Exhibit 4.26
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SALE AND SERVICING
AGREEMENT
AMONG
CPS AUTO RECEIVABLES TRUST 2007-C, AS
ISSUER,
CPS RECEIVABLES CORP., AS
SELLER,
CONSUMER PORTFOLIO SERVICES, INC.,
INDIVIDUALLY AND AS SERVICER
AND
βββββ� FARGO BANK, NATIONAL ASSOCIATION, AS
BACKUP SERVICER AND TRUSTEE
DATED AS OF SEPTEMBER 1, 2007
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SALE AND SERVICING AGREEMENT dated as of September 1, 2007, among CPS
AUTO RECEIVABLES TRUST 2007-C, a Delaware statutory trust, as Issuer, CPS
RECEIVABLES CORP., a California corporation, as Seller, CONSUMER PORTFOLIO
SERVICES, INC., a California corporation, individually and as Servicer, βββββ�
FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as Backup
Servicer and Trustee.
WHEREAS the Issuer desires to purchase a portfolio of receivables
arising in connection with motor vehicle retail installment sale contracts and
promissory notes and security agreements acquired by Consumer Portfolio
Services, Inc. through motor vehicle dealers and independent finance companies;
WHEREAS the Seller has purchased such receivables from Consumer
Portfolio Services, Inc. and is willing to sell such receivables to the Issuer;
WHEREAS the Issuer desires to purchase additional receivables arising
in connection with motor vehicle retail installment sale contracts and
promissory notes and security agreements to be acquired on or after the Closing
Date by Consumer Portfolio Services, Inc. through motor vehicle dealers and
independent finance companies;
WHEREAS the Seller has agreements to purchase such additional
receivables from Consumer Portfolio Services, Inc. and is willing to sell such
receivables to the Issuer; and
WHEREAS the Servicer is willing to service all such receivables.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
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DEFINITIONS
Definitions. (a) Whenever used in this Agreement, the following words
and phrases shall have the following meanings:
"Accountants' Report" means the report of a firm of nationally
recognized independent accountants described in Section 4.11.
"Addition Notice" means, with respect to any transfer of Subsequent
Receivables to the Trust pursuant to Section 2.2 of this Agreement, notice of
the Seller's election to transfer Subsequent Receivables to the Trust, such
notice to designate the related Subsequent Transfer Date and the approximate
principal amount of Subsequent Receivables to be transferred on such Subsequent
Transfer Date.
"Additional Servicing Compensation" shall mean, with respect to a
Receivable, any late fees, prepayment charges and other administrative fees or
similar charges allowed by applicable law with respect to the Receivables
collected (from whatever source) on the Receivables.
"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 Extension Percentage Limitation" has the meaning assigned to
such term in Section 4.2.
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"Aggregate Note Balance" means, as of any date of determination, the
sum of the Class A-1 Note Balance, the Class A-2 Note Balance, the Class A-3
Note Balance and the Class A-4 Note Balance.
"Aggregate Principal Balance" means, with respect to any date of
determination, the sum of the Principal Balances for all Receivables (other than
(i) any Receivable that became a Liquidated Receivable prior to the end of the
related Collection Period and (ii) any Receivable that became a Purchased
Receivable prior to the end of the related Collection Period) as of the date of
determination.
"Agreement" means this Sale and Servicing Agreement, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms hereof.
"Amount Financed" means, with respect to a Receivable, the aggregate
amount advanced under such Receivable toward the purchase price of the Financed
Vehicle and any related costs, including amounts advanced in respect of
accessories, insurance premiums, service and warranty contracts, other items
customarily financed as part of retail automobile installment sale contracts or
promissory notes, and related costs.
"Annual Percentage Rate" or "APR" of a Receivable means the annual
percentage rate of finance charges or service charges, as stated in the related
Contract.
"Assumption Date" has the meaning specified in Section 10.3(a).
"Backup Servicer" means βββββ� Fargo Bank, National Association, in its
capacity as Backup Servicer under this Agreement.
"Backup Servicing Fee" means the fee payable to the Backup Servicer so
long as CPS is the Servicer, on each Payment Date in an amount equal to the
greater of (a) $2,000 or (b) one-twelfth of 0.02% of the aggregate Collateral
Balance as of the first day of the related Collection Period; provided, however,
that on the first Payment Date the Backup Servicer will be entitled to receive
an amount equal to the greater of (a) $2,000 or (b) the product of (i) the
percentage equivalent of a fraction the numerator of which is the number days
from the Closing Date to but excluding the first Payment Date and the
denominator of which is 360, (ii) 0.03% and (iii) the Original Aggregate Note
Balance.
"Basic Documents" means this Agreement, the Certificate of Trust, the
Trust Agreement, the Indenture, the Receivables Purchase Agreement, each
Subsequent Receivables Purchase Agreement, each Subsequent Transfer Agreement,
the Master Spread Account Agreement, the Spread Account Supplement, the
Insurance Agreement, the Indemnification Agreement, the Lockbox Agreement, the
Placement Agency Agreement, the Notes, the Residual Pass-through Certificates,
any trust agreement, indenture or other agreement to which the Seller, CPS or
the Trust or any of their respective Affiliates is a party entered into in
connection with a transfer of any interest in the Residual Pass-through
Certificates, any securities representing direct or indirect interests in the
Residual Pass-through Certificates and other documents and certificates
delivered in connection with the foregoing.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in the City of New York, the State of Minnesota,
the State in which the executive offices of the Servicer are located and the
State in which the principal place of business of the Note Insurer is located
shall be authorized or obligated by law, executive order, or governmental decree
to be closed.
"Capitalized Interest Account" means the account designated as such,
established and maintained pursuant to Sections 5.1 and 5.2.
"Capitalized Interest Account Initial Deposit" means $434,939.96.
"Casualty" means, with respect to a Financed Vehicle, the total loss or
destruction of such Financed Vehicle.
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"Cayman Indenture" means the Indenture dated September 27, 2007,
between the Cayman Trustee, in its capacity as trustee of the Cayman Trust, as
issuer, and βββββ� Fargo Bank, National Association, as trustee, as the same may
be amended or supplemented from time to time in accordance with the terms
thereof.
"Cayman Indenture Trustee" means the Person acting as trustee under the
Cayman Indenture, its successors in interest and any successor trustee under the
Cayman Indenture.
"Cayman Trust" means Cayman Residual Trust 2007-C, a trust organized
under the laws of the Cayman Islands.
"Cayman Trust Agreement" means the trust agreement between the Seller
and Wilmington Trust (Cayman), Ltd. pursuant to which the Cayman Trust is
created, as the same may be amended, amended and restated or otherwise modified
in accordance with its terms from time to time.
"Cayman Trustee" means the Person acting as trustee of the Cayman
Trust, its successors in interest and any successor trustee under the Cayman
Trust Agreement.
"Cayman Trustee Fees" means, for any Collection Period, the sum of (A)
one-twelfth of the fee set forth on Exhibit H-2 payable to βββββ� Fargo Bank,
National Association as Cayman Indenture Trustee and backup administrator; (B)
the fees payable to the Cayman Trust pursuant to Article VIII of the Cayman
Trust Agreement; (C) reasonable out-of-pocket expenses (including reasonable
counsel fees and expenses) of the Cayman Trustee and the Cayman Indenture
Trustee; and (D) any such unpaid fees and expenses for prior Collection Periods.
"Certificate Register" has the meaning assigned to such term in the
Trust Agreement.
"Certificate Registrar" has the meaning assigned to such term in the
Trust Agreement.
"Class" means the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes or the Class A-4 Notes as the context requires.
"Class A-1 Final Scheduled Payment Date" means the Payment Date
occurring in September 15, 2008.
"Class A-1 Interest Rate" means 5.38750% per annum.
"Class A-1 Note Balance" on the Closing Date will equal the Original
Class A-1 Note Balance and on any date thereafter will equal the Original Class
A-1 Note Balance reduced by all distributions of principal previously made in
respect of the Class A-1 Notes.
"Class A-1 Notes" has the meaning assigned to such term in the
Indenture.
"Class A-2 Final Scheduled Payment Date" means the Payment Date
occurring in November 15, 2010.
"Class A-2 Interest Rate" means 5.44% per annum.
"Class A-2 Note Balance" on the Closing Date will equal the Original
Class A-2 Note Balance and on any date thereafter will equal the Original Class
A-2 Note Balance reduced by all distributions of principal previously made in
respect of the Class A-2 Notes.
"Class A-2 Notes" has the meaning assigned to such term in the
Indenture.
"Class A-3 Final Scheduled Payment Date" means the Payment Date
occurring in May 15, 2012.
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"Class A-3 Interest Rate" means 5.43% per annum.
"Class A-3 Note Balance" on the Closing Date will equal the Original
Class A-3 Note Balance and on any date thereafter will equal the Original Class
A-3 Note Balance reduced by all distributions of principal previously made in
respect of the Class A-3 Notes.
"Class A-3 Notes" has the meaning assigned to such term in the
Indenture.
"Class A-4 Final Scheduled Payment Date" means the Payment Date
occurring in May 15, 2014.
"Class A-4 Interest Rate" means 5.92% per annum.
"Class A-4 Note Balance" on the Closing Date will equal the Original
Class A-4 Note Balance and on any date thereafter will equal the Original Class
A-4 Note Balance reduced by all distributions of principal previously made in
respect of the Class A-4 Notes.
"Class A-4 Notes" has the meaning assigned to such term in the
Indenture.
"Closing Date" means September 27, 2007.
"Code" has the meaning specified in Section 3.2.
"Collateral" has the meaning assigned to such term in the Indenture.
"Collateral Agent" means βββββ� Fargo Bank, National Association, in its
capacity as Collateral Agent under the Master Spread Account Agreement.
"Collateral Balance" means, as of any date of determination, the sum of
(i) the Pool Balance as of such date, and (ii) the Pre-Funded Amount as of such
date.
"Collection Account" means the account designated as such, established
and maintained pursuant to Section 5.1.
"Collection Period" means, with respect to each Payment Date, the
calendar month preceding the calendar month in which such Payment Date occurs.
Any amount stated "as of the close of business on the last day of a Collection
Period" shall give effect to the following calculations as determined as of the
end of the day on such last day: (i) all applications of collections, and (ii)
all distributions.
"Consumer Lender" means a Person that is licensed under applicable law
to originate loans to natural persons resident in one or more of the United
States of America and authorized by CPS to participate in its direct lending
program, but shall not include CPS or any of its Affiliates.
"Contract" means a motor vehicle retail installment sale contract or an
installment promissory note and security agreement, in each case relating to the
sale or refinancing of new or used automobiles, light duty trucks, vans or
minivans, and any other documents related thereto from time to time.
"Controlling Party" shall be determined in accordance with the
provisions of Section 13.15.
"Corporate Trust Office" means (i) with respect to the Owner Trustee,
the principal corporate trust office of the Owner Trustee, which at the time of
execution of this agreement is ββββββ Square North, ββββ β�. ββββββ ββββββ,
ββββββββββ, ββββββββ βββββ�-ββββ, and (ii) with respect to the Trustee and
Collateral Agent, the principal corporate trust office of the Trustee, which at
the time of execution of this agreement is Sixth Street and Marquette Avenue,
MAC N9311-161, βββββββββββ�, βββββββββ�, βββββ�, Attention: Corporate Trust
Services/Asset Backed Administration - CPS 2007-C.
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"CPS" means Consumer Portfolio Services, Inc., a California corporation
and its successors.
"CPS Receivables Funding Trust" means CPS Receivables Funding Trust, a
Delaware statutory trust, and its successors.
"Cram Down Loss" means, with respect to a Receivable (other than a
Liquidated Receivable), if a court of appropriate jurisdiction in an insolvency
proceeding issues a ruling that reduces the amount owed on a Receivable or
otherwise modifies or restructures the Scheduled Receivable Payments to be made
thereon, an amount equal to the sum of (a) the Principal Balance of the
Receivable immediately prior to such order minus the Principal Balance of such
Receivable as so reduced, modified or restructured, plus (b) if such court shall
have issued an order reducing the effective rate of interest on such Receivable,
an amount equal to the excess of (i) the net present value (using as a discount
rate a rate equal to the adjusted APR on such Receivable) of the Scheduled
Receivable Payments as so modified or restructured over (ii) the net present
value (using as a discount rate a rate equal to the original APR on such
Receivable) of the Scheduled Receivable Payments as so modified or restructured.
A Cram Down Loss will be deemed to have occurred on the date of issuance of such
order.
"Cumulative Net Loss Rate" has the meaning assigned thereto in the
Master Spread Account Agreement.
"Cutoff Date" means the Initial Cutoff Date (in the case of the Initial
Receivables) or the applicable Subsequent Cutoff Date (in the case of a
Subsequent Receivable), as applicable.
"Dealer" means, with respect to a Receivable, the seller of the related
Financed Vehicle, who originated and assigned such Receivable to CPS, who in
turn sold such Receivable to the Seller.
"Defaulted Texas Receivables" means Receivables as to which more than
10% of a Scheduled Receivable Payment of more than ten dollars shall have become
90 or more days delinquent as of the end of a Collection Period, and which are
subject to purchase pursuant to Section 4.16.
"Deficiency Claim Amount" has the meaning set forth in Section 5.5(a).
"Deficiency Claim Date" means, with respect to any Payment Date, the
fourth Business Day immediately preceding such Payment Date.
"Deficiency Notice" has the meaning set forth in Section 5.5(a).
"Delinquency Ratio" has the meaning assigned such term in the Master
Spread Account Agreement.
"Delivery" means, when used with respect to Trust Account Property:
(terms used in the following provisions that are not otherwise defined are used
as defined in Articles 8 and 9 of the UCC):
(i) in the case of such Trust Account Property
consisting of security entitlements not covered by the following
paragraphs in this definition of Delivery, by (1) causing the Trustee
or related securities intermediary to indicate by book entry that a
financial asset related to such securities entitlement has been
credited to the related Trust Account and (2) causing the Trustee or
related securities intermediary to indicate that the Trustee is the
sole entitlement holder of each such securities entitlement and causing
the Trustee or related securities intermediary to agree that it will
comply with entitlement orders originated by the Trustee with respect
to each such security entitlement without further consent by the
Issuer;
(ii) in the case of each certificated security (other
than a clearing corporation security (as defined below)) or instrument
by: (1) the delivery of such certificated security or instrument to the
Trustee or related securities intermediary registered in the name of
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the Trustee or related securities intermediary or its respective
affiliated nominee or endorsed to the Trustee or related securities
intermediary in blank; (2) causing the Trustee or related securities
intermediary to continuously indicate by book-entry that such
certificated security or instrument is credited to the related Trust
Account; and (3) the Trustee or related securities intermediary
maintaining continuous possession of such certificated security or
instrument;
(iii) in the case of each uncertificated security
(other than a clearing corporation security (as defined below)), by
causing: (1) such uncertificated security to be continuously registered
in the books of the issuer thereof to the Trustee or related securities
intermediary; and (2) the Trustee or related securities intermediary to
continuously indicate by book-entry that such uncertificated security
is credited to the related Trust Account;
(iv) in the case of each security in the custody of
or maintained on the books of a clearing corporation (a "clearing
corporation security"), by causing: (1) the relevant clearing
corporation to credit such clearing corporation security to the
securities account of the Trustee or related securities intermediary at
such clearing corporation; and (2) the Trustee or related securities
intermediary to continuously indicate by book-entry that such clearing
corporation security is credited to the related Trust Account;
(v) in the case of each security issued or guaranteed
by the United States of America or agency or instrumentality thereof
(other than a security issued by the Government National Mortgage
Association) representing a full faith and credit obligation of the
United States of America and that is maintained in book-entry records
of the Federal Reserve Bank of New York ("FRBNY") (each such security,
a "government security"), by causing: (1) the creation of a security
entitlement to such government security by the credit of such
government security to the securities account of the Trustee or related
securities intermediary at the FRBNY; and (2) the Trustee or related
securities intermediary to continuously indicate by book-entry that
such government security is credited to the related Trust Account.
(vi) in each case of delivery contemplated pursuant
to clauses (ii) through (v) hereof, the Trustee shall make appropriate
notations on its records, and shall cause the same to be made on the
records of its nominees, indicating that such Trust Property which
constitutes a security is held in trust pursuant to and as provided in
this Agreement.
"Determination Date" means the earlier of (i) the seventh Business Day
of each calendar month and (ii) the fifth Business Day preceding the related
Payment Date.
"Draw Date" means with respect to any Payment Date, the third Business
Day immediately preceding such Payment Date.
"Eligible Account" means (i) a segregated trust account that is
maintained with a depository institution acceptable to the Note Insurer (so long
as an Insurer Default shall not have occurred and be continuing), or (ii) a
segregated direct deposit account maintained with a depository institution or
trust company organized under the laws of the United States of America, or any
of the States thereof, or the District of Columbia, having a certificate of
deposit, short-term deposit or commercial paper rating of at least "A-1+" by
Standard & Poor's and "Prime-1" by Moody's and (so long as an Insurer Default
shall not have occurred and be continuing) acceptable to the Note Insurer;
provided that the Note Insurer shall not be required to give its prior written
consent with respect to such an account maintained with βββββ� Fargo Bank,
National Association
"Eligible Investments" mean book-entry securities, negotiable
instruments or securities represented by instruments in registered form which
evidence:
(i) direct obligations of, and obligations fully
guaranteed as to the full and timely payment by, the United States of
America;
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(ii) demand deposits, time deposits or certificates
of deposit of any depository institution or trust company incorporated
under the laws of the United States of America or any State thereof (or
any domestic branch of a foreign bank) and subject to supervision and
examination by Federal or State banking or depository institution
authorities; provided, however, that at the time of the investment or
contractual commitment to invest therein, the commercial paper or other
short-term unsecured debt obligations (other than such obligations the
rating of which is based on the credit of a Person other than such
depository institution or trust company) thereof shall be rated "A-1+"
by Standard & Poor's and "Prime-1" by Moody's;
(iii) commercial paper that, at the time of the
investment or contractual commitment to invest therein, is rated "A-1+"
by Standard & Poor's and "Prime-1" by Moody's;
(iv) bankers' acceptances issued by any depository
institution or trust company referred to in clause (ii) above;
(v) repurchase obligations with respect to any
security that is a direct obligation of, or fully guaranteed as to the
full and timely payment by, the United States of America or any agency
or instrumentality thereof the obligations of which are backed by the
full faith and credit of the United States of America, in either case
entered into with (a) a depository institution or trust company (acting
as principal) described in clause (ii) or (b) a depository institution
or trust company whose commercial paper or other short term unsecured
debt obligations are rated "A-1+" by Standard & Poor's and "Prime-1" by
Moody's and long term unsecured debt obligations are rated "AAA" by
Standard & Poor's and "Aaa" by Moody's;
(vi) with the prior written consent of the Note
Insurer (so long as an Insurer Default shall not have occurred and be
continuing) money market mutual funds registered under the Investment
Company Act of 1940, as amended, having a rating, at the time of such
investment, from each of the Rating Agencies in the highest investment
category granted thereby; PROVIDED that the Note Insurer shall not be
required to give its prior written consent for βββββ� Fargo Money Market
Funds; and
(vii) any other investment as may be acceptable to
the Note Insurer, as evidenced by a writing to that effect, as may from
time to time be confirmed in writing to the Trustee by the Note Insurer
and as to which the Rating Agency Condition is satisfied;
provided that, in all cases the amounts paid with respect to such
instruments or securities not constituting principal must constitute either (i)
portfolio interest, as defined in Code Section 871(h)(2), (ii) interest on
deposits from a bank, within the meaning of Code Section 871(i)(2) or (iii)
payments of interest or dividends by a Person who is not a United States Person
and which interest or dividends is described in Code Section 862(a)(1) or (2);
provided, further, that an Eligible Investment must have a fixed principal
amount due at maturity and, if rated by S&P, must not have an "r" suffix
attached to the rating.
Any of the foregoing Eligible Investments may be purchased by or
through the Owner Trustee or the Trustee or any of their respective Affiliates.
"Eligible Servicer" means a Person approved to act as "Servicer" under
this Agreement by a Note Majority.
"ERISA" has the meaning specified in Section 3.2.
"Event of Default" has the meaning specified in the Indenture.
"FDIC" means the Federal Deposit Insurance Corporation.
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"Final Scheduled Payment Date" means with respect to the Class A-1
Notes, the Class A-1 Final Scheduled Payment Date, with respect to the Class A-2
Notes, the Class A-2 Final Scheduled Payment Date, with respect to the Class A-3
Notes, the Class A-3 Final Scheduled Payment Date and with respect to the Class
A-4 Notes, the Class A-4 Final Scheduled Payment Date.
"Financed Vehicle" means a new or used automobile, light truck, van or
minivan, together with all accessions thereto, securing an Obligor's
indebtedness under a Receivable.
"Funding Period" means the period beginning on and including the
Closing Date and ending on the first to occur of (a) the first date on which the
amount on deposit in the Pre-Funding Account (after giving effect to any
transfers therefrom in connection with the transfer of Subsequent Receivables to
the Issuer on such date) is less than $100,000, (b) the date on which an Event
of Default or a Servicer Termination Event occurs, (c) the date on which an
Insolvency Event occurs with respect to the Seller, and (d) October 31, 2007.
"Holder" means either a Noteholder or a Residual Certificateholder as
the context requires.
"Indemnification Agreement" means the Indemnification Agreement among
the Note Insurer, the Seller and the Placement Agents, dated as of September 27,
2007, as such agreement may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.
"Indenture" means the Indenture dated as of September 1, 2007, between
the Issuer and βββββ� 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.
"Initial Cutoff Date" means the close of business on August 31, 2007.
"Initial Receivable" means each Contract related to a Financed Vehicle
transferred to the Issuer pursuant to Section 2.1, which, as of the Closing
Date, is listed on Schedule A (which Schedule A may be in the form of
microfiche), and all rights and obligations thereunder, except for Initial
Receivables that shall have become Purchased Receivables.
"Initial Spread Account Deposit" has the meaning specified in the
Spread Account Supplement.
"Initial Trust Property" means the property and proceeds conveyed
pursuant to Section 2.1, together with all monies received with respect to the
Initial Receivables after the Initial Cutoff Date, the Insurance Policies, the
Collection Account (including all Eligible Investments therein and all proceeds
therefrom), the Lockbox Account and certain other rights under this Agreement.
Although the Seller has pledged the Series 2007-C Spread Account to the
Collateral Agent pursuant to the Spread Account Supplement, the Series 2007-C
Spread Account shall not under any circumstances be deemed to be a part of or
otherwise includable in the Trust or the Initial Trust Property.
"Insolvency Event" means, with respect to a specified Person, (a) the
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, or 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 or such Person's
affairs, and such petition, decree or order shall remain unstayed and in effect
for a period of 60 consecutive days; or (b) the commencement by such Person of a
voluntary case under any applicable Federal or State bankruptcy, insolvency or
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
9
Person generally to pay its debts as such debts become due, or the taking of
action by such Person in furtherance of any of the foregoing.
"Insurance Agreement" means the Insurance and Indemnity Agreement among
the Trust, CPS, the Seller, CPS Receivables Funding Trust and the Note Insurer,
September 27, 2007, as such agreement may be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof.
"Insurance Agreement Event of Default" means an "Event of Default" as
defined in the Insurance Agreement.
"Insurance Policy" means, with respect to a Receivable, any insurance
policy (including the insurance policies described in Section 4.4 hereof)
benefiting the holder of the Receivable providing loss or physical damage,
credit life, credit disability, theft, mechanical breakdown or similar coverage
with respect to the Financed Vehicle or the Obligor.
"Insurer Default" shall mean any one of the following events shall have
occurred and be continuing:
(i) the Note Insurer fails to make a payment required
under the Note Policy in accordance with its terms;
(ii) the Note Insurer (A) files any petition or
commences any case or proceeding under any provision or chapter of the
United States Bankruptcy Code, the New York Department of Insurance
Code or similar Federal or State law relating to insolvency,
bankruptcy, rehabilitation, liquidation or reorganization, (B) makes a
general assignment for the benefit of its creditors or (C) has an order
for relief entered against it under the United States Bankruptcy Code
or any other similar Federal or State law relating to insolvency,
bankruptcy, rehabilitation, liquidation or reorganization which is
final and nonappealable; or
(iii) a court of competent jurisdiction or the New
York Department of Insurance or any other competent regulatory
authority enters a final and nonappealable order, judgment or decree
(A) appointing a custodian, trustee, agent or receiver for the Note
Insurer or for all or any material portion of its property or (B)
authorizing the taking of possession by a custodian, trustee, agent or
receiver of the Note Insurer (or the taking of possession of all or any
material portion of the property of the Note Insurer).
"Interest Accrual Period" means, with respect to any Payment Date other
than the first Payment Date, the period commencing on the immediately preceding
Payment Date and ending on the day prior to the day of the month on which such
Payment Date occurs.
"Interest Rate" means the Class A-1 Interest Rate, the Class A-2
Interest Rate, the Class A-3 Interest Rate, the Class A-4 Interest Rate or the
Residual Certificate Interest Rate, as applicable.
"Investment Earnings" means, with respect to any Payment Date and any
Trust Account, the investment earnings on amounts on deposit in such Trust
Account during the related Collection Period and deposited into the Collection
Account on such Payment Date pursuant to Section 5.1(b).
"Issuer" means CPS Auto Receivables Trust 2007-C.
"Lien" means a security interest, lien, charge, pledge, equity, or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Receivable by operation of law.
"Lien Certificate" means, with respect to a Financed Vehicle, an
original certificate of title, certificate of lien or other notification issued
by the Registrar of Titles of the applicable state to a secured party which
indicates that the lien of the secured party on the Financed Vehicle is recorded
on the original
10
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 more than 10% of a
Scheduled Receivable Payment of more than ten dollars shall have become 120 (or,
if the related Financed Vehicle has been repossessed, 210) or more days
delinquent as of the end of a Collection Period or (iv) with respect to which
proceeds have been received which, in the Servicer's judgment, constitute the
final amounts recoverable in respect of such Receivable. For purposes of this
definition, a Receivable shall be deemed a "Liquidated Receivable" upon the
first to occur of the events specified in items (i) through (iv) of the previous
sentence.
