Receivables, collected (from whatever source) on the Receivables. If the Backup
Servicer becomes the successor Servicer, the "Servicing Fee" payable to the
Backup Servicer as successor Servicer shall be determined in accordance with the
Servicing and Lockbox Processing Assumption Agreement.
SECTION 4.9. Servicer's Certificate. No later than 12:00 noon New York City
time on each Determination Date, the Servicer shall deliver (facsimile or
electronic delivery being acceptable) to the Trustee, the Note Purchaser and the
Purchaser, a certificate substantially in the form of Exhibit A hereto (a
"Servicer's Certificate") containing among other things, (i) all information
necessary to enable the Trustee to make the distributions required by Section
5.7, (ii) all information necessary for the Trustee to send statements to the
Noteholders and the Note Purchaser pursuant to Sections 5.8(b) and 5.9, (iii) a
listing of all Purchased Receivables purchased as of the related Accounting
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Date, identifying the Receivables so purchased, (iv) the calculation of the
Borrowing Base, the CPS Borrowing Base and the TFC Borrowing Base as of the last
day of the related Accrual Period, and (v) all information necessary to enable
the Backup Servicer to verify the information specified in Section 4.14(b) and
to complete the accounting required by Section 5.9. In addition to the
information set forth in the preceding sentence, each Servicer's Certificate
shall also contain the following information: (a) whether a Servicer Termination
Event or any other Funding Termination Event has occurred; (b) the Servicer
Delinquency Ratio as of the end of the Related Accrual Period; (c) the Loss
Ratio as of such Determination Date; (d) so long as the Servicer is CPS, a
certification that the Servicer is in compliance with the financial covenants
contained in Sections 10.1(j), (k) and (l) of this Agreement; and (e) such other
information reasonably requested by the Note Purchaser and any Noteholder.
SECTION 4.10. Annual Statement as to Compliance, Notice of Servicer
Termination Event.
(a) The Servicer shall deliver to the Purchaser, to the Trustee, the
Note Purchaser and to the Noteholders and the Backup Servicer, on or before
February 28 of each year beginning February 28, 2005, an Officer's
Certificate, dated as of December 31 of the preceding year, stating that
(i) a review of the activities of the Servicer during the preceding
12-month period (or, in the case of the first such certificate, the period
from the initial Cutoff Date to December 31, 2004) and of its performance
under this Agreement has been made under such officer's supervision and
(ii) to the best of such officer's knowledge, based on such review, the
Servicer has fulfilled all its obligations under this Agreement throughout
such year (or, in the case of the first such certificate, such shorter
period), or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the
nature and status thereof.
(b) The Servicer shall deliver to the Trustee, the Noteholders, the
Note Purchaser and the Backup Servicer, promptly after having obtained
knowledge thereof, but in no event later than two (2) Business Days
thereafter, written notice in an Officer's Certificate of any event which
with the giving of notice or lapse of time, or both, would become a
Servicer Termination Event under Section 10.1.
SECTION 4.11. Independent Accountants' Reports. The Servicer shall cause a
firm of nationally recognized independent certified public accountants (the
"Independent Accountants"), who may also render other services to the Servicer
or to the Purchaser, to deliver to the Trustee, the Backup Servicer, the Note
Purchaser and the Noteholders, on or before March 31 of each year beginning
March 31, 2005, a report dated as of December 31 of the preceding year in form
and substance reasonably acceptable to the Note Purchaser (the "Accountants'
Report") and reviewing the Servicer's activities during the preceding 12-month
period (or, in the case of the first such report, the period from the Cutoff
Date with respect to Receivables transferred to the Purchaser on the initial
Funding Date to December 31, 2004), addressed to the Board of Directors of the
Servicer, to the Trustee, the Backup Servicer, the Note Purchaser and to the
Noteholders, to the effect that such firm has examined the financial statements
of the Servicer and issued its report therefor and that such examination (1) was
made in accordance with generally accepted auditing standards, and accordingly
included such tests of the accounting records and such other auditing procedures
as such firm considered necessary in the circumstances; (2) included tests
relating to auto loans serviced for others in accordance with the requirements
of the Uniform Single Attestation Program for Mortgage Bankers (the "Program"),
to the extent the procedures in the Program are applicable to the servicing
obligations set forth in this Agreement; (3) included an examination of the
delinquency and loss statistics relating to the Servicer's portfolio of
automobile and light truck installment sale contracts; and (4) except as
described in the report, disclosed no exceptions or errors in the records
relating to automobile and light truck loans serviced for others that, in the
firm's opinion, paragraph four of the Program requires such firm to report. The
accountant's report shall further state that (1) a review in accordance with
agreed upon procedures was made of two randomly selected Servicer's
Certificates; (2) except as disclosed in the report, no exceptions or errors in
the Servicer's Certificates were found; and (3) the delinquency and loss
information relating to the Receivables and the stated amount of Liquidated
Receivables, if any, contained in the Servicer's Certificates were found to be
accurate. In the event such firm requires the Trustee and/or the Backup Servicer
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to agree to the procedures performed by such firm, the Servicer shall direct the
Trustee and/or the Backup Servicer, as applicable, in writing to so agree; it
being understood and agreed that the Trustee and/or the Backup Servicer will
deliver such letter of agreement in conclusive reliance upon the direction of
the Servicer, and neither the Trustee nor the Backup Servicer makes any
independent inquiry or investigation as to, and shall have no obligation or
liability in respect of, the sufficiency, validity or correctness of such
procedures. The Report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
SECTION 4.12. Independent Accountants' Review of Receivable Files.
Commencing on September 30, 2004 and, thereafter on each December 31, March 31,
June 30 and September 30 (or, with respect to each such date, upon the date of
the closing of Seller's next occurring "CPS Auto Receivables Trust" (or similar)
term securitization transaction, provided that such review is not made more than
120 days after the immediately preceding review) prior to the Final Scheduled
Settlement Date, to the extent that the Invested Amount on any day in the
calendar quarter then ending was greater than $25 million (or such other dates
as the Note Purchaser may determine in its reasonable discretion from time to
time by prior written notice to the Seller, the Servicer and the Trustee), the
Seller at its own expense shall cause Independent Accountants reasonably
acceptable to the Note Purchaser to conduct a post-funding review of the
Seller's compliance with its stated underwriting policies and verify certain
characteristics of the Receivables as of each Funding Date. The Independent
Accountants shall within ten Business Days complete such physical inspection and
limited review and execute and deliver to Seller, the Servicer, the Trustee, the
Note Purchaser and the Noteholders a report summarizing the findings, which
report shall be delivered in any case within 120 days of the previous report
delivered in accordance with this Section 4.12. If such review reveals, in the
Note Purchaser's reasonable opinion, an unsatisfactory number of exceptions, the
Note Purchaser, in its reasonable discretion, may require a full review of a
larger sample of the Receivables by the Independent Accountants at the expense
of the Seller.
SECTION 4.13. Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to representatives of the Trustee, the
Backup Servicer, the Note Purchaser and the Noteholders reasonable access to the
documentation regarding the Receivables. In each case, such access shall be
afforded without charge but only upon reasonable request and during normal
business hours. Nothing in this Section shall derogate from the obligation of
the Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors, and the failure of the Servicer to provide access as
provided in this Section as a result of such obligation shall not constitute a
breach of this Section.
SECTION 4.14. Verification of Servicer's Certificate.
(a) Concurrently with the delivery by the Servicer of the Servicer's
Certificate each month, the Servicer will deliver to the Trustee and the
Backup Servicer a computer diskette (or other electronic transmission) in a
format acceptable to the Trustee and the Backup Servicer containing
information with respect to the Receivables as of the close of business on
the last day of the preceding Accrual Period which information is necessary
for preparation of the Servicer's Certificate. The Backup Servicer shall
use such computer diskette (or other electronic transmission) to verify
certain information specified in Section 4.14(b) contained in the
Servicer's Certificate delivered by the Servicer, and the Backup Servicer
shall notify the Servicer, the Note Purchaser and the Noteholders of any
discrepancies on or before the second Business Day following the
Determination Date. In the event that the Backup Servicer reports any
discrepancies, the Servicer and the Backup Servicer shall attempt to
reconcile such discrepancies by the related Settlement Date, but in the
absence of a reconciliation, the Servicer's Certificate shall control for
the purpose of calculations and distributions with respect to the related
Settlement Date. No payments shall be made to the Issuer pursuant to clause
(viii) of Section 5.7(a) hereof until any discrepancies shall have been
reconciled. In the event that the Backup Servicer and the Servicer are
unable to reconcile discrepancies with respect to a Servicer's Certificate
by the related Settlement Date, the Backup Servicer shall notify the Note
Purchaser and the Noteholders thereof in writing and the Servicer shall
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cause a firm of Independent Accountants, at the Servicer's expense, to
audit the Servicer's Certificate and, prior to the fifth day of the
following calendar month, reconcile the discrepancies. The effect, if any,
of such reconciliation shall be reflected in the Servicer's Certificate for
such next succeeding Determination Date. Other than the duties specifically
set forth in this Agreement, the Backup Servicer shall have no obligations
hereunder, including, without limitation, to supervise, verify, monitor or
administer the performance of the Servicer. The Backup Servicer shall have
no liability for any actions taken or omitted by the Servicer. The duties
and obligations of the Backup Servicer shall be determined solely by the
express provisions of this Agreement and no implied covenants or
obligations shall be read into this Agreement against the Backup Servicer.
(b) The Backup Servicer shall review each Servicer's Certificate
delivered pursuant to Section 4.14(a) and shall:
(i) confirm that such Servicer's Certificate is complete on its
face;
(ii) load the computer diskette (which shall be in a format
acceptable to the Backup Servicer) received from the Servicer pursuant
to Section 4.14(a) hereof, confirm that such computer diskette is in a
readable form and calculate and confirm the Aggregate Principal
Balance of the Receivables for the most recent Settlement Date; and
(iii) confirm that Available Funds, the Noteholders' Principal
Distributable Amount, the Noteholders' Interest Distributable Amount,
the Servicing Fee, the Backup Servicing Fee, the Trustee Fee, Loss
Ratio and Servicer Delinquency Ratio in the Servicer's Certificate are
accurate based solely on the recalculation of the Servicer's
Certificate.
(c) Within 90 days of the Original Closing Date, the Backup Servicer
will cause an affiliate of the Backup Servicer to data map to its servicing
system all servicing/loan file information, including all relevant borrower
contact information such as address and phone numbers as well as loan
balance and payment information, including comment histories and collection
notes. On or before the fifth calendar day of each month, the Servicer will
provide to an affiliate of the Backup Servicer and the Note Purchaser an
electronic transmission of all servicing/loan information, including all
relevant borrower contact information such as address and phone numbers as
well as loan balance and payment information, including comment histories
and collection notes, and the Backup Servicer will cause such affiliate to
review each file to ensure that it is in readable form and verify that the
data balances conform to the trial balance reports received from the
Servicer. Additionally, the Backup Servicer shall cause such affiliate to
store each such file.
SECTION 4.15. Retention and Termination of Servicer. The Servicer hereby
covenants and agrees to act as such under this Agreement for a term commencing
on the Restatement Effective Date and ending on May 31, 2006, which term may be
extended by the Note Purchaser for successive monthly terms pursuant to written
instructions delivered by the Note Purchaser to the Servicer and the Trustee
(or, at the discretion of the Note Purchaser exercised pursuant to revocable
written standing instructions from time to time to the Servicer and the Trustee,
for any specified number of terms greater than one), until such time as the
Notes and all other Secured Obligations have been paid in full (each such
notice, including each notice pursuant to standing instructions, which shall be
deemed delivered at the end of successive terms for so long as such instructions
are in effect, a "Servicer Extension Notice"). The Servicer hereby agrees that,
upon its receipt of any such Servicer Extension Notice, the Servicer shall
become bound, for the duration of the term covered by such Servicer Extension
Notice, to continue as the Servicer subject to and in accordance with the other
provisions of this Agreement. The Trustee agrees that if as of the twentieth day
prior to the last day of any term of the Servicer, the Trustee shall not have
received any Servicer Extension Notice as of such date from the Note Purchaser,
the Trustee shall, within five days thereafter, give written notice of such
non-receipt to the Note Purchaser and the Servicer and the Servicer's term shall
not be extended unless a Servicer Extension Notice is received on or before the
last day of such term.
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SECTION 4.16. Errors and Omission Policy and Fidelity Bond. The Servicer
shall maintain an errors and omissions insurance policy and a fidelity bond in
such form and amount as is customary for entities acting as custodian of funds
and documents in respect of consumer contracts on behalf of institutional
investors.
SECTION 4.18. Subservicing Arrangements. The Servicer may arrange for the
subservicing of all or any portion of the Receivables by a subservicer;
provided, however, that such subservicing arrangement must provide for the
servicing of such Receivables in a manner consistent with the servicing
arrangements contemplated hereunder; provided, further, that any such
subservicing arrangement with a Person that is not an Affiliate of CPS shall
require the prior written consent of the Note Purchaser. Unless the context
otherwise requires, references in this Agreement to actions taken or to be taken
by the Servicer in servicing the Receivables include actions taken or to be
taken by a subservicer on behalf of the Servicer. Notwithstanding the provisions
of any subservicing agreement, any of the provisions of this Agreement relating
to agreements or arrangements between the Servicer and a subservicer or
reference to actions taken through a subservicer or otherwise, the Servicer
shall remain obligated and liable to the Purchaser, the Trustee, the Backup
Servicer, the Note Purchaser and the Noteholders for the servicing and
administration of the Receivables in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
subservicing agreements or arrangements or by virtue of indemnification from the
subservicer and to the same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the Receivables. All actions
of each subservicer performed pursuant to a subservicing arrangement shall be
performed as an agent of the Servicer with the same force and effect as if
performed directly by the Servicer. The subservicer under each subservicing
arrangement shall be engaged by the Servicer upon terms consistent with the
engagement of the Servicer hereunder. Each subservicer shall be simultaneously
terminated in the event that the Servicer is terminated hereunder. In addition,
if a subservicing arrangement relates to TFC Receivables, the related
subservicer may be terminated by the Note Purchaser upon the occurrence of a TFC
Funding Termination Event. The fees paid by the Servicer to the related
subservicer under each subservicing arrangement shall not exceed the Servicing
Fees paid to the Servicer hereunder.
ARTICLE V
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ACCOUNTS; DISTRIBUTIONS; STATEMENTS TO THE NOTEHOLDERS
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SECTION 5.1. Establishment of Pledged Accounts.
(a) The Trustee, on behalf of the Noteholders and the Note Purchaser,
shall maintain in its own name an Eligible Account (the "Collection
Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Trustee on behalf of the
Noteholders and the Note Purchaser. The Collection Account shall initially
be established with the Trustee.
(b) The Trustee, on behalf of the Noteholders and the Note Purchaser,
shall maintain in its own name an Eligible Account (the "Note Distribution
Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Trustee on behalf of the
Noteholders and the Note Purchaser. The Note Distribution Account shall
initially be established with the Trustee.
(c) The Trustee, on behalf of the Noteholders and the Note Purchaser,
shall maintain in its own name an Eligible Account (the "Principal Funding
Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Trustee on behalf of the
Noteholders and the Note Purchaser. The Principal Funding Account shall
initially be established with the Trustee.
(d) [Reserved]
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(e) Funds on deposit in the Collection Account, the Principal Funding
Account and the Note Distribution Account (collectively, the "Pledged
Accounts") shall be invested by the Trustee (or any custodian with respect
to funds on deposit in any such account) in Eligible Investments selected
in writing by the Servicer or, after the resignation or termination of CPS
as Servicer, by the Note Purchaser (pursuant to standing instructions or
otherwise). All such Eligible Investments shall be held by or on behalf of
the Trustee for the benefit of the Noteholders and the Note Purchaser.
Other than as permitted by the Note Purchaser, funds on deposit in any
Pledged Account shall be invested in Eligible Investments that will mature
so that such funds will be available at the close of business on the
Business Day immediately preceding the following Settlement Date. Funds
deposited in a Pledged Account on the day immediately preceding a
Settlement Date upon the maturity of any Eligible Investments are not
required to be invested overnight. All Eligible Investments will be held to
maturity.
(f) All investment earnings of moneys deposited in the Pledged
Accounts shall be deposited (or caused to be deposited) by the Trustee in
the Collection Account for distribution pursuant to Section 5.7(a), and any
loss resulting from such investments shall be charged to such account. The
Servicer will not direct the Trustee to make any investment of any funds
held in any of the Pledged Accounts unless the security interest granted
and perfected in such account will continue to be perfected in such
investment, in either case without any further action by any Person, and,
in connection with any direction to the Trustee to make any such
investment, if requested by the Trustee, the Servicer shall deliver to the
Trustee an Opinion of Counsel, acceptable to the Trustee, to such effect.
(g) The Trustee shall not in any way be held liable by reason of any
insufficiency in any of the Pledged Accounts resulting from any loss on any
Eligible Investment included therein except for losses attributable to the
Trustee's negligence or bad faith or its failure to make payments on such
Eligible Investments issued by the Trustee, in its commercial capacity as
principal obligor and not as trustee, in accordance with their terms.
(h) If (i) the Servicer or the Note Purchaser, as applicable, shall
have failed to give investment directions for any funds on deposit in the
Pledged Accounts to the Trustee by 1:00 p.m. Eastern Time (or such other
time as may be agreed by the Purchaser and Trustee) on any Business Day; or
(ii) an Event of Default shall have occurred and be continuing with respect
to the Notes but the Notes shall not have been declared due and payable,
or, if the Notes shall have been declared due and payable following an
Event of Default, amounts collected or receivable from the Receivables and
the Other Conveyed Property are being applied as if there had not been such
a declaration; then the Trustee shall, to the fullest extent practicable,
invest and reinvest funds in the Pledged Accounts in an Eligible Investment
described in paragraph (f) the definition thereof.
(i) The Trustee shall possess all right, title and interest in all
funds on deposit from time to time in the Pledged Accounts and in all
proceeds thereof (including all Investment Earnings on the Pledged
Accounts) and all such funds, investments, proceeds and income shall be
part of the Other Conveyed Property and the Collateral. Except as otherwise
provided herein, the Pledged Accounts shall be under the sole dominion and
control of the Trustee for the benefit of the Noteholders and the Note
Purchaser. If at any time any of the Pledged Accounts ceases to be an
Eligible Account, the Trustee with the consent of the Note Purchaser shall
within five Business Days establish a new Pledged Account as an Eligible
Account and shall transfer any cash and/or any investments from the Pledged
Account that is no longer an Eligible Account to such new Pledged Account.
The Trustee shall promptly notify the Servicer, the Note Purchaser and the
Noteholders of any change in the location of any of the aforementioned
accounts. In connection with the foregoing, the Trustee agrees that, in the
event that any of the Pledged Accounts are not accounts with the Trustee,
the Trustee shall notify the Servicer, the Note Purchaser and the
Noteholders in writing promptly upon any of such Pledged Accounts ceasing
to be an Eligible Account.
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(j) Notwithstanding anything to the contrary herein or in any other
document relating to a Trust Account, the "securities intermediary's
jurisdiction" (within the meaning of Section 8-110 of the UCC) or the
"bank's jurisdiction" (with the meaning of 9-304 of the UCC) as applicable,
with respect to each Pledged Account shall be the State of New York.
(k) With respect to the Pledged Account Property, the Trustee agrees
that:
(i) any Pledged Account Property that is held in deposit accounts
shall be held solely in an Eligible Account; and, except as otherwise
provided herein, each such Eligible Account shall be subject to the
exclusive custody and control of the Trustee and the Trustee shall
have sole signature authority with respect thereto;
(ii) any Pledged Account Property shall be delivered to the
Trustee in accordance with the definition of "Delivery"; and
(iii) the Servicer shall have the power, revocable by the Note
Purchaser to instruct the Trustee to make withdrawals and payments
from the Pledged Accounts for the purpose of permitting the Servicer
and the Trustee to carry out their respective duties hereunder.
SECTION 5.2. Establishment of Deposit Account. The Trustee shall establish
and maintain the Deposit Account in the name of CPS. The Deposit Account shall
be established with the Trustee as the Deposit Account Bank (as defined in the
Account Control Agreement) and governed and maintained in accordance with the
provisions of the Account Control Agreement. All distributions made by the
Issuer and Seller to CPS in respect of CPS's equity interest in the Issuer shall
be deposited by the Issuer directly into the Deposit Account. Amounts on deposit
in the Deposit Account shall be not be invested.
SECTION 5.3. Certain Reimbursements to the Servicer. The Servicer will be
entitled to be reimbursed from amounts on deposit in the Collection Account with
respect to an Accrual Period for amounts previously deposited in the Collection
Account but later determined by the Servicer to have resulted from mistaken
deposits or postings or checks returned for insufficient funds. The amount to be
reimbursed hereunder shall be paid to the Servicer on the related Settlement
Date pursuant to Section 5.7(a)(ii) upon certification by the Servicer of such
amounts and the provision of such information to the Trustee and the Note
Purchaser as may be necessary in the opinion of the Note Purchaser to verify the
accuracy of such certification; provided, however, that the Servicer must
provide such certification within three months of it becoming aware of such
mistaken deposit, posting or returned check. In the event that the Note
Purchaser has not received evidence satisfactory to it of the Servicer's
entitlement to reimbursement pursuant to this Section, the Note Purchaser shall
give the Trustee notice to such effect, following receipt of which the Trustee
shall not make a distribution to the Servicer in respect of such amount pursuant
to Section 5.7, or if prior thereto the Servicer has been reimbursed pursuant to
Section 5.7, the Trustee shall withhold such amounts from amounts otherwise
distributable to the Servicer on the next succeeding Settlement Date.
SECTION 5.4. Application of Collections. All collections for each Accrual
Period shall be applied by the Servicer as follows:
With respect to each Receivable (other than a Purchased Receivable),
payments by or on behalf of the Obligor shall be applied, in the case of a Rule
of 78's Receivable, first, to the Scheduled Receivable Payment of such Rule of
78's Receivable and, second, to any late fees accrued with respect to such Rule
of 78's Receivable and, in the case of a Simple Interest Receivable, to interest
and principal in accordance with the Simple Interest Method.
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SECTION 5.5. [RESERVED].
SECTION 5.6. Additional Deposits. The Servicer, the Issuer, the Purchaser
or the Seller, as the case may be, shall each deposit or cause to be deposited
in the Collection Account, in immediately available funds, (i) the Purchase
Amount with respect to any Purchased Receivable on the date of purchase of such
Receivable and (ii) any amounts due the Trustee, Noteholders, the Note
Purchaser, the Backup Servicer, the Purchaser (in each case, to the extent not
paid directly thereto) in respect of any indemnification obligation of the
Servicer, the Issuer, the Purchaser or the Seller under the Basic Documents.
SECTION 5.7. Distributions.
(a) On each Settlement Date prior to acceleration of the Notes
following an Event of Default, the Trustee (based on the information
contained in the Servicer's Certificate delivered on the related
Determination Date) shall make the following distributions in the following
order of priority from amounts on deposit in the Collection Account:
(i) to the Backup Servicer and the Trustee, as applicable, pro
rata, from Available Funds, in respect of the Backup Servicing Fee (so
long as the Backup Servicer is not acting as successor Servicer), the
Trustee Fee, reasonable expenses incurred in connection with
transitioning the servicing to the Backup Servicer and all other
reasonable out-of-pocket expenses thereof (including counsel fees and
expenses) and all unpaid Backup Servicing Fees (so long as the Backup
Servicer is not acting as successor Servicer), Trustee Fees,
reasonable expenses incurred in connection with transitioning the
servicing to the Backup Servicer and all other reasonable
out-of-pocket expenses (including counsel fees and expenses) from
prior Accrual Periods; provided, however, that expenses payable to
each of the Backup Servicer and Trustee pursuant to this clause (i),
excluding amounts paid to the Backup Servicer in respect of transition
expenses, shall be limited to a total of $25,000 per annum; provided,
further, that the amount of transition expenses distributed to the
Backup Servicer during the term of this Agreement pursuant to this
clause (i) shall in no case exceed $50,000 in the aggregate;
(ii) to the Servicer, from Available Funds, in respect of the
Servicing Fee and all unpaid Servicing Fees from prior Accrual Periods
and all reimbursements to which the Servicer is entitled pursuant to
Section 5.3;
(iii) to the Note Distribution Account, from Available Funds, the
Noteholders' Interest Distributable Amount for such Accrual Period and
the Unused Facility Fee for such Settlement Date;
(iv) to the Note Distribution Account, from Available Funds, the
Noteholders' Principal Distributable Amount (including without
limitation that portion of the Noteholders' Principal Distributable
Amount arising out of any Margin Call) for such Accrual Period;
(v) to the Note Distribution Account, from Available Funds, for
payment to the Noteholders and the Note Purchaser in respect of any
and all other amounts owed to the Note Purchaser or the Noteholders,
as applicable, pursuant to any Basic Document, such amounts to be
applied in the order of priority described in Section 5.8(a)(iv);
(vi) to any successor Servicer, from Available Funds, its
servicing fees in excess of the Servicing Fee and, to the extent not
previously paid by the predecessor Servicer pursuant to this
Agreement, reasonable transition expenses (up to a maximum of $50,000
in the aggregate over the term of this Agreement) incurred in becoming
the successor Servicer;
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(vii) to the Backup Servicer and the Trustee, as applicable, pro
rata, from Available Funds, in respect of reasonable out-of-pocket
expenses thereof (including counsel fees and expenses) and reasonable
out-of-pocket expenses (including counsel fees and expenses) from
prior Accrual Periods to the extent not paid thereto pursuant to
Section 5.7(a)(i) above; and
(viii) to the Purchaser, the remaining Available Funds, if any.
(b) In the event that the Collection Account is maintained with an
institution other than the Trustee, the Servicer shall instruct and cause
such institution to make all deposits and distributions pursuant to Section
5.7(a) on the related Settlement Date.
SECTION 5.8. Note Distribution Account.
(a) On each Settlement Date (based solely on the information contained
in the Servicer's Certificate), the Trustee shall distribute all amounts on
deposit in the Note Distribution Account to the Noteholders in respect of
the Notes to the extent of amounts due and unpaid on the Notes for
principal and interest, and to the Note Purchaser in respect of other
amounts due and owing under the Basic Documents, in the following amounts
and in the following order of priority:
(i) to the Noteholders, the Noteholders' Interest Distributable
Amount; provided that if there are not sufficient funds in the Note
Distribution Account to pay the entire amount then due on the Notes,
the amount in the Note Distribution Account shall be applied to the
payment of such interest pro rata among the Holders of the Notes;
(ii) to the Noteholders, in reduction of the Invested Amount, the
Noteholders' Principal Distributable Amount to pay principal on the
Notes until the outstanding principal amount of the Notes has been
reduced to zero; provided that if there are not sufficient funds in
the Note Distribution Account to pay the entire amount then due on the
Notes, the amount in the Note Distribution Account shall be applied to
the payment of such principal pro rata among the Holders of the Notes;
(iii) to the Noteholders, in reduction of the Invested Amount, in
an amount necessary to cover ay Margin Call;
(iv) sequentially, to the Note Purchaser and the Noteholders, in
that order, any other amounts due the Note Purchaser and the
Noteholders, respectively, pursuant to any of the Basic Documents.
(b) On each Settlement Date, the Trustee shall provide or make
available electronically (or, upon written request, by first class mail or
facsimile) to the Noteholders and the Note Purchaser the statement or
statements provided to the Trustee by the Servicer pursuant to Section 5.9
hereof on such Settlement Date; provided however, the Trustee shall have no
obligation to provide such information described in this Section 5.8(b)
until it has received the requisite information from the Servicer.
SECTION 5.9. Statements to the Noteholders. (a) On the Determination Date
(in accordance with Section 4.9), the Servicer shall provide to the Trustee, the
Note Purchaser and the Noteholders on the related Record Date a copy of the
Servicer's Certificate setting forth at least the following information as to
the Notes to the extent applicable in the form attached hereto as Exhibit A:
(i) the amount of such distribution allocable to principal of the
Notes;
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(ii) the amount of such distribution allocable to interest on or
with respect to the Notes;
(iii) [Reserved]
(iv) the Aggregate Principal Balance as of the close of business
on the last day of the preceding Accrual Period;
(v) the aggregate outstanding principal amount of the Notes;
(vi) the amount of the Servicing Fee paid to the Servicer with
respect to the related Accrual Period, and the amount of any unpaid
Servicing Fees and the change in such amount from the prior Settlement
Date;
(vii) (A) the amount of each of the Backup Servicing Fee and the
Trustee Fee paid to the Backup Servicer and the Trustee as applicable,
with respect to the related Accrual Period, (B) the amount of any
unpaid Backup Servicing Fees and Trustee Fees and the change in such
amounts from the prior Settlement Date, (C) the amount of all expenses
paid to the Trustee and the Backup Servicer, with respect to the
related Accrual Period, and (D) the difference between the maximum per
annum amount payable to the Trustee and Backup Servicer in respect of
expenses (other than servicing transition expenses) as set forth in
Section 5.7(a)(i) and the amount paid to the Backup Servicer and
Trustee year-to-date (to and including the related Settlement Date) in
respect of such expenses;
(viii) the Noteholders' Interest Carryover Shortfall and the
Noteholders' Principal Carryover Shortfall, if any;
(ix) the number of Receivables and the aggregate gross amount
scheduled to be paid thereon, including unearned finance and other
charges, for which the related Obligors are delinquent in making
Scheduled Receivable Payments for (a) 31 to 45 days and (d) 46 days or
more, in each case as of the last day of the related Accrual Period;
(x) the number of Receivables and the aggregate gross amount
scheduled to be paid thereon, including unearned finance and other
charges, for which the related Obligors are delinquent in making
Scheduled Receivable Payments for 31 to 45 days as of the last day of
the related Accrual Period; and
(xi) the amount of aggregate Realized Losses, if any, for the
related Accrual Period;
(xii) the number of, and the aggregate Purchase Amounts for,
Receivables, if any, that were repurchased during the related Interest
Period and summary information as to losses and delinquencies with
respect to the Receivables as of the end of the related Accrual
Period;
(xiii) the cumulative amount of Realized Losses from the initial
Cutoff Date to the last day of the related Accrual Period; and
(xiv) the Servicer Delinquency Ratio as of the end of the related
Accrual Period and the Servicer Loss Ratio as of the related
Determination Date.
(b) Within 60 days after the end of each calendar year, commencing
February 28, 2005, the Servicer shall deliver to the Trustee, and the
Trustee shall, provided it has received the necessary information from the
Servicer, promptly thereafter furnish to each Noteholder (a) a report
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(prepared by the Servicer) as to the aggregate of the amounts reported
pursuant to subclauses (i), (ii), (vi) and (vii) of Section 5.9(a) for such
preceding calendar year, and (b) such information as may be reasonably
requested by such Noteholder or required by the Code and regulations
thereunder, to enable such Noteholder to prepare its Federal and State
income tax returns. The obligation of the Trustee set forth in this
paragraph shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Servicer to
such Noteholder pursuant to any requirements of the Code.
(c) The Trustee may make available to the Note Purchaser and the
Noteholders via the Trustee's Internet Website, all statements described
herein and, with the consent or at the direction of the Seller, such other
information regarding the Notes and/or the Receivables as the Trustee may
have in its possession, but only with the use of a password provided by the
Trustee. The Trustee will make no representation or warranties as to the
accuracy or completeness of such documents accurately posted and will
assume no responsibility therefor. The Trustee's Internet Website shall be
initially located at www.CTSLink.com or at such other address as shall be
specified by the Trustee from time to time in writing to the Noteholders
and the Note Purchaser. In connection with providing access to the
Trustee's Internet Website, the Trustee may require registration and the
acceptance of a disclaimer. The Trustee shall not be liable for the
dissemination of information in accordance with this Agreement.
SECTION 5.10. Dividend of Ineligible Receivables. The Issuer may, on the
last day of the month in which any Receivables are sold into a securitization
transaction, distribute any Ineligible Receivables to the Seller as a dividend,
free of the deemed security interest referred to in Section 2.2 hereof; provided
that there is no Borrowing Base Deficiency immediately after such dividend.
ARTICLE VI
----------
[RESERVED]
----------
ARTICLE VII
-----------
THE PURCHASER
-------------
SECTION 7.1. Representations of Purchaser. The Purchaser makes the
following representations on which the Noteholders shall be deemed to have
relied in purchasing the Notes and the Note Purchaser shall have been deemed to
have relied in making each Advance. The representations speak as of the
Restatement Effective Date and as of each Funding Date after the Restatement
Effective Date, and shall survive the sale of the Receivables to the Purchaser
and the pledge thereof to the Trustee for the benefit of the Note Purchaser and
the Noteholders pursuant to the Indenture.
(a) Organization and Good Standing. The Purchaser has been duly formed
and is validly existing as a limited liability company solely under the
laws of the state of Delaware and is in good standing under the laws of the
State of Delaware, with power and authority to own its properties and to
conduct its business as such properties are currently owned and such
business is currently conducted, and had at all relevant times, and now
has, power, authority and legal right to acquire, own and pledge the
Receivables and the Other Conveyed Property pledged to the Trustee and to
enter into and perform its other obligations under this Agreement and each
other Basic Document to which it is a party.
(b) Due Qualification. The Purchaser is duly qualified to do business
as a foreign limited liability company in good standing, and has obtained
all necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business (including,
without limitation, the purchase of Receivables from CPS, the pledge of
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Collateral to the Trustee for the benefit of the Note Purchaser and the
Noteholders pursuant to the Indenture, and the performance of its other
obligations under this Agreement and each other Basic Document) shall
require such qualifications.
(c) Power and Authority. The Purchaser has the power (corporate and
other) and authority, and has all material government licenses,
authorizations, consents and approvals necessary to own its assets and
carry on its business as now being conducted, to execute and deliver this
Agreement and the other Basic Documents to which it is a party and to carry
out its terms and their terms, respectively; the Purchaser has full power
and authority to pledge the Collateral to be pledged to the Trustee for the
benefit of the Note Purchaser and the Noteholders by it pursuant to the
Indenture and has duly authorized such pledge to the Trustee by all
necessary corporate action; and the execution, delivery and performance of
this Agreement and the Basic Documents to which the Purchaser is a party
have been duly authorized by the Purchaser by all necessary action.
(d) Valid Sale. Binding Obligations. This Agreement effects a valid
sale of the Receivables and the Other Conveyed Property, enforceable
against the Seller and creditors of and purchasers from the Seller, the
Indenture constitutes a valid pledge of the Collateral which constitutes a
first priority perfected security interest in the Collateral in favor of
the Trustee for the benefit of the Noteholders and the Note Purchaser,
enforceable against the Issuer and creditors of and purchasers from the
Issuer, and this Agreement and the other Basic Documents to which the
Purchaser is a party, when duly executed and delivered, shall constitute
legal, valid and binding obligations of the Purchaser enforceable in
accordance with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies, regardless of whether
such enforceability is considered in a proceeding in equity or at law.
(e) No Violation. The consummation of the transactions contemplated by
this Agreement and the other Basic Documents and the fulfillment of the
terms of this Agreement and the other Basic Documents shall not conflict
with, result in any breach of any of the terms and provisions of or
constitute (with or without notice, lapse of time or both) a default under
the Limited Liability Company Agreement of the Purchaser, or any indenture,
agreement, mortgage, deed of trust or other instrument to which the
Purchaser is a party or by which it is bound, or result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of
any such indenture, agreement, mortgage, deed of trust or other instrument,
other than the Basic Documents, or violate any law, order, rule,
regulation, ordinance or directive of any Governmental Authority applicable
to the Purchaser of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Purchaser or any of its properties.
(f) No Proceedings. There are no proceedings or investigations pending
or, to the Purchaser's knowledge after due inquiry, threatened against the
Purchaser, before any court, regulatory body, administrative agency or
other tribunal or governmental instrumentality having jurisdiction over the
Purchaser or its properties (A) asserting the invalidity of this Agreement,
the Notes or any of the Basic Documents, (B) seeking to prevent the
issuance of the Notes or the consummation of any of the transactions
contemplated by this Agreement or any of the Basic Documents, (C) seeking
any determination or ruling that might materially and adversely affect the
performance by the Purchaser of its obligations under, or the validity or
enforceability of, this Agreement or any of the Basic Documents or
otherwise have a Material Adverse Effect or result in a Material Adverse
Change in respect of the Receivables or business, operations, financial
condition, properties, assets or prospects of the Purchaser, or (D)
relating to the Purchaser or the Collateral and which might adversely
affect the federal or State income, excise, franchise or similar tax
attributes of the Notes.
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(g) No Consents. The Purchaser is not required to obtain the consent
of any other Person and no consent, approval, authorization or order of or
declaration or filing with any governmental authority is required for
conduct of the Purchaser's business, the issuance or sale of the Notes or
the consummation of the other transactions contemplated by this Agreement
and the other Basic Documents, except such as have been duly made or
obtained or as may be required by the Basic Documents.
(h) Tax Returns. The Purchaser has filed all federal and state tax
returns that are required to be filed and paid all taxes, including any
assessments received by it, to the extent that such taxes have become due.
Any taxes, fees and other governmental charges payable by the Purchaser in
connection with consummation of the transactions contemplated by this
Agreement and the other Basic Documents to which the Purchaser is a party
and the fulfillment of the terms of this Agreement and the other Basic
Documents to which the Purchaser is a party have been paid or shall have
been paid at or prior to the Original Closing Date and as of each Funding
Date.
(i) Other Obligations. The Purchaser is not in default in the
performance, observance or fulfillment of any obligation, covenant or
condition in any of the Basic Documents to which it is a party or in any
other agreement or instrument to which it is a party or by which it is
bound the result of which would have a Material Adverse Effect or result in
a Material Adverse Change.
(j) Chief Executive Office. The chief executive office of the
Purchaser is at 16355 Laguna Canyon Road, Irvine, CA 92618.
(k) Certificate, Statements and Reports. The officer's certificates,
statements, reports and other documents prepared by the Purchaser and
furnished by the Purchaser to the Trustee, the Note Purchaser or the
Noteholders pursuant to this Agreement or any other Basic Document to which
it is a party, or otherwise in connection with the transactions
contemplated hereby or thereby, when taken as a whole, do not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained herein or therein not
misleading.
(l) Legal Counsel, etc. The Purchaser consulted with its own legal
counsel and independent accountants to the extent it deems necessary
regarding the tax, accounting and regulatory consequences of the
transactions contemplated hereby, the Purchaser is not participating in
such transactions in reliance on any representations of any other party,
their affiliates, or their counsel with respect to tax, accounting,
regulatory or any other matters.
(m) No Default. The Purchaser is not in default in the performance,
observance or fulfillment of any of the obligations, covenants or
conditions contained in, and is not otherwise in default under (i) any law
or statute applicable to it, including, without limitation, any Consumer
Law, (ii) any judgment, decree, writ, injunction, order, award or other
action of any court or governmental authority or arbitrator or any order,
rule or regulation of any federal, state, county, municipal or other
governmental or public authority or agency having or asserting jurisdiction
over it or any of its properties or (iii) (x) any indebtedness or any
instrument or agreement under or pursuant to which any such indebtedness
has been, or could be, issued or incurred or (y) any other instrument or
agreement to which it is a party or by which it is bound or any of its
properties is affected, including, without limitation, the Basic Documents,
that either individually or in the aggregate, (A) would result in a
Material Adverse Change with respect to the Purchaser, or in any impairment
of the right or ability of the Purchaser to carry on its business
substantially as now conducted or (B) would result in a Material Adverse
Effect.
(n) ERISA. The Purchaser does not maintain any Plans, and the
Purchaser agrees to notify the Note Purchaser in advance of forming any
Plans. Neither the Issuer nor any Affiliate of the Purchaser (other than
MFN under the MFN Financial Corporation Pension Plan and CPS under its
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defined contribution (401(k)) plan) has any obligations or liabilities with
respect to any Plans or Multiemployer Plans, nor have any such Persons had
any obligations or liabilities with respect to any such Plans during the
five year period prior to the date this representation is made or deemed
made. The Purchaser will give notice to the Note Purchaser and the
Noteholders if at any time it or any Affiliate has any obligations or
liabilities with respect to any Plan or Multiemployer Plan. All Plans
maintained by the Purchaser or any Affiliate are in substantial compliance
with all applicable laws (including ERISA). The Purchaser is not an
employer under any Multiemployer Plan.
(o) Compliance with Laws. The Purchaser has complied and will comply
in all material respects with all applicable laws, rules, regulations,
judgments, agreements, decrees and orders with respect to its business and
properties.
ARTICLE VIII
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THE SELLER
----------
SECTION 8.1. Representations of Seller. The Seller makes the following
representations on which the Purchaser shall be deemed to have relied in
acquiring the Receivables, the Noteholders shall be deemed to have relied in
purchasing the Notes and the Note Purchaser shall have been deemed to have
relied in making each Advance. The representations speak as of the Restatement
Effective Date and as of each Funding Date after the Restatement Effective Date,
and shall survive the sale of the Receivables to the Purchaser and the pledge
thereof by the Purchaser to the Trustee for the benefit of the Note Purchaser
and the Noteholders pursuant to the Indenture.
(a) Organization and Good Standing. The Seller has been duly organized
and is validly existing as a corporation solely under the laws of the State
of California and is in good standing under the laws of the State of
California, with power and authority to own its properties and to conduct
its business as such properties are currently owned and such business is
currently conducted, and had at all relevant times, and now has, power,
authority and legal right to acquire, own and sell the Receivables and the
Other Conveyed Property transferred to the Purchaser and to perform its
other obligations under this Agreement or any other Basic Documents to
which it is a party.
(b) Due Qualification. The Seller is duly qualified to do business as
a foreign corporation in good standing and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or
lease of property or the conduct of its business (including, without
limitation, the origination or purchase of motor vehicle retail installment
sales contracts, the sale of the Receivables to the Purchaser hereunder,
the servicing of the Receivables as required by this Agreement, and its
other obligations hereunder and under the other Basic Documents) requires
or shall require such qualification except where the failure to so qualify
or obtain such licenses or consents would result in a Material Adverse
Effect or a Material Adverse Change.
(c) Power and Authority. The Seller has the power (corporate and
other) and authority, and has all material government licenses,
authorizations, consents and approvals necessary to own its assets and
carry on its business as now being conducted, to execute and deliver this
Agreement and the other Basic Documents to which it is a party and to carry
out its terms and their terms, respectively; the Seller has full power and
authority to sell and assign the Receivables and the Other Conveyed
Property to be sold and assigned to and deposited with the Purchaser by it
and has duly authorized such sale and assignment to the Purchaser by all
necessary corporate action; and the execution, delivery and performance of
this Agreement and the Basic Documents to which the Seller is a party have
been duly authorized by the Seller by all necessary corporate action.
(d) Valid Sale; Binding Obligations. This Agreement effects a valid
sale, transfer and assignment of the Receivables and the Other Conveyed
Property to the Purchaser, enforceable against the Seller and creditors of
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and purchasers from the Seller; and this Agreement and the Basic Documents
to which the Seller is a party, when duly executed and delivered, shall
constitute legal, valid and binding obligations of the Seller enforceable
in accordance with their respective terms, except as enforceability may be
limited, by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies, regardless of whether
such enforceability is considered in a proceeding in equity or at law.
(e) No Violation. The consummation of the transactions contemplated by
this Agreement and the Basic Documents and the fulfillment of the terms of
this Agreement and the Basic Documents does not conflict with, result in
any breach of any of the terms and provisions of or constitute (with or
without notice, lapse of time or both) a default under the certificate of
incorporation or by-laws of the Seller, or any indenture, agreement,
mortgage, deed of trust or other instrument to which the Seller is a party
or by which it is bound, or result in the creation or imposition of any
Lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument, other
than the Basic Documents, or violate any law, order, rule, regulation,
ordinance or directive of any Governmental Authority applicable to the
Seller of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Seller or any of its properties.