"Lockbox Account" means an account maintained on behalf of the Trustee
by the Lockbox Bank pursuant to Section 4.2(b).
"Lockbox Agreement" means the Multiparty Agreement Relating to Lockbox
Services and Blocked Account, dated as of September 27, 2007, by and among the
Lockbox Processor, the Lockbox Bank, the Servicer, the Trust and the Trustee, as
such agreement may be amended, supplemented or otherwise modified from time to
time, unless the Trustee shall cease to be a party thereunder, or such agreement
shall be terminated in accordance with its terms, in which event "Lockbox
Agreement" shall mean such other agreement, in form and substance acceptable to
the Controlling Party, among the Servicer, the Trustee, the Lockbox Bank and the
Lockbox Processor.
"Lockbox Bank" means, as of any date, βββββ� Fargo Bank, National
Association or another depository institution named by the Servicer and
acceptable to the Controlling Party at which the Lockbox Account is established
and maintained as of such date.
"Lockbox Processor" means βββββ� Fargo Bank, National Association and
its successors and assigns.
"Majority Certificateholders" has the meaning assigned to such term in
the Trust Agreement.
"Mandatory Redemption Date" means the first Payment Date occurring on
or after the last day of the Funding Period.
"Master Spread Account Agreement" means the Master Spread Account
Agreement amended and restated as of December 1, 1998 among the Note Insurer,
CPS Receivables Funding Trust, as assignee of the Seller and βββββ� Fargo Bank,
National Association, as amended as of September 1, 1999, as further amended as
of September 7, 2001, as further amended as of November 16, 2001, as further
amended as of March 1, 2002, as further amended as of June 30, 2003, as further
amended as of July 25, 2003, as further amended as of December 16, 2003, as
further amended as of September 30, 2004, as supplemented by the Spread Account
Supplement, and as the same may be further amended, supplemented or otherwise
modified in accordance with the terms thereof.
"MFN" means MFN Financial Corporation, a Delaware Corporation.
"Moody's" means βββββ�'β� Investors Service, Inc., or its successor.
"Net Liquidation Proceeds" means, with respect to a Liquidated
Receivable, all amounts realized with respect to such Receivable during the
Collection Period in which such Receivable became a Liquidated Receivable, net
of (i) reasonable expenses incurred by the Servicer in connection with the
collection of such Receivable and the repossession and disposition of the
Financed Vehicle and (ii) amounts that are required to be refunded to the
Obligor on such Receivable; provided, however, that the Net Liquidation Proceeds
with respect to any Receivable shall in no event be less than zero.
11
"Non-Certificated Title States" means the States of Arizona, Kansas,
Kentucky, Maine, Maryland, Michigan, Minnesota, Montana, New York, Oklahoma,
Wisconsin and such other States in which the applicable Department of Motor
Vehicles or similar authority issues evidence of title to a Financed Vehicle in
a non-certificated form.
"Non-United States Investor" has the meaning assigned to such term in
the Trust Agreement.
"Note" has the meaning assigned to such term in the Indenture.
"Note Balance" means, with respect to the Class A-1 Notes, the Class
A-1 Note Balance, with respect to the Class A-2 Notes, the Class A-2 Note
Balance, with respect to the Class A-3 Notes, the Class A-3 Note Balance and
with respect to the Class A-4 Notes, the Class A-4 Note Balance.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.1.
"Note Insurer" means Financial Security Assurance Inc., a stock
insurance company organized and created under the laws of the State of New York,
or its successors in interest.
"Note Majority" means the Holders collectively evidencing more than 50%
of the aggregate outstanding Note Balance for each Class of Notes.
"Note Policy" means the Financial Guaranty Insurance Policy issued by
the Note Insurer for the benefit of the Holders of the Notes issued under the
Indenture, including any endorsements thereto.
"Note Policy Claim Amount" with respect to any Payment Date, has the
meaning specified in Section 6.1.
"Note Prepayment Amount" means an amount equal to 90.0% of the
Pre-Funded Amount on the Mandatory Redemption Date (after giving effect to any
application thereof to acquire Subsequent Receivables on the last day of the
Funding Period).
"Note Register" has the meaning assigned to such term in the Indenture.
"Note Registrar" has the meaning assigned to such term in the
Indenture.
"Noteholder" has the meaning assigned to such term in the Indenture.
"Noteholders' Interest Carryover Shortfall" means, with respect to any
Payment Date, for each Class of Notes, the excess of the Noteholders' Interest
Distributable Amount for such Class of Notes for the preceding Payment Date over
the amount that was actually deposited in the Note Distribution Account on such
preceding Payment Date on account of the Noteholders' Interest Distributable
Amount for such Class of Notes.
"Noteholders' Interest Distributable Amount" means, with respect to any
Payment Date, the sum of (i) the aggregate Noteholders' Monthly Interest
Distributable Amount for all Classes of Notes for such Payment Date, (ii) the
aggregate Noteholders' Interest Carryover Shortfall for all Classes of Notes for
such Payment Date and (iii) interest on such aggregate Noteholders' Interest
Carryover Shortfall, to the extent permitted by law, at the applicable Interest
Rate from and including the preceding Payment Date to but excluding the current
Payment Date.
"Noteholders' Monthly Interest Distributable Amount" means:
(a) for the Class A-1 Notes (i) for the first Payment Date, an amount
equal to the product of (1) the Class A-1 Interest Rate, (2) the Original Class
A-1 Note Balance, and (3) a fraction, the numerator of which
12
is the number of days from and including the Closing Date to and including
October 14, 2007, and the denominator of which is 360; and (ii) for any Payment
Date after the first Payment Date, an amount equal to the product of (1) the
Class A-1 Interest Rate, (2) the Class A-1 Note Balance as of the close of the
preceding Payment Date (after giving effect to all distributions on account of
principal on such preceding Payment Date) and (3) a fraction, the numerator of
which is the number of days for the related Interest Accrual Period and the
denominator of which is 360; and
(b) for all other Classes of Notes (i) for the first Payment Date, an
amount equal to the product of (1) the Interest Rate for such Class of Notes,
(2) the Original Class Note Balance for such Class of Notes, and (3) a fraction,
the numerator of which is the number of days from and including the Closing Date
to and including October 14, 2007, and the denominator of which is 360; and (b)
for any Payment Date after the first Payment Date, an amount equal to the
product of (1) one-twelfth of the Interest Rate for such Class of Notes and (2)
the Note Balance for such Class of Notes as of the close of the preceding
Payment Date (after giving effect to all distributions on account of principal
on such preceding Payment Date).
"Noteholders' Parity Deficit Amount" means, with respect to any Payment
Date, the excess, if any, of (x) the Aggregate Note Balance on such Payment
Date, after giving effect to the distribution of the Noteholders' Principal
Distributable Amount on such Payment Date, but excluding any amounts in respect
thereof withdrawn from the Series 2007-C Spread Account or paid under the Note
Policy over (y) the Collateral Balance at the end of the related Collection
Period.
"Noteholders' Principal Distributable Amount" means (i) with respect to
any Payment Date (other than the Final Scheduled Payment Date for any Class of
Notes), the lesser of (a) the Principal Distributable Amount and (b) the excess
of (I) the Aggregate Note Balance as of the close of business on the preceding
Payment Date over (II) the Requisite Percentage and (ii) on the Final Scheduled
Payment Date for any Class of Notes, the greater of (I) the Note Balance of such
Class of Notes or (II) the amount calculated pursuant to clause (i) above. On
any Payment Date after the acceleration of the Notes pursuant to Section 5.2 of
the Indenture, the Noteholders' Principal Distributable Amount shall be the Note
Balance of each Class of Notes.
"Notes" means the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes and the Class A-4 Notes, collectively.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
Financed Vehicle and any other Person who owes payments under the Receivable.
"Officer's Certificate" means a certificate signed by the chairman of
the board, the president, any vice chairman of the board, any vice president,
the treasurer, the controller or assistant treasurer or any assistant
controller, secretary or assistant secretary of CPS, the Seller or the Servicer,
as appropriate.
"Opinion of Counsel" means a written opinion of counsel who may but
need not be counsel to the Seller or the Servicer, which counsel shall be
reasonably acceptable to the Trustee and the Note Insurer and which opinion
shall be acceptable in form and substance to the Trustee and, if such opinion or
a copy thereof is required by the provisions of this Agreement to be delivered
to the Note Insurer, to the Note Insurer.
"Original Aggregate Note Balance" means $294,750,000.
"Original Class A-1 Note Balance" means $46,000,000.
"Original Class A-2 Note Balance" means $77,300,000.
"Original Class A-3 Note Balance" means $89,500,000.
"Original Class A-4 Note Balance" means $81,950,000.
13
"Original Collateral Balance" means the sum of (i) the Original Pool
Balance and (ii) the initial Pre-Funded Amount.
"Original Pool Balance" means $230,872,981.89 which is the Pool Balance
as of the Initial Cutoff Date.
"Original Residual Certificate Notional Balance" means $32,750,000.
"Other Conveyed Property" means all property conveyed by the Seller to
the Trust pursuant to Sections 2.1(b) through (k) and Sections 2.2(a)(ii)
through (xi) of this Agreement.
"Owner Trust Estate" has the meaning assigned to such term in the Trust
Agreement.
"Owner Trustee" means Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, its successors
in interest or any successor Owner Trustee under the Trust Agreement.
"Payment Date" means, with respect to each Collection Period, the 15th
day of the following calendar month, or if such day is not a Business Day, the
immediately following Business Day, commencing on October 15, 2007.
"Pending Litigation" means the litigation matters that are described
under "CPS - Recent Developments" in the Confidential Private Placement
Memorandum dated as of September 25, 2007.
"Percentage Interests" has the meaning assigned to such term in the
Trust Agreement.
"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.
"Placement Agency Agreement" means the Placement Agency Agreement
relating to the Notes dated September 21, 2007, among the Placement Agents, CPS
and the Seller.
"Placement Agent" means each of UBS Securities LLC and Bear, βββββββ� &
Co. Inc.
"Pool Balance" means, as of any date of determination, the aggregate
Principal Balance of the Receivables (excluding Purchased Receivables and
Liquidated Receivables).
"Post Office Box" means the separate post office box in the name of the
Trust established and maintained pursuant to Section 4.2.
"Preference Claim" has the meaning specified in Section 6.2(b).
"Pre-Funded Amount" means, with respect to any Payment Date, the amount
on deposit in the Pre-Funding Account (exclusive of Pre-Funding Earnings), which
initially shall be $96,627,018.11.
"Pre-Funding Account" has the meaning specified in Section 5.1.
"Pre-Funding Earnings" means any Investment Earnings on amounts on
deposit in the Pre-Funding Account.
"Principal Balance" of a Receivable, as of the close of business on the
last day of a Collection Period means the Amount Financed minus the sum of the
following amounts without duplication: (i) that
14
portion of all Scheduled Receivable Payments actually received on or prior to
such day allocable to principal using the Simple Interest Method; (ii) any
payment of the Purchase Amount with respect to the Receivable allocable to
principal; (iii) any Cram Down Loss in respect of such Receivable; and (iv) any
prepayment in full or any partial prepayment applied to reduce the principal
balance of the Receivable; provided, however that the Principal Balance of a
Receivable that has become a Liquidated Receivable shall equal zero.
"Principal Distributable Amount" means, with respect to any Payment
Date, the sum of (i) collections on Receivables (other than Liquidated
Receivables) allocable to principal including full and partial prepayments
received during the related Collection Period; (ii) the portion of the Purchase
Amount allocable to principal of each Receivable that became a Purchased
Receivable as of the last day of the related Collection Period and, at the
option of the Note Insurer, the Principal Balance of each Receivable that was
required to be but was not so purchased or repurchased (without duplication of
amounts referred to in clause (i) above); (iii) the Principal Balance of each
Receivable that first became a Liquidated Receivable during the related
Collection Period (without duplication of the amounts included in clauses (i)
and (ii) above); and (iv) the aggregate amount of Cram Down Losses with respect
to the Receivables that have occurred during the related Collection Period
(without duplication of amounts referred to in clauses (i) through (iii) above).
"Program" has the meaning specified in Section 4.11.
"Purchase Amount" means, with respect to a Receivable, the amount, as
of the close of business on the last day of a Collection Period, required to
prepay in full such Receivable under the terms thereof, as reduced by the amount
of any Cram Down Loss, plus all accrued and unpaid interest thereon to the end
of the month of such purchase.
"Purchased Receivable" means a Receivable purchased as of the close of
business on the last day of a Collection Period by the Servicer or CPS pursuant
to Section 4.7 or Section 4.16 or repurchased by the Seller or CPS pursuant to
Section 3.2, Section 3.4 or Section 11.1(a).
"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 Insurer (so long
as an Insurer Default shall not have occurred and be continuing), notice of
which designation shall be given to the Trustee, the Owner Trustee and the
Servicer.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 10 days' (or such shorter period as shall be
acceptable to each Rating Agency) prior notice thereof and that each of the
Rating Agencies shall have notified the Seller, the Servicer, the Note Insurer,
the Owner Trustee and the Trustee in writing that (a) such action will not
result in a reduction or withdrawal of the then current rating of the Notes
(including the ratings on the Notes without giving effect to the Note Policy) or
(b) if the Notes and all amounts owing to the Note Insurer under the Basic
Documents have been paid in full, such action will not result in a reduction or
withdrawal of the then current rating of the Residual Certificates, if the
Residual Certificates are then rated; or if the Residual Certificates are not
then rated, the Rating Agency Condition with respect to the Residual
Certificates will be satisfied if such action does not materially and adversely
affect the holders of the Residual Certificates.
"Realized Losses" means, with respect to any Receivable that becomes a
Liquidated Receivable, the excess of the Principal Balance of such Liquidated
Receivable over Net Liquidation Proceeds allocable to principal.
"Receivable" means an Initial Receivable and/or a Subsequent
Receivable, as applicable.
"Receivable Files" means the documents specified in Section 3.3(a).
15
"Receivables Purchase Agreement" means the Receivables Purchase
Agreement dated as of September 27, 2007, by and between the Seller and CPS, as
such agreement may be amended, supplemented or otherwise modified from time to
time in accordance with the terms thereof, relating to the purchase of the
Receivables by the Seller from CPS.
"Record Date" means, with respect to the first Payment Date, the
Closing Date and with respect to any subsequent Payment Date, the last day of
calendar month preceding the calendar month in which such Payment Date occurs.
"Recoveries" means with respect to a Liquidated Receivable, the monies
collected from whatever source, during any Collection Period following the
Collection Period in which such Receivable became a Liquidated Receivable, net
of the reasonable costs of liquidation plus any amounts required by law to be
remitted to the Obligor (without duplication of amounts netted against the
amounts realized in calculating the Net Liquidation Proceeds).
"Registrar of Titles" means, with respect to any State, the
governmental agency or body responsible for the registration of, and the
issuance of certificates of title relating to, motor vehicles and liens thereon.
"Requisite Percentage" means (i) on any Payment Date prior to the
September 2009 Payment Date, 85.75% of the Collateral Balance as of the end of
the related Collection Period, (ii) on any Payment Date from and including the
September 2009 Payment Date to and including the February 2010 Payment Date,
86.75% of the Collateral Balance as of the end of the related Collection Period,
(iii) on any Payment Date from and including the March 2010 Payment Date to and
including the August 2010 Payment Date, 87.75% of the Collateral Balance as of
the end of the related Collection Period and (iv) on any Payment Date after the
August 2010 Payment Date, 88.75% of the Collateral Balance as of the end of the
related Collection Period; provided, that, in the case of clauses (ii), (iii)
and (iv) above, if, as of the Determination Date related to any such Payment
Date, (A) the Noteholders' Principal Distributable Amount (calculated without
reference to this proviso) is not equal to the Principal Distributable Amount,
(B) after making the distributions pursuant to Section 5.7(a) on such Payment
Date, the Specified Spread Account Requisite Amount is not then satisfied, (C)
as of the first Payment Date referenced in the applicable clause (ii), (iii) or
(iv) above, the Three Month Rolling Average Extension Ratio is greater than or
equal to 2.25%, 2.75% and 2.25%, respectively, (D) as of the first Payment Date
referenced in the applicable clause (ii), (iii) or (iv) above, the Cumulative
Net Loss Rate as of the end of the Collection Period related to such first
Payment Date is greater than or equal to 9.00%, 10.85% and 12.25%, respectively,
(E) as of the first Payment Date referenced in the applicable clause (ii), (iii)
or (iv) above, the Three-Month Rolling Average Delinquency Ratio as of the end
of the Collection Period related to such first Payment Date is greater than or
equal to 8.50%, 9.00% and 9.50%, respectively, or (F) any Trigger Event has
occurred and is continuing, then the Requisite Percentage shall not be increased
from the Requisite Percentage employed on the immediately preceding Payment
Date.
"Requisite Reserve Amount" as of any date will equal the product of:
(A) 1/360th of the difference between
(i) the sum of (a) the weighted average of the
Interest Rates for the Notes and the Residual Certificate
Interest Rate, weighted in accordance with the outstanding
principal amount of each class of Class A Notes and the
Residual Certificate Notional Balance, respectively, (c) the
Trustee fee rate, (d) the Backup Servicing fee rate, if
applicable, (e) the premium rate for the Policy and (f) the
Supplemental Residual Certificate Distribution, if any,
expressed as a percentage; and
(ii) 1.75% per annum;
16
(B) the Pre-Funded Amount on such date (after giving effect to
any application thereof to acquire Subsequent Receivables on such Payment Date);
and
(C) the number of days remaining until and including the last
day of the Collection Period for the Payment Date in November 2007;
provided that, upon the expiration of the Funding Period, after the
payment of all amounts required to be paid on the immediately following Payment
Date (or on the Payment Date on which the Funding Period ends, if applicable),
the Requisite Reserve Amount will be zero.
"Residual Certificate Interest Carryover Shortfall" means, with respect
to any Payment Date, the excess of the Residual Certificate Interest
Distributable Amount for the preceding Payment Date over the amount that was
actually distributed to the Residual Certificateholders on such preceding
Payment Date on account of the Residual Certificate Interest Distributable
Amount.
"Residual Certificate Interest Distributable Amount" means, with
respect to any Payment Date, the sum of (i) the Residual Certificate Monthly
Interest Distributable Amount for such Payment Date, (ii) the Residual
Certificate Interest Carryover Shortfall for such Payment Date and (iii)
interest on such Residual Certificate Interest Carryover Shortfall, to the
extent permitted by law, at the Residual Certificate Interest Rate from and
including the preceding Payment Date to but excluding the current Payment Date;
provided however, that the amount which may be distributed pursuant to Section
5.7(a)(vi) may not exceed the product of (a) one-twelfth of the Residual
Certificate Interest Rate and (b) the excess of (I) the Collateral Balance at
the beginning of the related Collection Period over (II) the Aggregate Note
Balance as of the close of business on the preceding Payment Date.
"Residual Certificate Interest Rate" means 10.00% per annum.
"Residual Certificate Monthly Interest Distributable Amount" means (a)
for the first Payment Date, an amount equal to the product of (i) the Residual
Certificate Interest Rate, (ii) the Original Residual Certificate Notional
Balance and (iii) a fraction, the numerator of which is the number of days from
and including the Closing Date to and including October 14, 2007, and the
denominator of which is 360, and (b) for any Payment Date after the first
Payment Date, an amount equal to the product of (i) one-twelfth of the Residual
Certificate Interest Rate and (ii) the Residual Certificate Notional Balance as
of the close of the preceding Payment Date after giving effect to all
distributions in reduction thereof on such preceding Payment Date.
"Residual Certificate Notional Balance" means, as of any Payment Date,
an amount equal to the Original Residual Certificate Notional Balance, less all
amounts distributed to the Residual Certificateholders pursuant to Section
5.7(a)(xiv) and Section 5.7(b) hereof.
"Residual Certificate Prepayment Amount" means an amount equal to 10.0%
of the Pre-Funded Amount on the Mandatory Redemption Date (after giving effect
to any application thereof to acquire Subsequent Receivables on the last day of
the Funding Period).
"Residual Certificate Principal Distributable Amount" means, as of any
Payment Date, the lesser of (i) the amount of the Total Distribution Amount
remaining after the distributions pursuant to clauses (i) through (xiii) of
Section 5.7(a) have been made and (ii) the excess of (a) the Residual
Certificate Notional Balance as of the close of business on the preceding
Payment Date over (b) 10.0% of the Collateral Balance at the end of the related
Collection Period. The Residual Certificate Principal Distributable Amount for
each Payment Date occurring on and after the Payment Date on which the Class A-4
Note Balance has been reduced to zero will equal the lesser of (i) the Residual
Certificate Notional Balance and (ii) the amount of the Total Distribution
Amount remaining after the distributions pursuant to clauses (i) through (xiii)
of Section 5.7(a) have been made.
17
"Residual Certificateholder" means each person in whose name a Residual
Pass-through Certificate is registered on the Certificate Register.
"Residual Pass-through Certificate" has the meaning assigned to such
term in the Trust Agreement.
"Responsible Officer" has the meaning specified in the Trust Agreement.
"Schedule of Receivables" means the schedule of Initial Receivables
attached hereto as Schedule A and the schedule of Subsequent Receivables
attached to each Subsequent Transfer Agreement, collectively, as such schedules
may be amended or supplemented from time to time in accordance with the terms
hereof.
"Scheduled Receivable Payment" means, with respect to any Collection
Period for any Receivable, the amount set forth in such Receivable as required
to be paid by the Obligor in such Collection Period. If after the Closing Date,
the Obligor's obligation under a Receivable with respect to a Collection 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(a), the Scheduled Receivable Payment with respect to such Collection Period
shall refer to the Obligor's payment obligation with respect to such Collection
Period as so modified.
"SeaWest" means SeaWest Financial Corporation, a California
corporation.
"Section 341 Meeting" means a meeting held pursuant to Section 341(a)
of the United States Bankruptcy Code (as the same may be amended from time to
time).
"Section 341 Receivable" means a Receivable, the Obligor of which has
completed a Section 341 Meeting as of the applicable Cutoff Date.
"Securities" means the Notes and the Residual Pass-through
Certificates, collectively.
"Securityholders" means the Noteholders and the Residual
Certificateholders, collectively.
"Seller" means CPS Receivables Corp., a California corporation, and its
successors in interest to the extent permitted hereunder.
"Seller's Contract Purchase Guidelines" means the set of criteria that
the Seller has established for purchasing Contracts on a state-by-state basis as
reflected in rate cards and the approval authority summary, as the same may be
amended from time to time.
"Series 2007-C Spread Account" means the account designated as such,
established and maintained pursuant to the Master Spread Account Agreement.
"Servicer" means CPS, as the servicer of the Receivables, and each
successor Servicer pursuant to Section 10.3.
"Servicer Termination Event" means an event specified in Section 10.1.
"Servicer's Certificate" means a certificate completed and executed by
a Servicing Officer and delivered pursuant to Section 4.9, substantially in the
form of Exhibit B.
"Servicing Assumption Agreement" means the Servicing Assumption
Agreement, dated as of September 27, 2007, among CPS, 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.
18
"Servicing Fee" has the meaning specified in Section 4.8.
"Servicing Officer" means any Person whose name appears on a list of
Servicing Officers delivered to the Trustee and the Note Insurer, as the same
may be amended from time to time.
"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.
"Skip Receivable" means a Receivable (i) which is delinquent as of the
Closing Date; and (ii) where CPS (a) has concluded that the address or telephone
number of the related Obligor maintained by CPS as of the Closing Date is
incorrect and CPS has not been able to obtain revised contact information for
such Obligor and (b) has designated the status of the Receivable as "A07" or
"F07" in accordance with its servicing procedures.
"Specified Affiliates" means CPS Receivables Two Corp., CPS Receivables
Three Corp., CPS Receivables Funding Trust, Page Funding LLC, Page Three Funding
LLC and their respective successors and assigns.
"Specified Spread Account Requisite Amount" has the meaning specified
in the Spread Account Supplement.
"Spread Account Supplement" means the Series 2007-C Supplement to the
Master Spread Account Agreement dated as of September 27, 2007 among the Note
Insurer, the Seller and the Collateral Agent, as the same may be modified,
supplemented or otherwise amended in accordance with the terms thereof.
"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of The ββββββ-ββββ Companies, Inc. or its successor.
"State" means any one of the 50 states of the United States of America
or the District of Columbia.
"Subsequent Cutoff Date" means (i) the close of business on the last
day of the month preceding the month in which particular Subsequent Receivables
are conveyed to the Trust pursuant to this Agreement or (ii) if any such
Subsequent Receivable is originated in the month of the related Subsequent
Transfer Date, the date of origination.
"Subsequent Receivables" means each Contract related to a Financed
Vehicle transferred to the Issuer pursuant to Section 2.2 (each of which shall
be listed on Schedule A to the related Subsequent Transfer Agreement), and all
rights and obligations thereunder, except for Subsequent Receivables that shall
have become Purchased Receivables.
"Subsequent Receivables Purchase Agreement" means an agreement by and
between the Seller and CPS pursuant to which the Seller will acquire Subsequent
Receivables from CPS during the Funding Period.
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"Subsequent Spread Account Deposit" means, with respect to each
Subsequent Transfer Date, an amount equal to 2.00% of the aggregate Principal
Balance of related Subsequent Receivables as of the related Subsequent Cutoff
Date transferred to the Trust on such Subsequent Transfer Date.
"Subsequent Transfer Agreement" means an agreement among the Issuer,
the Seller and the Servicer, substantially in the form of Exhibit A.
"Subsequent Transfer Date" means, with respect to Subsequent
Receivables, any date, occurring not more frequently than once per month, during
the Funding Period on which Subsequent Receivables are transferred to the Trust
pursuant to this Agreement.