(f) No Proceedings. There are no proceedings or investigations pending
or, to the Seller's knowledge, threatened against the Seller, before any
court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over the Seller or its
properties (A) asserting the invalidity of this Agreement or any of the
Basic Documents, (B) seeking to prevent the issuance of the Notes or the
consummation of any of the transactions contemplated by this Agreement or
any of the Basic Documents, or (C) seeking any determination or ruling that
might materially and adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability of, this Agreement or
any of the other Basic Documents or otherwise have a Material Adverse
Effect or result in a Material Adverse Change in respect of the Seller or
(D) relating to the Seller or the Receivables or Other Conveyed Property
and which might adversely affect the federal or State income, excise,
franchise or similar tax attributes of the Notes.
(g) No Consents. No consent, approval, authorization or order of or
declaration or filing with any governmental authority is required for the
conduct of the Seller's business, the issuance or sale of the Notes or the
consummation of the other transactions contemplated by this Agreement and
the Basic Documents, except such as have been duly made or obtained.
(h) Financial Condition. The Seller has a positive net worth and is
able to and does pay its liabilities as they mature. The Seller is not in
default under any obligation to pay money to any Person except for matters
being disputed in good faith which do not involve an obligation of the
Seller on a promissory note. The Seller will not use the proceeds from the
transactions contemplated by the Basic Documents to give any preference to
any creditor or class of creditors, and such transactions will not leave
the Seller with remaining assets which are unreasonably small compared to
its ongoing operations.
(i) Fraudulent Conveyance. The Seller is not selling the Receivables
to the Purchaser with any intent to hinder, delay or defraud any of its
creditors; the Seller will not be rendered insolvent as a result of the
sale of the Receivables to the Purchaser.
(j) Tax Returns. The Seller has filed all material federal and state
tax returns that are required to be filed and paid all material taxes,
including any assessments received by it, to the extent that such taxes
have become due (other than taxes, the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
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books of the Seller). Any taxes, fees and other governmental charges
payable by the Seller in connection with consummation of the transactions
contemplated by this Agreement and the other Basic Documents to which the
Seller is a party and the fulfillment of the terms of this Agreement and
the other Basic Documents to which the Seller is a party have been paid or
shall have been paid as of each Funding Date.
(k) Chief Executive Office. The Seller has more than one place of
business, and the chief executive office of the Seller is at 16355 Laguna
Canyon Road, Irvine, CA 92618 and its organizational number is 1682500.
(l) Certificate, Statements and Reports. The officer's certificates,
statements, reports and other documents prepared by Seller and furnished by
Seller to the Purchaser, the Trustee, the Note Purchaser or the Noteholders
pursuant to this Agreement or any other Basic Document to which it is a
party, or otherwise in connection with the transactions contemplated hereby
or thereby, when taken as a whole, do not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements contained herein or therein not misleading.
(m) Legal Counsel, etc. Seller consulted with its own legal counsel
and independent accountants to the extent it deems necessary regarding the
tax, accounting and regulatory consequences of the transactions
contemplated hereby, Seller is not participating in such transactions in
reliance on any representations of any other party, their affiliates, or
their counsel with respect to tax, accounting and regulatory matters.
(n) No Material Adverse Change as of December 31, 2005. No Material
Adverse Change has occurred with respect to the Seller since the end of the
year reported on in the Seller's Form 10-K filed with the Commission on
March 13, 2006.
(o) No Default. The Seller is not in default in the performance,
observance or fulfillment of any of the obligations, covenants or
conditions contained in, and is not otherwise in default under (i) any law
or statute applicable to it, including, without limitation, any Consumer
Law, (ii) any judgment, decree, writ, injunction, order, award or other
action of any court or governmental authority or arbitrator or any order,
rule or regulation of any federal, state, county, municipal or other
governmental or public authority or agency having or asserting jurisdiction
over it or any of its properties or (iii) (x) any indebtedness or any
instrument or agreement under or pursuant to which any such indebtedness
has been, or could be, issued or incurred or (y) any other instrument or
agreement to which it is a party or by which it is bound or any of its
properties is affected, including, without limitation, the Basic Documents,
that either individually or in the aggregate, (A) would result in a
Material Adverse Change with respect to the Seller, or in any impairment of
the right or ability of the Seller to carry on its business substantially
as now conducted or (B) would result in a Material Adverse Effect.
(p) Other Obligations. The Seller is not in default in the
performance, observance or fulfillment of any obligation, covenant or
condition in any of the Basic Documents to which it is a party or in any
agreement or instrument to which it is a party or by which it is bound the
result of which would have a Material Adverse Effect or result in a
Material Adverse Change.
(q) ERISA. The Seller does not maintain any Plans (other than its
defined contribution (401(k)) plan and the MFN Financial Corporation
Pension Plan), and the Seller agrees to notify the Note Purchaser in
advance of forming any Plans. Neither the Seller nor any Affiliate of the
Seller (other than MFN under the MFN Financial Corporation Pension Plan)
has any obligations or liabilities with respect to any Plans or
Multiemployer Plans, nor have any such Persons had any obligations or
liabilities with respect to any such Plans during the five year period
prior to the date this representation is made or deemed made. The Seller
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will give notice to the Note Purchaser if at any time it or any Affiliate
has any obligations or liabilities with respect to any Plan or
Multiemployer Plan. All Plans maintained by the Seller or any Affiliate are
in substantial compliance with all applicable laws (including ERISA). The
Seller is not an employer under any Multiemployer Plan.
(r) Compliance With Laws. The Seller has complied and will comply in
all material respects with all applicable laws, rules, regulations,
judgments, agreements, decrees and orders with respect to its business and
properties.
SECTION 8.2. Additional Covenants of the Seller.(a) Sale. The Seller agrees
to treat the conveyances hereunder as financings for tax and accounting purposes
and as sales for all other purposes (including without limitation legal and
bankruptcy purposes) on all relevant books, records, tax returns, financial
statements and other applicable documents.
(b) Non-Petition. In the event of any breach of a representation and
warranty made by the Purchaser hereunder, the Seller covenants and agrees
that it will not take any action to pursue any remedy that it may have
hereunder, in law, in equity or otherwise, until a year and a day have
passed since the date on which the Notes issued by the Issuer and all other
amounts due and owing to the Noteholders and the Note Purchaser pursuant to
the Basic Documents have been paid in full. The Purchaser and the Seller
agree that damages will not be an adequate remedy for breach of this
covenant and that this covenant may be specifically enforced by the
Purchaser, by the Trustee on behalf of the Noteholders and the Note
Purchaser, by the Note Purchaser or by the Majority Noteholders.
(c) Changes to Contract Purchase Guidelines. The Seller covenants that
it will not make any material credit-related changes to the Seller's
Contract Purchase Guidelines or allow any material credit-related changes
to TFC's Contract Purchase Guidelines without the prior written consent of
the Note Purchaser (which consent shall not unreasonably be withheld). The
Seller covenants to provide prompt written notice to the Note Purchaser
upon any material change made to the Seller's or TFC's Contract Purchase
Guidelines.
(d) Cooperation. If an Event of Default shall have occurred and be
continuing, Seller shall cooperate with and provide all information and
access requested by the Trustee, the Note Purchaser and/or the Noteholders
in connection with any actions taken pursuant to Section 5.4 of the
Indenture.
SECTION 8.3. Liability of Seller; Indemnities. The Seller shall indemnify
the Purchaser, the Backup Servicer, the Trustee, the Noteholders, the Note
Purchaser and their respective officers, directors, agents and employees for any
liability as a result of the failure of a Receivable to be originated in
compliance with all requirements of law and for any breach of any of its
representations, warranties, covenants or other agreements contained herein.
(a) The Seller shall defend, indemnify, and hold harmless the
Purchaser, the Backup Servicer, the Trustee, the Noteholders, the Note
Purchaser and their respective officers, directors, agents and employees
from and against any and all costs, expenses, losses, damages, claims, and
liabilities, arising out of or resulting from the use, ownership, or
operation by the Seller, any Affiliate thereof or any of their respective
agents or subcontractors, of a Financed Vehicle.
(b) The Seller shall indemnify, defend and hold harmless the
Purchaser, the Backup Servicer, the Trustee, the Noteholders, the Note
Purchaser and their respective officers, directors, agents and employees
from and against any taxes that may at any time be asserted against any
such Person with respect to the transactions contemplated in this Agreement
and any of the Basic Documents (except any income taxes arising out of fees
paid to the Trustee and the Backup Servicer and except any taxes to which
the Trustee may otherwise be subject), including without limitation any
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sales, gross receipts, general corporation, tangible personal property,
privilege or license taxes (but, in the case of the Purchaser, not
including any taxes asserted with respect to federal or other income taxes
arising out of distributions on the Notes) and costs and expenses in
defending against the same.
(c) The Seller shall indemnify, defend and hold harmless the
Purchaser, the Backup Servicer, the Trustee, the Noteholders, the Note
Purchaser and their respective officers, directors, agents and employees
from and against any loss, liability or expense incurred by reason of (i)
the Seller's willful misfeasance, bad faith or negligence in the
performance of its duties under this Agreement, or by reason of reckless
disregard of its obligations and duties under this Agreement and/or (ii)
the Seller's or the Purchaser's violation of federal or State securities
laws in connection with the offering and sale of the Notes
(d) The Seller shall indemnify, defend and hold harmless the Trustee
and the Backup Servicer and its officers, directors, employees and agents
from and against any and all costs, expenses, losses, claims, damages and
liabilities arising out of, or incurred in connection with the acceptance
or performance of the trusts and duties set forth herein and in the Basic
Documents except to the extent that such cost, expense, loss, claim, damage
or liability shall be due to the willful misfeasance, bad faith or
negligence (except for errors in judgment) of the Trustee or the Backup
Servicer.
(e) The Seller shall indemnify, defend and hold harmless the
Purchaser, the Backup Servicer, the Trustee, the Noteholders, the Note
Purchaser and their respective officers, directors, agents and employees
from and against any and all costs, expenses, losses, claims, damages and
liabilities arising out of or relating to the failure of a Receivable to be
originated in compliance with all requirements of law, including without
limitation all Consumer Laws, and for any breach of any of the Seller's
representations and warranties, covenants or other agreements contained
herein (including, without limitation, the representations contained in
Section 3.1 hereof) or in any other Basic Document or in any Original Basic
Document to which the Seller is a party.
Indemnification under this Section shall survive the resignation or removal
of the Servicer or the Trustee and the termination of this Agreement and the
other Basic Documents and shall include reasonable fees and expenses of counsel
and other expenses of litigation. These indemnity obligations shall be in
addition to any obligation that the Seller may otherwise have under applicable
law, hereunder or under any other Basic Document. If the Seller shall have made
any indemnity payments pursuant to this Section and the Person to or on behalf
of whom such payments are made thereafter shall collect any of such amounts from
others, such Person shall promptly repay such amounts to the Seller, without
interest.
Notwithstanding any provision of this Section 8.3 or any other provision of
this Agreement, nothing herein shall be construed as to require the Seller to
provide any indemnification hereunder or under any other Basic Document for any
costs, expenses, losses, claims, damages or liabilities arising out of, or
incurred in connection with, credit losses with respect to the Receivables.
SECTION 8.4. Merger or Consolidation of, or Assumption of the Obligations
of, Seller. Seller shall not merge or consolidate with any other person, convey,
transfer or lease substantially all its assets as an entirety to another Person,
or permit any other Person to become the successor to Seller's business unless,
after the merger, consolidation, conveyance, transfer, lease or succession, the
successor or surviving entity shall be capable of fulfilling the duties of
Seller contained in this Agreement and the other Basic Documents to which it is
a party. Any corporation (i) into which Seller may be merged or consolidated,
(ii) resulting from any merger or consolidation to which Seller shall be a
party, (iii) which acquires by conveyance, transfer, or lease substantially all
of the assets of Seller, or (iv) succeeding to the business of Seller, in any of
the foregoing cases shall execute an agreement of assumption to perform every
obligation of Seller under this Agreement and the other Basic Documents to which
it is a party and, whether or not such assumption agreement is executed, shall
be the successor to Seller under this Agreement and the other Basic Documents to
which it is a party without the execution or filing of any paper or any further
act on the part of any of the parties to this Agreement, anything in this
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Agreement to the contrary notwithstanding; provided, however, that nothing
contained herein shall be deemed to release Seller from any obligation. Seller
shall provide notice of any merger, consolidation or succession pursuant to this
Section to the Trustee, the Note Purchaser and the Noteholders. Notwithstanding
the foregoing, Seller shall not merge or consolidate with any other Person or
permit any other Person to become a successor to Seller's business, unless (x)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 8.1 shall have been breached (for purposes
hereof, such representations and warranties shall be deemed made as of the date
of the consummation of such transaction) and no event that, after notice or
lapse of time, or both, would become an Event of Default shall have occurred and
be continuing, (y) Seller shall have delivered to the Trustee, the Note
Purchaser and the Noteholders an Officer's Certificate and an Opinion of Counsel
each stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section and that all conditions precedent, if any,
provided for in this Agreement relating to such transaction have been complied
with, and (z) Seller shall have delivered to the Trustee, the Note Purchaser and
the Noteholders an Opinion of Counsel, stating in the opinion of such counsel,
either (A) all financing statements and continuation statements and amendments
thereto have been authorized and filed that are necessary to preserve and
protect the interest of the Purchaser and the Trustee in the Opinion Collateral
and reciting the details of the filings or (B) no such action shall be necessary
to preserve and protect such interest.
SECTION 8.5. Limitation on Liability of Seller and Others. The Seller and
any director or officer or employee or agent of the Seller may rely in good
faith on the advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
under any Basic Document. The Seller shall not be under any obligation to appear
in, prosecute or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
ARTICLE IX
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THE SERVICER
------------
SECTION 9.1. Representations and Covenants of Servicer. The Servicer (and
the Backup Servicer, in the case of clause (j) below) makes the following
representations and covenants on which the Purchaser shall be deemed to have
relied in acquiring the Receivables, on which the Noteholders shall be deemed to
have relied in purchasing the Notes and on which the Note Purchaser shall be
deemed to have relied in making each Advance. The representations speak as of
the Restatement Effective Date and as of each Funding Date after the Restatement
Effective Date, and shall survive the sale of the Receivables to the Purchaser
and the pledge thereof by the Purchaser to the Trustee for the benefit of the
Note Purchaser and the Noteholders pursuant to the Indenture
(a) Organization and Good Standing. The Servicer has been duly
organized and is validly existing as a corporation and in good standing
under the laws of the State of California, with power, authority and legal
right to own its properties and to conduct its business as such properties
are currently owned and such business is presently conducted, and had at
all relevant times, and shall have, power, authority and legal right to
acquire, own and service the Receivables.
(b) Due Qualification. The Servicer is duly qualified to do business
as a foreign corporation in good standing and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or
lease of property or the conduct of its business (including the servicing
of the Receivables as required by this Agreement) requires or shall require
such qualification except where the failure to so qualify or obtain such
licenses or consents would not result in a Material Adverse Effect or a
Material Adverse Change.
(c) Power and Authority. The Servicer has the power and authority to
execute and deliver this Agreement and the Basic Documents to which it is a
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party and to carry out its terms and their terms, respectively, and the
execution, delivery and performance of this Agreement and the Basic
Documents to which it is a party have been duly authorized by the Servicer
by all necessary corporate action.
(d) Binding Obligation. This Agreement and the Basic Documents to
which the Servicer is a party shall constitute legal, valid and binding
obligations of the Servicer enforceable in accordance with their respective
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement of
creditors' rights generally and by equitable limitations on the
availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(e) No Violation. The consummation of the transactions contemplated by
this Agreement and the Basic Documents to which to the Servicer is a party,
and the fulfillment of the terms of this Agreement and the Basic Documents
to which the Servicer is a party, shall not conflict with, result in any
breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time) a default under, the articles of
incorporation or bylaws of the Servicer, or any indenture, agreement,
mortgage, deed of trust or other instrument to which the Servicer is a
party or by which it is bound or any of its properties are subject, or
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement, mortgage, deed of
trust or other instrument, other than the Basic Documents, or violate any
law, order, rule or regulation applicable to the Servicer of any court or
of any federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Servicer or any
of its properties.
(f) No Proceedings. There are no proceedings or investigations pending
or, to the Servicer's knowledge, threatened against the Servicer, before
any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over the Servicer or its
properties (A) asserting the invalidity of this Agreement or any of the
Basic Documents, (B) seeking to prevent the issuance of the Notes or the
consummation of any of the transactions contemplated by this Agreement or
any of the Basic Documents, or (C) seeking any determination or ruling that
might materially and adversely affect the performance by the Servicer of
its obligations under, or the validity or enforceability of, this Agreement
or any of the other Basic Documents or otherwise have a Material Adverse
Effect or result in a Material Adverse Change, or (D) relating to the
Servicer and which might adversely affect the federal or state income,
excise, franchise or similar tax attributes of the Notes.
(g) No Consents. No consent, approval, authorization or order of or
declaration or filing with any governmental authority is required for the
issuance or sale of the Notes or the consummation of the other transactions
contemplated by this Agreement, except such as have been duly made or
obtained.
(h) Taxes. The Servicer has filed all federal and state tax returns
that are required to be filed and paid all taxes, including any assessments
received by it, to the extent that such taxes have become due (other than
taxes, the amount or validity of which are currently being contested in
good faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of the Servicer). Any
taxes, fees and other governmental charges payable by the Servicer in
connection with consummation of the transactions contemplated by this
Agreement and the other Basic Documents to which the Servicer is a party
and the fulfillment of the terms of this Agreement and the other Basic
Documents to which the Servicer is a party have been paid or shall have
been paid as of each Funding Date.
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(i) Chief Executive Office. The Servicer hereby represents and
warrants to the Trustee that the Servicer's principal place of business and
chief executive office is 16355 Laguna Canyon Road, Irvine, California
92618.
(j) Data Mapping. Neither the Servicer nor the Backup Servicer is
aware of any fact that would cause such Person reasonably to believe that
the Servicer's servicing data cannot be mapped from the Servicer's system
to the Backup Servicer's system.
(k) Changes to Servicing Guidelines. The Servicer covenants that it
will not make any material changes to the Servicing Guidelines prior to the
Termination Date without the prior written consent of the Note Purchaser
(which consent shall not unreasonably be withheld).
(l) Cooperation. If an Event of Default shall have occurred and be
continuing, Servicer shall cooperate with and provide all information and
access reasonably requested by the Trustee, the Note Purchaser and the
Noteholders in connection with any actions taken pursuant to Section 5.4 of
the Indenture.
SECTION 9.2. Liability of Servicer; Indemnities.
(a) The Servicer (in its capacity as such) shall be liable hereunder
only to the extent of the obligations in this Agreement specifically
undertaken by the Servicer and the representations made by the Servicer in
the Basic Documents to which it is a party.
(i) The Servicer shall defend, indemnify and hold harmless the
Purchaser, the Trustee, the Backup Servicer, the Noteholders, the Note
Purchaser and their respective officers, directors, agents and
employees from and against any and all costs, expenses, losses,
damages, claims and liabilities, arising out of or resulting from the
use, ownership, repossession or operation by the Servicer or any
Affiliate or agent or sub-contractor thereof of any Financed Vehicle.
(ii) The Servicer, so long as CPS is the Servicer, shall
indemnify, defend and hold harmless the Purchaser, the Trustee, the
Backup Servicer, the Noteholders, the Note Purchaser and their
respective officers, directors, agents and employees from and against
any taxes that may at any time be asserted against any of such parties
with respect to the transactions contemplated in this Agreement and
the other Basic Documents, including, without limitation, any sales,
gross receipts, general corporation, tangible personal property,
privilege or license taxes (but not including any federal or other
income taxes, including franchise taxes asserted with respect to, and
as of the date of, the sale of the Receivables and the Other Conveyed
Property to the Purchaser, the pledge thereof to the Trustee for the
benefit of the Note Purchaser and the Noteholders or the issuance and
original sale of the Notes) and costs and expenses in defending
against the same.
(iii) The Servicer shall indemnify, defend and hold harmless the
Purchaser, the Trustee, the Backup Servicer, the Noteholders, the Note
Purchaser and their respective officers, directors, agents and
employees from and against any and all costs, expenses, losses,
claims, damages, and liabilities to the extent that such cost,
expense, loss, claim, damage, or liability arose out of, or was
imposed upon the Purchaser, the Trustee, the Backup Servicer, the
Noteholders or the Note Purchaser through the negligence, willful
misfeasance or bad faith of the Servicer in the performance of its
duties under this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement or as a result of a breach
of any representation, warranty, covenant or other agreement made by
the Servicer in this Agreement or in any other Basic Document to which
it is a party.
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(iv) The Servicer shall indemnify, defend, and hold harmless the
Trustee and the Backup Servicer from and against all costs, expenses,
losses, claims, damages, and liabilities arising out of or incurred in
connection with the acceptance or performance of the trusts and duties
herein contained, except to the extent that such cost, expense, loss,
claim, damage or liability: (A) shall be due to the willful
misfeasance, bad faith, or negligence (except for errors in judgment)
of the Trustee or the Backup Servicer, as applicable or (B) relates to
any tax other than the taxes with respect to which the Servicer shall
be required to indemnify the Trustee or the Backup Servicer.
(v) The Servicer shall indemnify, defend and hold harmless the
Purchaser, the Backup Servicer, the Trustee, the Noteholders, the Note
Purchaser and their respective officers, directors, agents and
employees from and against any and all costs, expenses, losses,
claims, damages and liabilities arising out of or relating to the
failure of a Receivable to be serviced in compliance with all
requirements of law, including without limitation all Consumer Laws,
and for any breach of any of the Servicer's representations and
warranties, covenants or other agreements contained herein, in any
other Basic Document or in any Original Basic Document to which the
Servicer is a party.