"Subsequent Trust Property" means the property and proceeds conveyed
pursuant to Section 2.2, together with all monies received with respect to the
related Subsequent Receivables after the related Subsequent Cutoff Date, the
Insurance Policies, the Collection Account (including all Eligible Investments
therein and all proceeds therefrom), the Lockbox Account and certain other
rights under this Agreement. Although the Seller has pledged the Series 2007-C
Spread Account to the Collateral Agent pursuant to the Spread Account
Supplement, the Series 2007-C Spread Account shall not under any circumstances
be deemed to be a part of or otherwise includable in the Trust or the Subsequent
Trust Property.
"Successor Servicing Fee Schedule" means that certain Schedule of
Successor Servicing Fees, Expenses and Distributions attached hereto as Exhibit
G.
"Successor Servicing Fee" has the meaning specified in Section 4.8.
"Supplemental Residual Certificate Distribution" means for any Payment
Date, the sum of (i) the Cayman Trustee Fees on such Payment Date, if any, and
(ii) the product of (a) the Cayman Trustee Fees, (b) 1.0000458036246 and (c)
0.00458015267%.
"Targeted Principal Distributable Amount" means, with respect to any
Payment Date, the lesser of (i) the amount of the Total Distribution Amount
remaining after the distributions pursuant to priorities (i) through (x) under
Section 5.7(a) have been made and (ii) the excess of (a) the Aggregate Note
Balance (after giving effect to the Noteholders' Principal Distributable Amount
and the Noteholders' Parity Deficit Amount paid on such Payment Date) over (b)
the Requisite Percentage.
"Texas Franchise Tax" means any tax imposed by the State of Texas
pursuant to Tex. Tax Code βββ�. ss. 171.001 (ββββββ 2005), as amended by Tex.
H.B. 3, 79th Leg., 3d C.S. (2006).
"TFC" means The Finance Company, a Virginia corporation.
"Three-Month Rolling Average Delinquency Ratio" means, for any date of
determination, the average of the Delinquency Ratios for each of the three
immediately preceding Collection Periods.
"Three-Month Rolling Average Extension Ratio" means, for any date of
determination, a rolling three month average of the ratio for each of the three
immediately preceding Collection Periods, expressed as a percentage, of (i) the
aggregate Principal Balance of the Receivables whose payments are extended
during the related Collection Period to (ii) the Pool Balance as of the first
day of the related Collection Period prior to giving effect to any payment
activity on such date.
"Total Distribution Amount" means, for each Payment Date, the sum of
the following amounts with respect to the related Collection Period: (i) all
collections on the Receivables; (ii) Net Liquidation Proceeds received during
the Collection Period with respect to Liquidated Receivables; (iii) all proceeds
from Recoveries with respect to Liquidated Receivables; (iv) all proceeds
received during the Collection Period from Insurance Policies (other than funds
used for the repair of the related Financed Vehicle or otherwise released by CPS
to the related Obligor in accordance with normal servicing procedures); (v)
Investment Earnings for the related Payment Date; (vi) all Purchase Amounts
deposited in the Collection
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Account during the related Collection Period, plus the amount of any payments
made by CPS to the Trust pursuant to its indemnification obligations under the
Basic Documents; (vii) following the acceleration of the Notes pursuant to
Section 5.2 of the Indenture, the amount of money or property collected pursuant
to Section 5.3 of the Indenture since the preceding Payment Date by the Trustee
or Controlling Party for distribution pursuant to Section 5.7 hereof; (viii) any
amounts released from the Series 2007-C Spread Account in accordance with the
terms of the Master Spread Account Agreement for payment pursuant to priorities
(xi) through (xv) of Section 5.7(a) hereof; (ix) any amounts withdrawn from the
Capitalized Interest Account in excess of the Requisite Reserve Amount on the
October 2007 and November 2007 Payment Dates; and (x) the proceeds of any
purchase or sale of the assets of the Trust described in Sections 4.16 or 11.1
hereof.
"Trigger Event" has the meaning assigned thereto in the Spread Account
Supplement.
"Trust" means the Issuer.
"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), and all proceeds of the foregoing.
"Trust Accounts" has the meaning assigned thereto in Section 5.1.
"Trust Agreement" means the Trust Agreement dated as of March 15, 2007,
by and between CPS Receivables Three Corp., as depositor, and the Owner Trustee,
as amended and restated by the Amended and Restated Trust Agreement dated as of
September 27, 2007, by and among the CPS Receivables Three Corp., as original
depositor, Seller, as depositor, and the Owner Trustee, as the same may be
further amended or supplemented from time to time in accordance with the terms
thereof.
"Trust Officer" means, (i) in the case of the Trustee, any vice
president, any assistant vice president, any assistant secretary, any assistant
treasurer, any trust officer, or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject, and (ii) in the case of the Owner
Trustee, any officer in the Corporate Trust Office of the Owner Trustee or any
agent of the Owner Trustee under a power of attorney with direct responsibility
for the administration of this Agreement or any of the Basic Documents on behalf
of the Owner Trustee.
"Trust Property" means the Initial Trust Property and the Subsequent
Trust Property, collectively.
"Trustee" means the Person acting as trustee under the Indenture, its
successors in interest and any successor trustee under the Indenture.
"Trustee Fee Schedule" means the schedule attached hereto as Exhibit
H-1.
"Trustee Fees" means the sum of (A) the fee payable to the Trustee on
each Payment Date in an amount equal to the greater of (a) $2,500 and (b)
one-twelfth of 0.04% of the Aggregate Note Balance as of the close of the
preceding Payment Date; provided, however, that on the first Payment Date the
Trustee will be entitled to receive an amount equal to the greater of (a) $2,500
and (b) the product of (i) the percentage equivalent of a fraction the numerator
of which is the number days from the Closing Date to but excluding the first
Payment Date and the denominator of which is 360, (ii) 0.04% and (iii) the
Original Aggregate Note Balance; (B) any amounts payable to the Trustee in its
capacity as custodian of the Receivable Files pursuant to the Trustee Fee
Schedule; and (C) any amounts payable to the Owner Trustee pursuant to Article
VIII of the Trust Agreement or to the Trustee pursuant to this Agreement.
"UCC" means the Uniform Commercial Code as in effect in the relevant
jurisdiction on the date of the Agreement.
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(b) Capitalized terms used herein and not otherwise defined
herein have the meanings assigned to them in the Indenture or, if not defined
therein, in the Trust Agreement.
(c) All terms defined in this Agreement shall have the defined
meanings when used in any instrument governed hereby and in any certificate or
other document made or delivered pursuant hereto unless otherwise defined
therein.
(d) Accounting terms used but not defined or partly defined in
this Agreement, in any instrument governed hereby or in any certificate or other
document made or delivered pursuant hereto, to the extent not defined, shall
have the respective meanings given to them under generally accepted accounting
principles as in effect on the date of this Agreement or any such instrument,
certificate or other document, as applicable. To the extent that the definitions
of accounting terms in this Agreement or in any such instrument, certificate or
other document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement or
in any such instrument, certificate or other document shall control.
(e) (i) 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 and (ii) the word
"or" is not exclusive.
(f) Section, Schedule and Exhibit references contained in this
Agreement are references to Sections, Schedules and Exhibits in or to this
Agreement unless otherwise specified; and the term "including" shall mean
"including without limitation."
(g) The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such terms.
(h) Any agreement, instrument or statute defined or referred
to herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as the same may from time to time be
amended, modified or supplemented and includes (in the case of agreements or
instruments) references to all attachments and instruments associated therewith;
all references to a Person include its permitted successors and assigns.
Whenever a determination is to be made under this Agreement as to
whether a given event action, course of conduct or set of facts or circumstances
could or would have a material adverse effect on the Issuer or Noteholders (or
any similar or analogous determination), such determination shall be made
without taking into account the insurance provided by the Note Policy. Whenever
a determination is to be made under this Agreement whether a breach of a
representation, warranty or covenant has or could have a material adverse effect
on a Receivable or the interest therein of the Issuer, the Noteholders or the
Note Insurer (or any similar or analogous determination), such determination
shall be made by the Controlling Party in its sole discretion.
ARTICLE II
CONVEYANCE OF RECEIVABLES
Conveyance of Receivables. In consideration of the Issuer's delivery to
or upon the order of the Seller on the Closing Date of the Securities, the
Seller does hereby sell, transfer, assign, set over and otherwise convey to the
Issuer, 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:
(a) the Initial Receivables listed in Schedule A hereto and
all monies received thereunder (other than the Additional Servicing
Compensation) after the Initial Cutoff Date and all Net
22
Liquidation Proceeds and Recoveries received with respect to such Initial
Receivables after the Initial Cutoff Date;
(b) the security interests in the Financed Vehicles granted by
Obligors pursuant to the Initial Receivables and any other interest of the
Seller in such Financed Vehicles, including, without limitation, the
certificates of title or, with respect to such Financed Vehicles in the
Non-Certificated Title States, all other evidence of ownership with respect to
such Financed Vehicles issued by the applicable Department of Motor Vehicles or
similar authority;
(c) any proceeds from claims on any physical damage, credit
life and credit accident and health insurance policies or certificates relating
to the Financed Vehicles securing the Initial Receivables or the Obligors
thereunder;
(d) all proceeds from recourse against Dealers or Consumer
Lenders with respect to the Initial Receivables;
(e) all of the Seller's rights, title and interest in its
rights and benefits, but none of its obligations or burdens under the
Receivables Purchase Agreement, including a direct right to cause CPS to
purchase Initial Receivables from the Issuer and to indemnify the Issuer
pursuant to the Receivables Purchase Agreement under the circumstances specified
therein;
(f) refunds for the costs of extended service contracts with
respect to Financed Vehicles securing the Initial Receivables, refunds of
unearned premiums with respect to credit life and credit accident and health
insurance policies or certificates covering an Obligor or Financed Vehicle under
an Initial Receivable or his or her obligations with respect to a Financed
Vehicle and any recourse to Dealers or Consumer Lenders for any of the
foregoing;
(g) the Receivable File related to each Initial Receivable;
(h) all amounts and property from time to time held in or
credited to the Collection Account, the Pre-Funding Account, the Capitalized
Interest Account, the Lockbox Account and the Note Distribution Account;
(i) all property (including the right to receive future Net
Liquidation Proceeds) that secures an Initial Receivable that has been acquired
by or on behalf of CPS or the Seller, pursuant to a liquidation of such
Receivable;
(j) the proceeds of any and all of the foregoing; and
(k) 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.
Conveyance of Subsequent Receivables.
(a) Subject to the conditions set forth in paragraph (b)
below, in consideration of the Issuer's delivery on each related Subsequent
Transfer Date to or upon the order of the Seller of the amount described in
Section 5.10(a) to be delivered to the Seller, the Seller will, on the related
Subsequent Transfer Date, sell, transfer, assign, set over and otherwise convey
to the Issuer without recourse (subject to the obligations set forth herein) all
right, title and interest of the Seller in and to:
23
(i) the Subsequent Receivables listed in Schedule A
to the related Subsequent Transfer Agreement and all monies received
thereunder (other than the Additional Servicing Compensation) after the
related Subsequent Cutoff Date and all Net Liquidation Proceeds and
Recoveries received with respect to such Subsequent Receivables after
the related Subsequent Cutoff Date;
(ii) the security interests in the Financed Vehicles
granted by Obligors pursuant to the Subsequent Receivables and any
other interest of the Seller in such Financed Vehicles, including,
without limitation, the certificates of title or, with respect to such
Financed Vehicles in the Non-Certificated Title States, all other
evidence of ownership with respect to such Financed Vehicles issued by
the applicable Department of Motor Vehicles or similar authority;
(iii) any proceeds from claims on any physical
damage, credit life and credit accident and health insurance policies
or certificates relating to the Financed Vehicles securing the
Subsequent Receivables or the Obligors thereunder;
(iv) all proceeds from recourse against Dealers or
Consumer Lenders with respect to the related Subsequent Receivables;
(v) all of the Seller's rights, title and interest in
its rights and benefits, but none of its obligations or burdens, under
the related Subsequent Receivables Purchase Agreement, including a
direct right to cause CPS to purchase Subsequent Receivables from the
Issuer under certain circumstances and to indemnify the Issuer pursuant
to the Subsequent Receivables Purchase Agreement;
(vi) refunds for the costs of extended service
contracts with respect to Financed Vehicles securing Subsequent
Receivables, refunds of unearned premiums with respect to credit life
and credit accident and health insurance policies or certificates
covering an Obligor or Financed Vehicle under a Subsequent Receivable
or his or her obligations with respect to a Financed Vehicle and any
recourse to Dealers or Consumer Lenders for any of the foregoing;
(vii) the Receivable File related to each Subsequent
Receivable;
(viii) all amounts and property from time to time
held in or credited to the Collection Account, the Pre-Funding Account,
the Capitalized Interest Account, the Lockbox Account and the Note
Distribution Account;
(ix) all property (including the right to receive
future Net Liquidation Proceeds) that secured a Subsequent Receivable
that has been acquired by or on behalf of CPS or the Seller pursuant to
a liquidation of such Receivable;
(x) the proceeds of any and all of the foregoing; and
(xi) all present and future claims, demands, causes
and choses in action in respect of any or all of the foregoing and all
payments on or under and all proceeds of every kind and nature
whatsoever in respect of any or all of the foregoing, including all
proceeds of the conversion, voluntary or involuntary, into cash or
other liquid property, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of
any and every kind and other forms of obligations and receivables,
instruments and other property which at any time constitute all or part
of or are included in the proceeds of any of the foregoing.
(b) The Seller shall transfer to the Issuer the Subsequent
Receivables and the other property and rights related thereto described in
paragraph (a) above only upon the satisfaction of each of the following
conditions on or prior to the related Subsequent Transfer Date:
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(i) the Seller shall have provided the Trustee, the
Owner Trustee, the Note Insurer and the Rating Agencies with an
Addition Notice not later than five Business Days prior to such
Subsequent Transfer Date and shall have provided any information
reasonably requested by any of the foregoing with respect to the
related Subsequent Receivables;
(ii) the Seller shall have delivered to the Owner
Trustee and the Trustee a duly executed Subsequent Transfer Agreement
which shall include supplements to Schedule A, listing the related
Subsequent Receivables;
(iii) the Seller shall, to the extent required by
Section 4.2 of this Agreement, have deposited in the Collection Account
all collections in respect of the related Subsequent Receivables;
(iv) as of each Subsequent Transfer Date, (A) the
Seller shall not be insolvent and shall not become insolvent as a
result of the transfer of Subsequent Receivables on such Subsequent
Transfer Date, (B) the Seller shall not intend to incur or believe that
it shall incur debts that would be beyond its ability to pay as such
debts mature, (C) such transfer shall not have been made with actual
intent to hinder, delay or defraud any Person and (D) the assets of the
Seller shall not constitute unreasonably small capital to carry out its
business as then conducted;
(v) the Funding Period shall not have terminated;
(vi) after giving effect to any transfer of
Subsequent Receivables on a Subsequent Transfer Date, the Receivables
then owned by the Trust shall meet the following criteria (based on the
characteristics of the Initial Receivables on the Initial Cutoff Date
and the Subsequent Receivables on the related Subsequent Cutoff Dates):
(A) the weighted average APR of such Receivables will be greater than
or equal to 18.09%, (B) the weighted average remaining term of such
Receivables will be within a range of 12 to 72 months, (C) not more
than 83.00% of the aggregate Principal Balance of such Receivables will
represent financing of used Financed Vehicles, (D) not more than 1.00%
of the aggregate Principal Balance of such Receivables will have an APR
in excess of 24.00% and not more than 21.00% of the aggregate Principal
Balance of such Receivables will have an APR of less than 16.00%, (E)
none of such Receivables will have an APR in excess of 27.00%, (F) each
Receivable will have a minimum APR of 7.50%; (G) each Receivable will
have an original term of no more than 72 months and no more than 52.50%
of the aggregate Principal Balance of such Receivables will have an
original term in excess of sixty (60) months; (H) no more than 10.25%
of the aggregate Principal Balance of the Receivables will be
originated in Texas; (I) not less than 76.00% of the aggregate
Principal Balance of the Receivables will have been purchased under the
Seller's "Alpha", "Super Alpha", "Alpha Plus" or "Preferred" programs;
(J) no more than 6.00% of the aggregate Principal Balance of the
Receivables will have been purchased under the Seller's "First-Time
Buyer" program; (K) none of the Receivables will have been originated
by MFN, TFC or SeaWest or any of their respective subsidiaries; (L) no
more than 3.00% of the Receivables will constitute Section 341
Receivables; (M) no more than 2.00% of the aggregate Principal Balance
of Receivables will have been purchased by the Seller from Consumer
Lenders; and (N) the Trust, the Trustee, the Owner Trustee and the Note
Insurer shall have received written confirmation from a firm of
certified independent public accountants as to the satisfaction of the
criteria in clauses (A) through (M) above;
(vii) each of the representations and warranties made
by the Seller pursuant to Section 3.1 with respect to the related
Subsequent Receivables to be transferred on such Subsequent Transfer
Date shall be true and correct as of the related Subsequent Transfer
Date, and the Seller shall have performed all obligations to be
performed by it hereunder on or prior to such Subsequent Transfer Date;
(viii) the Seller shall, at its own expense, on or
prior to the Subsequent Transfer Date indicate in its computer files
that the Subsequent Receivables identified in the Subsequent Transfer
Agreement have been sold to the Trust pursuant to this Agreement;
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(ix) the Seller shall have taken any action required
to maintain the first priority perfected ownership interest of the
Issuer in the Owner Trust Estate and the first priority perfected
security interest of the Trustee in the Collateral;
(x) no selection procedures adverse to the interests
of the Noteholders or the Note Insurer shall have been utilized in
selecting the Subsequent Receivables;
(xi) the addition of any such Subsequent Receivables
shall not result in a material adverse tax consequence to the Trust or
the Noteholders;
(xii) the Seller shall have delivered (A) to the
Rating Agencies, the Note Insurer and each Placement Agent an Opinion
of Counsel with respect to the characterization of the transfer of such
Subsequent Receivables as a "true sale", which Opinion of Counsel may
be in the form of a "bring down" letter to the Opinion of Counsel
delivered to the Rating Agencies, the Note Insurer and each Placement
Agent on the Closing Date, and (B) to the Trustee and each Placement
Agent the Opinion of Counsel required by Section 13.2(i)(i), which
Opinion of Counsel may be in the form of a "bring down" letter to the
Opinion of Counsel delivered to the Trustee and each Placement Agent on
the Closing Date;
(xiii) each of the Seller, the Issuer and the Note
Insurer shall have received verbal verification from the Rating
Agencies that the addition of all such Subsequent Receivables will not
result in a qualification, modification or withdrawal of the then
current rating of each Class of Notes without regard to the Policy;
(xiv) the Note Insurer (so long as no Insurer Default
shall have occurred and be continuing), in its absolute and sole
discretion, shall have approved in writing the transfer of such
Subsequent Receivables to the Issuer and the Note Insurer shall have
been reimbursed for any fees and expenses incurred by the Note Insurer
in connection with the granting of such approval;
(xv) the Servicer shall instruct the Trustee to
transfer the Subsequent Spread Account Deposit to the Collateral Agent
with respect to the related Subsequent Receivables transferred on such
Subsequent Transfer Date; and
(xvi) the Seller shall have delivered to the Note
Insurer and the Trustee an Officers' Certificate confirming the
satisfaction of each condition precedent specified in this paragraph
(b).
The Seller covenants that in the event any of the foregoing conditions
precedent are not satisfied with respect to any Subsequent Receivable on the
date required as specified above, the Seller will immediately repurchase such
Subsequent Receivable from the Issuer, at a price equal to the Purchase Amount
thereof, in the manner specified in Section 3.2.
Transfers Intended as Sales. It is the intention of the Seller that
each transfer and assignment contemplated by Sections 2.1 and 2.2 of this
Agreement shall constitute a sale of the Trust Property from the Seller to the
Issuer and the beneficial interest in and title to the Trust Property shall not
be part of the Seller's estate in the event of the filing of a bankruptcy
petition by or against the Seller under any bankruptcy law. In the event that,
notwithstanding the intent of the Seller as set forth in this Section 2.3 and in
Section 13.17, the transfer and assignment contemplated hereby is held not to be
a sale, this Agreement shall constitute a grant of (and the Seller does hereby
grant) a security interest in all of the Seller's right, title and interest in,
to and under the Trust Property to the Trust for the benefit of the
Securityholders and the Note Insurer and this Agreement shall constitute a
security agreement under New York law. The Seller shall take such actions as are
necessary from time to time in order to maintain the perfection and priority of
the Issuer's security interest in the Trust Property.
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Further Encumbrance of Trust Property.
(a) Immediately upon the conveyance to the Trust by the Seller
of any item of the Trust Property pursuant to Sections 2.1 or 2.2, all right,
title and interest of the Seller in and to such item of Trust Property shall
terminate, and all such right, title and interest shall vest in the Trust, in
accordance with the Trust Agreement and Sections 3802 and 3805 of the Statutory
Trust Statute (as defined in the Trust Agreement).
(b) Immediately upon the vesting of the Trust Property in the
Trust, the Trust shall have the sole right to pledge or otherwise encumber, such
Trust Property. Pursuant to the Indenture, the Trust shall grant a security
interest in the Trust Property to secure the repayment of the Notes. The
Residual Pass-through Certificates shall represent beneficial ownership
interests in the Trust Property, and the Residual Certificateholders shall be
entitled to receive distributions with respect thereto as set forth herein and
in the Master Spread Account Agreement.
(c) Following the payment in full of the Notes and the release
and discharge of the Indenture, all covenants of the Issuer under Article III of
the Indenture shall, until all amounts due in respect of the Residual
Pass-through Certificates have been paid in full, remain as covenants of the
Issuer for the benefit of the Residual Certificateholders, enforceable by the
Residual Certificateholders to the same extent as such covenants were
enforceable by the Noteholders prior to the discharge of the Indenture. Any
rights of the Trustee under Article III of the Indenture, following the
discharge of the Indenture, shall vest in the Residual Certificateholders.
(d) The Trustee shall, at such time as there are no Notes
outstanding and all sums due to the Trustee and the Note Insurer pursuant to the
Basic Documents, have been paid, release any remaining portion of the Trust
Property to the Residual Certificateholders.
Conveyance of Additional Servicing Compensation. As of the Closing Date
and as of each Subsequent Transfer Date, as applicable, the Seller does hereby
sell, transfer, assign, set over and otherwise convey to the Servicer, 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 all Additional Servicing Compensation.
ARTICLE III
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THE RECEIVABLES
Representations and Warranties of Seller. The Seller makes the
following representations and warranties as to the Receivables to the Note
Insurer, the Issuer and to the Trustee for the benefit of the Securityholders on
which the Issuer relies in acquiring the Receivables, and on which the Trustee
is deemed to have relied in executing and performing pursuant to this Agreement,
the Indenture and the other Basic Documents to which it is a party and on which
the Note Insurer relies in issuing the Note Policy. Such representations and
warranties speak as of the execution and delivery of this Agreement and as of
the Closing Date (in the case of the Initial Receivables) and as of the related
Subsequent Transfer Date (in the case of the Subsequent Receivables), but shall
survive the sale, transfer and assignment of the Receivables to the Issuer and
the pledge thereof to the Trustee pursuant to the Indenture.
(i) Characteristics of Receivables. (A) Each
Receivable (1) has been originated in the United States of America by a
Dealer or Consumer Lender for the retail sale of a Financed Vehicle in
the ordinary course of such Dealer's or Consumer Lender's business, has
been fully and properly executed by the parties thereto, has been
purchased by CPS in connection with the related Obligor's purchase of
the related Financed Vehicle and has been validly assigned by such
Dealer or Consumer Lender to CPS and by CPS to the Seller, (2) has
created a valid, subsisting, and enforceable first priority perfected
security interest in favor of CPS in the Financed Vehicle, which
security interest has been assigned by CPS to the Seller, which in turn
has assigned such security interest to the Trust which in turn has
assigned such security interest to the Trustee,
27
(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 monthly scheduled payments that fully
amortize the Amount Financed over the original term (except for the
last scheduled payment, which may be different from the level monthly
payment) and yield interest at the Annual Percentage Rate, (5) has an
Annual Percentage Rate of not less than 7.50%, (6) is a Simple Interest
Receivable, (7) was originated by a Dealer or Consumer Lender and was
sold by such Dealer or Consumer Lender without any fraud or
misrepresentation on the part of such Dealer or Consumer Lender, (8) is
denominated in U.S. dollars and (9) provides, in the case of a
prepayment, for the full payment of the Principal Balance thereof plus
accrued interest through the date of prepayment based on the Annual
Percentage Rate of the Receivable. (B) Approximately 82.61% of the
aggregate Principal Balance of the Initial Receivables as of the
Initial Cutoff Date represents financing of used automobiles, light
trucks, vans or minivans; the remainder of the Initial Receivables
represent financing of new vehicles; approximately 4.52% of the
aggregate Principal Balance of the Initial Receivables as of the
Initial Cutoff Date were originated under the CPS Preferred Program;
approximately 42.85% of the aggregate Principal Balance of the Initial
Receivables as of the Initial Cutoff Date were originated under the CPS
Alpha Program; approximately 7.81% of the aggregate Principal Balance
of the Initial Receivables as of the Initial Cutoff Date were
originated under the CPS Delta Program; approximately 5.48% of the
Initial Receivables as of the Initial Cutoff Date were originated under
the CPS First-Time Buyer Program; approximately 9.55% of the aggregate
Principal Balance of the Initial Receivables as of the Initial Cutoff
Date were originated under the CPS Standard Program; approximately
12.09% of the aggregate Principal Balance of the Initial Receivables as
of the Initial Cutoff Date were originated under the CPS Super Alpha
Program; approximately 17.70% of the aggregate Principal Balance of the
Initial Receivables as of the Initial Cutoff Date were originated under
the CPS Alpha Plus Program; approximately 1.75% of the aggregate
Principal Balance of the Initial Receivables, as of the related Cut-off
Date, were Section 341 Receivables; all of the Initial Receivables were
acquired by CPS; no Receivable has a payment that is more than 30 days
contractually delinquent as of the applicable Cutoff Date; each
Receivable has a final scheduled payment due no later than October 31,
2013; and each Receivable was originated on or before the applicable
Cutoff Date.