(b) Notwithstanding the foregoing, the Servicer shall not be obligated
to defend, indemnify, and hold harmless any Noteholder or the Note
Purchaser for any losses, claims, damages or liabilities incurred by such
Noteholder or the Note Purchaser arising out of claims, complaints, actions
and allegations relating to Section 406 of ERISA or Section 4975 of the
Code as a result of the purchase or holding of any Note by such Noteholder
or the Note Purchaser with the assets of a plan subject to such provisions
of ERISA or the Code.
(c) For purposes of this Section 9.2, in the event of the termination
of the rights and obligations of the Servicer (or any successor thereto
pursuant to Section 9.3) as Servicer pursuant to Section 10.1, or a
resignation by such Servicer pursuant to this Agreement, such Servicer
shall be deemed to be the Servicer pending appointment of a successor
Servicer pursuant to Section 10.2. The provisions of this Section 9.2(c)
shall in no way affect the survival pursuant to Section 9.2(d) of the
indemnification by the Servicer provided by Section 9.2(a).
(d) Indemnification under this Section 9.2 shall survive the
termination of this Agreement and the other Basic Documents and any
resignation or removal of CPS or any successor Servicer as Servicer and
shall include reasonable fees and expenses of counsel and expenses of
litigation. These indemnity obligations shall be in addition to any
obligation that the Servicer may otherwise have under applicable law,
hereunder or under any other Basic Document. If the Servicer shall have
made any indemnity payments pursuant to this Section and the recipient
thereafter collects any of such amounts from others, the recipient shall
promptly repay such amounts to the Servicer, without interest.
SECTION 9.3. Merger or Consolidation of, or Assumption of the Obligations
of the Servicer or Backup Servicer.
(a) The Servicer shall not merge or consolidate with any other Person,
convey, transfer or lease all or substantially all of its assets as an
entirety to another Person, or permit any other Person to become the
successor to the Servicer's business unless, after the merger,
consolidation, conveyance, transfer, lease or succession, the successor or
surviving entity shall be capable of fulfilling the duties of the Servicer
contained in this Agreement and the other Basic Documents to which it is a
party. Any corporation (i) into which the Servicer may be merged or
consolidated, (ii) resulting from any merger or consolidation to which the
Servicer shall be a party, (iii) which acquires by conveyance, transfer, or
lease substantially all of the assets of the Servicer, or (iv) succeeding
to the business of the Servicer, in any of the foregoing cases shall
execute an agreement of assumption to perform every obligation of the
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Servicer under this Agreement and the other Basic Documents to which it is
a party and, whether or not such assumption agreement is executed, shall be
the successor to the Servicer under this Agreement and the other Basic
Documents to which it is a party without the execution or filing of any
paper or any further act on the part of any of the parties to this
Agreement, anything in this Agreement to the contrary notwithstanding;
provided, however, that nothing contained herein shall be deemed to release
the Servicer from any obligation. The Servicer shall provide notice of any
merger, consolidation or succession pursuant to this Section to the
Trustee, the Note Purchaser and the Noteholders. Notwithstanding the
foregoing, the Servicer shall not merge or consolidate with any other
Person or permit any other Person to become a successor to the Servicer's
business, unless (x) immediately after giving effect to such transaction,
no representation or warranty made pursuant to Section 9.1 shall have been
breached (for purposes hereof, such representations and warranties shall be
deemed made as of the date of the consummation of such transaction) and no
event that, after notice or lapse of time, or both, would become Event of
Default shall have occurred and be continuing, (y) the Servicer shall have
delivered to the Trustee, the Note Purchaser and the Noteholders an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply
with this Section and that all conditions precedent, if any, provided for
in this Agreement relating to such transaction have been complied with, and
(z) the Servicer shall have delivered to the Trustee and the Noteholders an
Opinion of Counsel, stating in the opinion of such counsel, either (A) all
financing statements and continuation statements and amendments thereto
have been executed and filed that are necessary to preserve and protect the
interest of the Purchaser and the Trustee for the benefit of the Note
Purchaser and the Noteholders in the Opinion Collateral and reciting the
details of the filings or (B) no such action shall be necessary to preserve
and protect such interest.
(b) Any Person (i) into which the Backup Servicer (in its capacity as
Backup Servicer or successor Servicer) may be merged or consolidated, (ii)
resulting from any merger or consolidation to which the Backup Servicer
shall be a party, (iii) which acquires by conveyance, transfer or lease
substantially all of the assets of the Backup Servicer, or (iv) succeeding
to the business of the Backup Servicer, in any of the foregoing cases shall
execute an agreement of assumption to perform every obligation of the
Backup Servicer under this Agreement and, whether or not such assumption
agreement is executed, shall be the successor to the Backup Servicer under
this Agreement without the execution or filing of any paper or any further
act on the part of any of the parties to this Agreement, anything in this
Agreement to the contrary notwithstanding; provided, however, that nothing
contained herein shall be deemed to release the Backup Servicer from any
obligation.
SECTION 9.4. [RESERVED].
SECTION 9.5. [RESERVED].
SECTION 9.6. Servicer and Backup Servicer Not to Resign. Subject to the
provisions of Section 9.3, neither the Servicer nor the Backup Servicer shall
resign from the obligations and duties imposed on it by this Agreement as
Servicer or Backup Servicer except (i) upon a determination that by reason of a
change in legal requirements the performance of its duties under this Agreement
would cause it to be in violation of such legal requirements in a manner which
would have a material adverse effect on the Servicer or the Backup Servicer, as
the case may be, and the Note Purchaser does not elect to waive the obligations
of the Servicer or the Backup Servicer, as the case may be, to perform the
duties which render it legally unable to act or to delegate those duties to
another Person or, (ii) in the case of the Backup Servicer, upon the prior
written consent of the Note Purchaser. Any such determination permitting the
resignation of the Servicer or Backup Servicer pursuant to clause (i) in the
immediately preceding sentence shall be evidenced by an Opinion of Counsel to
such effect delivered and acceptable to the Trustee and the Note Purchaser. No
resignation of the Servicer shall become effective until the Backup Servicer or
an entity acceptable to the Note Purchaser shall have assumed the
responsibilities and obligations of the Servicer. No resignation of the Backup
Servicer shall become effective until an entity acceptable to the Note Purchaser
shall have assumed the responsibilities and obligations of the Backup Servicer;
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provided, however, that in the event a successor Backup Servicer is not
appointed within 60 days after the Backup Servicer has given notice of its
resignation and has provided the Opinion of Counsel required by this Section
9.6, the Backup Servicer may petition a court for its removal.
SECTION 9.7. Reporting Requirements. (a) The Servicer shall furnish, or
cause to be furnished to the Noteholders and the Note Purchaser:
(i) Audit Report. As soon as available and in any event within 90
days after the end of each fiscal year of the Servicer, a copy of the
consolidated balance sheet of the Servicer and its Affiliates as at
the end of such fiscal year, together with the related statements of
earnings, stockholders' equity and cash flows for such fiscal year,
prepared in reasonable detail and in accordance with GAAP certified by
Independent Accountants of recognized national standing as shall be
selected by the Servicer.
(ii) Quarterly Statements. As soon as available, but in any event
within 45 days after the end of each fiscal quarter (except the fourth
fiscal quarter) of the Servicer, copies of the unaudited consolidated
balance sheet of the Servicer and its Affiliates as at the end of such
fiscal quarter and the related unaudited statements of earnings,
stockholders' equity and cash flows for the portion of the fiscal year
through such fiscal quarter (and as to the statements of earnings for
such fiscal quarter) in each case setting forth in comparative form
the figures for the corresponding periods of the previous fiscal year,
prepared in reasonable detail and in accordance with GAAP applied
consistently throughout the periods reflected therein and certified by
the chief financial or accounting officer of the Servicer as
presenting fairly the financial condition and results of operations of
the Servicer and its Affiliates (subject to normal year-end
adjustments).
ARTICLE X
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DEFAULT
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SECTION 10.1. Servicer Termination Events. For purposes of this Agreement,
each of the following shall constitute a "Servicer Termination Event":
(a) Any failure by the Servicer or, for so long as the Seller or an
Affiliate of the Purchaser is the Servicer, the Purchaser, to deliver any
proceeds or payment required to be so delivered under this Agreement or any
other Basic Document that continues unremedied for a period of two Business
Days (or one Business Day with respect to payment of Purchase Amounts)
after written notice is received by the Servicer from the Trustee or the
Noteholders or after discovery of such failure by a Responsible Officer of
the Servicer;
(b) Failure by the Servicer to deliver or cause to be delivered to the
Note Purchaser, the Noteholders, the Trustee and the Backup Servicer, the
Servicer's Certificate 12:00 noon New York City time on the second Business
Day after the date such Servicer's Certificate is required to be delivered;
(c) Failure on the part of the Servicer or, for so long as the Seller
or an Affiliate of the Purchaser is the Servicer, the Purchaser to duly
observe or perform any other covenants or agreements of the Servicer or the
Purchaser, as applicable, set forth in this Agreement or any other Basic
Document (other than any term, covenant or agreement referred to in another
subparagraph of this Section 10.1), which failure (i) materially and
adversely affects the rights of the Noteholders or the Note Purchaser and
(ii) except for covenants relating to merger and consolidation or
preservation of ownership or security interests in the Financed Vehicles,
continues unremedied for a period of 30 days after the earlier of knowledge
thereof by the Servicer or after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Servicer by the Noteholders or the Note Purchaser;
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(d) The occurrence of an Insolvency Event with respect to the Servicer
(or, for so long as the Seller or an Affiliate of the Purchaser is the
Servicer, the Purchaser);
(e) Any representation, warranty or statement of the Servicer made in
this Agreement or any other Basic Document to which it is a party or any
certificate, report or other writing delivered pursuant hereto or thereto
shall prove to be incorrect in any material respect as of the time when the
same shall have been made (excluding, however, any representation or
warranty set forth in this Agreement relating to the characteristics of the
Receivables), and the incorrectness of such representation, warranty or
statement has a material adverse effect on the Purchaser, the Note
Purchaser or the Noteholders and, within 30 days after the earlier of
knowledge thereof by the Servicer or after written notice thereof shall
have been given to the Servicer by the Trustee, the Noteholders or the Note
Purchaser the circumstances or condition in respect of which such
representation, warranty or statement was incorrect shall not have been
eliminated or otherwise cured;
(f) The three-month rolling average Loss Ratio exceeds (1) 7.50%
during the Accrual Periods from May to October or (2) 8.25% during the
Accrual Periods from November to April;
(g) The Note Purchaser shall not have delivered a Servicer Extension
Notice pursuant to Section 4.15;
(h) An Event of Default shall have occurred;
(i) The three-month rolling average Servicer Delinquency Ratio exceeds
(A) 6.00% during the Accrual Periods from April to September or (B) 6.50%
during the Accrual Periods from October to March;
(j) The Servicer fails to maintain minimum Consolidated Total Adjusted
Equity of $60,000,000 as of the end of any fiscal quarter;
(k) The Servicer exceeds a maximum leverage ratio (total liabilities
less all non-recourse debt/Consolidated Total Adjusted Equity) of six times
as of the end of any fiscal quarter; and
(l) The Servicer fails to maintain cash and cash equivalents of at
least $8.5 million as of the end of any calendar month.
In the event that the Servicer, Purchaser or Trustee gains knowledge of the
occurrence of a Servicer Termination Event, the Servicer, Purchaser or Trustee,
as applicable, shall promptly notify the Note Purchaser and the Noteholders in
writing of such occurrence; provided that, the Servicer shall be deemed to
satisfy such obligation upon its delivery of an Officer's Certificate in
accordance with Section 4.10 hereof.
SECTION 10.2. Consequences of a Servicer Termination Event. If a Servicer
Termination Event shall occur and be continuing, the Majority Noteholders or the
Note Purchaser by notice given in writing to the Backup Servicer and the
Servicer may terminate all of the rights and obligations of the Servicer under
this Agreement. The outgoing Servicer shall be entitled to its pro rata share of
the Servicing Fee for the number of days in the Accrual Period prior to the
effective date of its termination. On or after the receipt by the Servicer of
such written notice or upon non-extension of the servicing term as referred to
in Section 4.15, all authority, power, obligations and responsibilities of the
Servicer under this Agreement, whether with respect to the Notes or the
Receivables and Other Conveyed Property or otherwise, automatically shall pass
to, be vested in and become obligations and responsibilities of the Backup
Servicer (or such other successor Servicer appointed by the Majority Noteholders
and the Note Purchaser under Section 10.3); provided, however, that the
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successor Servicer shall have no liability with respect to any obligation which
was required to be performed by the outgoing Servicer prior to the date that the
successor Servicer becomes the Servicer or any claim of a third party based on
any alleged action or inaction of the outgoing Servicer. The successor Servicer
is authorized and empowered by this Agreement to execute and deliver, on behalf
of the outgoing Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
whether to complete the transfer and endorsement of the Receivables and the
Other Conveyed Property and related documents to show the Purchaser as
lienholder or secured party on the related Lien Certificates, or otherwise. The
outgoing Servicer agrees to cooperate with the successor Servicer in effecting
the termination of the responsibilities and rights of the outgoing Servicer
under this Agreement, including, without limitation, the transfer to the
successor Servicer for administration by it of all cash amounts that shall at
the time be held by the outgoing Servicer for deposit, or have been deposited by
the outgoing Servicer, in the Collection Account or thereafter received with
respect to the Receivables and the delivery to the successor Servicer of all
Receivable Files that shall at the time be held by the outgoing Servicer and a
computer tape in readable form as of the most recent Business Day containing all
information necessary to enable the successor Servicer to service the
Receivables and the Other Conveyed Property. All reasonable costs and expenses
(including reasonable attorneys' fees) incurred in connection with transferring
any Receivable Files to the successor Servicer and amending this Agreement to
reflect such succession as Servicer pursuant to this Section 10.2 shall be paid
by the predecessor Servicer upon presentation of reasonable documentation of
such costs and expenses. In addition, any successor Servicer shall be entitled
to payment from the immediate predecessor Servicer for reasonable transition
expenses incurred in connection with acting as successor Servicer, and to the
extent not so paid, such payment shall be made pursuant to Section 5.7 hereof.
Upon receipt of notice of the occurrence of a Servicer Termination Event or the
non-extension of the Servicer's term, the Trustee shall give notice thereof to
the Noteholders and the Note Purchaser. If requested by the Majority Noteholders
or the Note Purchaser, the successor Servicer shall terminate the Lockbox
Agreements and direct the Obligors to make all payments under the Receivables
directly to the successor Servicer (in which event the successor Servicer shall
process such payments in accordance with Section 4.2(e)), or to a lockbox
established by the successor Servicer at the direction of the Note Purchaser, at
the successor Servicer's expense. The outgoing Servicer shall grant the Trustee,
the successor Servicer, the Note Purchaser and the Noteholders reasonable access
to the outgoing Servicer's premises at the outgoing Servicer's expense.
SECTION 10.3. Appointment of Successor.
(a) On and after the time the Servicer receives a notice of
termination pursuant to Section 10.2, upon non-extension of the servicing
term as referred to in Section 4.15, or upon the resignation of the
Servicer pursuant to Section 9.6, the outgoing Servicer shall continue to
perform its functions as Servicer under this Agreement, in the case of
termination, only until the date specified in such termination notice or,
if no such date is specified in a notice of termination, until receipt of
such notice and, in the case of expiration and non-renewal of the term of
the Servicer upon the expiration of such term, and, in the case of
resignation, until (i) the later of (x) the date 45 days from the delivery
to the Trustee of written notice of such resignation (or written
confirmation of such notice) in accordance with the terms of this Agreement
and (y) the date upon which the predecessor Servicer shall become unable to
act as Servicer, as specified in the notice of resignation and accompanying
Opinion of Counsel or (ii) such time as a successor Servicer shall assume
all of the rights and obligations of the predecessor Servicer hereunder and
under any other Basic Document; provided, however, that the outgoing
Servicer shall not be relieved of its duties, obligations and liabilities
as Servicer until a successor Servicer has assumed such duties, obligations
and liabilities. Notwithstanding the preceding sentence, if the Backup
Servicer or any other successor Servicer shall not have assumed the duties,
obligations and liabilities of the Servicer within 45 days of the
termination, non-extension or resignation described in this Section 10.3,
the outgoing Servicer may petition a court of competent jurisdiction to
appoint any Eligible Servicer as the successor to the outgoing Servicer.
Pending appointment as successor Servicer, the Backup Servicer (or such
other Person as shall have been appointed by the Majority Noteholders or
the Note Purchaser) shall act as successor Servicer unless it is legally
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unable to do so, in which event the outgoing Servicer shall continue to act
as Servicer until a successor has been appointed and accepted such
appointment. In the event of termination of the Servicer, Wells Fargo Bank,
National Association, as the Backup Servicer shall assume the obligations
of Servicer hereunder on the date (the "Assumption Date") specified in the
written notice delivered by the Trustee to the Backup Servicer and the
Servicer pursuant to Section 10.2 or, in the event that the Majority
Noteholders or the Note Purchaser shall have determined that a Person other
than the Backup Servicer shall be the successor Servicer in accordance with
Section 10.2, on the date of the execution of a written assumption
agreement by such Person to serve as successor Servicer. Notwithstanding
the Backup Servicer's assumption of, and its agreement to perform and
observe, all duties, responsibilities and obligations of the Seller as
Servicer, or any successor Servicer, under this Agreement arising on and
after the Assumption Date, the Backup Servicer shall not be deemed to have
assumed or to become liable for, or otherwise have any liability for any
duties, responsibilities, obligations or liabilities of the Seller or any
other Servicer arising on or before the Assumption Date, whether provided
for by the terms of this Agreement, arising by operation of law or
otherwise, including, without limitation, any liability for any duties,
responsibilities, obligations or liabilities of the Seller or any other
Servicer arising on or before the Assumption Date under Section 4.7 or 9.2
of this Agreement, regardless of when the liability, duty, responsibility
or obligation of the Seller or any other Servicer therefor arose, whether
provided by the terms of this Agreement, arising by operation of law or
otherwise. Notwithstanding the above, if the Backup Servicer shall be
legally unable or unwilling to act as Servicer, the Backup Servicer, the
Trustee, the Majority Noteholders or the Note Purchaser may petition a
court of competent jurisdiction to appoint any Eligible Servicer as the
successor to the outgoing Servicer. Pending appointment pursuant to the
preceding sentence, the Backup Servicer shall act as successor Servicer
unless it is legally unable to do so, in which event the outgoing Servicer
shall continue to act as Servicer until a successor has been appointed and
accepted such appointment. Subject to Section 9.6, no provision of this
Agreement shall be construed as relieving the Backup Servicer of its
obligation to succeed as successor Servicer upon the termination of the
Servicer pursuant to Section 10.2, the non-extension of the Servicer's term
pursuant to Section 4.15 or the resignation of the Servicer pursuant to
Section 9.6. If upon the termination of the Servicer pursuant to Section
10.2, the non-extension of the Servicer's term pursuant to Section 4.15 or
the resignation of the Servicer pursuant to Section 9.6, the Majority
Noteholders and the Note Purchaser appoint a successor Servicer other than
the Backup Servicer, the Backup Servicer shall not be relieved of its
duties as Backup Servicer hereunder
(b) Any successor Servicer shall be entitled to such compensation
(whether payable out of the Collection Account or otherwise) as the
outgoing Servicer would have been entitled to under this Agreement if the
outgoing Servicer had not resigned or been terminated hereunder or had been
renewed for an additional servicing term hereunder.
SECTION 10.4. Notification of Termination and Appointment. Upon any
termination of, or appointment of a successor to, the Servicer, the Trustee
shall give prompt written notice thereof to the Noteholders and the Note
Purchaser.
SECTION 10.5. Waiver of Past Defaults. The Note Purchaser and the Majority
Noteholders may, waive in writing any default by the Servicer in the performance
of its obligations under this Agreement and the consequences thereof. Upon any
such waiver of a past default, such default shall cease to exist, and any
Servicer Termination Event arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereto.
SECTION 10.6. Action Upon Certain Failures of the Servicer. In the event
that the Trustee shall have knowledge of any failure of the Servicer specified
in Section 10.1 that would give rise to a right of termination under such
Section upon the Servicer's failure to remedy the same after notice, the Trustee
shall give notice thereof to the Servicer, the Note Purchaser and the
Noteholders. For all purposes of this Agreement (including, without limitation,
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this Section 10.6), the Trustee shall not be deemed to have knowledge of any
failure of the Servicer as specified in Sections 10.1(c) through (h) unless
notified thereof in writing by the Servicer, the Note Purchaser or the
Noteholders. The Trustee shall be under no duty or obligation to investigate or
inquire as to any potential failure of the Servicer specified in Section 10.1.
SECTION 10.7. Continued Errors. Notwithstanding anything contained herein
to the contrary, if the Backup Servicer becomes successor Servicer it is
authorized to accept and rely on all of the accounting, records (including
computer records) and work of the prior Servicer relating to the Receivables
(collectively, the "Predecessor Servicer Work Product") without any audit or
other examination thereof, and the Backup Servicer as successor Servicer shall
have no duty, responsibility, obligation or liability for the acts and omissions
of the prior Servicer. If any error, inaccuracy, omission or incorrect or
non-standard practice or procedure (collectively, "Errors") exist in any
Predecessor Servicer Work Product and such Errors make it materially more
difficult to service or should cause or materially contribute to the Backup
Servicer as successor Servicer making or continuing any Errors (collectively,
"Continued Errors"), the Backup Servicer as successor Servicer shall have no
duty or responsibility, for such Continued Errors; provided, however, that the
Backup Servicer as successor Servicer agrees to use its best efforts to prevent
further Continued Errors. In the event that the Backup Servicer as successor
Servicer becomes aware of Errors or Continued Errors, the Backup Servicer as
successor Servicer shall, with the prior consent of the Note Purchaser use its
best efforts to reconstruct and reconcile such data as is commercially
reasonable to correct such Errors and Continued Errors and to prevent future
Continued Errors. The Backup Servicer as successor Servicer shall be entitled to
recover its costs thereby expended in accordance with Sections 5.7(a)(i) and
5.7(a)(vii) hereof.
ARTICLE XI
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MISCELLANEOUS PROVISIONS
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SECTION 11.1. Amendment.
(a) This Agreement may not be waived, amended or otherwise modified
except in a writing signed by the parties hereto, the Note Purchaser and
the Majority Noteholders; provided, however, that, no such amendment shall,
without the prior written consent of the Note Purchaser and all of the
Noteholders, (i) modify or have the effect of modifying Sections 5.7 or 5.8
or this Section 11.1 or (ii) eliminate or materially alter any party's
delivery or notice obligations to the Noteholders or the Note Purchaser.
(b) Prior to the execution of any amendment, waiver or consent to this
Agreement the Trustee shall be entitled to receive and rely upon (i) an
Opinion of Counsel stating that the execution of such amendment, waiver or
consent is authorized or permitted by this Agreement and (ii) the Opinion
of Counsel referred to in Section 11.2(i).
(c) The Trustee may, but shall not be obligated to, enter into any
such amendment, waiver or consent which affects the Trustee's own rights,
duties or immunities under this Agreement or otherwise.
(d) Upon the termination of CPS as Servicer and the appointment of the
Backup Servicer as Servicer hereunder, all amendments to the terms of this
Agreement specified in the Servicing and Lockbox Processing Assumption
Agreement shall become a part of this Agreement, as if this Agreement was
amended to reflect such changes in accordance with this Section 11.1.
SECTION 11.2. Protection of Title to Property.
(a) The Seller, the Purchaser or the Servicer or each of them shall
authorize, execute (if necessary) and file such financing statements and
cause to be authorized, executed (if necessary) and filed such continuation
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statements, all in such manner and in such places and take such other
action as may be required by law fully to preserve, maintain and protect
the interest of the Purchaser and the interests of the Trustee for the
benefit of the Noteholders and the Note Purchaser in the Collateral and in
the proceeds thereof. The Seller shall deliver (or cause to be delivered)
to the Noteholders, the Note Purchaser and the Trustee file-stamped copies
of, or filing receipts for, any document filed as provided above, as soon
as available following such filing.
(b) None of the Seller, the Purchaser or the Servicer shall change its
name, identity, jurisdiction of organization, form of organization or
corporate structure in any manner that would, could or might make any
financing statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the meaning of Section
9-506(a) of the UCC, unless it shall have given the Noteholders, the Note
Purchaser and the Trustee at least thirty (30) days' prior written notice
thereof and shall have promptly filed appropriate amendments to all
previously filed financing statements or continuation statements. Promptly
upon such filing, the Purchaser, the Seller or the Servicer, as the case
may be, shall deliver an Opinion of Counsel to the Trustee, the Note
Purchaser and the Noteholders, in a form and substance reasonably
satisfactory to the Note Purchaser, stating either (A) all financing
statements and continuation statements have been authorized, executed and
filed that are necessary fully to preserve and protect the interest of the
Purchaser and the Trustee for the benefit of the Noteholders and the Note
Purchaser in the Collateral, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given, or
(B) no such action shall be necessary to preserve and protect such
interest.
(c) Each of the Seller, the Purchaser and the Servicer shall have an
obligation to give the Noteholders, the Note Purchaser and the Trustee at
least 60 days' prior written notice of any relocation of its chief
executive office or a change in its corporate structure, jurisdiction of
organization or name and shall file amendments, continuation statements and
new financing statements if, as a result of such relocation or change, the
applicable provisions of the UCC would require the filing of any amendment
of any previously filed financing or continuation statement or of any new
financing statement to fully preserve and protect the interest of the
Purchaser and the Trustee on behalf of the Noteholders and the Note
Purchaser in the Collateral. The Servicer shall at all times be organized
under the laws of the United States (or any State thereof) and maintain its
chief executive office and jurisdiction of organization, within the United
States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Receivable, including
payments and recoveries made and payments owing (and the nature of each)
and (ii) reconciliation between payments or recoveries on (or with respect
to) each Receivable and the amounts from time to time deposited in the
Collection Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables and the
Other Conveyed Property to the Purchaser, the Servicer's master computer
records (including any backup archives) that refer to a Receivable shall
indicate clearly the interest of the Purchaser in such Receivable and that
such Receivable is owned by the Purchaser and pledged to the Trustee.
Indication of the Purchaser's and the Trustee's interest in a Receivable
shall be deleted from or modified on the Servicer's computer systems when,
and only when, the related Receivable shall have been paid in full or
repurchased.
(f) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in or otherwise transfer any interest in
automotive receivables to any prospective purchaser, lender or other
transferee, the Servicer shall give to such prospective purchaser, lender
or other transferee computer tapes, records or printouts (including any
restored from backup archives) that, if they shall refer in any manner
whatsoever to any Receivable, shall indicate clearly that such Receivable
has been sold and is owned by the Purchaser and pledged to the Trustee for
the benefit of the Noteholders and the Note Purchaser.
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(g) The Servicer shall permit the Trustee, the Backup Servicer, the
Note Purchaser and the Noteholders and their respective agents upon
reasonable notice and at any time during normal business hours to inspect,
audit, and make copies of and abstracts from the Servicer's records
regarding any Receivable.
(h) Upon request, the Servicer shall furnish to any Noteholder, the
Note Purchaser or to the Trustee, within five Business Days, a list of all
Receivables (by contract number and name of Obligor) then pledged to the
Trustee, together with a reconciliation of such list to the Schedule of
Receivables and to each of the Servicer's Certificates furnished before
such request indicating removal of Receivables from the lien of the
Indenture.
(i) The Servicer shall deliver to the Note Purchaser, the Noteholders
and the Trustee:
(i) promptly after the execution and delivery of this Agreement
and, if required pursuant to Section 11.1, of each amendment, waiver,
or consent, an Opinion of Counsel, in form and substance satisfactory
to the Note Purchaser and the Majority Noteholders, stating that in
the opinion of such counsel, either (A) all financing statements and
continuation statements have been authorized, executed and filed that
are necessary fully to preserve and protect the interest of the
Purchaser and the Trustee for the benefit of the Noteholders and the
Note Purchaser in the Receivables and the Opinion Collateral, and
reciting the details of such filings or referring to a prior Opinion
of Counsel in which such details are given, or (B) no such action
shall be necessary to preserve and protect such interest; and
(ii) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three
months after the Original Closing Date, an Opinion of Counsel, dated
as of a date during such 90-day period, stating that, the opinion of
such counsel, either (a) all financing statements and continuation
statement have been authorized, executed and filed that are necessary
fully to preserve and protect the interest of the Purchaser and the
Trustee for the benefit of the Noteholders and the Note Purchaser in
the Receivables and the Opinion Collateral, and reciting the details
of such filings or referring to prior Opinions of Counsel in which
such details are given, or (b) no such action shall be necessary to
preserve and protect such interest.
Each Opinion of Counsel referred to in clause (i) or (ii) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
Subject to Section 4.5, the Seller hereby authorizes the Note Purchaser,
the Trustee and their respective agents to file such financing statements and
continuation statements and take such other actions as the Note Purchaser or the
Trustee may deem advisable in connection with the security interest granted by
the Seller pursuant to Section 2.2 to the extent permitted by applicable law.
Any such financing statements and continuation statements shall be prepared by
the Issuer or the Note Purchaser.
SECTION 11.3. Notices. All demands, notices and communications upon or to
the Issuer, the Seller, the Backup Servicer, the Servicer, the Purchaser, the
Trustee, the Note Purchaser or the Noteholders under this Agreement shall be in
writing, via facsimile (and confirmed by telephone in the case of facsimiles to
the Issuer, the Seller, the Servicer and the Purchaser), personally delivered,
or mailed by certified mail, return receipt requested, and shall be deemed to
have been duly given upon receipt (a) in the case of the Seller, to Consumer
Portfolio Services, Inc., 16355 Laguna Canyon Road, Irvine, CA 92618, Attention:
Chief Financial Officer, Telecopy: (888) 577-7923; Telephone: (949) 785-6691;
(b) in the case of the Servicer, to Consumer Portfolio Services, Inc., 16355
Laguna Canyon Road, Irvine, CA 92618, Attention: Chief Financial Officer,
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Telecopy: (888) 577-7923; Telephone: (949) 785-6691; (c) in the case of the
Purchaser or the Issuer, to Page Funding LLC, 16355 Laguna Canyon Road, Irvine,
CA 92618, Attention: Chief Financial Officer, Telecopy: (888) 577-7923;
Telephone: (949) 785-6691; (d) in the case of the Trustee or the Backup Servicer
at the Corporate Trust Office; Telecopy: (612) 667-3464; (e) in the case of the
initial Noteholder and the Note Purchaser, to UBS Real Estate Securities Inc.,
1285 Avenue of the Americas, 11th Floor, New York, New York 10019, Attention:
Reginald DeVilliers, Telecopy: (212)713-7999; Telephone: (212)713-3055; and (f)
in the case of any subsequent Noteholders, at the address reflected on the Note
Register. The Note Purchaser may deliver to the Noteholders any notices,
reports, Servicer's Certificates or any other documentation delivered to the
Note Purchaser hereunder or under any other Basic Document, but is under no
obligation to so deliver such documentation and shall not be liable for the
content thereof. Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been duly given, whether or not
the Noteholders or the Note Purchaser shall receive such notice.
SECTION 11.4. Assignment. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective successors and permitted
assigns. Notwithstanding anything to the contrary contained herein, except as
provided in Sections 8.4, 9.3 and this Section 11.4 and as provided in the
provisions of this Agreement concerning the resignation of the Servicer, this
Agreement may not be assigned by the Purchaser, the Seller or the Servicer
without the prior written consent of the Trustee, the Backup Servicer, the Note
Purchaser and the Majority Noteholders; provided that the Purchaser will grant
all of its right, title and interest herein to the Trustee for the benefit of
the Noteholders and the Note Purchaser.
SECTION 11.5. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the parties hereto and for the benefit
of the Note Purchaser, as a third-party beneficiary. Nothing in this Agreement,
whether express or implied, shall be construed to give to any other Person any
legal or equitable right, remedy or claim in the Collateral or under or in
respect of this Agreement or any covenants, conditions or provisions contained
herein.
SECTION 11.6. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.7. Separate Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument. Any signature page to this Agreement
containing a manual signature may be delivered by facsimile transmission or
other electronic communication device capable of transmitting or creating a
printable written record, and when so delivered shall have the effect of
delivery of an original manually signed signature page.
SECTION 11.8. Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
SECTION 11.9. Governing Law. THIS AGREEMENT (OTHER THAN SECTIONS 2.1(A) AND
2.2 HEREOF) SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS (OTHER THAN SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTIONS 2.1(A) AND 2.2 OF THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF
THE PARTIES UNDER SUCH SECTION SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
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SECTION 11.10. Assignment to Trustee. The Seller hereby acknowledges and
consents to any mortgage, pledge, assignment and grant of a security interest by
the Purchaser to the Trustee pursuant to the Indenture for the benefit of the
Noteholders and the Note Purchaser of all right, title and interest of the
Purchaser in, to and under the Receivables and Other Conveyed Property and/or
the assignment of any or all of the Purchaser's rights and obligations hereunder
to the Trustee for the benefit of the Noteholders and the Note Purchaser.
SECTION 11.11. Nonpetition Covenants. Notwithstanding any prior termination
of this Agreement, the Servicer and the Seller shall not, prior to the date
which is one year and one day after the day upon which the outstanding principal
amount of the Notes has been reduced to zero and all Secured Obligations have
been paid in full, acquiesce, petition or otherwise invoke or cause the
Purchaser to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Purchaser under any
federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Purchaser or any substantial part of its property, or ordering the
winding up or liquidation of the affairs of the Purchaser.
SECTION 11.12. Limitation of Liability of Trustee. Notwithstanding anything
contained herein to the contrary, this Agreement has been executed and delivered
by Wells Fargo Bank, National Association, not in its individual capacity but
solely as Trustee and Backup Servicer and in no event shall Wells Fargo Bank,
National Association, have any liability for the representations, warranties,
covenants, agreements or other obligations of the Purchaser hereunder or in any
of the certificates, notices or agreements delivered pursuant hereto, as to all
of which recourse shall be had solely to the assets of the Purchaser.
SECTION 11.13. Independence of the Servicer. For all purposes of this
Agreement, the Servicer shall be an independent contractor and shall not be
subject to the supervision of the Purchaser, the Trustee and Backup Servicer
with respect to the manner in which it accomplishes the performance of its
obligations hereunder. Unless expressly authorized by this Agreement, the
Servicer shall have no authority to act for or represent the Purchaser in any
way and shall not otherwise be deemed an agent of the Purchaser.
SECTION 11.14. No Joint Venture. Nothing contained in this Agreement (i)
shall constitute the Servicer and the Purchaser as members of any partnership,
joint venture, association, syndicate, unincorporated business or other separate
entity, (ii) shall be construed to impose any liability as such on any of them
or (iii) shall be deemed to confer on any of them any express, implied or
apparent authority to incur any obligation or liability on behalf of the others.
SECTION 11.15. Intention of Parties Regarding Delaware Securitization Act.
It is the intention of the Purchaser and the Seller that the transfer and
assignment of the property contemplated by Section 2.1(a) of this Agreement
shall constitute a sale of property from the Seller to the Purchaser, conveying
good title thereto free and clear of any liens, and the beneficial interest in
and title to such assets shall not be part of the Seller's estate in the event
of the filing of a bankruptcy petition by or against the Seller under any
bankruptcy or similar law. In addition, for purposes of complying with the
requirements of the Asset-Backed Securities Facilitation Act of the State of
Delaware, 6 Del. C. ss. 2701A, et seq. (the "Securitization Act"), each of the
parties hereto hereby agrees that:
(a) any property, assets or rights purported to be transferred, in
whole or in part, by the Seller to the Purchaser pursuant to this Agreement
shall be deemed to no longer be the property, assets or rights of the
Seller;
(b) none of the Seller, its creditors or, in any insolvency proceeding
with respect to the Seller or the Seller's property, a bankruptcy trustee,
receiver, debtor, debtor in possession or similar person, to the extent the
issue is governed by Delaware law, shall have any rights, legal or
equitable, whatsoever to reacquire (except pursuant to a provision of this
Agreement), reclaim, recover, repudiate, disaffirm, redeem or
recharacterize as property of the Seller any property, assets or rights
purported to be transferred, in whole or in part, by the Seller to the
Purchaser pursuant to this Agreement;
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(c) in the event of a bankruptcy, receivership or other insolvency
proceeding with respect to the Seller or the Seller's property, to the
extent the issue is governed by Delaware law, such property, assets and
rights shall not be deemed to be part of the Seller's property, assets,
rights or estate; and
(d) the transaction contemplated by this Agreement shall constitute a
"securitization transaction" as such term is used in the Securitization
Act.
SECTION 11.16. Special Supplemental Agreement. If any party to this
Agreement is unable to sign any amendment or supplement due to its dissolution,
winding up or comparable circumstances, then the consent of the Majority
Noteholders and the Note Purchaser shall be sufficient to amend this Agreement
without such party's signature.
SECTION 11.17. Full Recourse to the Issuer and the Purchaser.. The
obligations of the Issuer and the Purchaser under this Agreement and the other
Basic Documents to which it is a party shall be full recourse obligations of the
Issuer and the Purchaser. Notwithstanding the foregoing, no recourse shall be
had for the payment of any amount owing hereunder or for the payment of any fee
hereunder or any other obligation of, or claim against, the Issuer or the
Purchaser arising out of or based upon any provision herein or under any other
Basic Document, against any member, employee, officer, agent, director or
authorized person of the Issuer or the Purchaser or any Affiliate thereof except
as the Issuer or the Purchaser may have expressly agreed and except that any
such partner, owner or beneficiary shall be fully liable, to the extent provided
by applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity;
provided, however, that the foregoing shall not relieve any such person or
entity of any liability they might otherwise have as a result of fraudulent
actions or omissions taken by them. Nothing contained in this Section shall
limit or be deemed to limit any obligations of the Issuer, the Purchaser, the
Seller or the Servicer hereunder or under any other Basic Document, which
obligations are full recourse obligations of the Issuer, the Purchaser, the
Seller and the Servicer, respectively.
SECTION 11.18. Acknowledgement of Roles. The parties expressly acknowledge
and consent to Wells Fargo Bank, National Association acting in the multiple
capacities of Backup Servicer and Trustee. The parties agree that Wells Fargo
Bank, National Association in such multiple capacities shall not be subject to
any claim, defense or liability arising from its performance in any such
capacity based on conflict of interest principles, duty of loyalty principles or
other breach of fiduciary duties to the extent that any such conflict or breach
arises from the performance by Wells Fargo Bank, National Association of any
other such capacity or capacities in accordance with this Agreement or any other
Basic Documents to which it is a party.
SECTION 11.19. Termination. Except as otherwise provided herein, the
respective obligations and responsibilities of the Seller, the Purchaser, the
Servicer, the Backup Servicer, and the Trustee created hereby shall terminate on
the Termination Date; provided, however, in any case there shall be delivered to
the Trustee, the Note Purchaser and the Noteholders an Opinion of Counsel that
all applicable preference periods under federal, State and local bankruptcy,
insolvency and similar laws have expired with respect to the payments pursuant
to this Section 11.19. The Servicer shall promptly notify the Trustee, the
Seller, the Issuer, the Note Purchaser and the Noteholders of any prospective
termination pursuant to this Section 11.19.
SECTION 11.20. Submission to Jurisdiction. ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW
YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO CONSENTS,
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF
THOSE COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
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NON CONVENIENS, OR ANY LEGAL PROCESS WITH RESPECT TO ITSELF OR ANY OF ITS
PROPERTY, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY
SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY NEW YORK LAW.
SECTION 11.21. Waiver of Trial by Jury. THE PARTIES HERETO EACH WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY
PARTY AGAINST THE OTHER PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS OR OTHERWISE. THE PARTIES HERETO EACH AGREE THAT ANY SUCH CLAIM OR CAUSE
OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY
JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR
OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT.
SECTION 11.22. Process Agent. Each of Purchaser, Seller, Servicer and
Trustee agrees that the process by which any proceedings in the State of New
York are begun may be served on it by being delivered by certified mail at the
chief executive office or corporate trust office, as applicable, or at its
registered office for the time being. If such person is not or ceases to be
effectively appointed to accept service of process on the Purchaser's, Seller's,
Servicer's or Trustee's behalf, the Purchaser, Seller, Servicer or Trustee, as
applicable, shall, on the written demand of the process agent, appoint a further
person in the State of New York to accept service of process on its behalf and,
failing such appointment within 15 days, the process agent shall be entitled to
appoint such a person by written notice to the Purchaser, Seller, Servicer or
Trustee, as applicable. Nothing in this sub-clause shall affect the right of the
process agent to serve process in any other manner permitted by law.
SECTION 11.23. Set-Off(a) . Each of the Seller, the Purchaser, the Issuer
and the Servicer agrees that it shall have no right of set-off or banker's lien
against, and no right to otherwise deduct from, any funds held in any account
described herein or in the Basic Documents for any amount owed to it by the Note
Purchaser or any Noteholder.
(b) In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of such rights, during the
continuance of any Event of Default hereunder:
(i) the Note Purchaser is hereby authorized at any time and from
time to time, without notice to the Purchaser or the Issuer, such
notice being hereby expressly waived, to set-off any obligation owing
by the Note Purchaser or any of its Affiliates to the Purchaser or the
Issuer, or against any funds or other property of the Purchaser or the
Issuer, held by or otherwise in the possession of the Note Purchaser
or any of its Affiliates, the respective obligations of the Purchaser
or the Issuer to the Note Purchaser under this Agreement and the other
Basic Documents and irrespective of whether or not the Note Purchaser
shall have made any demand hereunder or thereunder; and
(ii) the Note Purchaser is hereby authorized at any time and from
time to time, without notice to the Seller or the Servicer, such
notice being hereby expressly waived, to set-off any obligation owing
by the Note Purchaser or any of its Affiliates to the Seller or the
Servicer, or against any funds or other property of the Seller or the
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Servicer held by or otherwise in the possession of the Note Purchaser
or any of its Affiliates, the respective obligations of the Seller or
the Servicer to the Note Purchaser under this Agreement and the other
Basic Documents and irrespective of whether or not the Note Purchaser
shall have made any demand hereunder or thereunder.
SECTION 11.24. No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising any right, remedy, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise hereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exhaustive of any rights, remedies, powers and privileges provided by law.
SECTION 11.25. Merger and Integration. Except as specifically stated
otherwise herein, this Agreement and the other Basic Documents sets forth the
entire understanding of the parties relating to the subject matter hereof, and
all prior understandings, written or oral, are superseded by this Agreement and
the other Basic Documents. This Agreement may not be modified, amended, waived
or supplemented except as provided herein.
SECTION 11.26. No Novation. It is expressly understood and agreed by the
parties hereto that the amendment and restatement of this Agreement is in no way
intended to and shall not be deemed to constitute a novation or repayment of the
outstanding Advances and the other obligations and liabilities existing under
the Original Basic Documents and the security interest of the Trustee in the
Collateral for the benefit of the Noteholders and the Note Purchaser shall
remain in full force and effect after giving effect to the amendment and
restatement of this Agreement.
SECTION 11.27. Survival of Representations, Warranties and Indemnities
under Amended and Restated Sale and Servicing Agreement. The representations,
warranties and indemnity obligations of the Issuer, the Purchaser, the Servicer,
the Seller and CPS made in the Amended and Restated Sale and Servicing Agreement
and each other Basic Document prior to the Restatement Effective Date shall
survive the Restatement Effective Date and the execution and delivery of this
Agreement, and each such representation and warranty so made is true and correct
as of the date originally made and as of the date hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective duly authorized officers as of
the day and the year first above written.