(ii) Additional Receivables Characteristics. As of
the Closing Date (in the case of the Initial Receivables) or the
applicable Subsequent Transfer Date (in the case of the applicable
Subsequent Receivables):
(A) no Receivable is more than 60 days past
due with respect to more than 10% of any Scheduled
Receivable Payment; and
(B) no Receivable is a Skip Receivable.
(iii) Schedule of Receivables; Selection Procedures.
The information with respect to the Initial Receivables set forth in
Schedule A to this Agreement is true and correct in all material
respects as of the close of business on the Initial Cutoff Date; the
information with respect to the Subsequent Receivables set forth in
Schedule A to the related Subsequent Transfer Agreement is true and
correct in all material respects as of the close of business on the
related Subsequent Cutoff Date; no selection procedures adverse to the
Securityholders or the Note Insurer have been utilized in selecting the
Receivables.
(iv) Compliance with Law. Each Receivable, the sale
of the Financed Vehicle and the sale of any physical damage, credit
life and credit accident and health insurance and any extended
warranties or service contracts (A) complied at the time the related
Receivable was originated or made and at the execution of this
Agreement (or the applicable Subsequent Transfer Agreement) complies in
all material respects with all requirements of applicable Federal,
State, and local laws, and regulations thereunder including, without
limitation, usury laws, the Federal Truth-in-Lending Act, the Equal
Credit Opportunity Act, the Fair Credit Reporting Act,
28
the Fair Debt Collection Practices Act, the Federal Trade Commission
Act, the ββββββββ-ββββ Warranty Act, the Federal Reserve Board's
Regulations B and Z, the Servicemembers Civil Relief Act, the Military
Reservist Relief Act, the Texas Consumer Credit Code, the California
Automobile Sales Finance Act and State adaptations of the National
Consumer Act and of the Uniform Consumer Credit Code, and all other
applicable consumer credit laws and equal credit opportunity and
disclosure laws, and (B) without limiting the generality of the
foregoing, is not subject to liabilities or is not rendered
unenforceable based on general theories of contract limitation or
relief including, without limitation, theories based on unconscionable,
deceptive, unfair, or predatory sales or financing practices.
(v) No Government Obligor. None of the Receivables
are due from the United States of America or any State or from any
agency, department, or instrumentality of the United States of America
or any State.
(vi) Security Interest in Financed Vehicle.
Immediately subsequent to the sale, assignment and transfer thereof to
the Trust, each Receivable shall be secured by a validly perfected
first priority security interest in the Financed Vehicle in favor of
CPS as secured party which security interest has been validly assigned
by CPS to the Seller, validly assigned by the Seller to the Trust, and
validly pledged by the Trust to the Trustee, and such assigned security
interest is prior to all other liens upon and security interests in
such Financed Vehicle which now exist or may hereafter arise or be
created, except, as to priority, for any tax liens or mechanics' liens
which may arise after the Closing Date (in the case of the Initial
Receivables) or the related Subsequent Transfer Date (in the case of
the Subsequent Receivables).
(vii) Receivables in Force. No Receivable has been
satisfied, subordinated or rescinded, nor has any Financed Vehicle been
released from the lien granted by the related Receivable in whole or in
part.
(viii) No Waiver. Except as permitted under Section
4.2 and clause (ix) below, no provision of a Receivable has been
waived.
(ix) No Amendments. Except as permitted under Section
4.2, no Receivable has been amended, except as such Receivable may have
been amended to grant extensions which shall not have numbered more
than (a) one extension of one calendar month in any calendar year or
(b) three such extensions in the aggregate.
(x) No Defenses. No right of rescission, setoff,
counterclaim or defense exists or has been asserted or threatened with
respect to any Receivable. The operation of the terms of any Receivable
or the exercise of any right thereunder will not render such Receivable
unenforceable in whole or in part and such Receivable is not subject to
any such right of rescission, setoff, counterclaim, or defense.
(xi) No Liens. As of the applicable 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 that
shall be liens prior to, or equal or coordinate with, the security
interest in the Financed Vehicle granted by the Receivable and (b)
there is no lien against the related Financed Vehicle for delinquent
taxes.
(xii) No Default; Repossession. Except for payment
delinquencies continuing for a period of not more than thirty days as
of the applicable Cutoff Date, no default, breach, violation or event
permitting acceleration under the terms of any Receivable has occurred;
and no continuing condition that with notice or the lapse of time, or
both, would constitute a default, breach, violation or event permitting
acceleration under the terms of any Receivable has arisen; and the
Seller shall not waive and has not waived any of the foregoing (except
in a manner consistent with Section 4.2); and no Financed Vehicle shall
have been repossessed or assigned for
29
repossession as of the Closing Date (in the case of the Initial
Receivables) or the related Subsequent Transfer Date (in the case of
the Subsequent Receivables).
(xiii) Insurance; Other. (A) Each Obligor has
obtained insurance covering the Financed Vehicle as of the execution of
the Receivable insuring against loss and damage due to fire, theft,
transportation, collision and other risks generally covered by
comprehensive and collision coverage, and each Receivable requires the
Obligor to obtain and maintain such insurance naming CPS and its
successors and assigns as loss payee or an additional insured, (B) each
Receivable that finances the cost of premiums for credit life and
credit accident and health insurance is covered by an insurance policy
or certificate of insurance naming CPS as policyholder (creditor) under
each such insurance policy and certificate of insurance and (C) as to
each Receivable that finances the cost of an extended service contract,
the respective Financed Vehicle which secures the Receivable is covered
by an extended service contract.
(xiv) Title. It is the intention of the Seller that
the transfer and assignment herein contemplated constitute a sale of
the Receivables and the Other Conveyed Property from the Seller to the
Trust and that the beneficial interest in and title to such Receivables
and the 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 Receivable or Other Conveyed
Property has been sold, transferred, assigned, or pledged by the Seller
to any Person other than the Trust. Immediately prior to the transfer
and assignment herein contemplated, the Seller had good and marketable
title to each Receivable and the 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, the Trust for the benefit of the Securityholders and
the Note Insurer shall have good and marketable title to each such
Receivable and will be the sole owner thereof, free and clear of all
liens, encumbrances, security interests, and rights of others, and the
transfer has been perfected under the UCC.
(xv) Lawful Assignment. No Receivable has been
originated in, or is subject to the laws of, any jurisdiction under
which the sale, transfer, and assignment of such Receivable under this
Agreement or pursuant to transfers of the Securities shall be unlawful,
void, or voidable. The Seller has not entered into any agreement with
any account debtor that prohibits, restricts or conditions the
assignment of any portion of the Receivables.
(xvi) All Filings Made. All filings (including,
without limitation, UCC filings) necessary in any jurisdiction to give
(i) the Issuer a first priority perfected security interest in the
Receivables and the Other Conveyed Property, and (ii) the Trustee a
first priority perfected security interest in the Trust Property have
been made, taken or performed.
(xvii) Receivable File; One Original. CPS has
delivered to the Trustee a complete Receivable File with respect to
each Receivable. There is only one original executed copy of each
Receivable.
(xviii) Chattel Paper. Each Contract constitutes
"tangible chattel paper" under the UCC.
(xix) Title Documents. (A) If the Receivable was
originated in a State in which notation of a security interest on the
title document of the related Financed Vehicle is required or permitted
to perfect such security interest, the title document of the related
Financed Vehicle for such Receivable shows, or if a new or replacement
title document is being applied for with respect to such Financed
Vehicle the title document (or, with respect to Receivables originated
in the Non-Certificated Title States, other evidence of title issued by
the applicable Department of Motor Vehicles or similar authority) will
be received within 180 days and will show, CPS named as the original
secured party under the related Receivable as the holder of a first
priority security interest in such Financed Vehicle, and (B) if the
Receivable was originated in a State in which the filing of a financing
statement under the UCC is required to perfect a security
30
interest in motor vehicles, such filings or recordings have been duly
made and show CPS, named as the original secured party under the
related Receivable, and in either case, the Trust has the same rights
as such secured party has or would have (if such secured party were
still the owner of the Receivable) against all parties claiming an
interest in such Financed Vehicle, and such rights have been validly
pledged to the Trustee pursuant to the Indenture. With respect to each
Receivable for which the title document has not yet been returned from
the Registrar of Titles, CPS has received written evidence from the
related Dealer or Consumer Lender that such title document showing CPS,
as first lienholder has been applied for.
(xx) Valid and Binding Obligation of Obligor. Each
Receivable is the legal, valid and binding obligation in writing of the
Obligor thereunder and is enforceable in accordance with its terms,
except only as such enforcement may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors'
rights generally, and all parties to such contract had full legal
capacity to execute and deliver such contract and all other documents
related thereto and to grant the security interest purported to be
granted thereby.
(xxi) Characteristics of Obligors. As of the date of
each Obligor's application for financing of the vehicle purchase from
which the related Receivable arises, such Obligor (a) did not have any
material past due credit obligations or any personal or real property
repossessed or wages garnished within one year prior to the date of
such application, unless such amounts have been repaid or discharged
through bankruptcy (other than any Obligor that was the subject of a
Federal, State or other bankruptcy, insolvency or similar proceeding
pending on the date of application that has completed a Section 341
Meeting), (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 completed a Section 341 Meeting or been
discharged, (c) had not been the subject of more than one Federal,
State or other bankruptcy, insolvency or similar proceeding, and (d)
was domiciled in the United States. During the period from the date of
each Obligor's application for financing of the vehicle purchase from
which the related Receivable arises to the Closing Date (in the case of
the Initial Receivables) or the related Subsequent Transfer Date (in
the case of the Subsequent Receivables), no Obligor is or has been the
subject of any Federal, State or other bankruptcy, insolvency or
similar proceeding other than an Obligor related to a Section 341
Receivable.
(xxii) Origination Date. Each Receivable has an
origination date on or after April 1, 2007.
(xxiii) Maturity of Receivables. Each Receivable has
an original term to maturity of not more than 72 months; the weighted
average original term to maturity of the Initial Receivables was 64.5
months as of the Initial Cutoff Date; the remaining term to maturity of
each Receivable was 72 months or less as of the applicable Cutoff Date;
the weighted average remaining term to maturity of the Initial
Receivables was 63.0 months as of the Initial Cutoff Date.
(xxiv) Scheduled Receivable Payments. Each Receivable
has an original principal balance of not less than $3,000 nor more than
$35,000.
(xxv) Origination of Receivables. Based on the
billing address of the Obligors and the Principal Balances as of the
Initial Cutoff Date, approximately 11.10%, 10.07%, 9.00%, 6.16% and
5.59% of the Initial Receivables (by principal balance) had Obligors
residing in the States of California, Texas, Florida, Pennsylvania and
Ohio, respectively.
(xxvi) Post Office Box. On or prior to the next
billing period after the applicable Cutoff Date, CPS will notify each
Obligor to make payments with respect to its respective Receivables
after the applicable Cutoff Date directly to the Post Office Box, and
will provide each Obligor with a monthly statement in order to enable
such Obligors to make payments directly to the Post Office Box.
31
(xxvii) Location of Receivable Files. A complete
Receivable File with respect to each Receivable has been or prior to
the Closing Date or the related Subsequent Transfer Date, as
applicable, will be delivered to the Trustee at the location listed in
Schedule B hereto.
(xxviii) Casualty and Impounding. No Financed Vehicle
has suffered a Casualty and CPS has not received notice that any
Financed Vehicle has been impounded.
(xxix) Principal Balance/Number of Contracts. As of
the Initial Cutoff Date, the aggregate principal balance of the Initial
Receivables was $230,872,981.89. The Initial Receivables are evidenced
by 14,899 Contracts.
(xxx) Full Amount Advanced. The full amount of each
Receivable has been advanced to each Obligor, and there are no
requirements for future advances thereunder. The Obligor with respect
to the Receivable does not have any option under the terms of the
related Contract to borrow from any person additional funds secured by
the Financed Vehicle.
(xxxi) No Impairment. Neither CPS nor the Seller has
done anything to convey any right to any Person that would result in
such Person having a right to payments due under any Receivables or
otherwise to impair the rights of the Purchaser, the Issuer, the
Securityholders or the Note Insurer in any Receivable or the proceeds
hereof.
(xxxii) Receivables Not Assumable. No Receivable is
assumable by another Person in a manner in which would release the
Obligor thereof from such Obligor's obligations to CPS or the Seller
with respect to such Receivable.
(xxxiii) Servicing. The servicing of each Receivable
and the collection practices relating thereto have been lawful and in
accordance with the standards set forth in this Agreement; other than
the Servicer and the Backup Servicer, no other Person has the right to
service the Receivables.
(xxxiv) 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.
(xxxv) California Receivables. Each Receivable
originated in the State of California has been, and at all times during
the term of the Sale and Servicing Agreement will be, serviced by the
Servicer in compliance with Cal. Civil Code ss. 2981, et seq.
(xxxvi) Creation of Security Interest. This Agreement
creates a valid and continuing security interest (as defined in the
UCC) in the Trust Property in favor of the Issuer for the benefit of
the Securityholders and the Note Insurer, which security interest is
prior to all other Liens and is enforceable as such as against
creditors of and purchasers from the Seller.
(xxxvii) Perfection of Security Interest in Financed
Vehicles. CPS has taken all steps necessary to perfect its security
interest against the Obligors in the Financed Vehicles securing the
Contracts.
(xxxviii) Perfection of Security Interest in Trust
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 Trust Property
32
granted to the Issuer for the benefit of the Securityholders and the
Note Insurer hereunder pursuant to Section 2.3.
(xxxix) No Other Security Interests. Other than the
security interest granted to the Issuer for the benefit of the
Securityholders and the Note Insurer pursuant to Section 2.3, the
Seller has not pledged, assigned, sold, granted a security interest in,
or otherwise conveyed any of the Trust Property. The Seller has not
authorized the filing of and is not aware of any financing statements
filed against the Seller that include a description of collateral
covering the Trust Property other than any financing statement relating
to the security interest granted to the Issuer for the benefit of the
Securityholders and the Note Insurer hereunder or that has been
terminated. The Seller is not aware of any judgment or tax lien filings
against the Seller.
(xl) Notations on Contracts; Financing Statement
Disclosure. The Servicer has in its possession copies of all Contracts
that constitute or evidence the Receivables. The Contracts that
constitute or evidence the Receivables do not have any marks or
notations indicating that they have been pledged, assigned or otherwise
conveyed to any Person other than the Issuer and/or the Trustee for the
benefit of the Securityholders and the Note Insurer. All financing
statements filed or to be filed against the Seller in favor of the
Issuer in connection herewith describing the Trust Property contain a
statement to the following effect: "A purchase of or security interest
in any collateral described in this financing statement will violate
the rights of the secured party."
(xli) TFC, MFN, SeaWest Receivables. None of the
Receivables were originated by TFC, MFN or SeaWest or any of their
respective subsidiaries.
(xlii) Consumer Lenders. Each Consumer Lender has
obtained all necessary licenses and approvals in all jurisdictions in
which the origination and purchase of installment promissory notes and
security agreements and the sale thereof requires or shall require such
licenses or approvals, except where the failure to obtain such licenses
or approvals would not result in a material adverse effect on the value
or marketability of any Receivable (including, without limitation, the
enforceability or collectibility of any Receivable).
The representations and warranties set forth above in paragraphs (xiv),
(xvi), (xviii) and paragraphs (xxxvi) through (xlii) shall survive the
termination of this Agreement and may not be waived in whole or in part.
Repurchase upon Breach.
(a) The Seller, the Servicer, the Note Insurer, the Trustee or
(upon actual knowledge of a Responsible Officer thereof) the Owner Trustee, as
the case may be, shall inform the other parties to this Agreement promptly, in
writing, upon the discovery of any breach of the Seller's representations and
warranties made pursuant to Section 3.1 (without regard to any limitations
therein as to the Seller's knowledge). Unless the breach shall have been cured
by the last day of the second Collection Period following the discovery thereof
by CPS or receipt by CPS of notice of such breach, CPS (pursuant to the
Receivables Purchase Agreement) shall repurchase any Receivable if the value of
such Receivable is materially and adversely affected by the breach as of the
last day of such second Collection Period (or, at CPS's option, the last day of
the first Collection Period following the discovery) and, in the event that the
breach relates to a characteristic of the Receivables in the aggregate, and if
the interests of the Trust or the Securityholders are materially and adversely
affected by such breach, unless the breach shall have been cured by the last day
of such second Collection Period, CPS shall purchase such aggregate Principal
Balance of Receivables, such that following such purchase such representation
shall be true and correct with respect to the remainder of the Receivables in
the aggregate. In consideration of the purchase of any Receivable, CPS shall
remit the Purchase Amount, in the manner specified in Section 5.6. For purposes
of this Section, the Purchase Amount of a Receivable which is not consistent
with the warranty pursuant to Section 3.1(i)(A)(5) or (A)(6) shall include such
additional amount as shall be necessary to provide the full amount of interest
as contemplated therein. The sole remedy of the Issuer, the Owner Trustee, the
Trustee,
33
the Securityholders or the Note Insurer with respect to a breach of
representations and warranties pursuant to Section 3.1 shall be to enforce CPS's
obligation to purchase such Receivables pursuant to the Receivables Purchase
Agreement; provided, however, that CPS shall indemnify the Trustee, the Owner
Trustee, the Backup Servicer, the Collateral Agent, the Note Insurer, the Trust
and the Securityholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third party claims
arising out of the events or facts giving rise to such breach. Upon receipt of
the Purchase Amount and written instructions from the Servicer, the Trustee
shall release to CPS or its designee the related Receivables File and shall
execute and deliver all reasonable instruments of transfer or assignment,
without recourse, as are prepared by the Seller and delivered to the Trustee and
necessary to vest in CPS or such designee title to the Receivable including a
Trustee's Certificate in the form of Exhibit F-1.
(b) If it is determined that consummation of the transactions
contemplated by this Agreement and the other transaction documents referenced in
this Agreement, the servicing and operation of the Trust pursuant to this
Agreement and such other documents, or the ownership of a Note or a Residual
Pass-through Certificate by a Holder constitutes a violation of the prohibited
transaction rules of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or the Internal Revenue Code of 1986, as amended (the "Code")
or any successor statutes of similar impact, together with the regulations
thereunder, to which no statutory exception or administrative exemption applies,
such violation shall not be treated as a breach of the Seller's representations
and warranties made pursuant to Section 3.1 if not otherwise such a breach.
(c) Pursuant to Sections 2.1 and 2.2 of this Agreement, the
Seller has conveyed to the Trust all of the Seller's right, title and interest
in its rights and benefits, but none of its obligations or burdens, under the
Receivables Purchase Agreement and each Subsequent Receivables Purchase
Agreement, including the Seller's rights under the Receivables Purchase
Agreement and each Subsequent Receivables Purchase Agreement and the delivery
requirements, representations and warranties and the cure, repurchase and
indemnity obligations of CPS under the Receivables Purchase Agreement and each
Subsequent Receivables Purchase Agreement. The Seller hereby represents and
warrants to the Trust, the Note Insurer and the Trustee for the benefit of the
Securityholders that such assignment is valid, enforceable and effective to
permit the Trust to enforce such obligations of CPS under the Receivables
Purchase Agreement and each Subsequent Receivables Purchase Agreement.
(d) If the Insolvency Event related to a Section 341 Meeting
has not been discharged pursuant to βββββββ� βββ� ββ βββ� ββββββ ββββββ Bankruptcy
Code by the bankruptcy court presiding over such Insolvency Event within 120
days of the conveyance of the related Receivable by the Seller to the Issuer
pursuant to Section 2.1(a) or Section 2.2(a), the Seller shall repurchase such
Receivable as of the last day of the next occurring Collection Period at the
Purchase Amount.
Custody of Receivables Files.
(a) In connection with the sale, transfer and assignment of
the Receivables and the Other Conveyed Property to the Trust pursuant to this
Agreement the Trustee shall act as custodian of the following documents or
instruments in its possession which shall be delivered to the Trustee on or
before the Closing Date (with respect to each Initial Receivable) or the
applicable Subsequent Transfer Date (with respect to each Subsequent
Receivable):
(i) The fully executed original of the Receivable
(together with any agreements modifying the Receivable, including
without limitation any extension agreements);
(ii) The original certificate of title in the name of
CPS or such documents that CPS shall keep on file, in accordance with
its customary procedures, evidencing the security interest of CPS in
the Financed Vehicle or, if not yet received, a copy of the application
therefor showing CPS as secured party, or a dealer guarantee of title.
34
(b) Upon payment in full of any Receivable, the Servicer will
notify the Trustee pursuant to a certificate of an officer of the Servicer
(which certificate shall include a statement to the effect that all amounts
received in connection with such payments which are required to be deposited in
the Collection Account pursuant to Section 4.2 have been so deposited) and shall
request delivery of the Receivable and Receivable File to the Servicer.
Acceptance of Receivable Files by Trustee. The Trustee acknowledges
receipt of files which the Seller has represented are the Receivable Files for
the Initial Receivables. The Trustee has reviewed such Receivable Files and has
determined that it has received a file for each Initial Receivable identified in
Schedule A to this Agreement. Not less than four (4) Business Days prior to each
Subsequent Transfer Date, the Seller will cause to be delivered to the Trustee
the Receivable Files for the Subsequent Receivables to be transferred to the
Trust on such Subsequent Transfer Date. The Trustee declares that it holds and
will continue to hold such files and any amendments, replacements or supplements
thereto and all other Trust Assets as Trustee in trust for the use and benefit
of all present and future Securityholders. The Trustee agrees to review each
file delivered to it prior to the Closing Date (in the case of the Initial
Receivables) or the applicable Subsequent Transfer Date (in the case of the
Subsequent Receivables) to determine whether such Receivable Files contain the
documents referred to in Sections 3.3(a)(i) and (ii). If the Trustee has found
or finds that a file for a Receivable has not been received, or that a file is
unrelated to the Receivables identified in Schedule A to this Agreement or that
any of the documents referred to in Section 3.3(a)(i) or (ii) are not contained
in a Receivable File, the Trustee shall inform CPS, the Seller, the Owner
Trustee and the Note Insurer promptly, in writing, of the failure to receive a
file with respect to such Receivable (or of the failure of any of the
aforementioned documents to be included in the Receivable File) or shall return
to CPS as the Seller's designee any file unrelated to a Receivable identified in
Schedule A to this Agreement (in the case of the Initial Receivables) or
Schedule A to the related Subsequent Transfer Agreement (in the case of the
Subsequent Receivables), it being understood that the Trustee's obligation to
review the contents of any Receivable File shall be limited as set forth in the
preceding sentence. Unless such defect with respect to such Receivable File
shall have been cured by the last day of the second Collection Period following
discovery thereof by the Trustee, the Trustee (at the direction of the Note
Insurer, if no Insurer Default shall have occurred and be continuing) shall
cause CPS to repurchase any such Receivable as of such last day pursuant to the
Receivables Purchase Agreement. In consideration of the purchase of the
Receivable, CPS shall remit the Purchase Amount, in the manner specified in
Section 5.6. The sole remedy of the Trustee, the Trust, or the Securityholders
with respect to a breach pursuant to this Section 3.4 shall be to require CPS to
purchase the applicable Receivables pursuant to this Section 3.4; provided,
however, that CPS shall indemnify the Trustee, the Owner Trustee, the Backup
Servicer, the Collateral Agent, the Note Insurer, the Trust and the
Securityholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third party claims
arising out of the events or facts giving rise to such breach. Upon receipt of
the Purchase Amount and written instructions from the Servicer, the Trustee
shall release to CPS or its designee the related Receivable File and shall
execute and deliver all reasonable instruments of transfer or assignment,
without recourse, as are prepared by CPS and delivered to the Trustee and are
necessary to vest in CPS or such designee title to the Receivable including a
Trustee's Certificate in the form of Exhibit F-1. The Trustee shall make a list
of Receivables for which an application for a certificate of title but not an
original certificate of title or, with respect to Receivables originated in the
Non-Certificated Title States, another evidence of title issued by the
applicable Department of Motor Vehicles or similar authority 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 Owner Trustee and the
Note Insurer. On the date which is 180 days following the Closing Date (in the
case of the Initial Receivables) or the applicable Subsequent Transfer Date (in
the case of the Subsequent Receivables) or, if such day is not a Business Day,
the next succeeding Business Day, the Trustee shall inform CPS and the other
parties to this Agreement and the Note Insurer of any Receivable for which the
related Receivable File on such date does not include an original certificate of
title or, with respect to Financed Vehicles in the Non-Certificated Title
States, for which the related Receivable File on such date does not include
evidence of title issued by the applicable Department of Motor Vehicles or
similar authority, and CPS shall repurchase any such Receivable as of the last
day of the current Collection Period.
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Access to Receivable Files. The Trustee shall permit the Servicer and
the Note Insurer access to the Receivable Files at all reasonable times during
the Trustee's normal business hours. The Trustee shall, within two Business Days
of the request of the Servicer, the Owner Trustee or the Note Insurer, execute
such documents and instruments as are prepared by the Servicer, the Owner
Trustee or the Note Insurer and delivered to the Trustee, as the Servicer, the
Owner Trustee or the Note Insurer deems necessary to permit the Servicer, in
accordance with its customary servicing procedures, to enforce the Receivable on
behalf of the Trust and any related insurance policies covering the Obligor, the
Receivable or Financed Vehicle so long as such execution in the Trustee's sole
discretion does not conflict with this Agreement and will not cause it undue
risk or liability. The Trustee shall not be obligated to release any document
from any Receivable File unless it receives a release request signed by a
Servicing Officer in the form of Exhibit C hereto (the "Release Request"). 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.
Trustee to Deliver Monthly Receivable File Report. Within three
Business Days after the end of a month in which the Trustee releases any
Receivable Files to the Servicer or after any subsequent month in which such
Receivable Files remain outstanding pursuant to Section 3.5 hereof, the Trustee
shall deliver to the Note Insurer and the Servicer a monthly report which
identifies all Receivable Files released to the Servicer and not yet returned to
the Trustee.