PAGE FUNDING LLC, as Purchaser
By:_____________________________________________
Name:
Title:
CONSUMER PORTFOLIO SERVICES, INC., as
Seller
By:_____________________________________________
Name:
Title:
CONSUMER PORTFOLIO SERVICES, INC.,
as Servicer
By:_____________________________________________
Name:
Title:
WELLS FARGO BANK, NATIONAL ASSOCIATION, not in
its individual capacity, but solely as Backup
Servicer and Trustee
By:_____________________________________________
Name:
Title:
CONSENTED TO BY:
UBS REAL ESTATE SECURITIES, INC.,
as Noteholder and Note Purchaser
By: _____________________________
Name: _____________________________
Title: _____________________________
By: _____________________________
Name: _____________________________
Title: _____________________________
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ACKNOWLEDGEMENT
---------------
TFC, in its capacity as a subservicer with respect to the TFC Receivables
hereby acknowledges and agrees to the provisions set forth in Section 4.18 of
the foregoing Agreement.
THE FINANCE COMPANY
By:____________________________
Name:__________________________
Title:_________________________
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ANNEX A---DEFINED TERMS
"Account Control Agreement" means that Deposit Account Control Agreement
dated as of April 18, 2006, by and among CPS, the Note Purchaser and Wells Fargo
Bank, National Association, as such agreement may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
"Accounting Date" means, with respect to any Determination Date, the close
of business on the day immediately preceding such Determination Date.
"Accountants' Report" means the report of a firm of nationally recognized
independent accountants described in Section 4.11 of the Sale and Servicing
Agreement.
"Accrual Period" means a calendar month; provided that the initial Accrual
Period shall be the period from and including the day after the initial Cutoff
Date to and including July 31, 2004.
"Act" has the meaning specified in Section 11.3 of the Indenture.
"Addition Notice" means, with respect to any transfer of Receivables to the
Purchaser pursuant to Section 2.1 of the Sale and Servicing Agreement, notice of
the Seller's election to transfer Receivables to the Purchaser, such notice to
designate the related Funding Date and the aggregate principal amount of
Receivables to be transferred on such Funding Date, substantially in the form of
Exhibit G to the Sale and Servicing Agreement.
"Advance" has the meaning set forth in paragraph 1 of the recitals to the
Note Purchase Agreement.
"Advance Amount" means with respect to the Receivables, an amount equal to
the least of (i) the excess of the Maximum Invested Amount over the Invested
Amount of the Notes as of such Funding Date; and (ii) the excess of the Net
Borrowing Base (taking into account the amount of the Receivables to be
purchased on such Funding Date) over the Invested Amount of the Notes as of such
Funding Date.
"Advance Rate" as of any day means (a) with respect to each TFC Receivable,
the lesser of (i) 70% and (ii) 80% of Market Value and (b) with respect to each
CPS Receivable, the lesser of (i) 80% and (ii) 85% of Market Value.
"Advance Request" has the meaning set forth in Section 2.03 of the Note
Purchase Agreement.
"Affiliate" of any Person means any Person who directly or indirectly
controls, is controlled by, or is under direct or indirect common control with
such Person. For purposes of this definition, the term "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling", "controlled
by" and "under common control with" have meanings correlative to the foregoing.
"Aggregate Principal Balance" means, with respect to any date of
determination and with respect to the Receivables, the Eligible Receivables or
any specified portion thereof, as the case may be, the sum of the Principal
Balances for all Receivables, the Eligible Receivables or any specified portion
thereof, as the case may be (other than (i) any Receivable that became a
Liquidated Receivable prior to the end of the most recently ended Accrual Period
and (ii) any Receivable that became a Purchased Receivable prior to the end of
the most recently ended Accrual Period) as of the date of determination.
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"Amended and Restated Sale and Servicing Agreement" has the meaning
ascribed to such term in the Recitals to the Sale and Servicing Agreement.
"Amortization Period" means the period beginning on the Facility
Termination Date and ending on the Final Scheduled Settlement Date.
"Amount Financed" means, with respect to a Receivable, the aggregate amount
advanced under such Receivable toward the purchase price of the Financed Vehicle
and any related costs, including amounts advanced in respect of accessories,
insurance premiums, service and warranty contracts, other items customarily
financed as part of retail automobile installment sale contracts or promissory
notes, and related costs.
"Annual Percentage Rate" or "APR" of a Receivable means the annual
percentage rate of finance charges or service charges, as stated in the related
Contract.
"Applicable Margin" means (a) with respect to any day prior to the
commencement of the Amortization Period, 2.00% and (b) with respect to any day
on or after which the Amortization Period commences, the Default Applicable
Margin.
"Assignment" means an assignment from the Seller to the Purchaser with
respect to the Receivables and Other Conveyed Property to be conveyed by the
Seller to the Purchaser on any Funding Date, in substantially the form of
Exhibit F to the Sale and Servicing Agreement.
"Assumption Date" has the meaning set forth in Section 10.3(a) of the Sale
and Servicing Agreement.
"Authorized Officer" means, with respect to the Servicer or the Issuer, any
officer or agent acting pursuant to a power of attorney of such Person, who is
authorized to act therefor and who is identified on the list of Authorized
Officers delivered by such Person to the Trustee and the Note Purchaser on the
Original Closing Date (as such list may be modified or supplemented from time to
time thereafter).
"Available Funds" means, for each Settlement Date, the sum of the following
amounts with respect to the preceding Accrual Period, without duplication: (i)
all collections on the Receivables; (ii) all Net Liquidation Proceeds received
during the Accrual Period with respect to Liquidated Receivables; (iii) the
Purchase Amount of each Receivable repurchased by the Seller or the Purchaser
during such Accrual Period; (iv) Investment Earnings for the related Settlement
Date; (v) all amounts received pursuant to Receivable Insurance Policies with
respect to any Financed Vehicles; and (vi) cash received from a Margin Call.
"Backup Servicer" means Wells Fargo Bank, National Association in its
capacity as Backup Servicer pursuant to the terms of the Servicing and Lockbox
Processing Assumption Agreement or such Person as shall have been appointed
Backup Servicer pursuant to Section 9.3(b) or 9.6 of the Sale and Servicing
Agreement.
"Backup Servicing Fee" means (A) the fee payable to the Backup Servicer so
long as the Seller or any successor Servicer (other than the Backup Servicer) is
the Servicer, on each Settlement Date in the amount equal to $1,800 per monthly
data transmission received by the Backup Servicer pursuant to Section 4.14 of
the Sale and Servicing Agreement and (B) any other amounts payable to the Backup
Servicer pursuant to the Fee Schedule.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as amended from
time to time, and as codified as 11 U.S.C. Section 101 et seq.
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"Basic Documents" means the Indenture, the Notes, the Sale and Servicing
Agreement (including this Annex A), the Lockbox Agreements, the Note Purchase
Agreement, the LLC Agreement, each Assignment, the Pledge Agreement, the
Servicing and Lockbox Processing Assumption Agreement, the Engagement Letter,
the Consent and Agreement, the Servicer Termination Side Letter, the Account
Control Agreement and other documents and certificates delivered in connection
therewith.
"Borrowing Base" means, as of any date of determination, an amount equal to
the sum of (i) the CPS Borrowing Base, (ii) the lesser of (A) the TFC Borrowing
Base and (B) $25,000,000 and (iii) Available Funds allocable to principal
payments made by Obligors (including any Eligible Investments) on deposit in the
Collection Account.
"Borrowing Base Certificate" means, with respect to any transfer of
Receivables, the certificate of the Servicer setting forth the calculation of
the Borrowing Base, substantially in the form of Exhibit A to the Note Purchase
Agreement.
"Borrowing Base Deficiency" means, as of any date of determination, the
positive excess, if any, of the Invested Amount over the Borrowing Base, after
application of funds, if any, by the Trustee in reduction of the Invested Amount
as contemplated by Section 3.06(a) of the Note Purchase Agreement.
"Business Day" means any (i) day other than a Saturday, a Sunday or other
day on which commercial banks located in the states of Minnesota, California or
New York are authorized or obligated to be closed and (ii) if the applicable
Business Day relates to the determination of LIBOR, a day which is a day
described in clause (i) above and which is also a day for trading by and between
banks in the London interbank eurodollar market.
"Casualty" means, with respect to a Financed Vehicle, the total loss or
destruction of such Financed Vehicle.
"Change of Control" means a change resulting when (i) the Seller no longer
owns 100% of the membership interests in the Purchaser, (ii) the Seller or the
Purchaser merges or consolidates with, or sells all or substantially all of its
assets to any other Person, or (iii) any Unrelated Person or any Unrelated
Persons, acting together, that would constitute a Group together with any
Affiliates or Related Persons thereof (in each case also constituting Unrelated
Persons) shall at any time Beneficially Own more than 50% of the aggregate
voting power of all classes of Voting Stock of the Seller. As used herein, (a)
"Beneficially Own" shall mean "beneficially own" as defined in Rule 13d-3 of the
Exchange Act, or any successor provision thereto; provided, however, that, for
purposes of this definition, a Person shall not be deemed to Beneficially Own
securities tendered pursuant to a tender or exchange offer made by or on behalf
of such Person or any of such Person's Affiliates until such tendered securities
are accepted for purchase or exchange; (b) "Group" shall mean a "group" for
purposes of Section 13(d) of the Exchange Act; (c) "Unrelated Person" shall mean
at any time any Person other than the Seller or any of its Subsidiaries and
other than any trust for any employee benefit plan of the Seller or any of its
Subsidiaries; (d) "Related Person" shall mean any other Person owning (1) 5% or
more of the outstanding common stock of such Person, or (2) 5% or more of the
Voting Stock of such Person; and (e) "Voting Stock" of any Person shall mean the
capital stock or other indicia of equity rights of such Person which at the time
has the power to vote for the election of one or more members of the Board of
Directors (or other governing body) of such Person.
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act, or any successor provision thereto.
The initial Clearing Agency shall be The Depository Trust Company.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
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"Collateral" has the meaning specified in the Granting Clause of the
Indenture.
"Collection Account" means the account designated as such, established and
maintained pursuant to Section 5.1 of the Sale and Servicing Agreement.
"Commission" means the United States Securities and Exchange Commission.
"Commitment" means the obligation of the Note Purchaser to make Advances to
the Issuer pursuant to the terms of the Note Purchase Agreement and the other
Basic Documents.
"Concentration Limits" means with respect to Eligible Receivables:
(i) CPS Receivables the Obligors of which are the subject of
Insolvency Events under Chapter 7 of the Bankruptcy Code and have completed
a 341 Hearing shall not at any time represent more than 5% of the Aggregate
Principal Balance of the CPS Receivables;
(ii) CPS Receivables originated under the Seller's "Delta Program" and
"First Time Buyer Program" shall not in the aggregate at any time represent
more than 15% of the Aggregate Principal Balance of the CPS Receivables;
(iii) TFC Receivables with respect to which more than 10% of a
Scheduled Receivable Payment is more than 31 days contractually delinquent
as of the end of the immediately preceding Accrual Period shall not in the
aggregate represent more than 10% of the Aggregate Principal Balance of the
TFC Receivables;
(iv) TFC Receivables originated under TFC's "E-1 Program" and "E-2
Program" shall not at any time represent more than 30% of the Aggregate
Principal Balance of the TFC Receivables; and
(v) Unless an Opinion of Counsel, in form and substance satisfactory
to the Note Purchaser, has been delivered to the Trustee and the Note
Purchaser addressing (i) the form of Contract used by Seller in such State
and (ii) the security interest of the Trustee in the Financed Vehicles
titled in such State in the absence of any retitling of such Financed
Vehicles, Eligible Receivables originated in any one State shall not in the
aggregate at any time represent more than 10% of the aggregate Principal
Balance of Eligible Receivables.
"Consent and Agreement" means that Consent and Agreement dated as of April
18, 2006, made by the Issuer, as such consent and agreement may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.
"Consolidated Total Adjusted Equity" of any Person means, with respect to
any fiscal quarter, the total shareholders' equity of such Person and its
consolidated Subsidiaries that, in accordance with GAAP, is reflected on the
consolidated balance sheet of such Person and its consolidated Subsidiaries for
such fiscal quarter, minus the aggregate amount of such Person's and its
consolidated Subsidiaries intangible assets, including without limitation,
goodwill, franchises, licenses, patents, trademarks, tradenames, copyrights and
service marks.
"Consumer Laws" means federal and State usury laws, the Federal
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's
Regulations B and Z, the Servicemembers Civil Relief Act, the California
Military Reservist Relief Act, the Texas Consumer Credit Code, the California
Automobile Sales Finance Act, State adaptations of the National Consumer Act and
of the Uniform Consumer Credit Code and all other federal, State and local
consumer credit laws and equal credit opportunity and disclosure laws and
regulations thereunder.
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"Contract" means a motor vehicle retail installment sale contract or
installment promissory note or security agreement relating to the sale or
refinancing of new or used automobiles, light duty trucks, vans or minivans, and
other writings related thereto from time to time.
"Contract Purchase Guidelines" means (a) with respect to the CPS
Receivables, CPS' established "Contract Purchase Guidelines" and (b) with
respect to the TFC Receivables, TFC's established "Contract Purchase
Guidelines", in each case as the same may be amended from time to time in
accordance with Section 8.2(c) of the Sale and Servicing Agreement.
"Corporate Trust Office" means with respect to the Trustee, the principal
office of the Trustee at which at any particular time its corporate trust
business shall be administered which office is located at Sixth Street and
Marquette Avenue, MAC N9311-161, Minneapolis, Minnesota 55479, or at such other
address as the Trustee may designate from time to time by notice to the Note
Purchaser, the Servicer, the Issuer, or the principal corporate trust office of
any successor Trustee (the address of which the successor Trustee will notify
the Note Purchaser).
"CPS" means Consumer Portfolio Services, Inc., a California corporation.
"CPS Borrowing Base" means, as of any date of determination, an amount
equal to (a) the excess of (i) the Aggregate Principal Balance of the CPS
Receivables (after giving effect to Available Funds allocable to principal
payments made by Obligors) over (ii) the Excess Concentration Amount for the CPS
Receivables multiplied by (b) the applicable Advance Rate.
"CPS Receivables" means Eligible Receivables that were acquired from
Dealers by the Seller.
"Cram Down Loss" means, with respect to a Receivable, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the amount owed on a Receivable or otherwise modifying or restructuring
Scheduled Receivable Payments to be made on a Receivable, an amount equal to
such reduction in the Principal Balance of such Receivable or the reduction in
the net present value (using as the discount rate the lower of the contract rate
or the rate of interest specified by the court in such order) of the Scheduled
Receivable Payments as so modified or restructured. A "Cram Down Loss" shall be
deemed to have occurred on the date such order is entered.
"Cutoff Date" means, with respect to a Receivable or Receivables, the date
specified as such for such Receivable or Receivables in the Schedule of
Receivables attached to the Sale and Servicing Agreement or to the applicable
Assignment.
"Dealer" means, with respect to a Receivable, the seller of the related
Financed Vehicle, who originated and assigned such Receivable to the Seller,
which Dealer shall not be an Affiliate of the Seller (including, without
limitation, MFN and TFC Enterprises, Inc.).
"Default" means any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.
"Default Applicable Margin" means 4.00%.
"Defaulted Receivable" means, with respect to any Receivable as of any
date, a Receivable with respect to which: (i) more than 10% of its Scheduled
Receivable Payment is more than 90 days past due as of the end of the
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immediately preceding Accrual Period, (ii) the Servicer has repossessed the
related Financed Vehicle (and any applicable redemption or acceleration period
has expired) as of the end of the immediately preceding Accrual Period, or (iii)
such Receivable has been written off by the Servicer as uncollectible in
accordance with the Servicer's policies or the Servicer has determined in good
faith that payments thereunder are not likely to be resumed.
"Defective Receivable" means a Receivable that is subject to repurchase
pursuant to Section 3.2 or Section 4.7 of the Sale and Servicing Agreement.
"Delivery" means, when used with respect to Pledged Account Property:
(i) the perfection and priority of a security interest in such Pledged
Account Property which is governed by the law of a jurisdiction which has
adopted the 1978 Revision to Article 8 of the UCC (and not the 1994 Revision to
Article 8 of the UCC as referred to in (ii) below):
(a) with respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute "instruments"
within the meaning of Section 9-102(a)(47) of the UCC and are susceptible
of physical delivery, transfer thereof to the Trustee or its nominee or
custodian by physical delivery to the Trustee or its nominee or custodian
endorsed to, or registered in the name of, the Trustee or its nominee or
custodian or endorsed in blank, and, with respect to a certificated
security (as defined in Section 8-102 of the UCC), transfer thereof (1) by
delivery of such certificated security endorsed to, or registered in the
name of, the Trustee or its nominee or custodian or endorsed in blank to a
financial intermediary (as defined in Section 8-313 of the UCC) and the
making by such financial intermediary of entries on its books and records
identifying such certificated securities as belonging to the Trustee or its
nominee or custodian and the sending by such financial intermediary of a
confirmation of the purchase of such certificated security by the Trustee
or its nominee or custodian, or (2) by delivery thereof to a "clearing
corporation" (as defined in Section 8-102(3) of the UCC) and the making by
such clearing corporation of appropriate entries on its books reducing the
appropriate securities account of the transferor and increasing the
appropriate securities account of a financial intermediary by the amount of
such certificated security, the identification by the clearing corporation
of the certificated securities for the sole and exclusive account of the
financial intermediary, the maintenance of such certificated securities by
such clearing corporation or a "custodian bank" (as defined in Section
8-102(4) of the UCC) or the nominee of either subject to the clearing
corporation's exclusive control, the sending of a confirmation by the
financial intermediary of the purchase by the Trustee or its nominee or
custodian of such securities and the making by such financial intermediary
of entries on its books and records identifying such certificated
securities as belonging to the Trustee or its nominee or custodian (all of
the foregoing, "Physical Property"), and, in any event, any such Physical
Property in registered form shall be in the name of the Trustee or its
nominee or custodian; and such additional or alternative procedures as may
hereafter become appropriate to effect the complete transfer of ownership
of any such Pledged Account Property to the Trustee or its nominee or
custodian, consistent with changes in applicable law or regulations or the
interpretation thereof;
(b) with respect to any security issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or by the Federal National Mortgage
Association that is a book-entry security held through the Federal Reserve
System pursuant to Federal book-entry regulations, the following
procedures, all in accordance with applicable law, including applicable
Federal regulations and Articles 8 and 9 of the UCC: book-entry
registration of such Pledged Account Property to an appropriate book-entry
account maintained with a Federal Reserve Bank by a financial intermediary
which is also a "depository" pursuant to applicable Federal regulations and
issuance by such financial intermediary of a deposit advice or other
written confirmation of such book-entry registration to the Trustee or its
nominee or custodian of the purchase by the Trustee or its nominee or
custodian of such book-entry securities; the making by such financial
intermediary of entries in its books and records identifying such
book-entry security held through the Federal Reserve System pursuant to
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Federal book-entry regulations as belonging to the Trustee or its nominee
or custodian and indicating that such custodian holds such Pledged Account
Property solely as agent for the Trustee or its nominee or custodian; and
such additional or alternative procedures as may hereafter become
appropriate to effect complete transfer of ownership of any such Pledged
Account Property to the Trustee or its nominee or custodian, consistent
with changes in applicable law or regulations or the interpretation
thereof; and
(c) with respect to any item of Pledged Account Property that is an
uncertificated security under Article 8 of the UCC and that is not governed
by clause (b) above, registration on the books and records of the issuer
thereof in the name of the financial intermediary, the sending of a
confirmation by the financial intermediary of the purchase by the Trustee
or its nominee or custodian of such uncertificated security, the making by
such financial intermediary of entries on its books and records identifying
such uncertificated securities as belonging to the Trustee or its nominee
or custodian; or
(ii) the perfection and priority of a security interest in such Pledged
Account Property which is governed by the law of a jurisdiction which has
adopted the 1994 Revision to Article 8 of the UCC:
(a) with respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute "instruments"
within the meaning of Section 9-102(a)(47) of the UCC (other than
certificated securities) and are susceptible of physical delivery, transfer
thereof to the Trustee by physical delivery to the Trustee, indorsed to, or
registered in the name of, the Trustee or its nominee or indorsed in blank
and such additional or alternative procedures as may hereafter become
appropriate to effect the complete transfer of ownership of any such
Pledged Account Property to the Trustee free and clear of any adverse
claims, consistent with changes in applicable law or regulations or the
interpretation thereof;
(b) with respect to a "certificated security" (as defined in Section
8-102(a)(4) of the UCC), transfer thereof:
(1) by physical delivery of such certificated security to the
Trustee, provided that if the certificated security is in registered
form, it shall be indorsed to, or registered in the name of, the
Trustee or indorsed in blank;
(2) by physical delivery of such certificated security in
registered form to a "securities intermediary" (as defined in Section
8-102(a)(l4) of the UCC) acting on behalf of the Trustee if the
certificated security has been specially indorsed to the Trustee by an
effective indorsement.
(c) with respect to any security issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or by the Federal National Mortgage
Association that is a book-entry security held through the Federal Reserve
System pursuant to Federal book entry regulations, the following
procedures, all in accordance with applicable law, including applicable
federal regulations and Articles 8 and 9 of the UCC: book-entry
registration of such property to an appropriate book-entry account
maintained with a Federal Reserve Bank by a securities intermediary which
is also a "depositary" pursuant to applicable federal regulations and
issuance by such securities intermediary of a deposit advice or other
written confirmation of such book-entry registration to the Trustee of the
purchase by the securities intermediary on behalf of the Trustee of such
book-entry security; the making by such securities intermediary of entries
in its books and records identifying such book-entry security held through
the Federal Reserve System pursuant to Federal book-entry regulations as
belonging to the Trustee and indicating that such securities intermediary
holds such book-entry security solely as agent for the Trustee; and such
additional or alternative procedures as may hereafter become appropriate to
effect complete transfer of ownership of any such Pledged Account Property
to the Trustee free of any adverse claims, consistent with changes in
applicable law or regulations or the interpretation thereof;
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(d) with respect to any item of Pledged Account Property that is an
"uncertificated security" (as defined in Section 8-102(a)(18) of the UCC)
and that is not governed by clause (c) above, transfer thereof:
(1)(A) by registration to the Trustee as the registered owner
thereof, on the books and records of the issuer thereof;
(B) by another Person (not a securities intermediary) who either
becomes the registered owner of the uncertificated security on behalf
of the Trustee, or having become the registered owner acknowledges
that it holds for the Trustee;
(2) the issuer thereof has agreed that it will comply with
instructions originated by the Trustee without further consent of the
registered owner thereof;
(e) with respect to a "security entitlement" (as defined in Section
8-102(a)(17) of the UCC):
(1) if a securities intermediary (A) indicates by book entry that
a "financial asset" (as defined in Section 8-102(a)(9) of the UCC) has
been credited to the Trustee's "securities account" (as defined in
Section 8-501(a) of the UCC), (B) receives a financial asset (as so
defined) from the Trustee or acquires a financial asset for the
Trustee, and in either case, accepts it for credit to the Trustee's
securities account (as so defined), (C) becomes obligated under other
law, regulation or rule to credit a financial asset to the Trustee's
securities account, or (D) has agreed that it will comply with
"entitlement orders" (as defined in Section 8-102(a)(8) of the UCC)
originated by the Trustee, without further consent by the "entitlement
holder" (as defined in Section 8-l02(a)(7) of the UCC), of a
confirmation of the purchase and the making by such securities
intermediary of entries on its books and records identifying as
belonging to the Trustee of (I) a specific certificated security in
the securities intermediary's possession, (II) a quantity of
securities that constitute or are part of a fungible bulk of
certificated securities in the securities intermediary's possession,
or (III) a quantity of securities that constitute or are part of a
fungible bulk of securities shown on the account of the securities
intermediary on the books of another securities intermediary;
(f) in each case of delivery contemplated pursuant to clauses (a)
through (e) of subsection (ii) hereof, the Trustee shall make appropriate
notations on its records, and shall cause the same to be made on the
records of its nominees, indicating that such Trust Property which
constitutes a security is held in trust pursuant to and as provided in the
Sale and Servicing Agreement.
"Deposit Account" means that deposit account established pursuant to the
Account Control Agreement.
"Determination Date" means, with respect to any Settlement Date, the fourth
Business Day immediately preceding such Settlement Date.
"Dollar" means lawful money of the United States.
"Eligible Account" means either (i) a segregated trust account that is
maintained with a depository institution acceptable to the Note Purchaser, or
(ii) a segregated direct deposit account maintained with a depository
institution or trust company organized under the laws of the United States of
America, or any of the States thereof, or the District of Columbia, having a
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certificate of deposit, short-term deposit or commercial paper rating of at
least "A-1+" by Standard & Poor's and "P-1" by Moody's and acceptable to the
Note Purchaser.
"Eligible Investments" mean book-entry securities, negotiable instruments
or securities represented by instruments in bearer or registered form which
evidence:
(a) direct obligations of, and obligations fully guaranteed as to the
full and timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of the
United States of America or any State thereof (or any domestic branch of a
foreign bank) and subject to supervision and examination by Federal or
State banking or depository institution authorities; provided, however,
that at the time of the investment or contractual commitment to invest
therein, the commercial paper or other short-term unsecured debt
obligations (other than such obligations the rating of which is based on
the credit of a Person other than such depository institution or trust
company) thereof shall be rated "A-1+" or better by Standard & Poor's and
"P-1" by Moody's;
(c) commercial paper that, at the time of the investment or
contractual commitment to invest therein, is rated "A-1+" or better by
Standard & Poor's and "P-1" by Moody's;
(d) bankers' acceptances issued by any depository institution or trust
company referred to in clause (b) above;
(e) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed as to the full and timely payment
by, the United States of America or any agency or instrumentality thereof
the obligations of which are backed by the full faith and credit of the
United States of America, in either case entered into with (i) a depository
institution or trust company (acting as principal) described in clause (b)
or (ii) a depository institution or trust company whose commercial paper or
other short term unsecured debt obligations are rated "A-1+" or better by
Standard & Poor's and "P-1" by Moody's and long term unsecured debt
obligations are rated "AAA" by Standard & Poor's and "Aaa" by Moody's;
(f) with the prior written consent of the Note Purchaser, money market
mutual funds registered under the Investment Company Act of 1940, as
amended, having a rating, at the time of such investment, from each of the
Rating Agencies in the highest investment category granted thereby; and
(g) any other investment as may be acceptable to the Note Purchaser,
as evidenced by a writing to that effect, as may from time to time be
confirmed in writing to the Trustee by the Note Purchaser.
Any of the foregoing Eligible Investments may be purchased by or through
the Trustee or any of its Affiliates.
"Eligible Receivables" means, as of any date of determination, Receivables
(a) with respect to each of which no more than 10% of its Scheduled Receivable
Payment is no more than 45 days contractually delinquent as of the end of the
immediately preceding Accrual Period, (b) that are not Liquidated Receivables,
(c) that are not Repossessed Receivables, (d) that are not Defective
Receivables; (e) that are not listed on Schedule A to the Trust Receipt (unless
subsequently cured); (f) that have the characteristics set forth in Section 3.1
of the Sale and Servicing Agreement; (g) that have not been in the CPS Borrowing
Base for more than 180 days (in the case of CPS Receivables) or in the TFC
Borrowing Base for more than 360 days (in the case of TFC Receivables).
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"Eligible Servicer" means a Person approved to act as "Servicer" under the
Sale and Servicing Agreement by the Note Purchaser.
"Engagement Letter" means the letter agreement dated as of April 27, 2004,
entered between CPS and UBS Securities LLC.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" has the meaning specified in Section 5.1 of the
Indenture.
"Excess Concentration Amount" means the aggregate amount by which (without
duplication), the Aggregate Principal Balance of Eligible Receivables sold to
the Purchaser hereunder exceeds any of the Concentration Limits; provided,
however, that in determining which Receivables to exclude for purposes of
complying with any Concentration Limit, the Seller shall exclude Receivables
starting with those having the most recent origination dates.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, President,
Senior Vice President, any Vice President, the Secretary or the Treasurer of
such corporation; with respect to any limited liability company, the manager,
and any individuals appointed to any of the preceding offices by the manager;
and with respect to any partnership, any general partner thereof.
"Facility Termination Date" means the earlier of (I) the first to occur of
(A) the Scheduled Maturity Date or (B) the date of the occurrence of a Funding
Termination Event specified in clauses (iv) through (vi) of the definition
thereof, (II) the date of the occurrence of a Funding Termination Event
specified in clauses (i) through (iii) of the definition thereof, and (III) any
anniversary of the Original Closing Date to the extent that the Note Purchaser,
the Issuer or CPS has delivered notice of termination to the other parties to
the Note Purchase Agreement no earlier than 90 days and no later than 30 days
prior to such anniversary.
"FDIC" means the Federal Deposit Insurance Corporation.
"Fee Schedule" means that certain notice captioned "Schedule of Fees for
CPS - UBS Warehouse" from Wells Fargo Bank, National Association, as
acknowledged by the Servicer as of June 30, 2004.
"Final Scheduled Settlement Date" means the Settlement Date occurring on or
after the date that is four months after the Facility Termination Date.
"Financed Vehicle" means a new or used automobile, light truck, van or
minivan, together with all accessions thereto, securing an Obligor's
indebtedness under a Receivable.
"Funding Date" shall mean the Business Day on which an Advance occurs.
"Funding Termination Event" means the occurrence of any one of the
following events, unless waived in writing by the Note Purchaser: (i) an Event
of Default; (ii) failure by the Seller or the Servicer to repurchase any
Receivable in accordance with the terms of the Sale and Servicing Agreement;
(iii) CPS or an Affiliate thereof shall no longer be the Servicer under the Sale
and Servicing Agreement; (iv) CPS is terminated as servicer under any other sale
and servicing agreement relating to a term securitization or warehouse financing
facility (other than a term securitization or a warehouse financing facility,
with respect to which CPS is only in the capacity of a third-party servicer and
owns no residual interest therein and the related retail motor vehicle
installment sale contracts of which were not originated or purchased by CPS or
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its Affiliates); (v) failure by the Issuer or the Servicer to accept the
proposed assignee in accordance with Section 8.03(c)(iii) of the Note Purchase
Agreement; and (vi) Charles E. Bradley, Sr. becomes an officer, director or
employee of the Seller.
"GAAP" means U.S. generally accepted accounting principles occasioned by
the promulgation of rules, regulations, pronouncements or opinions by the
Financial Accounting Standards Board, the American Institute of Certified Public
Accountants or the Securities and Exchange Commission (or successors thereto or
agencies with similar functions) from time to time.
"Governmental Authority" means the United States of America, any state,
local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory, or administrative functions
thereof pertaining thereto.
"Grant" means to mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to the Indenture or the Pledge Agreement, as applicable. A Grant of the
Collateral or Pledged Collateral, as the case may be, or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the granting party thereunder, including the immediate and
continuing right (after an Event of Default) to claim for, collect, receive and
give receipt for principal and interest payments in respect of the Collateral or
the Pledged Collateral, as the case may be, and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
proceedings in the name of the granting party or otherwise and generally to do
and receive anything that the granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"Holders" or "Noteholders" means the Persons in whose name the Notes are
registered on the Note Register, which shall initially be UBS.
"Indebtedness" means, with respect to any Person at any time, (a) any
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes, repurchase agreements and similar
arrangements, or other instruments, or for the deferred purchase price of
property or services (including trade obligations); (b) obligations of such
Person as lessee under leases which should be, in accordance with GAAP, recorded
as capital leases; (c) current liabilities of such Person in respect of unfunded
vested benefits under plans covered by Title IV of ERISA; (d) obligations issued
for or liabilities incurred on the account of such Person; (e) obligations or
liabilities of such Person arising under acceptance facilities; (f) obligations
of such Person under any guarantees, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any Person
or otherwise to assure a creditor against loss; (g) obligations of others
secured by any lien on property or assets of such Person, whether or not the
obligations have been assumed by such Person; or (h) obligations of such Person
under any interest rate or currency exchange agreement.
"Indenture" means the Amended and Restated Indenture dated as of April 18,
2006, among the Issuer, UBS, as Noteholder, and Wells Fargo Bank, National
Association, as Trustee, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof.
"Independent" means, when used with respect to any specified Person, that
the person (a) is in fact independent of the Issuer, any other obligor upon the
Notes, the Seller and any Affiliate of any of the foregoing persons, (b) does
not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Seller or any Affiliate of
any of the foregoing Persons and (c) is not connected with the Issuer, any such
other obligor, the Seller or any Affiliate of any of the foregoing Persons as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions.
"Ineligible Receivable" means any Receivable other than an Eligible
Receivable.
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"Initial Advance" means, the first Advance that is funded on or after the
Original Closing Date.
"Insolvency Event" means, with respect to a specified Person, (a) the
institution of a proceeding or the filing of a petition against such Person
seeking the entry of a decree or order for relief by a court having jurisdiction
in the premises in respect of such Person or any substantial part of its
property in an involuntary case under any applicable federal or state
bankruptcy, insolvency or other similar law now or hereafter in effect, seeking
the appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for such Person or for any substantial part of
its property, or ordering the winding-up or liquidation of such Person's
affairs, and such proceeding or petition, decree or order shall remain unstayed
or undismissed for a period of 60 consecutive days or an order or decree for the
requested relief is earlier entered or issued; or (b) the commencement by such
Person of a voluntary case under any applicable federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or the consent by
such Person to the entry of an order for relief in an involuntary case under any
such law, or the consent by such Person to the appointment of or taking
possession by, a receiver, liquidator, assignee, custodian, trustee,
sequestrator, or similar official for such Person or for any substantial part of
its property, or the making by such Person of any general assignment for the
benefit of creditors, or the failure by such Person generally to pay its debts
as such debts become due, or the taking of action by such Person in furtherance
of any of the foregoing.
"Interest Period" means, with respect to the Notes and any Settlement Date,
the Accrual Period most recently ended as of such Settlement Date.
"Invested Amount" means, with respect to any date of determination, the
aggregate principal amount (including all Advance Amounts as of such date) of
the Notes Outstanding at such date of determination.
"Investment Company Act" has the meaning set forth in Section 5.01 of the
Note Purchase Agreement.
"Investment Earnings" means, with respect to any Settlement Date and any
Pledged Account, the investment earnings on Pledged Account Property and
deposited into such Pledged Account during the related Accrual Period pursuant
to Section 5.1(f) of the Sale and Servicing Agreement.
"Issuer" means Page Funding LLC until a successor replaces it and,
thereafter, means the successor and, for purposes of any provision contained
herein, each other obligor on the Notes.
"Issuer Order" and "Issuer Request" means a written order or request signed
in the name of the Issuer by any one of its Authorized Officers and delivered to
the Trustee.
"LIBOR" means the rate for one-month deposits in U.S. dollars, which rate
is determined on a daily basis by the Note Purchaser by reference to the British
Bankers' Association LIBOR Rates on Bloomberg (or such other service or services
as may be nominated by the British Bankers' Association for the purpose of
displaying London interbank offered rates for U.S. dollar deposits) on such date
(or, if such date is not a Business Day, on the immediately preceding Business
Day) at or about 11 a.m. New York City time; provided, however, that if no rate
appears on Bloomberg on any date of determination, LIBOR shall mean the rate for
one-month deposits in U.S. Dollars which appears on the Telerate Page 3750 on
any such date of determination; provided further, that if no rate appears on
either Bloomberg or such Telerate Page 3750, on any such date of determination
LIBOR shall be determined as follows:
LIBOR will be determined at approximately 11:00 a.m., New York City time,
on such day on the basis of (a) the arithmetic mean of the rates at which
one-month deposits in U.S. dollars are offered to prime banks in the London
interbank market by four (4) major banks in the London interbank market selected
by the Note Purchaser and in a principal amount of not less than $200,000,000
that is representative for a single transaction in such market at such time, if
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at least two (2) such quotations are provided, or (b) if fewer than two (2)
quotations are provided as described in the preceding clause (a), the arithmetic
mean of the rates, as requested by the Note Purchaser, quoted by three (3) major
banks in New York City, selected by the Note Purchaser, at approximately 11:00
A.M., New York City time, on such day, one-month deposits in United States
dollars to leading European banks and in a principal amount of not less than
$200,000,000 that is representative for a single transaction in such market at
such time.
"Lien" means a security interest, lien, charge, pledge, equity, or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Receivable by operation of law as a result of an
Obligor's failure to pay an obligation.
"Lien Certificate" means, with respect to a Financed Vehicle, an original
certificate of title, certificate of lien or other notification issued by the
Registrar of Titles of the applicable state to a secured party which indicates
that the lien of the secured party on the Financed Vehicle is recorded on the
original certificate of title. In any jurisdiction in which the original
certificate of title is required to be given to the obligor, the term "Lien
Certificate" shall mean only a certificate or notification issued to a secured
party.
"Liquidated Receivable" means any Receivable (i) which has been liquidated
by the Servicer through the sale of the Financed Vehicle or (ii) for which the
related Financed Vehicle has been repossessed and 90 days have elapsed since the
date of such repossession or (iii) as to which an Obligor has failed to make
more than 90% of a Scheduled Receivable Payment of more than ten dollars for 120
(or, if the related Financed Vehicle has been repossessed, 210) or more days as
of the end of an Accrual Period or (iv) with respect to which proceeds have been
received which, in the Servicer's judgment, constitute the final amounts
recoverable in respect of such Receivable. For purposes of this definition, a
Receivable shall be deemed a "Liquidated Receivable" upon the first to occur of
the events specified in items (i) through (iv) of the previous sentence.
"LLC Agreement" means the Limited Liability Company Agreement of Page
Funding, LLC dated as of June 30, 2004, as amended by Amendment No. 1 thereto
dated as of the Restatement Effective Date, entered into by CPS, as such
agreement may be amended, supplemented or otherwise modified from time to time
in accordance with the terms thereof.
"Lockbox Accounts" means the accounts maintained on behalf of the Trustee
for the further benefit of the Noteholders and the Note Purchaser by the Lockbox
Bank pursuant to Section 4.2(b) of the Sale and Servicing Agreement.
"Lockbox Agreement" means (a) in the case of CPS Receivables, the
Multiparty Agreement Relating to Lockbox Services, dated as of June 30, 2004, by
and among the Lockbox Processor, the Purchaser, the Servicer and the Trustee,
and (b) in the case of TFC Receivables, the Multiparty Agreement Relating to
Lockbox Services, dated as of June 29, 2005, by and among the Lockbox Processor,
the Purchaser, the Servicer and the Trustee, in each case, as such agreement may
be amended, supplemented or otherwise modified from time to time in accordance
with the terms thereof, unless the Trustee shall cease to be a party thereunder,
or such agreement shall be terminated in accordance with its terms, in which
event "Lockbox Agreements" shall mean such other agreement(s), in form and
substance acceptable to the Note Purchaser, among the Servicer, the Purchaser,
and the Lockbox Processor and any other appropriate parties.
"Lockbox Bank" means as of any date a depository institution named by the
Servicer and acceptable to the Majority Noteholder and the Note Purchaser at
which each Lockbox Account is established and maintained as of such date.
"Lockbox Processor" means Wells Fargo Bank, National Association (as
successor to Regulus West, LLC) and its successors and assigns.
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"Loss Ratio" means, as of any date, the average of the loss ratios
(expressed as a percentage) for the three Accrual Periods immediately preceding
such date, as computed based on the methodology set forth in the Servicer's then
most recent report on Form 10-Q or Form 10-K, as applicable, for calculation of
net losses on Receivables originated and serviced by the Servicer (excluding
receivables acquired in mergers or acquisitions).
"Majority Noteholders" means Holders of Notes that in the aggregate
constitute more than 50% of the Percentage Interests.
"Margin Call" has the meaning given to such term in Section 3.06 of the
Note Purchase Agreement.
"Market Value" means, on any Business Day, the value of the Receivables as
determined by the periodic market valuation report as calculated by the Note
Purchaser in its sole discretion.
"Material Adverse Change" means (a) in respect of any Person, a material
adverse change in (i) the business, financial condition, results of operations,
prospects or properties of such Person, or (ii) the ability of such Person to
perform its obligations under any of the Basic Documents to which it is a party,
in each case in a manner that materially and adversely affects the Noteholders,
the Note Purchaser or the value, collectibility or marketability of the Notes,
(b) in respect of any Receivable, a material adverse change in (i) the value or
marketability of such Receivable, or (ii) the probability that amounts now or
hereafter due in respect of such Receivable will be collected on a timely basis,
in each case in a manner that materially and adversely affects the Noteholders,
the Note Purchaser or the value, collectibility or marketability of the Notes,
or the ability of the Trustee on behalf of the Noteholders and the Note
Purchaser to realize the benefits of the security afforded under the Basic
Documents.
"Material Adverse Effect" means an effect on (a) the value or marketability
of the Receivables or any of the other Collateral (including, without
limitation, the enforceability or collectibility of the Receivables); (b) the
business, operations, properties, condition (financial or otherwise) or
prospects of the Seller, the Servicer, the Purchaser or the Issuer, in each
case, individually or taken as a whole; (c) the validity or enforceability of
this or any of the other Basic Documents or the rights or remedies of the
Trustee, the Note Purchaser or the Noteholders hereunder or thereunder or the
validity, perfection or priority of any Lien in favor of the Trustee, the Note
Purchaser or the Noteholders granted thereunder; (d) the timely payment of the
principal of or interest on any Advances or other amounts payable under the
Basic Documents; or (e) the ability of the Seller, the Servicer, the Purchaser
or the Issuer to perform its obligations under any Basic Document to which it is
a party, in each case that materially and adversely affects the Noteholders, the
Note Purchaser or the value, collectability or marketability of the Notes.
"Maximum Invested Amount" means $200,000,000.
"MFN" means MFN Financial Corporation, a Delaware corporation.
"Moody's" means Moody's Investors Service, Inc., or its successor.
"Multiemployer Plan" means a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"Net Borrowing Base" means, as of any date of determination, an amount
equal to the Borrowing Base less any Available Funds (including any Eligible
Investments) on deposit in the Collection Account
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"Net Liquidation Proceeds" means, with respect to a Liquidated Receivable,
all amounts realized with respect to such Receivable (other than amounts
withdrawn from the Reserve Account) net of (i) reasonable expenses incurred by
the Servicer in connection with the collection of such Receivable and the
repossession and disposition of the Financed Vehicle and the reasonable cost of
legal counsel with the enforcement of a Liquidated Receivable and (ii) amounts
that are required to be refunded to the Obligor on such Receivable; provided,
however, that the Net Liquidation Proceeds with respect to any Receivable shall
in no event be less than zero.
"Notes" means the Third Amended and Restated Floating Rate Variable Funding
Notes, substantially in the form of the Notes set forth in Exhibit A to the
Indenture.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.1 of the Sale and Servicing
Agreement.
"Note Interest Rate" means for any day during any Interest Period the sum
of (i) LIBOR for such day and (ii) the Applicable Margin for such day; provided,
however, that the Note Interest Rate will in no event be higher than the maximum
rate permitted by law.
"Note Paying Agent" means the Trustee or any other Person that meets the
eligibility standards for the Trustee specified in Section 6.11 of the Indenture
and is authorized by the Issuer to make the payments to and distributions from
the Collection Account and the Note Distribution Account, including payment of
principal of or interest on the Notes on behalf of the Issuer.
"Note Purchase Agreement" means the Amended and Restated Note Purchase
Agreement dated as of April 18, 2006, among UBS, the Issuer, the Purchaser, the
Seller and the Servicer, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof.