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
Duties of the Servicer. The Servicer, as agent for the Trust, the
Securityholders and the Note Insurer (to the extent provided herein) shall
manage, service, administer and make collections on the Receivables with
reasonable care, using that degree of skill and attention customary and usual
for institutions which service motor vehicle retail installment contracts or
promissory notes and security agreements, in each case, similar to the
Receivables and, to the extent more exacting, that the Servicer exercises with
respect to all comparable automotive receivables that it services for itself or
others. The Servicer's duties shall include collection and posting of all
payments, responding to inquiries of Obligors on such Receivables, investigating
delinquencies, sending payment statements to Obligors, reporting tax information
to Obligors, accounting for collections, furnishing monthly and annual
statements to the Trustee, the Owner Trustee and the Note Insurer with respect
to distributions. Without limiting the generality of the foregoing, and subject
to the servicing standards set forth in this Agreement, the Servicer is
authorized and empowered by the Trust to execute and deliver, on behalf of
itself, the Trust or the Securityholders, any and all instruments of
satisfaction or cancellation, or partial or full release or discharge, and all
other comparable instruments, with respect to such Receivables or to the
Financed Vehicles securing such Receivables and/or the certificates of title or,
with respect to Financed Vehicles in the Non-Certificated Title States, other
evidence of ownership with respect to such Financed Vehicles issued by the
applicable Department of Motor Vehicles or similar authority. If the Servicer
shall commence a legal proceeding to enforce a Receivable, the Trust shall
thereupon be deemed to have automatically assigned, solely for the purpose of
collection, such Receivable to the Servicer. If in any enforcement suit or legal
proceeding it shall be held that the Servicer may not enforce a Receivable on
the ground that it shall not be a real party in interest or a holder entitled to
enforce such Receivable, the Trust shall, at the Servicer's expense and
direction, take steps to enforce such Receivable, including bringing suit in its
name or the name of the Securityholders. The Servicer shall prepare and furnish,
and the Trustee and the Owner Trustee shall execute, any powers of attorney and
other documents reasonably necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties hereunder.
Collection of Receivable Payments; Modifications of Receivables;
Lockbox Agreements.
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(a) Consistent with the standards, policies and procedures
required by this Agreement, the Servicer shall make reasonable efforts to
collect all payments called for under the terms and provisions of the
Receivables as and when the same shall become due and shall follow such
collection procedures as it follows with respect to all comparable automotive
receivables that it services for itself or others; provided, however, that
promptly after the Closing Date the Servicer shall notify each Obligor to make
all payments with respect to the Receivables to the Post Office Box. The
Servicer will provide each Obligor with a monthly statement in order to notify
such Obligors to make payments directly to the Post Office Box. The Servicer
shall allocate collections between principal and interest in accordance with the
customary servicing procedures it follows with respect to all comparable
automotive receivables that it services for itself or others and in accordance
with the terms of this Agreement. Except as provided below, the Servicer, for so
long as CPS is the Servicer, may grant extensions to the extent that the
Three-Month Rolling Average Extension Ratio does not exceed (i) 2.5%, if the
most recent Collection Period tested was in the period from March through
September (inclusive), or (ii) 3.0%, if the most recent Collection Period tested
was in the period from October through February (inclusive) (the "Aggregate
Extension Percentage Limitation"); provided, however, that the Servicer may not
grant more than one extension per calendar year with respect to a Receivable or
grant an extension with respect to a Receivable for more than one calendar month
or grant more than four extensions in the aggregate with respect to a Receivable
without the prior written consent of the Note Insurer; provided, further,
however, that if the Servicer extends the date for final payment by the Obligor
of any Receivable beyond the last day of the penultimate Collection Period
preceding the Class A-4 Final Scheduled Payment Date, it shall promptly purchase
the Receivable from the Trust in accordance with the terms of Section 4.7 hereof
(and for purposes thereof, the Receivable shall be deemed to be materially and
adversely affected by such breach). In addition, if the Servicer grants
extensions with respect to any Receivables in excess of the Aggregate Extension
Percentage Limitation, the Servicer will promptly purchase such Receivables from
the Trust in accordance with the terms of Section 4.7 hereof (and for purposes
thereof, such Receivables shall be deemed to be materially and adversely
affected by such breach). If the Servicer is not CPS, the Servicer may not make
any extension on a Receivable without the prior written consent of the Note
Insurer. The Servicer may in its discretion waive any late payment charge or any
other fees that may be collected in the ordinary course of servicing a
Receivable. Notwithstanding anything to the contrary contained herein, the
Servicer shall not agree to any alteration of the interest rate on any
Receivable or of the amount of any Scheduled Receivable Payment on Receivables,
other than to the extent that such alteration is required by applicable law.
(b) The Servicer shall establish the Lockbox Account in the
name of the Trust for the benefit of the Trustee for the further benefit of the
Securityholders and the Note Insurer. Pursuant to the Lockbox Agreement, the
Trustee has authorized the Servicer to direct dispositions of funds on deposit
in the Lockbox Account to the Collection Account (but not to any other account),
and no other Person, except the Lockbox Processor and the Trustee, has authority
to direct the disposition of funds on deposit in the Lockbox Account. The
Lockbox Agreement shall provide that Lockbox Banks will comply with the
instructions originated by the Trustee relating to the disposition of funds on
deposit in the Lockbox Account. The Trustee shall have no liability or
responsibility with respect to the Lockbox Processor's directions or activities
as set forth in the preceding sentence. The Lockbox Account shall be established
pursuant to and maintained in accordance with the Lockbox Agreement and shall be
a demand deposit account initially established and maintained with the Lockbox
Bank or, at the request of the Note Insurer (unless an Insurer Default shall
have occurred and be continuing), an Eligible Account satisfying clause (i) of
the definition thereof; provided, however, that the Trustee shall give the
Servicer prior written notice of any change made at the request of the Note
Insurer in the location of the Lockbox Account. The Trustee shall establish and
maintain the Post Office Box at a United States Post Office Branch in the name
of the Trust for the benefit of the Securityholders and the Note Insurer.
(c) Notwithstanding any Lockbox Agreement, or any of the
provisions of this Agreement relating to the Lockbox Agreement, the Servicer
shall remain obligated and liable to the Trust, the Trustee and Securityholders
for servicing and administering the Receivables and the Other Conveyed Property
in accordance with the provisions of this Agreement without diminution of such
obligation or liability by virtue thereof.
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(d) In the event CPS shall for any reason no longer be acting
as the Servicer hereunder, the Backup Servicer or a successor Servicer shall
thereupon assume all of the rights and obligations of the outgoing Servicer
under the Lockbox Agreement arising from and after such assumption. In such
event, the successor Servicer shall be deemed to have assumed all of the
outgoing Servicer's interest therein and to have replaced the outgoing Servicer
as a party to the Lockbox Agreement to the same extent as if such Lockbox
Agreement had been assigned to the successor Servicer, except that the outgoing
Servicer shall not thereby be relieved of any liability or obligations on the
part of the outgoing Servicer to the Lockbox Bank under such Lockbox Agreement.
The outgoing Servicer shall, upon request of the Trustee, but at the expense of
the outgoing Servicer, deliver to the successor Servicer all documents and
records relating to the Lockbox Agreement and an accounting of amounts collected
and held by the Lockbox Bank and otherwise use its best efforts to effect the
orderly and efficient assignment of any Lockbox Agreement to the successor
Servicer. In the event that the Note Insurer (so long as an Insurer Default
shall not have occurred and be continuing) or a Note Majority (if an Insurer
Default shall have occurred and be continuing) or the Majority
Certificateholders (if the Note Balance has been reduced to zero, all amounts
due and owing to the Note Insurer have been paid in full and the Policy has
expired in accordance with its terms) shall elect to change the identity of the
Lockbox Bank, the Servicer, at its expense, shall cause the Lockbox Bank to
deliver, at the direction of the Note Insurer (so long as an Insurer Default
shall not have occurred and be continuing) or a Note Majority (if an Insurer
Default shall have occurred and be continuing) or the Majority
Certificateholders (if the Note Balance has been reduced to zero, all amounts
due and owing to the Note Insurer have been paid in full and the Policy has
expired in accordance with its terms) 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. The outgoing Servicer shall
deliver prompt written notice to the Rating Agencies of any change or transfer
of the Lockbox arrangements.
(e) On each Business Day, pursuant to the Lockbox Agreement,
the Lockbox Processor will transfer any payments from Obligors received in the
Post Office Box to the Lockbox Account. Within two Business Days of receipt of
funds into the Lockbox Account, the Servicer shall cause the Lockbox Bank to
transfer funds from the Lockbox Account to the Collection Account. In addition,
the Servicer shall remit all payments by or on behalf of the Obligors received
by the Servicer with respect to the Receivables (other than Purchased
Receivables), and all Liquidation Proceeds no later than the Business Day
following receipt directly (without deposit into any intervening account) into
the Lockbox Account or the Collection Account. The Servicer shall not commingle
its assets and funds with those on deposit in the Lockbox Account.
Realization Upon Receivables. On behalf of the Trust, the
Securityholders and the Note Insurer, the Servicer shall use its best efforts,
consistent with the servicing procedures set forth herein, to repossess or
otherwise convert the ownership of the Financed Vehicle securing any Receivable
as to which the Servicer shall have determined eventual payment in full is
unlikely. The Servicer shall commence efforts to repossess or otherwise convert
the ownership of a Financed Vehicle or sell the related Receivable to an
unaffiliated third-party 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 or Consumer Lenders 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.
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Insurance.
(a) The Servicer, in accordance with the servicing procedures
and standards set forth herein, shall require that (i) each Obligor shall have
obtained insurance covering the Financed Vehicle, as of the date of the
execution of the Receivable, insuring against loss and damage due to fire,
theft, transportation, collision and other risks generally covered by
comprehensive and collision coverage and each Receivable requires the Obligor to
maintain such physical loss and damage insurance naming CPS and its successors
and assigns as an additional insured, (ii) each Receivable that finances the
cost of premiums for credit life and credit accident and health insurance is
covered by an insurance policy or certificate naming CPS as policyholder
(creditor) and (iii) as to each Receivable that finances the cost of an extended
service contract, the respective Financed Vehicle which secures the Receivable
is covered by an extended service contract.
(b) To the extent applicable, the Servicer shall not take any
action which would result in noncoverage under any of the insurance policies
referred to in Section 4.4(a) which, but for the actions of the Servicer, would
have been covered thereunder. The Servicer, on behalf of the Trust, shall take
such reasonable action as shall be necessary to permit recovery under any of the
foregoing insurance policies. Any amounts collected by the Servicer under any of
the foregoing insurance policies shall be deposited in the Collection Account.
Maintenance of Security Interests in Vehicles.
(a) Consistent with the policies and procedures required by
this Agreement, the Servicer shall take such steps on behalf of the Trust as are
necessary to maintain perfection of the security interest created by each
Receivable in the related Financed Vehicle, including but not limited to
obtaining the authorization of the Obligors and the recording, registering,
filing, re-recording, re-registering and refiling of all security agreements,
financing statements and continuation statements or instruments as are necessary
to maintain the security interest granted by the Obligors under the respective
Receivables. The Trustee hereby authorizes the Servicer, and the Servicer
agrees, to take any and all steps necessary to re-perfect or continue the
perfection of such security interest on behalf of the Trust as necessary because
of the relocation of a Financed Vehicle or for any other reason. In the event
that the assignment of a Receivable to the Trust is insufficient, without a
notation on the related Financed Vehicle's certificate of title, or without
fulfilling any additional administrative requirements under the laws of the
State in which the Financed Vehicle is located, to perfect a security interest
in the related Financed Vehicle in favor of the Trust, the Servicer hereby
agrees that CPS's designation as the secured party on the certificate of title
is in its capacity as Servicer as agent of the Trust.
(b) Upon the occurrence of an Insurance Agreement Event of
Default, the Note Insurer may (so long as it is the Controlling Party) instruct
the Trustee and the Servicer to take or cause to be taken or, if the Note
Insurer is not the Controlling Party, upon the occurrence of a Servicer
Termination Event, the Trustee and the Servicer shall take or cause to be taken,
such action as may, in the opinion of counsel to the Trustee, which opinion
shall not be an expense of the Trustee, be necessary to perfect or re-perfect
the security interests in the Financed Vehicles securing the Receivables in the
name of the Trust by amending the title documents of such Financed Vehicles or
by such other reasonable means as may, in the opinion of counsel to the Trustee,
which opinion shall not be an expense of the Trustee, be necessary or prudent.
The Servicer hereby agrees to pay all expenses related to such perfection or
re-perfection and to take all action necessary therefor. In addition, prior to
the occurrence of an Insurance Agreement Event of Default, the Controlling Party
may instruct the Trustee and the Servicer to take or cause to be taken such
action as may, in the opinion of counsel to the Controlling Party, be necessary
to perfect or re-perfect the security interest in the Financed Vehicles
underlying the Receivables in the name of the Trust, including by amending the
title documents of such Financed Vehicles or by such other reasonable means as
may, in the opinion of counsel to the Controlling Party, be necessary or
prudent; provided, however, that if the Controlling Party requests that the
title documents be amended prior to the occurrence of an Insurance Agreement
Event of Default, the out-of-pocket expenses of the Servicer or the Trustee in
connection with such action shall be reimbursed to the Servicer or the Trustee,
as applicable, by the Controlling Party.
Additional Covenants of Servicer. The Servicer shall not release the
Financed Vehicle securing each Receivable from the security interest granted by
such Receivable in whole or in part except in the
39
event of payment in full by the Obligor thereunder or repossession, nor shall
the Servicer impair the rights of the Securityholders in such Receivables, nor
shall the Servicer amend a Receivable, except that extensions and waivers may be
granted in accordance with Section 4.2. The Servicer shall not create, incur or
suffer to exist any Lien or restriction on transferability of the Receivables
nor, except as contemplated by the Basic Documents, sign or file under the UCC
of any jurisdiction any financing statement that names CPS or the Servicer as
debtor, nor sign any security agreement authorizing any secured party thereunder
to file such financing statement, with respect to the Receivables. The Servicer
shall take such actions as are necessary from time to time in order to maintain
the perfection and priority of the Issuer's security interest in the Trust
Property.
Purchase of Receivables Upon Breach of Covenant(a) . Upon discovery by
any of the Servicer, the Note Insurer, the Owner Trustee or the Trustee of a
breach of any of the covenants set forth in Section 4.2(a), 4.4, 4.5 or 4.6, the
party discovering such breach shall give prompt written notice to the others;
provided, however, that the failure to give any such notice shall not affect any
obligation of the Servicer under this Section 4.7. Unless the breach shall have
been cured by the last day of the second Collection Period following such
discovery (or, at the Servicer's election, the last day of the first following
Collection Period), the Servicer shall purchase any Receivable with respect to
which the Securityholders' or the Note Insurers' interest therein or in the
related Financed Vehicle is materially and adversely affected by such breach. In
consideration of the purchase of such Receivable, the Servicer shall remit the
Purchase Amount in the manner specified in Section 5.6. The sole remedy of the
Trustee, the Trust, the Owner Trustee, the Note Insurer or the Securityholders
with respect to a breach of Section 4.2(a), 4.4, 4.5 or 4.6 shall be to require
the Servicer to repurchase Receivables pursuant to this Section 4.7; provided,
however, that the Servicer shall indemnify the Trustee, the Backup Servicer, the
Collateral Agent, the Note Insurer, the Owner Trustee, the Trust and the
Securityholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third party claims
arising out of the events or facts giving rise to such breach. If it is
determined that the management, administration and servicing of the Receivables
and operation of the Trust pursuant to this Agreement constitutes a violation of
the prohibited transaction rules of ERISA or the Code to which no statutory
exception or administrative exemption applies, such violation shall not be
treated as a breach of Section 4.2(a), 4.4, 4.5 or 4.6 if not otherwise such a
breach. Upon receipt of the Purchase Amount and written instructions from the
Servicer, the Trustee shall release to CPS or its designee the related
Receivables File and shall execute and deliver all reasonable instruments of
transfer or assignment, without recourse, as are prepared by the Seller and
delivered to the Trustee and necessary to vest in CPS or such designee title to
the Receivable including a Trustee's Certificate in the form of Exhibit F-2.
Servicing Fee. The "Servicing Fee" for each Payment Date shall be equal
to the result of one twelfth times 2.50% of the Pool Balance as of the first day
of the related Collection Period; provided, however, that with respect to the
first Payment Date the Servicer will be entitled to receive a Servicing Fee
equal to the product of one-twelfth times 2.50% of the Original Pool Balance. In
addition the Servicing Fee shall also include the Additional Servicing
Compensation, which shall not be a part of the Owner Trust Estate. On each
Payment Date occurring after the date, if any, on which CPS resigns as Servicer
pursuant to Section 9.6 or is terminated as Servicer pursuant to Section 10.2,
the Person then acting as successor Servicer (including the Backup Servicer, if
acting in such capacity) shall be entitled to receive (i) the Servicing Fee and
(ii) a supplemental fee (the "Successor Servicing Fee") equal to the positive
difference, if any, between (A) the product of the number of Receivables
serviced by the successor Servicer during the related Collection Period and $13
and (B) the Servicing Fee, each in accordance with the priorities set forth in
Section 5.7(a) hereof.
Servicer's Certificate. By 9:00 a.m., Minneapolis time, on each
Determination Date, the Servicer shall deliver to the Trustee, the Owner
Trustee, the Note Insurer, the Rating Agencies and the Seller a Servicer's
Certificate containing all information necessary to make the distributions
pursuant to Sections 5.7 and 5.8 (including, if required, withdrawals from the
Series 2007-C Spread Account) for the Collection Period preceding the date of
such Servicer's Certificate and all information necessary for the Trustee to
send statements to the Securityholders and the Note Insurer pursuant to Section
5.8(b) and all information necessary to enable the Backup Servicer to verify the
information specified in Section 4.13(b)
40
and to complete the accounting required by Section 5.9. Receivables to be
purchased by the Servicer or to be purchased by CPS shall be identified by the
Servicer by account number with respect to such Receivable (as specified in
Schedule A).
Annual Statement as to Compliance, Notice of Servicer Termination
Event.
(a) The Servicer shall deliver to the Owner Trustee, the
Trustee, the Backup Servicer, the Note Insurer and each Rating Agency, on or
before March 31 of each year beginning March 31, 2008, 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 Officer's Certificate, from the Closing Date to December 31,
2007) 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 Officer's Certificate,
from the Closing Date to December 31, 2007), or, if there has been a default in
the fulfillment of any such obligation, specifying each such default known to
such officer and the nature and status thereof. The Trustee shall forward a copy
of such certificate as well as the report referred to in Section 4.11 to each
Noteholder and the Owner Trustee shall forward a copy to each Residual
Certificateholder.
(b) The Servicer shall deliver to the Owner Trustee, the
Trustee, the Backup Servicer, the Note Insurer, the Collateral Agent, and each
Rating Agency, promptly after having obtained knowledge thereof, but in no event
later than two (2) Business Days thereafter, written notice in an Officer's
Certificate of any event which with the giving of notice or lapse of time, or
both, would become a Servicer Termination Event under Section 10.1.
Annual Independent Accountants' Report. The Servicer shall cause a firm
of nationally recognized independent certified public accountants (the
"Independent Accountants"), who may also render other services to the Servicer
or to the Seller, to deliver to the Trustee, the Owner Trustee, the Backup
Servicer, the Note Insurer and each Rating Agency, on or before March 31 of each
year beginning March 31, 2008, a report dated as of December 31 of the previous
year (the "Accountants' Report") and reviewing the Servicer's activities during
the preceding 12-month period, addressed to the Board of Directors of the
Servicer, to the Owner Trustee, the Trustee, the Backup Servicer and to the Note
Insurer, to the effect that such firm has examined the financial statements of
the Servicer and issued its report therefor and that such examination (1) was
made in accordance with generally accepted auditing standards, and accordingly
included such tests of the accounting records and such other auditing procedures
as such firm considered necessary in the circumstances; (2) included tests
relating to auto loans serviced for others in accordance with the requirements
of the Uniform Single Attestation Program for Mortgage Bankers (the "Program"),
to the extent the procedures in the Program are applicable to the servicing
obligations set forth in this Agreement; (3) included an examination of the
delinquency and loss statistics relating to the Servicer's portfolio of
automobile and light truck installment sales contracts; and (4) except as
described in the report, disclosed no exceptions or errors in the records
relating to automobile and light truck loans serviced for others that, in the
firm's opinion, paragraph four of the Program requires such firm to report. The
accountant's report shall further state that (A) a review in accordance with
agreed upon procedures was made of two randomly selected Servicer Certificates;
(B) except as disclosed in the report, no exceptions or errors in the Servicer
Certificates were found; and (C) the delinquency and loss information relating
to the Receivables and the stated amount of Liquidated Receivables, if any,
contained in the Servicer Certificates were found to be accurate. In the event
such firm requires the Trustee, the Owner Trustee and/or the Backup Servicer to
agree to the procedures performed by such firm, the Servicer shall direct the
Trustee, the Owner Trustee and/or the Backup Servicer, as applicable, in writing
to so agree; it being understood and agreed that the Trustee, the Owner 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, the Owner
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.
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Access to Certain Documentation and Information Regarding Receivables.
The Servicer shall provide to representatives of the Trustee, the Owner Trustee,
the Backup Servicer, the Note Insurer and the Rating Agencies 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.
Verification of Servicer's Certificate.
(a) On or before the fifth calendar day of each month, the
Servicer will deliver to the Trustee and the 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 related Collection 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 4.13(b)
contained in the Servicer's Certificate delivered by the Servicer, and the
Backup Servicer shall notify the Servicer and the Note Insurer of any
discrepancies on or before the second Business Day following the Determination
Date. In the event that the Backup Servicer reports any discrepancies, the
Servicer and the Backup Servicer shall attempt to reconcile such discrepancies
prior to the second Business Day prior to the related Payment Date, but in the
absence of a reconciliation, the Servicer's Certificate shall control for the
purpose of calculations and distributions with respect to the related Payment
Date. In the event that the Backup Servicer and the Servicer are unable to
reconcile discrepancies with respect to a Servicer's Certificate by the related
Payment Date, the Servicer shall cause a firm of independent certified public
accountants, at the Servicer's expense, to audit the Servicer's Certificate and,
prior to the fifth calendar day of the following month, reconcile the
discrepancies. The effect, if any, of such reconciliation shall be reflected in
the Servicer's Certificate for such next succeeding Determination Date. Other
than the duties specifically set forth in this Agreement, the 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.
Notwithstanding the fact that the Backup Servicer shall receive the data
referenced in this Section 4.13(a) on a monthly basis, at the request of the
Note Insurer, the Backup Servicer agrees to receive and the Servicer agrees to
deliver any such data with respect to the Receivables from the Servicer on a
more frequent basis, up to and including daily or weekly transmissions.
(b) The Backup Servicer shall review each Servicer's
Certificate delivered pursuant to Section 4.13(a) and shall:
(i) confirm that such Servicer's Certificate is
complete on its face;
(ii) load the computer diskette (which shall be in a
format acceptable to the Backup Servicer) received from the Servicer
pursuant to Section 4.13(a) hereof, confirm that such computer diskette
is in a readable form and calculate and confirm the Aggregate Principal
Balance for the most recent Payment Date;
(iii) confirm, based solely on the information shown
on the Servicer's Certificate, that the Total Distribution Amount, the
Principal Distributable Amount, the Noteholders' Principal
Distributable Amount, the Note Prepayment Amount, the Noteholders'
Parity Deficit Amount, the Noteholders' Interest Distributable Amount
for each Class of Notes, the Residual Certificate Interest
Distributable Amount, the Residual Certificate Principal Distributable
Amount, the Residual Certificate Prepayment Amount, the Targeted
Principal Distributable Amount, the Backup Servicing Fee, the Servicing
Fee, the Trustee Fees, the Cayman Trustee Fees, the amount on deposit
in the Series 2007-C Spread Account, the amount on deposit in the
Pre-Funding Account, the amount on deposit in the Capitalized Interest
Account, the Three-
42
Month Rolling Average Extension Ratio, the Three-Month Rolling Average
Delinquency Ratio, the Cumulative Net Loss Rate and the Premium (as
defined in the Insurance Agreement) in the Servicer's Certificate are
accurate based solely on the recalculation of the Servicer's
Certificate and without further investigation;
(iv) confirm the calculation of the Trigger Events
based solely upon the information contained on the applicable computer
diskette; and
(v) by the third Business Day following the Backup
Servicer's receipt of the Servicer's Certificate and following the
Backup Servicer's review of such Servicer's Certificate and the related
monthly tape, the Backup Servicer shall provide the Note Insurer with a
certificate (i) describing those activities it performed in its review
of the monthly tape and the Servicer's Certificate, (ii) listing those
parts of the Servicer's Certificate that it confirmed were correct,
(iii) listing those parts of the Servicer's Certificate that it found
to be incorrect, and (iv) describing any discrepancies,
inconsistencies, incorrect information or incorrect calculations that
were revealed by its review of the Servicer's Certificate and the
related monthly tape.
(c) On or prior to the Closing Date, the Backup Servicer will
cause an affiliate of the Back-up Servicer to data map to their 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 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.
Retention and Termination of Servicer. The Servicer hereby covenants
and agrees to act as such under this Agreement for an initial term commencing on
the Closing Date and ending on December 31, 2007, which term may be extended by
the Note Insurer for successive quarterly terms ending on each successive March
31, June 30, September 30 and December 31 (or, at the discretion of the Note
Insurer exercised pursuant to revocable written standing instructions from time
to time to the Servicer and the Trustee, for any specified number of terms
greater than one), until such time as the Notes have been paid in full, all
amounts due to the Residual Certificateholders and the Note Insurer have been
paid and until the termination of the Trust. Each such notice (including each
notice pursuant to standing instructions, which shall be deemed delivered at the
end of successive terms for so long as such instructions are in effect) (a
"Servicer Extension Notice") shall be delivered by the Note Insurer to the
Trustee and the Servicer. The Servicer hereby agrees that, upon its receipt of
any such Servicer Extension Notice, the Servicer shall become bound, for the
duration of the term covered by such Servicer Extension Notice, to continue as
the Servicer subject to and in accordance with the other provisions of this
Agreement. If an Insurer Default has occurred and is continuing, the term of the
Servicer's appointment hereunder shall be deemed to have been extended until
such time, if any, as such Insurer Default has been cured unless such
appointment is terminated sooner in accordance with the terms of this Agreement.