"Note Purchaser" means UBS and its successors and permitted assigns.
"Note Register" and "Note Registrar" have the respective meanings specified
in Section 2.4 of the Indenture.
"Noteholders' Interest Carryover Shortfall" means, with respect to any
Settlement Date, the excess of the Noteholders' Interest Distributable Amount
for the preceding Settlement Date over the amount that was actually deposited in
the Note Distribution Account on such preceding Settlement Date on account of
the Noteholders' Interest Distributable Amount.
"Noteholders' Interest Distributable Amount" means, with respect to any
Settlement Date, the sum of the Noteholders' Monthly Interest Distributable
Amount for such Settlement Date and the Noteholders' Interest Carryover
Shortfall for such Settlement Date, if any, plus interest on the Noteholders'
Interest Carryover Shortfall, to the extent permitted by law, at the Note
Interest Rate for the related Interest Period(s), from and including the
preceding Settlement Date to, but excluding, the current Settlement Date.
"Noteholders' Monthly Interest Distributable Amount" means, with respect to
any Settlement Date, the sum of the product of (i) the Note Interest Rate for
each day during such Interest Period, (ii) the Invested Amount for each day
during such Interest Period and (iii) 1/360.
"Noteholders' Principal Distributable Amount" means, with respect to any
Settlement Date (other than the Final Scheduled Settlement Date) (A) (i) prior
to the Facility Termination Date or (ii) upon and after the Facility Termination
Date that results upon the occurrence of any event specified in clauses (I) and
(III) of the definition thereof, the Borrowing Base Deficiency, if any, and (B)
upon and after the Facility Termination Date that results upon the occurrence of
any event specified in clause (II) of the definition thereof, the aggregate
outstanding principal amount of the Notes. The Noteholders' Principal
Distributable Amount on the Final Scheduled Settlement Date will equal the
aggregate outstanding principal amount of the Notes.
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"Obligor" on a Receivable means the purchaser or co-purchasers of the
Financed Vehicle and any other Person who owes payments under the Receivable.
"Officer's Certificate" means a certificate signed by the chairman of the
board, the president, any vice chairman of the board, any vice president, the
treasurer, the controller or assistant treasurer or any assistant controller,
secretary or assistant secretary of the Seller, the Purchaser or the Servicer,
as appropriate.
"Opinion Collateral" has the meaning set forth in Section 3.6(a) of the
Indenture.
"Opinion of Counsel" means a written opinion of counsel who may be but need
not be counsel to the Purchaser, the Seller or the Servicer, which counsel shall
be reasonably acceptable to the Trustee and the Note Purchaser and which opinion
shall be reasonably acceptable in form and substance to the Trustee and to the
Note Purchaser.
"Original Basic Documents" means each of the "Basic Documents" as such term
is defined in the Amended and Restated Sale and Servicing Agreement.
"Original Closing Date" means June 30, 2004.
"Original Indenture" has the meaning ascribed to such term in the Recitals
to the Indenture.
"Original Note Purchase Agreement" has the meaning ascribed to such term in
the Recitals to the Note Purchase Agreement.
"Other Conveyed Property" means all property conveyed by the Seller to the
Purchaser pursuant to Sections 2.1 (a)(ii) through (xii) of the Sale and
Servicing Agreement and Section 2 of each Assignment.
"Outstanding" means, as of the date of determination, the Notes theretofore
authenticated and delivered under the Indenture except:
(i) the Notes theretofore canceled by the Note Registrar or delivered
to the Note Registrar for cancellation;
(ii) the Notes the payment for which money in the necessary amount has
been theretofore deposited with the Trustee or any Note Paying Agent in
trust for the Holders of such Notes (provided, however, that if such Notes
are to be prepaid, notice of such prepayment has been duly given pursuant
to the Indenture, satisfactory to the Trustee); and
(iii) the Notes in exchange for or in lieu of one or more other Notes
which have been authenticated and delivered pursuant to the Indenture
unless proof satisfactory to the Trustee is presented that any such Note is
held by a bona fide purchaser.
"Percentage Interest" means, with respect to any Note, the percentage
interest as specified on the face of such Note, which when multiplied by the
Invested Amount outstanding on any date of determination shall equal the
principal amount outstanding on such Note as of such date.
"Person" means any individual, corporation, estate, partnership, limited
liability company, joint venture, association, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or government
or any agency or political subdivision thereof.
"Physical Property" has the meaning assigned to such term in the definition
of "Delivery" above.
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"Plan" means any Person that is (i) an "employee benefit plan" (as defined
in Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA,
(ii) a "plan" (as defined in Section 4975(e)(1) of the Code) that is subject to
Section 4975 of the Code or (ii) any entity whose underlying assets include
assets of a plan described in (i) or (ii) above by reason of such plan's
investment in the entity.
"Pledge Agreement" means the Pledge and Security Agreement dated as of
April 18, 2006, among CPS and the Note Purchaser, as such agreement may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof.
"Pledged Account Property" means the Pledged Accounts, all amounts and
investments held from time to time in any Pledged Account (whether in the form
of deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), and all proceeds of the foregoing.
"Pledged Accounts" has the meaning assigned thereto in Section 5.1(e) of
the Sale and Servicing Agreement.
"Pledged Collateral" has the meaning assigned thereto in the Pledge
Agreement.
"Post-Office Box" means each separate post-office box in the name of the
Purchaser for the benefit of the Trustee acting on behalf of the Noteholder,
established and maintained pursuant to Section 4.2 of the Sale and Servicing
Agreement.
"Prime Rate" for any date of determination means the highest rate of
interest (or if a range is given, the highest prime rate) published in The Wall
Street Journal on such date as constituting the "prime rate" or "base rate" in
such publication's table of Money Rates or, if The Wall Street Journal is not
published on such date, then in The Wall Street Journal most recently published.
"Principal Balance" of a Receivable, as of the close of business on the
last day of an Accrual Period, means the Amount Financed minus the sum of the
following amounts without duplication: (i) in the case of a Rule of 78's
Receivable, that portion of all Scheduled Receivable Payments actually received
on or prior to such day allocable to principal using the actuarial or constant
yield method; (ii) in the case of a Simple Interest Receivable, that portion of
all Scheduled Receivable Payments actually received on or prior to such day
allocable to principal using the Simple Interest Method; (iii) any payment of
the Purchase Amount with respect to the Receivable allocable to principal; (iv)
any Cram Down Loss in respect of such Receivable; and (v) any prepayment in full
or any partial prepayment applied to reduce the principal balance of the
Receivable.
"Principal Funding Account" has the meaning specified in Section 5.1(c) of
the Sale and Servicing Agreement.
"Proceeding" means any suit in equity, action at law or other judicial or
administrative proceeding.
"Program" has the meaning specified in Section 4.11 of the Sale and
Servicing Agreement.
"Purchase Amount" means, on any date with respect to a Defective
Receivable, the sum of (a) the Principal Balance of such Receivable as of the
date of purchase and (b) all accrued and unpaid interest on the Receivable as of
such date (which in the case of a Rule 78's Receivable shall include, without
limitation, a full month's interest in the month of purchase at the related
APR), after giving effect to the receipt of any moneys collected (from whatever
source) on such Receivable, if any, as of such date.
"Purchase Price" means, with respect to each Receivable and related Other
Conveyed Property transferred to the Purchaser on the Original Closing Date or
on any Funding Date, an amount equal to the Principal Balance of such Receivable
as of the Original Closing Date or such Funding Date, as applicable.
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"Purchased Receivable" means a Receivable purchased as of the close of
business on the last day of an Accrual Period by the Servicer pursuant to
Section 4.7 of the Sale and Servicing Agreement or repurchased by the Seller
pursuant to Section 3.2 or Section 3.4 of the Sale and Servicing Agreement.
"Purchaser" means Page Funding LLC.
"Purchaser Property" means the Receivables and Other Conveyed Property,
together with certain monies received after the related Cutoff Date, the
Receivables Insurance Policies, the Collection Account (including all Eligible
Investments therein and all proceeds therefrom), each Lockbox Account and
certain other rights under the Sale and Servicing Agreement.
"Rating Agency" means each of Moody's and Standard & Poor's, and any
successors thereof. If no such organization or successor maintains a rating on
the Notes, "Rating Agency" shall be a nationally recognized statistical rating
organization or other comparable Person designated by the Note Purchaser, notice
of which designation shall be given to the Trustee and the Servicer.
"Realized Losses" means, with respect to any Receivable that becomes a
Liquidated Receivable, the excess of the Principal Balance of such Liquidated
Receivable over Net Liquidation Proceeds allocable to principal thereof.
"Receivable" means each retail installment sale contract for a Financed
Vehicle which is listed on the Schedule of Receivables and all rights and
obligations thereunder, except for Receivables that shall have become Purchased
Receivables, and, for the avoidance of doubt, shall include all Related
Receivables (other than Related Receivables that shall have become Purchased
Receivables).
"Receivable Files" means the documents specified in Section 3.3(a) of the
Sale and Servicing Agreement.
"Receivables Insurance Policy" means, with respect to a Receivable, any
insurance policy (including the insurance policies described in Section 4.4 of
the Sale and Servicing Agreement) benefiting the holder of the Receivable
providing loss or physical damage, credit life, credit accident, health, credit
disability, theft, mechanical breakdown or similar coverage with respect to the
Financed Vehicle or the Obligor, including without limitation any GAP, vendor's
single interest or other collateral protection insurance policy or coverage.
"Record Date" means, with respect to a Settlement Date, the close of
business on the day immediately preceding such Settlement Date.
"Registrar of Titles" means, with respect to any state, the governmental
agency or body responsible for the registration of, and the issuance of
certificates of title relating to, motor vehicles and liens thereon.
"Related Receivables" means, with respect to a Funding Date, the
Receivables listed on Schedule A to the applicable Assignment executed and
delivered by the Seller with respect to such Funding Date.
"Release Request" has the meaning specified in Section 3.5 of the Sale and
Servicing Agreement.
"Requirement of Law" means as to any Person, the certificate of
incorporation and bylaws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
property is subject.
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"Repossessed Receivable" means a Receivable with respect to which the
earlier to occur of (i) the date the Financed Vehicle is actually repossessed
and (ii) 30 days after the date the Financed Vehicle is authorized for
repossession.
"Responsible Officer" means, in the case of the Trustee, the chairman or
vice-chairman of the board of directors, the chairman or vice-chairman of the
executive committee of the board of directors, the president, vice-president,
assistant vice-president or managing director, the secretary, and assistant
secretary or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Restatement Effective Date" means April 18, 2006.
"Rule 144A Information" has the meaning set forth in Section 3.26 of the
Indenture.
"Rule of 78's Receivable" means any Receivable under which the portion of a
payment allocable to earned interest (which may be referred to in the related
retail installment sale contract as an add-on finance charge) and the portion
allocable to the Amount Financed is determined according to the method commonly
referred to as the "Rule of 78's" method or the "sum of the months' digits"
method or any equivalent method.
"Sale and Servicing Agreement" means the Second Amended and Restated Sale
and Servicing Agreement dated as of April 18, 2006, among the Purchaser, CPS, as
the Seller and the Servicer, and Wells Fargo Bank, National Association, as the
Backup Servicer and the Trustee, as the same may be amended or supplemented from
time to time.
"Scheduled Maturity Date" means June 30, 2007, or such later date as the
Note Purchaser, the Issuer and CPS have each agreed upon in writing prior to
June 30, 2007, in their sole and absolute discretion.
"Scheduled Receivable Payment" means, with respect to any Accrual Period
for any Receivable, the amount set forth in such Receivable as required to be
paid by the Obligor in such Accrual Period. If after the Original Closing Date,
the Obligor's obligation under a Receivable with respect to an Accrual Period
has been modified so as to differ from the amount specified in such Receivable
(i) as a result of the order of a court in an insolvency proceeding involving
the Obligor, (ii) pursuant to the Servicemembers Civil Relief Act, or (iii) as a
result of modifications or extensions of the Receivable permitted by Section 4.2
of the Sale and Servicing Agreement, the Scheduled Receivable Payment with
respect to such Accrual Period shall refer to the Obligor's payment obligation
with respect to such Accrual Period as so modified.
"Schedule of Receivables" means the schedule of all Receivables purchased
by the Purchaser pursuant to the Sale and Servicing Agreement and each
Assignment, which is attached as Schedule A to the Sale and Servicing Agreement,
as amended or supplemented from time to time upon each Assignment of Receivables
or in accordance with the terms of the Sale and Servicing Agreement.
"Section 341 Meeting" means a meeting held pursuant to Section 341(a) of
the United States Bankruptcy Code (as the same may be amended from time to time)
in which an Obligor subject to a Insolvency Event under Chapter 7 of the United
States Bankruptcy Code has presented his/her plan to the bankruptcy court and
all of his/her creditors.
"Section 341 Receivable" means a Receivable, the Obligor of which has
completed a Section 341 Meeting as of the applicable Cutoff Date.
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"Secured Obligations" means all amounts and obligations which the Issuer or
Purchaser may at any time owe under the Basic Documents to, or on behalf of the
Noteholders, the Note Purchaser and/or the Trustee for the benefit of the
Noteholders and the Note Purchaser.
"Secured Parties" means each of the Noteholders, the Note Purchaser and the
Trustee for the benefit of the Noteholders and the Note Purchaser, in respect of
the Secured Obligations.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" means Consumer Portfolio Services, Inc., and its successors in
interest to the extent permitted hereunder.
"Servicer" means, initially, Consumer Portfolio Services, Inc., as the
servicer of the Receivables, and each successor Servicer pursuant to Section
10.3 of the Sale and Servicing Agreement.
"Servicer Delinquency Ratio" means, as of the end of any Accrual Period, a
percentage equal to (i) the aggregate outstanding principal balance as of the
end of any Accrual Period of all automobile receivables serviced by the Servicer
or any Affiliate thereof (excluding automobile receivables acquired by CPS or
its Affiliates in mergers and acquisitions and TFC Managed Receivables) as to
which more than 10% of the scheduled receivable payment is more than 30 days
contractually delinquent as of the end of the immediately preceding Accrual
Period, including all receivables for which the related financed vehicle has
been repossessed and the proceeds thereof have not yet been realized by the
Servicer divided by (ii) the aggregate outstanding principal balance of all
automobile receivables serviced by the Servicer or any Affiliate thereof as of
the end of the relevant Accrual Period (excluding automobile receivables
acquired by CPS or its Affiliates in mergers and acquisitions and TFC Managed
Receivables).
"Servicer Extension Notice" has the meaning specified in Section 4.15 of
the Sale and Servicing Agreement.
"Servicer Termination Event" means an event specified in Section 10.1 of
the Sale and Servicing Agreement.
"Servicer Termination Side Letter" means the Servicer Termination Side
Letter dated April 18, 2006, from the Note Purchaser to the Servicer, the Backup
Servicer and the Trustee, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof.
"Servicer's Certificate" means a certificate completed and executed by a
Servicing Officer and delivered pursuant to Section 4.9 of the Sale and
Servicing Agreement, substantially in the form of Exhibit A to the Sale and
Servicing Agreement.
"Servicing Fee" has the meaning specified in Section 4.8 of the Sale and
Servicing Agreement.
"Servicing Fee Percentage" means (a) with respect to the CPS Receivables,
2.50%, and (b) with respect to the TFC Receivables, 3.50%, provided that if
Backup Servicer is the Servicer, the Servicing Fee Percentage shall be
determined in accordance with Servicing and Lockbox Processing Assumption
Agreement.
"Servicing Guidelines" means CPS's established servicing guidelines, as the
same may be amended from time to time in accordance with Section 9.1(k) of the
Sale and Servicing Agreement.
"Servicing and Lockbox Processing Assumption Agreement" means the Amended
and Restated Servicing and Lockbox Processing Assumption Agreement, dated as of
June 29, 2005, among CPS, as Seller and Servicer, the Backup Servicer, the
Standby Processor and the Trustee, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
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"Servicing Officer" means any Person whose name appears on a list of
Servicing Officers delivered to the Trustee and the Note Purchaser, as the same
may be amended, modified or supplemented from time to time.
"Settlement Date" means, with respect to each Accrual Period, the 15th day
of the following calendar month, or if such day is not a Business Day, the
immediately following Business Day, commencing on August 16, 2004.
"Simple Interest Method" means the method of allocating a fixed level
payment between principal and interest, pursuant to which the portion of such
payment that is allocated to interest is equal to the product of the APR
multiplied by the unpaid balance multiplied by the period of time (expressed as
a fraction of a year, based on the actual number of days in the calendar month
and the actual number of days in the calendar year) elapsed since the preceding
payment of interest was made and the remainder of such payment is allocable to
principal.
"Simple Interest Receivable" means a Receivable under which the portion of
the payment allocable to interest and the portion allocable to principal is
determined in accordance with the Simple Interest Method.
"Standard & Poor's" means Standard & Poor's, a division of The McGraw-Hill
Companies, Inc., or its successor.
"Standby Processor" means Wells Fargo Bank, National Association, in its
capacity as Standby Processor under the Servicing and Lockbox Processing
Assumption Agreement, and it successors and assigns thereunder in such capacity.
"State" means any one of the 50 states of the United States of America or
the District of Columbia.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business entity of which a majority of the
outstanding shares of capital stock or other equity interests having ordinary
voting power for the election of directors or their equivalent is at the time
owned by such Person directly or through one or more Subsidiaries.
"Taxes" has the meaning set forth in Section 3.05 of the Note Purchase
Agreement.
"Term" has the meaning set forth in Section 2.05 of the Note Purchase
Agreement.
"Termination Date" means the date on which the Trustee shall have received
payment and performance of all Secured Obligations and disbursed such payments
in accordance with the Basic Documents.
"TFC" means The Finance Company, a Virginia corporation.
"TFC Assignment" means an assignment in substantially the form attached as
Exhibit E to the Sale and Servicing Agreement pursuant to which TFC transfers
and conveys TFC Receivables to CPS from time to time.
"TFC Borrowing Base" means, as of any date of determination, an amount
equal to (a) the excess of (i) the Aggregate Principal Balance of the TFC
Receivables (after giving effect to Available Funds allocable to principal
payments made by Obligors) over (ii) the Excess Concentration Amount for the TFC
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Receivables multiplied by (b) the applicable Advance Rate; provided that on or
after the occurrence of a TFC Funding Termination Event, the TFC Borrowing Base
shall equal zero.
"TFC Delinquency Ratio" means, at any time of determination for the TFC
Managed Receivables, a percentage, equal to the aggregate Principal Balance of
the TFC Managed Receivables constituting TFC Delinquent Receivables as of such
date of determination divided by the aggregate Principal Balance of all TFC
Managed Receivables as of such date of determination.
"TFC Delinquent Receivable" means any TFC Managed Receivable (other than a
Defaulted Receivable) with respect to which more than 10% of a Scheduled
Receivable Payment is more than 30 days contractually delinquent as of the end
of the immediately preceding Accrual Period.
"TFC Funding Termination Event" shall mean the occurrence and continuance
of any one or more of the following events: (a) the three-month rolling average
TFC Delinquency Ratio for all TFC Managed Receivables exceeds 11.25%; (b) the
TFC Three-Month Rolling Average Net Loss Test is breached; or (c) TFC shall no
longer be an Affiliate of CPS.
"TFC Managed Receivables" means a Receivable serviced by TFC, whether a TFC
Receivable, a Receivable owned by TFC or otherwise.
"TFC Receivables" means Eligible Receivables acquired from Dealers by TFC.
"TFC Three-Month Rolling Average Net Loss Test" means that for each month
specified in the following table, the TFC Three-Month Rolling Average Net Loss
Rate, determined as of the last day of such month, does not exceed the "Maximum
TFC Three-Month Rolling Average Net Loss Rate" specified by the following table:
------------------------------------------------------------------
MONTH MAXIMUM TFC THREE-MONTH ROLLING
AVERAGE NET LOSS RATE
------------------------------------------------------------------
January 24.00%
------------------------------------------------------------------
February 22.00%
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March 20.00%
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April 18.00%
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May 18.00%
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June 18.00%
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July 18.00%
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August 18.00%
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September 18.00%
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October 18.00%
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November 20.00%
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December 22.00%
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Conversely if such Maximum Three-Month Rolling Average Net Loss Rate is equaled
or exceeded, the TFC Three-Month Rolling Average Net Loss Test shall be
breached.
"TFC Three-Month Rolling Average Net Loss Rate" means, as of any date of
determination, (x) the sum of the fractions, expressed as a percentage
(annualized) for each of the three most recently ended Accrual Periods, the
numerator of which is the amount of gross charge-offs of TFC Managed Receivables
(less liquidation proceeds and recoveries) and the denominator of which is the
average outstanding aggregate principal amount of the TFC Managed Receivables
during such Accrual Period divided by (y) three.
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"Trust Estate" means all money, instruments, rights and other property that
are subject or intended to be subject to the lien and security interest of the
Indenture for the benefit of the Noteholders (including all Collateral Granted
to the Trustee) and the Note Purchaser, including all proceeds thereof.
"Trust Receipt" means a trust receipt in substantially the form of Exhibit
B to the Sale and Servicing Agreement.
"Trustee" means Wells Fargo Bank, National Association, a national banking
association, not in its individual capacity but as trustee under the Indenture,
or any successor trustee under the Indenture.
"Trustee Fee" means (A) the fee payable to the Trustee on each Settlement
Date in an amount equal to the greater of $2,000 and (b) one-twelfth of 0.04% of
the aggregate outstanding principal amount of the Notes on the first day of the
related Accrual Period, and (B) any other amounts payable to the Trustee
pursuant to the Fee Schedule, including Custodial Fees.
"UBS" means UBS Real Estate Securities Inc.
"UCC" means the Uniform Commercial Code as in effect in the relevant
jurisdiction, as amended from time to time.
"Unused Facility Fee" has the meaning set forth in Section 3.02 of the Note
Purchase Agreement.
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