Until such time as an Insurer Default shall have occurred and be continuing, the
Trustee agrees that if as of the fifteenth day prior to the last day of any term
of the Servicer, the Trustee shall not have received any Servicer Extension
Notice from the Note Insurer, the Trustee shall, within five days thereafter,
give written notice of such non-receipt to the Note Insurer.
Fidelity Bond. The Servicer shall maintain a fidelity bond in such form
and amount as is customary for entities acting as custodian of funds and
documents in respect of consumer contracts on behalf of institutional investors.
SECTION 4.16 Optional Purchase of Certain Receivables
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(a) CPS shall have the right, but not the obligation, to
acquire Receivables on the last day of any Collection Period during the term of
the Trust at a price equal to at least the fair market value of such
Receivables, so long as the fair market value is not less than the related
aggregate Purchase Amount plus the costs and expenses of the Servicer, the Trust
and the Note Insurer (including any outstanding reimbursements) in connection
with such optional purchase. The aggregate Principal Balance of Receivables
repurchased under such option shall be limited to 1% of the Original Collateral
Balance. To exercise such option, CPS shall (subject to the proviso below)
deposit in the Collection Account pursuant to Section 5.6 (or remit to the
Servicer, if CPS is not then Servicer) an amount equal to the related aggregate
Purchase Amount for such Receivables and thereafter shall succeed to all
interests of the Trust in and to such Receivables. Upon notice of receipt of the
related aggregate Purchase Amount for such Receivables and written instructions
from the Servicer, the Trustee shall release to CPS or its designee the related
Receivables Files and shall execute and deliver all reasonable instruments of
transfer or assignment, without recourse, as are prepared by CPS and delivered
to the Trustee and necessary to vest in CPS or such designee title to such
Receivables including a Trustee's Certificate in the form of Exhibit F-2.
(b) CPS shall have the right, which right may be assigned by
CPS to an Affiliate, but not the obligation, to repurchase on the last day of
any Collection Period any Defaulted Texas Receivables the related Obligors of
which reside in the State of Texas or the related Financed Vehicles of which are
located in the State of Texas at a price equal to at least the fair market value
of such Defaulted Texas Receivables, so long as the fair market value is not
less than the related aggregate Purchase Amount, plus the costs and expenses of
the Servicer, the Trust and the Note Insurer (including any outstanding
reimbursements) in connection with such optional purchase. To exercise such
option, CPS shall (subject to the proviso below) deposit in the Collection
Account pursuant to Section 5.6 (or remit to the Servicer, if CPS is not then
Servicer) an amount equal to the related aggregate Purchase Amount for such
Defaulted Texas Receivables and thereafter shall succeed to all interests of the
Trust in and to such Defaulted Texas Receivables. Upon notice of receipt of the
related aggregate Purchase Amount for such Defaulted Texas Receivables and
written instructions from the Servicer, the Trustee shall release to CPS or its
designee the related Receivables Files and shall execute and deliver all
reasonable instruments of transfer or assignment, without recourse, as are
prepared by the CPS and delivered to the Trustee and necessary to vest in CPS or
such designee title to such Defaulted Texas Receivables including a Trustee's
Certificate in the form of Exhibit F-2.
ARTICLE V
---------
TRUST ACCOUNTS; DISTRIBUTIONS; STATEMENTS TO SECURITYHOLDERS
Establishment of Trust Accounts.
(a) (i) The Trustee, on behalf of the Securityholders and the
Note Insurer, shall establish and maintain in its own name an Eligible Account
(the "Collection Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Trustee on behalf of the
Securityholders and the Note Insurer. On the Closing Date, the Servicer will
deposit, on behalf of the Seller, in the Collection Account, an amount equal to
$4,603,222.85, such amount representing collections on the Receivables received
from and including the day after the Initial Cutoff Date through September 26,
2007, but not previously deposited into the Collection Account.
(ii) The Trustee, on behalf of the Noteholders, shall establish and
maintain in its own name an Eligible Account (the "Note Distribution Account"),
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Trustee on behalf of the Noteholders and the Note
Insurer. The Note Distribution Account shall initially be established with the
Trustee.
(iii) The Trustee, on behalf of the Noteholders, shall establish and
maintain in its own name an Eligible Account (the "Pre-Funding Account"),
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Trustee on behalf of the Securityholders and the
Note Insurer. The Pre-Funding Account shall initially be established with the
Trustee.
44
(iv) The Servicer shall cause the Trustee to establish and maintain an
Eligible Account (the "Capitalized Interest Account") with the Trustee, bearing
a designation clearly indicating that the funds deposited therein are held in
trust for the benefit of the Securityholders and the Note Insurer.
(v) Funds on deposit in the Collection Account, the Note Distribution
Account, the Pre-Funding Account and the Capitalized Interest Account
(collectively, the "Trust Accounts") shall be invested by the Trustee (or any
custodian with respect to funds on deposit in any such account) in Eligible
Investments selected in writing by the Servicer (pursuant to standing
instructions or otherwise). All such Eligible Investments shall be held by or on
behalf of the Trustee for the benefit of the Securityholders and the Note
Insurer. Other than as permitted by the Rating Agencies and the Note Insurer,
funds on deposit in any Trust Account shall be invested in Eligible Investments
that will mature so that such funds will be available at the close of business
on the Business Day immediately preceding the following Payment Date. Funds
deposited in a Trust Account on the day immediately preceding a Payment Date
upon the maturity of any Eligible Investments are not required to be invested
overnight. All Eligible Investments will be held to maturity.
(b) All investment earnings of moneys deposited in the Trust
Accounts shall be deposited (or caused to be deposited) by the Trustee in the
Collection Account for distribution pursuant to Section 5.7(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 Trust Accounts unless the security interest granted and perfected in such
account will continue to be perfected in such investment, in either case without
any further action by any Person, and, in connection with any direction to the
Trustee to make any such investment, if requested by the Trustee, the Servicer
shall deliver to the Trustee an Opinion of Counsel, acceptable to the Trustee,
to such effect.
(c) The Trustee shall not in any way be held liable by reason
of any insufficiency in any of the Trust Accounts resulting from any loss on any
Eligible Investment included therein except for losses attributable to the
Trustee's negligence or bad faith or its failure to make payments on such
Eligible Investments issued by the Trustee, in its commercial capacity as
principal obligor and not as trustee, in accordance with their terms.
(d) If (i) the Servicer shall have failed to give investment
directions for any funds on deposit in the Trust Accounts to the Trustee by 1:00
p.m. Eastern Time (or such other time as may be agreed by the Issuer and
Trustee) on any Business Day; or (ii) an Event of Default shall have occurred
and be continuing but the Notes shall not have been declared due and payable,
or, if such Notes shall have been declared due and payable following an Event of
Default, amounts collected or receivable from the Trust Property are being
applied as if there had not been such a declaration; then the Trustee shall, to
the fullest extent practicable, invest and reinvest funds in the Trust Accounts
in one or more Eligible Investments described in clause (ii) of the definition
thereof.
(e) The Trustee shall possess all right, title and interest in
all funds on deposit from time to time in the Trust Accounts and in all proceeds
thereof (including all Investment Earnings on the Trust Accounts) and all such
funds, investments, proceeds and income shall be part of the Trust Property.
Except as otherwise provided herein, the Trust Accounts shall be under the sole
dominion and control of the Trustee for the benefit of the Securityholders and
the Note Insurer. If at any time any of the Trust Accounts ceases to be an
Eligible Account, the Servicer with the consent of the Note Insurer shall within
five Business Days establish a new Trust Account as an Eligible Account and
shall transfer any cash and/or any investments to such new Trust Account. The
Servicer shall promptly notify the Rating Agencies and the Owner Trustee of any
change in the location of any of the aforementioned accounts. In connection with
the foregoing, the Servicer agrees that, in the event that any of the Trust
Accounts are not accounts with the Trustee, the Servicer shall notify the
Trustee in writing promptly upon any of such Trust Accounts ceasing to be an
Eligible Account.
(f) Notwithstanding anything to the contrary herein or in any
other document relating to a Trust Account, the "securities intermediary's
jurisdiction" (within the meaning of Section 8-
45
110 of the UCC) or the "bank's jurisdiction" (with the meaning of 9-304 of the
UCC), as applicable, with respect to each Trust Account shall be the State of
New York.
(g) With respect to the Trust Account Property, the Trustee
agrees that:
(A) any Trust Account Property that is held in
deposit accounts shall be held solely in an Eligible Account;
and, each such Eligible Account shall be subject to the
exclusive custody and control of the Trustee and the Trustee
shall have sole signature authority with respect thereto; and
(B) any other Trust Account Property shall be
delivered to the Trustee in accordance with the definition of
"Delivery".
Capitalized Interest Account.
(a) On or prior to the Closing Date, the Seller shall deposit
an amount equal to the Capitalized Interest Account Initial Deposit into the
Capitalized Interest Account.
(b) On the Determination Date for each of the October and
November 2007 Payment Dates, to the extent that the Servicer's Certificate
indicates that the funds on deposit in the Capitalized Interest Account are in
excess of the Requisite Reserve Amount for such Payment Date, the Trustee shall
withdraw such excess from the Capitalized Interest Account and deposit such
amount in the Collection Account for distribution pursuant to Section 5.7(a) on
such Payment Date.
Certain Reimbursements to the Servicer. The Servicer will be entitled
to be reimbursed from amounts on deposit in the Collection Account with respect
to a Collection Period for amounts previously deposited in the Collection
Account but later determined by the Servicer to have resulted from mistaken
deposits or postings or checks returned for insufficient funds. The amount to be
reimbursed hereunder shall be paid to the Servicer on the related Payment Date
pursuant to Section 5.7(a)(ii) upon certification by the Servicer of such
amounts and the provision of such information to the Trustee and the Note
Insurer as may be necessary in the opinion of the Note Insurer to verify the
accuracy of such certification; provided, however, that the Servicer must
provide such certification within three months of its becoming aware of such
mistaken deposit, posting or returned check. In the event that the Note Insurer
has not received evidence satisfactory to it of the Servicer's entitlement to
reimbursement pursuant to this Section, the Controlling Party 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(a)(ii), or, if prior thereto the Servicer has been reimbursed
pursuant to Section 5.7(a)(ii), the Trustee shall withhold such amounts from
amounts otherwise distributable to the Servicer on the next succeeding Payment
Date.
Application of Collections. All collections for each Collection Period
shall be applied by the Servicer as follows:
With respect to each Receivable (other than a Purchased Receivable),
payments by or on behalf of the Obligor shall be applied to interest and
principal in accordance with the Simple Interest Method.
Withdrawals from Series 2007-C Spread Account.
(a) In the event that the Servicer's Certificate with respect
to any Determination Date shall state that the Total Distribution Amount with
respect to such Determination Date is insufficient to make the payments required
to be made on the related Payment Date pursuant to Sections 5.7(a)(i) through
(v) and (vii) through (ix), provided however, that with respect to Section
5.7(a)(vii), the amount which may be withdrawn from the Series 2007-C Spread
Account shall equal the Noteholders' Parity Deficit Amount, or, if such Payment
Date is the Final Scheduled Payment for any Class of Notes, the greater of (i)
the Noteholders' Parity Deficit Amount and (ii) the unpaid Note Balance of such
Class of Notes (such deficiency being a "Deficiency Claim Amount"), then on the
fourth Business Day immediately
46
preceding the related Payment Date, the Trustee shall deliver to the Collateral
Agent, the Owner Trustee, the Note Insurer, and the Servicer, by hand delivery,
telex or facsimile transmission, a written notice (a "Deficiency Notice")
specifying the Deficiency Claim Amount for such Payment Date. Such Deficiency
Notice shall direct the Collateral Agent to remit such Deficiency Claim Amount
(to the extent of the funds available to be distributed pursuant to the Master
Spread Account Agreement) to the Trustee for deposit in the Collection Account
and distribution pursuant to Sections 5.7(a)(i) through (v) and (vii) through
(ix), as applicable.
Any Deficiency Notice shall be delivered by 3:00 p.m., New
York City time, on the fourth Business Day preceding such Payment Date. The
amounts distributed by the Collateral Agent to the Trustee pursuant to a
Deficiency Notice shall be deposited by the Trustee into the Collection Account
pursuant to Section 5.7(a).
Additional Deposits. The Servicer or CPS, as the case may be, shall
deposit or cause to be deposited in the Collection Account the aggregate
Purchase Amount with respect to Purchased Receivables and all amounts to be paid
by CPS pursuant to its indemnification obligations under the Basic Documents and
the Servicer shall deposit or cause to be deposited therein all amounts to be
paid under Sections 4.16 and 11.1. All such deposits made pursuant to Section
4.16 shall be made, in immediately available funds, on the Business Day
preceding the Determination Date. All such deposits made pursuant to Section
11.1 shall be made, in immediately available funds, on the Business Day
preceding the related Payment Date. On or before the third Business Day
preceding each Payment Date, the Trustee shall remit to the Collection Account
any amounts delivered to the Trustee by the Collateral Agent pursuant to Section
5.5.
Distributions.
(a) On each Payment Date, the Trustee (based on the
information contained in the Servicer's Certificate delivered on the related
Determination Date) shall make the following distributions in the following
order of priority:
(i) to the Backup Servicer so long as the Backup
Servicer is not acting as the successor Servicer, from the Total
Distribution Amount, any amount deposited in the Collection Account
pursuant to Section 5.5(a) and any amount deposited in the Collection
Amount pursuant to Section 5.12(a) in respect of Backup Servicing Fees,
the Backup Servicing Fee and all unpaid Backup Servicing Fees from
prior Collection Periods;
(ii) to the Servicer, from the Total Distribution
Amount (as such Total Distribution Amount has been reduced by payments
pursuant to clause (i) above), any amount deposited in the Collection
Account pursuant to Section 5.5(a) and any amount deposited in the
Collection Account pursuant to Section 5.12(a) in respect of Servicing
Fees, the Servicing Fee and all unpaid Servicing Fees from prior
Collection Periods and all reimbursements to which the Servicer is
entitled pursuant to Section 5.3 and an amount, not to exceed $35,000
per annum, for payment to the taxing authority of the State of Texas on
behalf of the Issuer for any Texas franchise or similar tax due and
owing by the Issuer (or with respect to the Receivables) and not timely
paid by CPS in accordance with the Receivables Purchase Agreement;
(iii) if the Backup Servicer becomes the successor
Servicer, to the Backup Servicer, from the Total Distribution Amount
(as such Total Distribution Amount has been reduced by payments
pursuant to clauses (i) and (ii) above), any amount deposited in the
Collection Account pursuant to Section 5.5(a) and any amount deposited
in the Collection Account pursuant to Section 5.12(a), to the extent
not previously paid by the predecessor Servicer pursuant to this
Agreement, reasonable transition expenses (up to a maximum of $50,000
for all such expenses incurred over the term of this Agreement)
incurred by the Backup Servicer in becoming the successor Servicer;
47
(iv) concurrently on a pro rata basis, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) through (iii) above),
(A) to the Trustee and the Owner Trustee pro
rata, any amount deposited in the Collection Account
pursuant to Section 5.5(a) and any amount deposited
in the Collection Account pursuant to Section 5.12(a)
in respect of Trustee Fees, the Trustee Fees and
reasonable out-of-pocket expenses thereof (including
reasonable counsel fees and expenses) and all unpaid
Trustee Fees and unpaid reasonable out-of-pocket
expenses (including reasonable counsel fees and
expenses) from prior Collection Periods;
(B) to the Residual Certificateholders pro
rata based on their respective Percentage Interests,
the Supplemental Residual Certificate Distribution;
provided, however, that expenses and other amounts payable to the
Trustee, the Owner Trustee and the Residual Certificateholders pursuant
to this clause (iv) shall be limited to a total of $50,000 per annum;
provided further, however, (I) that if an Event of Default specified
under Section 5.1(a)(i) or (ii) of the Indenture has occurred and is
continuing or (II) if the Note Insurer (so long as an Insurer Default
shall not have occurred and be continuing) otherwise agrees in writing
to waive such $50,000 per annum limitation described in the first
proviso, in its sole discretion, then such expenses payable pursuant to
this priority (iv) shall not be so limited;
(v) to the Note Distribution Account, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) through (iv) above), and any amount
deposited in the Collection Account pursuant to Sections 5.5(a) and
5.12(a), the Noteholders' Interest Distributable Amount for such
Payment Date;
(vi) to the Residual Certificateholders pro rata
based on their respective Percentage Interests, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) through (v) above), the Residual
Certificate Interest Distributable Amount for such Payment Date,
subject to the limitation thereon contained in the proviso to the
definition thereof;
(vii) to the Note Distribution Account from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments pursuant to clauses (i) through (vi) above) and any amount
deposited in the Collection Account pursuant to Sections 5.5(a) and
5.12(a), the sum of (A) the Noteholders' Principal Distributable Amount
and (B) the Noteholders' Parity Deficit Amount, if any;
(viii) to the Note Insurer, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments made pursuant to clauses (i) through (vii) above) and any
amount deposited in the Collection Account pursuant to Section 5.5(a),
any amounts owing to the Note Insurer under this Agreement and the
Insurance Agreement and not paid;
(ix) if any Person other than the Backup Servicer
becomes the successor Servicer, to such successor Servicer from the
Total Distribution Amount (as such Total Distribution Amount has been
reduced by payments pursuant to clauses (i) through (viii) above), any
amount deposited in the Collection Account pursuant to Section 5.5(a)
and any amount deposited in the Collection Account pursuant to Section
5.12(a), to the extent not previously paid by the predecessor Servicer
pursuant to this Agreement, reasonable transition expenses (up to a
maximum of $50,000 for all such expenses incurred over the term of this
Agreement) incurred by such successor Servicer in becoming the
successor Servicer;
48
(x) to the Collateral Agent, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments made pursuant to clauses (i) through (ix) above) for
deposit into the Series 2007-C Spread Account, the remaining Total
Distribution Amount until the amount in the Series 2007-C Spread
Account equals the Specified Spread Account Requisite Amount;
(xi) to the Note Distribution Account, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments made pursuant to clauses (i) through (x) above), the
Targeted Principal Distributable Amount, if any, for such Payment Date;
(xii) (a) to the Backup Servicer and the Owner
Trustee, as applicable, from the Total Distribution Amount (as such
Total Distribution has been reduced by payments made pursuant to
clauses (i) through (xi) above), any amounts owing to the Backup
Servicer hereunder and any amounts to the Owner Trustee under the Trust
Agreement, to the extent not previously paid, (b) to any successor
Servicer (including the Backup Servicer, if the Backup Servicer is then
acting in such capacity), if any, from the Total Distribution Amount
(as such Total Distribution has been reduced by payments made pursuant
to clauses (i) through (xi) above), the Successor Servicing Fees due,
if any, and (c) to the Servicer from the Total Distribution Amount (as
such Total Distribution has been reduced by payments made pursuant to
clauses (i) through (xi) above) for payment to the taxing authority of
the State of Texas on behalf of the Issuer for any Texas franchise or
similar tax due and owing by the Issuer (or with respect to the
Receivables), the amount, if any, to be paid to such taxing authority
after giving effect to the distribution pursuant to clause (ii) above
and not timely paid by CPS in accordance with the Receivables Purchase
Agreement;
(xiii) to the Residual Certificateholders pro rata
based on their respective Percentage Interests, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments made pursuant to clauses (i) through (xii) above), the
Residual Certificate Interest Distributable Amount remaining to be paid
after giving effect to the distribution pursuant to clause (vi) above;
(xiv) to the Residual Certificateholders pro rata
based on their respective Percentage Interests, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced
by payments made pursuant to clauses (i) through (xiii) above), the
Residual Certificate Principal Distributable Amount, if any, for such
Payment Date; and
(xv) to the Residual Certificateholders pro rata
based on their respective Percentage Interests, any remaining Total
Distribution Amount;
provided, however, that, (A) following an acceleration of the Notes or,
(B) if an Insurer Default shall have occurred and be continuing and an Event of
Default pursuant to Sections 5.1(a)(i), 5.1(a)(ii) or 5.1(a)(v) of the Indenture
shall have occurred and be continuing, the Total Distribution Amount shall be
paid pursuant to Section 5.6(a) of the Indenture.
(b) On the Payment Date immediately following the date upon
which the Funding Period terminates, the Trustee shall withdraw an amount equal
to the Residual Certificate Prepayment Amount from the Collection Account and
distribute such amount to the Residual Certificateholders pro rata based on
their respective Percentage Interests.
(c) In the event that the Collection Account is maintained
with an institution other than the Trustee, the Servicer shall instruct and
cause such institution to make all deposits and distributions pursuant to
Section 5.7(a) on the related Payment Date.
49
Note Distribution Account.
(a) On each Payment Date, 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 in the following amounts and in the following order of
priority:
(i) to the Holders of the Notes, 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 each Class of Notes, the amount in the Note
Distribution Account shall be applied to the payment of such interest
on each Class of Notes pro rata on the basis of the amount of accrued
and unpaid interest due on each Class of Notes;
(ii) concurrently, to the Holders of each Class of
Notes on the Mandatory Redemption Date, pro rata, on the basis of each
Class' share of the Aggregate Note Balance, the Note Prepayment Amount;
(iii) to the Holders of the Class A-1 Notes, the sum
of (x) the Noteholders' Principal Distributable Amount and (y) the
Noteholders' Parity Deficit Amount, if any, until the Class A-1 Note
Balance is reduced to zero;
(iv) to the Holders of the Class A-1 Notes, the
Targeted Principal Distributable Amount, if any, for such Payment Date
until the Class A-1 Note Balance is reduced to zero;
(v) to the Holders of the Class A-2 Notes, the sum of
(x) the Noteholders' Principal Distributable Amount (as reduced by any
distributions made on such Payment Date pursuant to clause (iii) above)
and (y) the Noteholders' Parity Deficit Amount, if any, remaining after
distributions made on such Payment Date pursuant to clauses (iii) and
(iv) above, until the Class A-2 Note Balance is reduced to zero;
(vi) to the Holders of the Class A-2 Notes, the
Targeted Principal Distributable Amount, if any, for such Payment Date
until the Class A-2 Note Balance is reduced to zero;
(vii) to the Holders of the Class A-3 Notes, the sum
of (x) the Noteholders' Principal Distributable Amount (as reduced by
any distributions made on such Payment Date pursuant to clauses (iii)
and (v) above) and (y) the Noteholders' Parity Deficit Amount, if any,
remaining after distributions made on such Payment Date pursuant to
clauses (iii) through (vi) above, until the Class A-3 Note Balance is
reduced to zero;
(viii) to the Holders of the Class A-3 Notes, the
Targeted Principal Distributable Amount, if any, for such Payment Date
until the Class A-3 Note Balance is reduced to zero;
(ix) to the Holders of the Class A-4 Notes, the sum
of (x) the Noteholders' Principal Distributable Amount (as reduced by
any distributions made on such Payment Date pursuant to clauses (iii),
(v) and (vii) above) and (y) the Noteholders' Parity Deficit Amount, if
any, remaining after distributions made on such Payment Date pursuant
to clauses (iii) through (viii) above, until the Class A-4 Note Balance
is reduced to zero; and then
(x) to the Holders of the Class A-4 Notes, the
Targeted Principal Distributable Amount, if any, for such Payment Date
until the Class A-4 Note Balance is reduced to zero.
50
(b) On each Payment Date, the Trustee shall provide or make
available electronically (or, upon written request, by first class mail or
facsimile) to each Noteholder the statement or statements provided to the
Trustee by the Servicer pursuant to Section 5.11 hereof on such Payment Date;
PROVIDED, HOWEVER, the Trustee shall have no obligation to provide such
information described in this Section 5.8(b) until it has received the requisite
information from the Servicer.
(c) In the event that any withholding tax is imposed on the
Trust's payment (or allocations of income) to a Noteholder, such tax shall
reduce the amount otherwise distributable to the Noteholder in accordance with
this Section 5.8. The Trustee is hereby authorized and directed to retain from
amounts otherwise distributable to the Noteholders sufficient funds for the
payment of any tax that is legally owed by the Trust (but such authorization
shall not prevent the Trustee from contesting any such tax in appropriate
proceedings, and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings). The amount of any withholding tax imposed with
respect to a Noteholder shall be treated as cash distributed to such Noteholder
at the time it is withheld by the Trust and remitted to the appropriate taxing
authority. If, after consultations with experienced counsel, the Trustee
determines that there is a reasonable likelihood that withholding tax is payable
with respect to a distribution (such as a distribution to a Non-United States
Investor), the Trustee may in its sole discretion withhold such amounts in
accordance with this clause (c). In the event that a Noteholder wishes to apply
for a refund of any such withholding tax, the Trustee shall reasonably cooperate
with such Noteholder in making such claim so long as such Noteholder agrees to
reimburse the Trustee for any out-of-pocket expenses incurred.
(d) Distributions required to be made to Noteholders on any
Payment Date shall be made to each Noteholder of record on the preceding Record
Date either by wire transfer, in immediately available funds, to the account of
such Noteholder at a bank or other entity having appropriate facilities
therefor, if (i) such Holder shall have provided to the Note Registrar
appropriate written instructions at least five Business Days prior to such
Payment Date and such Holder's Notes in the aggregate evidence a denomination of
not less than $1,000,000 or (ii) such Noteholder is the Seller, or an Affiliate
thereof, or, if not, by check mailed to such Noteholder at the address of such
holder appearing in the Note Register; provided, however, that, unless
Definitive Notes have been issued pursuant to Section 2.12 of the Indenture,
with respect to Notes registered on the Record Date in the name of the nominee
of the Clearing Agency (initially, such nominee to be Cede & Co.), distributions
will be made by wire transfer in immediately available funds to the account
designated by such nominee. Notwithstanding the foregoing, the final
distribution in respect of any Note (whether on the related Final Scheduled
Payment Date or otherwise) will be payable only upon presentation and surrender
of such Note at the office or agency maintained for that purpose by the Note
Registrar pursuant to Section 2.4 of the Indenture.
Each Noteholder, by its acceptance of its Note, will be deemed to have
consented to the provisions of Sections 5.7 and 5.8 relating to the priority of
payments, and will be further deemed to have acknowledged that no property
rights in any amount or the proceeds of any such amount shall vest in such
Noteholder until such amounts have been distributed to such Noteholder pursuant
to such provisions; PROVIDED, that the foregoing shall not restrict the right of
any Noteholder, upon compliance with the provisions hereof from seeking to
compel the performance of the provisions hereof by the parties hereto. Each
Noteholder, by its acceptance of its Note, will be deemed to have further agreed
that withdrawals of funds by the Collateral Agent from the Series 2007-C Spread
Account for application hereunder, shall be made in accordance with the
provisions of the Master Spread Account Agreement.
Certain Rights of the Residual Certificateholders(a) .On each Payment
Date, the Trustee shall provide or make available electronically (or, upon
written request, send by first class mail or facsimile) to each Residual
Certificateholder the statement or statements provided to the Trustee by the
Servicer pursuant to Section 5.11 hereof on such Payment Date; PROVIDED,
HOWEVER, the Trustee shall have no obligation to provide such information
described in this Section 5.9(a) until it has received the requisite information
from the Servicer.
(b) In the event that any withholding tax is imposed on the
Trust's payment (or allocations of income) to a Residual Certificateholder, such
tax shall reduce the amount otherwise distributable to such Residual
Certificateholder in accordance with Section 5.7(a). The Trustee is hereby
51
authorized and directed to retain from amounts otherwise distributable to the
Residual Certificateholders sufficient funds for the payment of any tax that is
legally owed by the Trust (but such authorization shall not prevent the Trustee
from contesting any such tax in appropriate proceedings, and withholding payment
of such tax, if permitted by law, pending the outcome of such proceedings). The
amount of any withholding tax imposed with respect to a Residual
Certificateholder shall be treated as cash distributed to such Residual
Certificateholder at the time it is withheld by the Trust and remitted to the
appropriate taxing authority. If, after consultations with experienced counsel,
the Trustee determines that there is a reasonable likelihood that withholding
tax is payable with respect to a distribution (such as a distribution to a
Non-United States Investor), the Trustee may in its sole discretion withhold
such amounts in accordance with this clause (c). In the event that a Residual
Certificateholder wishes to apply for a refund of any such withholding tax, the
Trustee shall reasonably cooperate with such Residual Certificateholder in
making such claim so long as such Residual Certificateholder agrees to reimburse
the Trustee for any out-of-pocket expenses incurred.
(c) Distributions required to be made to Residual
Certificateholders on any Payment Date shall be made to each Residual
Certificateholder of record on the preceding Record Date either by wire
transfer, in immediately available funds, to the account of such Residual
Certificateholder at a bank or other entity having appropriate facilities
therefor, if (i) such Residual Certificateholder shall have provided to the
Certificate Registrar appropriate written instructions at least five Business
Days prior to such Payment Date and such Residual Certificateholder's Residual
Pass-through Certificates in the aggregate evidence a denomination of not less
than $1,000,000 or (ii) such Residual Certificateholder is the Seller, or an
Affiliate thereof, or, if not, by check mailed to such Residual
Certificateholder at the address of such holder appearing in the Certificate
Register. Notwithstanding the foregoing, the final distribution in respect of
any Residual Pass-through Certificate will be payable only upon presentation and
surrender of such Residual Pass-through Certificate at the office or agency
maintained for that purpose by the Certificate Registrar pursuant to Section 3.8
of the Trust Agreement.
Each Residual Certificateholder, by its acceptance of its Residual
Pass-through Certificate, will be deemed to have consented to the provisions of
Sections 5.7, 5.8 and 5.9 relating to the priority of payments, and will be
further deemed to have acknowledged that no property rights in any amount or the
proceeds of any such amount shall vest in such Residual Certificateholder until
such amounts have been distributed to such Residual Certificateholder pursuant
to such provisions; PROVIDED, that the foregoing shall not restrict the right of
any Residual Certificateholder, upon compliance with the provisions hereof from
seeking to compel the performance of the provisions hereof by the parties
hereto. Each Residual Certificateholder, by its acceptance of its Residual
Pass-through Certificate, will be deemed to have further agreed that withdrawals
of funds by the Collateral Agent from the Series 2007-C Spread Account for
application hereunder, shall be made in accordance with the provisions of the
Master Spread Account Agreement.
Each Residual Certificateholder, by its acceptance of a Residual
Pass-through Certificate, further specifically acknowledges that it has no right
to or interest in any moneys at any time held pursuant to the Master Spread
Account Agreement prior to the release of such moneys as aforesaid, such moneys
being held in trust for the benefit of the Securityholders and the Note Insurer
as their interests may appear prior to such release. Notwithstanding the
foregoing, in the event that it is ever determined that any property held in the
Series 2007-C Spread Account constitutes a pledge of collateral, then the
provisions of this Agreement and the Master Spread Account Agreement shall be
considered to constitute a security agreement and the Residual
Certificateholders hereby grant to the Collateral Agent a first priority
perfected security interest in such amounts, to be applied as set forth in
Section 3.03(b) of the Master Spread Account Agreement. In addition, each
Residual Certificateholder, by its acceptance of a Residual Pass-through
Certificate, hereby grants a first priority perfected security interest in its
interest in the Series 2007-C Spread Account, if any, and any property held
therein from time to time to the Collateral Agent for the benefit of the Note
Insurer pursuant to the Master Spread Account Agreement and agrees to execute
and deliver such instruments of conveyance, assignment, grant, confirmation,
etc., as well as any financing statements, in each case as the Note Insurer
shall consider reasonably necessary in order to perfect the Collateral Agent's
Security Interest in the Collateral (as such terms are defined in the Master
Spread Account Agreement).
52
Pre-Funding Account.
(a) On the Closing Date, the Trustee will deposit, on behalf
of the Seller, the Pre-Funded Amount into the Pre-Funding Account from the
proceeds of the sale of the Notes. On each Subsequent Transfer Date, the
Servicer shall instruct the Trustee to withdraw from the Pre-Funding Account (i)
an amount equal to the excess of (a) the Principal Balance of the Subsequent
Receivables transferred to the Issuer on such Subsequent Transfer Date over (b)
the Subsequent Spread Account Deposit for such Subsequent Transfer Date, and to
distribute such amount to or upon the order of the Seller upon satisfaction of
the conditions set forth in this Agreement with respect to such transfer; and
(ii) an amount equal to the Subsequent Spread Account Deposit on such Subsequent
Transfer Date and deposit such amount into the Series 2007-C Spread Account upon
satisfaction of the conditions set forth in this Agreement with respect to such
transfer.
(b) If the Pre-Funded Amount has not been reduced to zero on
the date on which the Funding Period ends, after giving effect to any reductions
in the Pre-Funded Amount on such date, the Servicer shall instruct the Trustee
to withdraw from the Pre-Funding Account on the Mandatory Redemption Date the
Pre-Funded Amount (exclusive of any Pre-Funding Earnings) and deposit an amount
equal to the Note Prepayment Amount into the Note Distribution Account and an
amount equal to the Residual Certificate Prepayment Amount into the Collection
Account.
(c) All Pre-Funding Earnings will be deposited in the
Collection Account on each Payment Date and deemed to be part of the Total
Distribution Amount.
Statements to Securityholders.
(a) On or prior to each Payment Date, the Servicer shall
provide to the Trustee and the Owner Trustee (with a copy to the Note Insurer
and the Rating Agencies) for the Trustee and the Owner Trustee to forward to
each Securityholder of record (in the case of the Trustee, pursuant to Sections
5.8(b) and 5.9(a) hereof) the statement or statements provided by the Servicer
in substantially the form attached hereto as Exhibit E setting forth at least
the following information as to the Notes and the Residual Pass-through
Certificates to the extent applicable:
(i) the amount of such distribution allocable to
principal of each Class of Notes and the Residual Certificate Principal
Distributable Amount;
(ii) the amount of such distribution allocable to
interest on or with respect to each Class of Notes and Residual
Certificate Interest Distributable Amount;
(iii) the Pool Balance as of the close of business on
the last day of the related Collection Period;
(iv) the Note Balance for each Class of Notes after
giving effect to payments allocated to principal reported under clause
(i) above and the Residual Certificate Notional Balance after giving
effect to the Residual Certificate Principal Distributable Amount
reported under clause (i) above;
(v) the amount of the Servicing Fee paid to the
Servicer with respect to the related Collection Period, and the amount
of any unpaid Servicing Fees and the change in such amount from the
prior Payment Date;
(vi) the amount of the Backup Servicing Fee, the
Trustee Fees and the Cayman Trustee Fees paid to the Backup Servicer,
the Trustee, the Owner Trustee and the Cayman Trust, as applicable, and
the Supplemental Residual Certificate Distribution, if any, in each
case with respect to the related Collection Period, and the amount of
any unpaid
53
Backup Servicing Fees, Trustee Fees and Cayman Trustee Fees and the
amount of any unpaid Supplemental Residual Certificate Distributions
and the change in all such amounts from the prior Payment Date;
(vii) the Noteholders' Interest Carryover Shortfall
for each Class of Notes and the Residual Certificate Interest Carryover
Shortfall for such Payment Date;
(viii) the amount, if any, paid to the Noteholders
under the Note Policy or from the Series 2007-C Spread Account for such
Payment Date;
(ix) the amount distributable to the Note Insurer on
such Payment Date;
(x) the aggregate amount in the Series 2007-C Spread
Account and the change in such amount from the previous Payment Date
and the Specified Spread Account Requisite Amount for such Payment
Date;
(xi) 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 60 days, (b) 61 to
90 days, and (c) 91 days or more;
(xii) the aggregate amount in the Capitalized
Interest Account and the change in such amount from the previous
Payment Date and the Requisite Reserve Amount for such Payment Date;
(xiii) the number and the aggregate Purchase Amounts
for Receivables purchased by CPS or purchased by the Servicer during
the related Collection Period and summary information as to losses and
delinquencies with respect to such Receivables;
(xiv) the Principal Balance of all Receivables that
have become Liquidated Receivables, net of Recoveries, during the
related Collection Period;
(xv) the cumulative Principal Balance of all
Receivables that have become Liquidated Receivables, net of Recoveries,
during the period from the Cutoff Date to the last day of the related
Collection Period;
(xvi) for any Payment Date during the Funding Period,
the Pre-Funded Amount and the change in such amount from the previous
Payment Date;
(xvii) for the Mandatory Redemption Date, the amount
of any remaining Pre-Funded Amount that was not used to fund the
purchase of Subsequent Receivables;
(xviii) the amount, if any, paid by the Note Insurer
to the Trustee for deposit into the Collection Account pursuant to
Section 5.12;
(xix) the amount of any Texas Franchise Tax due and
owing by CPS under the Receivables Purchase Agreement to the taxing
authority of the State of Texas on or prior to the related Payment Date
or paid by CPS since the prior Payment Date; and
(xx) the Three-Month Rolling Average Extension Ratio,
the Cumulative Net Loss Rate, the Delinquency Ratio and the Three-Month
Rolling Average Delinquency Ratio.
(b) Within 60 days after the end of each calendar year, the
Servicer shall deliver to the Trustee a statement setting forth the amounts paid
during such preceding calendar year in respect of paragraphs (i), (ii), (v) and
(vi) above. The Trustee shall mail a copy of such statement to each person who
54
at any time during such preceding calendar year shall have been a Securityholder
of record and received any payment in respect of the Securities.
(c) The Trustee may make available to the Securityholders, via
the Trustee's Internet Website, all statements described herein and, with the
consent or at the direction of the Seller, such other information regarding the
Notes and/or the Receivables as the Trustee may have in its possession, but only
with the use of a password provided by the Trustee. The Trustee will make no
representation or warranties as to the accuracy or completeness of such
documents and will assume no responsibility therefor.
The Trustee's Internet Website shall be initially located at
"βββ�.βββββββ�.βββ�" or at such other address as shall be specified by the Trustee
from time to time in writing to the Securityholders. In connection with
providing access to the Trustee's Internet Website, the Trustee may require
registration and the acceptance of a disclaimer. The Trustee shall not be liable
for the dissemination of information in accordance with this Agreement.
Optional Deposits by the Note Insurer; Notice of Waivers.
--------------------------------------------------------
(a) The Note Insurer shall at any time, and from time to time,
with respect to a Payment Date, have the option (but shall not be required,
except as provided in Section 6.1(a)) to deliver amounts to the Trustee for
deposit into the Collection Account for any of the following purposes: (i) to
provide funds in respect of the payment of fees or expenses of any provider of
services to the Trust with respect to such Payment Date, or (ii) to include such
amount as part of the Total Distribution Amount for such Payment Date, in each
case only to the extent that without such amount a draw would be required to be
made on the Note Policy.
(b) If the Note Insurer waives the satisfaction of any of the
events that might trigger an Insurance Agreement Event of Default and so
notifies the Trustee in writing pursuant to Section 5.02(d) of the Insurance
Agreement, the Trustee shall notify βββββ�'β� and S&P of such waiver.
ARTICLE VI
----------
THE NOTE POLICY
Claims Under Note Policy.
(a) In the event that the Trustee has delivered a Deficiency
Notice with respect to any Determination Date pursuant to Section 5.5 hereof,
the Trustee shall on the related Draw Date determine whether the application of
funds in accordance with Section 5.7, together with any amounts deposited by the
Note Insurer pursuant to Section 5.12 and the application of any Deficiency
Claim Amount pursuant to Section 5.5 would result in a shortfall in amounts
distributable pursuant to Sections 5.7(a)(v) and 5.7(a)(vii) on any Payment
Date; provided, however, in calculating such shortfall, any portion of the
Noteholders' Interest Distributable Amount due to the Noteholders representing
interest on any Noteholders' Interest Carryover Shortfall accrued from and
including the date of payment of the amount of such Noteholders' Interest
Carryover Shortfall shall be excluded from such shortfall; provided, further, in
calculating such shortfall, the amount distributable pursuant to Section
5.7(a)(vii) shall equal the Noteholders' Parity Deficit Amount, or, if such
Payment Date is the Final Scheduled Payment for any Class of Notes, the greater
of (i) the Noteholders' Parity Deficit Amount and (ii) the unpaid Note Balance
of such Class of Notes (any such shortfall, a "Note Policy Claim Amount"). If
the Note Policy Claim Amount for such Payment Date is greater than zero, the
Trustee shall furnish to the Note Insurer no later than 12:00 noon New York City
time on the related Draw Date a completed Notice of Claim (as defined in clause
(b) below) in the amount of the Note Policy Claim Amount. Amounts paid by the
Note Insurer pursuant to a claim submitted under this Section 6.1 shall be
deposited by the Trustee into the Note Distribution Account for payment to
Noteholders on the related Payment Date.
55
(b) Any notice delivered by the Trustee to the Note Insurer
pursuant to Section 6.1(a) shall specify the Note Policy Claim Amount claimed
under the Note Policy and shall constitute a "Notice of Claim" (as defined in
the Note Policy). In accordance with the provisions of the Note Policy, the Note
Insurer is required to pay to the Trustee the Note Policy Claim Amount properly
claimed thereunder by 12:00 noon, New York City time, on the later of (i) the
third Business Day (as defined in the Note Policy) following receipt on a
Business Day of the Notice of Claim, and (ii) the applicable Payment Date. Any
payment made under the Note Policy by the Note Insurer shall be applied solely
to the payment of the Notes, and for no other purpose.
(c) The Trustee shall (i) receive as attorney-in-fact of each
Noteholder any Note Policy Claim Amount from the Note Insurer and (ii) deposit
the same in the Note Distribution Account for distribution to Noteholders. Any
and all Note Policy Claim Amounts disbursed by the Trustee from claims made
under the Note Policy shall not be considered payment by the Trust or from the
Series 2007-C Spread Account with respect to such Notes, and shall not discharge
the obligations of the Trust with respect thereto. The Note Insurer shall, to
the extent it makes any payment with respect to the Notes, become subrogated to
the rights of the recipients of such payments to the extent of such payments.
Subject to and conditioned upon any payment with respect to the Notes by or on
behalf of the Note Insurer, the Trustee and the Noteholders shall assign to the
Note Insurer all rights to the payment of interest or principal with respect to
the Notes which are then due for payment to the extent of all payments made by
the Note Insurer, and the Note Insurer may exercise any option, vote, right,
power or the like with respect to the Notes to the extent that it has made
payment pursuant to the Note Policy. To evidence such subrogation, the Note
Registrar shall note the Note Insurer's rights as subrogee upon the register of
Noteholders upon receipt from the Note Insurer of proof of payment by the Note
Insurer of any Noteholders' Interest Distributable Amount, Noteholders' Parity
Deficit Amount or Noteholders' Principal Distributable Amount. The foregoing
subrogation shall in all cases be subject to the rights of the Noteholders to
receive all Scheduled Payments (as defined in the Note Policy).
(d) The Trustee shall keep a complete and accurate record of
all funds deposited by the Note Insurer into the Note Distribution Account and
the allocation of such funds to payment of interest on and principal paid in
respect of any Note. The Note Insurer shall have the right to inspect such
records at reasonable times upon one Business Day's prior notice to the Trustee.
(e) The Trustee shall be entitled to enforce on behalf of the
Noteholders the obligations of the Note Insurer under the Note Policy.
Notwithstanding any other provision of this Agreement or any Basic Documents,
the Noteholders are not entitled to make any claims under the Note Policy or
institute proceedings directly against the Note Insurer.
Preference Claims.
(a) In the event that the Trustee has received a certified
copy of an order of the appropriate court that any Scheduled Payment (as defined
in the Note Policy) paid on a Note has been avoided in whole or in part as a
preference payment under applicable bankruptcy law, the Trustee shall so notify
the Note Insurer, shall comply with the provisions of the Note Policy to obtain
payment by the Note Insurer of such avoided payment, and shall, at the time it
provides notice to the Note Insurer, notify Holders of the Notes by mail that,
in the event that any Noteholder's payment is so recoverable, such Noteholder
will be entitled to payment pursuant to the terms of the Note Policy. The
Trustee shall furnish to the Note Insurer its records evidencing the payments of
principal of and interest on Notes, if any, which have been made by the Trustee
and subsequently recovered from Noteholders, and the dates on which such
payments were made. Pursuant to the terms of the Note Policy, the Note Insurer
will make such payment on behalf of the Noteholder to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Final Order (as
defined in the Note Policy) and not to the Trustee or any Noteholder directly
(unless a Noteholder has previously paid such payment to the receiver,
conservator, debtor-in-possession or trustee in bankruptcy, in which case the
Note Insurer will make such payment to the Trustee for distribution to such
Noteholder upon proof of such payment reasonably satisfactory to the Note
Insurer).
56
(b) The Trustee shall promptly notify the Note Insurer of any
proceeding or the institution of any action (of which the Trustee has actual
knowledge) seeking the avoidance as a preferential transfer under applicable
bankruptcy, insolvency, receivership, rehabilitation or similar law (a
"Preference Claim") of any distribution made with respect to the Notes. Each
Holder, by its purchase of Notes, and the Trustee hereby agrees that so long as
an Insurer Default shall not have occurred and be continuing, the Note Insurer
may at any time during the continuation of any proceeding relating to a
Preference Claim direct all matters relating to such Preference Claim including,
without limitation, (i) the direction of any appeal of any order relating to any
Preference Claim and (ii) the posting of any surety, supersedeas or performance
bond pending any such appeal at the expense of the Note Insurer, but subject to
reimbursement as provided in the Insurance Agreement. In addition, and without
limitation of the foregoing, as set forth in Section 6.1(c), the Note Insurer
shall be subrogated to, and each Noteholder and the Trustee hereby delegate and
assign, to the fullest extent permitted by law, the rights of the trustee and
each Noteholder in the conduct of any proceeding with respect to a Preference
Claim, including, without limitation, all rights of any party to an adversary
proceeding action with respect to any court order issued in connection with any
such Preference Claim.
Surrender of Note Policy. The Trustee shall surrender the Note Policy
to the Note Insurer for cancellation upon the expiration of such policy in
accordance with the terms thereof.
ARTICLE VII
-----------
[RESERVED]
ARTICLE VIII
------------
THE SELLER
Representations of the Seller. The Seller makes the following
representations for the benefit of the Securityholders and on which the Note
Insurer shall be deemed to have relied in executing and delivering the Note
Policy, on which the Issuer is deemed to have relied in acquiring the
Receivables and on which the Trustee is deemed to have relied in executing and
performing pursuant to this Agreement, the Indenture and the other Basic
Documents to which it is a party. The representations speak as of the execution
and delivery of this Agreement, as of the Closing Date, and as of each
Subsequent Transfer Date, and shall survive each sale of the Receivables to the
Issuer and the pledge thereof to the Trustee pursuant to the Indenture and the
issuance of the Notes and the Residual Pass-through Certificates.
(a) Organization and Good Standing. The Seller has been duly
incorporated 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 Trust.
(b) Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals in all jurisdictions in which the ownership or
lease of property or the conduct of its business or the consummation of the
transactions contemplated by the Basic Documents shall require such
qualifications.
(c) Power and Authority. The Seller has the power and
authority to execute and deliver this Agreement and the Basic Documents to which
it is a party and to carry out its terms and their terms, respectively; the
Seller has full power and authority to sell and assign the Receivables and the
Other Conveyed Property to be sold and assigned to and deposited with the Trust
by it and has duly authorized such sale and assignment to the Trust by all
necessary corporate action; and the execution, delivery and performance of this
Agreement and the Basic Documents to which the Seller is a party have been duly
authorized by the Seller by all necessary corporate action.
57
(d) Valid Sale, Binding Obligations. This Agreement effects a
valid sale, transfer and assignment of the Receivables and the Other Conveyed
Property, enforceable against the Seller and creditors of and purchasers from
the Seller; and this Agreement and the Basic Documents to which the Seller is a
party, when duly executed and delivered, shall constitute legal, valid and
binding obligations of the Seller enforceable in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by equitable limitations on the availability of
specific remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the Basic Documents and the fulfillment of
the terms of this Agreement and the Basic Documents shall not conflict with,
result in any breach of any of the terms and provisions of or constitute (with
or without notice, lapse of time or both) a default under the certificate of
incorporation or by-laws of the Seller, or any indenture, agreement, mortgage,
deed of trust or other instrument to which the Seller is a party or by which it
is bound, or result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement, mortgage,
deed of trust or other instrument, other than the Basic Documents, or violate
any law, order, rule or regulation applicable to the Seller of any court or of
any Federal or State regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Seller or any of its
properties.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the Seller's knowledge, threatened against the Seller, before any
court, regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Seller or its properties (A)
asserting the invalidity of this Agreement, the Securities or any of the Basic
Documents, (B) seeking to prevent the issuance of the Securities or the
consummation of any of the transactions contemplated by this Agreement or any of
the Basic Documents, (C) seeking any determination or ruling that might
materially and adversely affect the performance by the Seller of its obligations
under, or the validity or enforceability of, this Agreement or any of the Basic
Documents, or (D) relating to the Seller and which might adversely affect the
Federal or State income, excise, franchise or similar tax attributes of the
Securities.
(g) No Consents. No consent, approval, authorization or order
of or declaration or filing with any governmental authority is required for the
issuance or sale of the Securities or the consummation of the other transactions
contemplated by this Agreement, except such as have been duly made or obtained.
(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 transaction 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 Trust 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 Trust.
(j) Tax Returns. The Seller has filed on a timely basis all
tax returns which are required to be filed by it 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 by the books of the Seller).
(k) Certificates, Statements and Reports. The officer's
certificates, statements, reports and other documents prepared by Seller and
furnished by Seller to the Note Insurer or the Trustee pursuant to this
Agreement or any other Basic Document to which it is a party, and in connection
with the transactions contemplated hereby or thereby, when taken as a whole, do
not contain any untrue statement of a
58
material fact or omit to state a material fact necessary to make the statements
contained herein or therein not misleading.
(l) 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.
(m) Chief Executive Office. The chief executive office of the
Seller is at βββββ� ββββββ ββββββ, ββββββ, ββ βββββ� and its organizational number
is 3544934.
(n) Separateness Covenants. The Seller is in compliance in all
material respects with Article VIII of its Articles of Incorporation relating to
the separateness of the Seller from any other Person.
Sale Treatment. The Seller agrees to treat the conveyances hereunder as
secured financings for tax and accounting purposes and as a sale for all other
purposes (including without limitation legal and bankruptcy purposes), on all
relevant books, records, tax returns, financial statements and other applicable
documents.
Changes to Seller's Contract Purchase Guidelines. The Seller covenants
that it will not make any material changes to the Seller's Contract Purchase
Guidelines, or its classification of Obligors within such programs during the
Funding Period unless (i) the Controlling Party expressly consents in writing to
such changes and (ii) after giving effect to any such changes, the Rating Agency
Condition is satisfied.
Liability of Seller; Indemnities. The Seller shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement.
(a) The Seller shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Note Insurer, the Securityholders, the Backup
Servicer and the Trustee from and against any taxes that may at any time be
asserted against any such Person with respect to the transactions contemplated
in this Agreement and any of the Basic Documents (except any income taxes
arising out of fees paid to the Owner Trustee, the Trustee, the Backup Servicer
and the Note Insurer and except any taxes to which the Owner Trustee, or the
Trustee may otherwise be subject), including without limitation any sales, gross
receipts, general corporation, tangible personal property, privilege or license
taxes (but, in the case of the Issuer and the Securityholders, not including any
taxes asserted with respect to federal or other income taxes arising out of
distributions on the Notes and the Residual Pass-through Certificates) and costs
and expenses in defending against the same.
(b) The Seller shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Trustee, the Note Insurer and the Securityholders
from and against any loss, liability or expense incurred by reason of (i) the
Seller's willful misfeasance, bad faith or negligence in the performance of its
duties under this Agreement, or by reason of reckless disregard of its
obligations and duties under this Agreement and (ii) the Seller's or the
Issuer's violation of Federal or State securities laws in connection with the
offering and sale of the Notes or the Residual Pass-through Certificates.
(c) The Seller shall indemnify, defend and hold harmless the
Owner Trustee, 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 Owner Trustee.
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Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Trustee and the termination of this
Agreement or the Indenture or the Trust Agreement, as applicable, and shall
include reasonable fees and expenses of counsel and other expenses of
litigation. If the Seller shall have made any indemnity payments pursuant to
this Section and the Person to or on behalf of whom such payments are made
thereafter shall collect any of such amounts from others, such Person shall
promptly repay such amounts to the Seller, without interest.
Merger or Consolidation of, or Assumption of the Obligations of,
Seller. Any Person (a) into which the Seller may be merged or consolidated, (b)
which may result from any merger or consolidation to which the Seller shall be a
party or (c) which may succeed to the properties and assets of the Seller
substantially as a whole, which Person in any of the foregoing cases executes an
agreement of assumption to perform every obligation of the Seller under this
Agreement, shall be the successor to the Seller hereunder without the execution
or filing of any document or any further act by any of the parties to this
Agreement; provided, however, that (i) the Seller shall have received the
written consent of the Note Insurer prior to entering into any such transaction,
(ii) immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 3.1 shall have been breached and no Servicer
Termination Event, and no event which, after notice or lapse of time, or both,
would become a Servicer Termination Event shall have occurred and be continuing,
(iii) the Seller shall have delivered to the Owner Trustee, the Trustee and the
Note Insurer an Officers' Certificate and an Opinion of Counsel each stating
that such consolidation, merger or succession and such agreement of assumption
comply with this Section and that all conditions precedent, if any, provided for
in this Agreement relating to such transaction have been complied with, (iv) the
Rating Agency Condition shall have been satisfied with respect to such
transaction and (v) the Seller shall have delivered to the Owner Trustee, the
Trustee and the Note Insurer an Opinion of Counsel stating that, in the opinion
of such counsel, either (A) all financing statements and continuation statements
and amendments thereto have been authorized and filed that are necessary fully
to preserve and protect the interest of the Owner Trustee and the Trustee,
respectively, in the Receivables and the Other Conveyed Property and reciting
the details of such filings or (B) no such action shall be necessary to preserve
and protect such interest. Notwithstanding anything herein to the contrary, the
execution of the foregoing agreement of assumption and compliance with clauses
(i), (ii), (iii), (iv) and (v) above shall be conditions to the consummation of
the transactions referred to in clauses (a), (b) or (c) above.
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.
Seller May Own Residual Pass-through Certificates or Notes. The Seller
and any Affiliate thereof may in its individual or any other capacity become the
owner or pledgee of Securities with the same rights as it would have if it were
not the Seller or an Affiliate thereof, except as expressly provided herein or
in any Basic Document. Securities so owned by the Seller or such Affiliate shall
have an equal and proportionate benefit under the provisions of the Basic
Documents, without preference, priority or distinction as among all of the
Securities; provided, however, that any Notes owned by the Seller or any
Affiliate thereof (other than the Cayman Trust), during the time such Securities
are so owned by them, shall be without voting rights for any purpose set forth
in the Basic Documents and such Securities shall not be entitled to the benefits
of the Note Policy. The Seller shall notify the Owner Trustee, the Trustee and
the Note Insurer promptly after it or any of its Affiliates become the owner of
a Security.
ARTICLE IX
----------
THE SERVICER
Representations of Servicer. The Servicer makes the following
representations for the benefit of the Securityholders and on which the Note
Insurer shall be deemed to have relied in executing and
60
delivering the Note Policy, on which the Issuer is deemed to have relied in
acquiring the Receivables and on which the Trustee is deemed to have relied in
executing and performing pursuant to this Agreement, the Indenture and the other
Basic Documents to which it is a party. The representations speak as of the
execution and delivery of this Agreement, as of the Closing Date, and as of each
Subsequent Transfer Date, and shall survive the sale of the Receivables to the
Issuer and the pledge thereof to the Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Servicer has been duly
incorporated and is validly existing as a corporation solely under the laws of
the State of California, in good standing thereunder, 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) or the consummation of the
transactions contemplated by the Basic Documents requires or shall require such
qualification.
(c) Power and Authority. The Servicer has the power and
authority to execute and deliver this Agreement and the Basic Documents to which
it is a party and to carry out its terms and their terms, respectively, and the
execution, delivery and performance of this Agreement and the Basic Documents to
which it is a party have been duly authorized by the Servicer by all necessary
corporate action.
(d) Binding Obligation. This Agreement and the Basic Documents
to which the Servicer is a party shall constitute legal, valid and binding
obligations of the Servicer enforceable in accordance with their respective
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement of creditors'
rights generally and by equitable limitations on the availability of specific
remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the Basic Documents to which to the Servicer
is a party, and the fulfillment of the terms of this Agreement and the Basic
Documents to which the Servicer is a party, shall not conflict with, result in
any breach of any of the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under, the articles of incorporation or
bylaws of the Servicer, or any indenture, agreement, mortgage, deed of trust or
other instrument to which the Servicer is a party or by which it is bound or any
of its properties are subject, or result in the creation or imposition of any
Lien upon any of its properties pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust or other instrument, other than the Basic
Documents, or violate any law, order, rule or regulation applicable to the
Servicer of any court or of any Federal or State regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over the
Servicer or any of its properties.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the Servicer's knowledge, threatened against the Servicer, before
any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over the Servicer or its
properties (A) asserting the invalidity of this Agreement or any of the Basic
Documents, (B) seeking to prevent the issuance of the Securities or the
consummation of any of the transactions contemplated by this Agreement or any of
the Basic Documents, or (C) except for the Pending Litigation, seeking any
determination or ruling that might materially and adversely affect the
performance by the Servicer of its obligations under, or the validity or
enforceability of, this Agreement, the Securities or any of the Basic Documents
or (D) relating to the Servicer and which might adversely affect the Federal or
State income, excise, franchise or similar tax attributes of the Securities.
61
(g) No Consents. No consent, approval, authorization or order
of or declaration or filing with any governmental authority is required for the
issuance or sale of the Securities or the consummation of the other transactions
contemplated by this Agreement, except such as have been duly made or obtained.
(h) Taxes. The Servicer has filed on a timely basis all tax
returns which are required to be filed by it 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).
(i) Chief Executive Office. The Servicer hereby represents and
warrants to the Trustee that the Servicer's principal place of business and
chief executive office is, and for the four months preceding the date of this
Agreement has been, located at: βββββ� ββββββ ββββββ, ββββββ, ββ βββββ�.
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.
(i) The Servicer shall indemnify, defend and hold
harmless the Trust, the Trustee, the Owner Trustee, the Backup
Servicer, the Collateral Agent, the Note Insurer, and the
Securityholders 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 (unless the Backup Servicer is the
Servicer) shall indemnify, defend and hold harmless the Trust, the
Trustee, the Owner Trustee, the Backup Servicer, the Collateral Agent,
the Note Insurer, and the Securityholders from and against any taxes
that may at any time be asserted against any of such parties with
respect to the transactions contemplated in this Agreement, including,
without limitation, any sales, gross receipts, general corporation,
tangible personal property, privilege or license taxes (but not
including federal or other income taxes, including franchise taxes
(other than Texas Franchise Tax, if CPS is the Servicer) asserted with
respect to, and as of the date of, the sale of the Receivables and the
Other Conveyed Property to the Trust or the issuance and original sale
of the Securities and, in the case of the Issuer and the
Securityholders, not including any taxes asserted with respect to
federal or other income taxes arising out of distributions on the Notes
and Residual Pass-through Certificates) and costs and expenses in
defending against the same;
(iii) The Servicer shall indemnify, defend and hold
harmless the Trust, the Trustee, the Owner Trustee, the Backup
Servicer, the Collateral Agent, the Note Insurer, each Placement Agent,
their respective officers, directors, agents and employees and the
Securityholders from and against any and all costs, expenses, losses,
claims, damages, and liabilities to the extent that such cost, expense,
loss, claim, damage, or liability arose out of, or was imposed upon the
Trust, the Trustee, the Owner Trustee, the Backup Servicer, the Note
Insurer, each Placement Agent or the Securityholders or such officers,
directors, agents or employees through the negligence, willful
misfeasance or bad faith of the Servicer in the performance of its
duties under this Agreement, by reason of reckless disregard of its
obligations and duties under this Agreement or as a result of a breach
of any representation or warranty made by the Servicer in this
Agreement (without regard to any exception relating to the Pending
Litigation).
(iv) The Servicer shall indemnify, defend, and hold
harmless the Trustee, the Owner Trustee, the Backup Servicer and the
Collateral Agent from and against all costs, expenses, losses, claims,
damages, and liabilities arising out of or incurred in connection with
the acceptance or performance of the trusts and duties herein contained
or in the Trust Agreement, if
62
any, except to the extent that such cost, expense, loss, claim, damage
or liability: (A) shall be due to the willful misfeasance, bad faith,
or negligence (except for errors in judgment) of the Trustee, the Owner
Trustee, the Backup Servicer or the Collateral Agent, 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, the Owner Trustee,
the Backup Servicer or the Collateral Agent.
(v) CPS shall indemnify, defend and hold harmless the
Trust, the Trustee, the Owner Trustee, the Backup Servicer, the
Collateral Agent, the Note Insurer and the Securityholders against any
and all costs, expenses, losses, damages, claims and liabilities
arising out of or resulting from CPS's involvement in, or the effect on
any Receivable as a result of, the Pending Litigation.
(b) Notwithstanding the foregoing, the Servicer shall not be
obligated to defend, indemnify, and hold harmless any Noteholders for any
losses, claims, damages or liabilities incurred by any Securityholders arising
out of claims, complaints, actions and allegations relating to Section 406 of
ERISA or Section 4975 of the Code as a result of the purchase or holding of a
Security by such Noteholder with the assets of a plan subject to such provisions
of ERISA or the Code or the servicing, management and operation of the Trust.
(c) For purposes of this Section 9.2, in the event of the
termination of the rights and obligations of the Servicer (or any successor
thereto pursuant to Section 9.3) as Servicer pursuant to Section 10.1, or a
resignation by such Servicer pursuant to this Agreement, such Servicer shall be
deemed to be the Servicer pending appointment of a successor Servicer pursuant
to Section 10.2. The provisions of this Section 9.2(c) shall in no way affect
the survival pursuant to Section 9.2(d) of the indemnification by the Servicer
provided by Section 9.2(a).
(d) Indemnification under this Section 9.2 shall survive the
termination of this Agreement and any resignation or removal of CPS as Servicer
and shall include reasonable fees and expenses of counsel and expenses of
litigation. If the Servicer shall have made any indemnity payments pursuant to
this Section and the recipient thereafter collects any of such amounts from
others, the recipient shall promptly repay such amounts to the Servicer, without
interest.
Merger or Consolidation of, or Assumption of the Obligations of, the
Servicer or Backup Servicer.
(a) CPS shall not merge or consolidate with any other person,
convey, transfer or lease substantially all its assets as an entirety to another
Person, or permit any other Person to become the successor to CPS's business
unless, after the merger, consolidation, conveyance, transfer, lease or
succession, the successor or surviving entity shall be capable of fulfilling the
duties of CPS contained in this Agreement. Any corporation (i) into which CPS
may be merged or consolidated, (ii) resulting from any merger or consolidation
in which CPS shall be a constituent corporation, (iii) which acquires by
conveyance, transfer, or lease substantially all of the assets of CPS, or (iv)
succeeding to the business of CPS, in any of the foregoing cases shall execute
an agreement of assumption to perform every obligation of CPS under this
Agreement and, whether or not such assumption agreement is executed, shall be
the successor to CPS under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties to this Agreement,
anything in this Agreement to the contrary notwithstanding; provided, however,
that nothing contained herein shall be deemed to release CPS from any
obligation. CPS shall provide notice of any merger, consolidation or succession
pursuant to this Section to the Owner Trustee, the Trustee, the Securityholders,
the Note Insurer and each Rating Agency. Notwithstanding the foregoing, CPS
shall not merge or consolidate with any other Person or permit any other Person
to become a successor to CPS's business, unless (x) immediately after giving
effect to such transaction, no representation, warranty or covenant made
pursuant to Sections 9.1 or 4.6 shall have been breached (for purposes hereof,
such representations and warranties shall be deemed made as of the date of the
consummation of such transaction) and no event that, after notice or lapse of
time, or both, would become an Insurance Agreement Event of Default shall have
occurred and be continuing, (y) CPS shall have delivered to the Owner Trustee,
the Trustee, the Rating Agencies and the Note Insurer an Officer's Certificate
and an Opinion of Counsel each stating that such consolidation, merger or
succession and such
63
agreement of assumption comply with this Section and that all conditions
precedent, if any, provided for in this Agreement relating to such transaction
have been complied with, and (z) CPS shall have delivered to the Owner Trustee,
the Trustee, the Rating Agencies and the Note Insurer an Opinion of Counsel,
stating in the opinion of such counsel, either (A) all financing statements and
continuation statements and amendments thereto have been authorized and filed
that are necessary to preserve and protect the interest of the Owner Trustee and
the Trustee, respectively, in the Receivables and the Other Conveyed Property
and reciting the details of the filings or (B) no such action shall be necessary
to preserve and protect such interest.
(b) Any corporation (i) into which the Backup Servicer may be
merged or consolidated, (ii) resulting from any merger or consolidation in which
the Backup Servicer shall be a constituent corporation, (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.
Limitation on Liability of Servicer, Backup Servicer and Others.
Neither the Servicer, the Backup Servicer nor any of the directors or officers
or employees or agents of the Servicer or Backup Servicer shall be under any
liability to the Trust or the Securityholders, except as provided in this
Agreement, for any action taken or for refraining from the taking of any action
pursuant to this Agreement; provided, however, that this provision shall not
protect the Servicer, the Backup Servicer or any such person against any
liability that would otherwise be imposed by reason of a breach of this
Agreement or willful misfeasance, bad faith or negligence in the performance of
duties. CPS, the Backup Servicer and any director, officer, employee or agent of
CPS or the Backup Servicer may rely in good faith on the written advice of
counsel or on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising under this Agreement. In
addition, the Backup Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
Delegation of Duties. The Servicer may at any time delegate duties
under this Agreement to sub-contractors who are in the business of servicing
automotive receivables with the prior written consent of the Controlling Party
as determined pursuant to Section 13.15; provided, however, that no such
delegation or sub-contracting of duties by the Servicer shall relieve the
Servicer of its responsibility with respect to such duties.
Servicer and Backup Servicer Not to Resign(a). 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 Insurer (so long as an Insurer Default shall not
have occurred and be continuing) or a Note Majority (if an Insurer Default shall
have occurred and be continuing) or, if the Notes are no longer outstanding, the
Majority Certificateholders, do 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 Insurer. Any such determination permitting the resignation of the
Servicer or Backup Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered and acceptable to the Trustee, the Owner Trustee and the Note
Insurer (unless an Insurer Default shall have occurred and be continuing). No
resignation of the Servicer shall become effective until, so long as no Insurer
Default shall have occurred and be continuing, the Backup Servicer or an entity
acceptable to the Note Insurer shall have assumed the responsibilities and
obligations of the Servicer or, if an Insurer Default shall have occurred and be
continuing, the Backup Servicer or a successor Servicer that is an
64
Eligible Servicer shall have assumed the responsibilities and obligations of the
Servicer. No resignation of the Backup Servicer shall become effective until, so
long as no Insurer Default shall have occurred and be continuing, an entity
acceptable to the Note Insurer shall have assumed the responsibilities and
obligations of the Backup Servicer or, if an Insurer Default shall have occurred
and be continuing a Person that is an Eligible Servicer shall have assumed the
responsibilities and obligations of the Backup Servicer; provided, however, that
in the event a successor Backup Servicer is not appointed within 60 days after
the Backup Servicer has given notice of its resignation and has provided the
Opinion of Counsel required by this Section 9.6, the Backup Servicer may
petition a court for its removal.
ARTICLE X
---------
DEFAULT
Servicer Termination Event. For purposes of this Agreement, each of the
following shall constitute a "Servicer Termination Event":
(a) Any failure by the Servicer to deliver to the Trustee for
distribution to the Securityholders and the Note Insurer or for deposit into the
Collection Account or the Series 2007-C Spread Account any payment required
under the terms of this Agreement, which failure continues unremedied for a
period of two Business Days (one Business Day with respect to the payment of
Purchase Amounts) after the earlier of knowledge thereof by the Servicer or
after written notice is received by the Servicer from the Trustee or the Note
Insurer (unless an Insurer Default shall have occurred and be continuing, in
which case from a Note Majority) or, after the Notes have been paid in full and
all amounts due to the Note Insurer have been paid in full, from Majority
Certificateholders, or after discovery of such failure by a Responsible Officer
of the Servicer; or
(b) Failure by the Servicer to deliver to the Trustee and the
Note Insurer (so long as an Insurer Default shall not have occurred and be
continuing), the Servicer's Certificate within three days after the date on
which such Servicer's Certificate is required to be delivered under Section 4.9,
or failure on the part of the Servicer to observe or perform its covenants and
agreements set forth in Section 9.3(a); or
(c) Failure on the part of the Servicer duly to observe or
perform any other covenants or agreements of the Servicer set forth in this
Agreement or, if the Servicer is CPS, failure of CPS to duly perform any other
covenants or agreements of CPS set forth in this Agreement, which failure (i)
materially and adversely affects the rights of Noteholders (determined without
regard to the availability of funds under the Note Policy), the Note Insurer
(unless an Insurer Default shall have occurred and be continuing) or the
Residual Certificateholders (after the Notes have been paid in full and all
other amounts owed to the Note Insurer have been paid in full and the Note
Policy has expired in accordance with its terms), and (ii) 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 (1) to the Servicer by the Trustee or the
Note Insurer or (2) or, if an Insurer Default shall have occurred and be
continuing, to the Servicer, the Trustee and the Note Insurer by each of the
Holders of Notes evidencing not less than 25% of the aggregate outstanding Note
Balance of each Class of Notes or, after the Notes have been paid in full and
all amounts due to the Note Insurer have been paid in full, by the Majority
Certificateholders; or
(d) The occurrence of an Insolvency Event with respect to the
Servicer or the Seller (or, for so long as CPS is Servicer, any of the Specified
Affiliates); or
(e) Failure on the part of the Servicer to observe its
covenants and agreements relating to (a) merger or consolidation or (b)
preservation of its ownership (or security interest) in repossessed Financed
Vehicles delivered for sale to dealers; or
(f) Any representation, warranty or statement of the Servicer
made in this Agreement or any certificate, report or other writing delivered
pursuant hereto shall prove to be incorrect in any material respect as of the
time when the same shall have been made (excluding, however, any
65
representation or warranty set forth in this Agreement relating to the
characteristics of the Receivables), and the incorrectness of such
representation, warranty or statement has a material adverse effect on the
Trust, the Note Insurer or the Securityholders and, within 30 days after the
earlier of knowledge thereof by the Servicer or after written notice thereof
shall have been given (1) to the Servicer by the Collateral Agent, the Trustee
or the Note Insurer or (2) if an Insurer Default shall have occurred and be
continuing, to the Servicer and to the Trustee and the Note Insurer by each of
the Holders of Notes evidencing not less than 25% of the aggregate outstanding
Note Balance of each Class of Notes or, after the Notes have been paid in full
and all amounts due to the Note Insurer have been paid in full, by the Majority
Certificateholders, the circumstances or condition in respect of which such
representation, warranty or statement was incorrect shall not have been
eliminated or otherwise cured; or
(g) So long as an Insurer Default shall not have occurred and
be continuing, the Note Insurer shall not have delivered a Servicer Extension
Notice pursuant to Section 4.14; or
(h) So long as an Insurer Default shall not have occurred and
be continuing, an Insurance Agreement Event of Default shall have occurred; or
(i) A claim is made under the Note Policy.
Consequences of a Servicer Termination Event. If a Servicer Termination
Event shall occur and be continuing, the Note Insurer (or, if an Insurer Default
shall have occurred and be continuing either the Trustee (to the extent it has
knowledge thereof) or the Holders of Notes evidencing not less than 25% of the
aggregate outstanding Note Balance for each Class of Notes or, after the Notes
have been paid in full and all amounts due to the Note Insurer have been paid in
full, the Majority Certificateholders), by notice given in writing to the
Servicer (and to the Trustee if given by the Note Insurer or the Noteholders) or
by non-extension of the term of the Servicer as referred to in Section 4.14 may
terminate all of the rights and obligations of the Servicer under this
Agreement. The Servicer shall be entitled to its pro rata share of the Servicing
Fee for the number of days in the Collection Period prior to the effective date
of its termination. On or after the receipt by the Servicer of such written
notice or upon termination of the term of the Servicer, all authority, power,
obligations and responsibilities of the Servicer under this Agreement, whether
with respect to the Notes, the Residual Pass-through Certificates, the
Receivables or the 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 Controlling Party
under Section 10.3); provided, however, that the successor Servicer shall have
no liability with respect to any obligation which was required to be performed
by the terminated Servicer prior to the date that the successor Servicer becomes
the Servicer or any claim of a third party based on any alleged action or
inaction of the terminated Servicer. The successor Servicer is authorized and
empowered by this Agreement to execute and deliver, on behalf of the terminated
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of the Receivables and the Other Conveyed
Property and related documents to show the Trust as lienholder or secured party
on the related Lien Certificates, or otherwise. The terminated Servicer agrees
to cooperate with the successor Servicer in effecting the termination of the
responsibilities and rights of the terminated Servicer under this Agreement,
including, without limitation, the transfer to the successor Servicer for
administration by it of all cash amounts that shall at the time be held by the
terminated Servicer for deposit, or have been deposited by the terminated
Servicer, in the Collection Account or thereafter received with respect to the
Receivables and the delivery to the successor Servicer of all Receivable Files
that shall at the time be held by the terminated Servicer and a computer tape in
readable form as of the most recent Business Day containing all information
necessary to enable the successor Servicer to service the Receivables and the
Other Conveyed Property. All reasonable costs and expenses (including reasonable
attorneys' fees and boarding 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(a)
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hereof. Upon receipt of notice of the occurrence of Servicer Termination Event,
the Trustee shall give notice thereof to the Rating Agencies. If requested by
the Controlling Party, the successor Servicer shall terminate the Lockbox
Agreement and direct the Obligors to make all payments under the Receivables
directly to the successor Servicer (in which event the successor Servicer shall
process such payments in accordance with Section 4.2(e)), or to a lockbox
established by the successor Servicer at the direction of the Controlling Party,
at the successor Servicer's expense. The terminated Servicer shall grant the
Trustee, the successor Servicer and the Controlling Party reasonable access to
the terminated Servicer's premises at the terminated Servicer's expense.
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 4.14, or upon the resignation of the Servicer pursuant
to Section 9.6, the predecessor Servicer shall continue to perform its functions
as Servicer under this Agreement, in the case of termination, only until the
date specified in such termination notice or, if no such date is specified in a
notice of termination, until receipt of such notice and, in the case of
expiration and non-renewal of the term of the Servicer upon the expiration of
such term, and, in the case of resignation, until the later of (x) the date 45
days from the delivery to the Trustee of written notice of such resignation (or
written confirmation of such notice) in accordance with the terms of this
Agreement and (y) the date upon which the predecessor Servicer shall become
unable to act as Servicer, as specified in the notice of resignation and
accompanying Opinion of Counsel. In the event of termination of the Servicer,
βββββ� Fargo Bank, National Association, as Backup Servicer, shall assume the
obligations of Servicer hereunder on the date specified in such written notice
(the "Assumption Date") pursuant to the Servicing Assumption Agreement or, in
the event that the Note Insurer 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 CPS as 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, whether
provided for by the terms of this Agreement, arising by operation of law or
otherwise, for any duties, responsibilities, obligations or liabilities of CPS
or any predecessor Servicer (i) arising under Sections 4.7 and 9.2 of this
Agreement, regardless of when the liability, duty, responsibility or obligation
of CPS or any predecessor Servicer therefor arose, (ii) required to be performed
by CPS or any predecessor Servicer prior to the Assumption Date or any claim of
any third party based on any alleged action or inaction of CPS or any
predecessor Servicer, or (iii) with respect to the payment of any taxes required
to be paid by CPS or any predecessor Servicer. The indemnification obligations
of the Backup Servicer, upon becoming a successor Servicer, are expressly
limited to those instances of gross negligence or willful misconduct of the
Backup Servicer in its role as successor Servicer that occur after the
Assumption Date. Notwithstanding the above, if the Backup Servicer shall be
legally unable or unwilling to act as Servicer, and an Insurer Default shall
have occurred and be continuing, the Backup Servicer, the Trustee or a Note
Majority or, if the Note Balance has been reduced to zero and all amounts due
and owing to the Note Insurer have been paid in full and the Policy has expired
in accordance with its terms, the Majority Certificateholders may petition a
court of competent jurisdiction to appoint any Eligible Servicer as the
successor to the Servicer. Pending appointment pursuant to the preceding
sentence, the 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 resignation of the Servicer pursuant to Section 9.6 or the
non-extension of the servicing term of the Servicer, as referred to in Section
4.14. If upon the termination of the Servicer pursuant to Section 10.2 or the
resignation of the Servicer pursuant to Section 9.6, the Controlling Party
appoints a successor Servicer other than the Backup Servicer, the Backup
Servicer shall not be relieved of its duties as Backup Servicer hereunder.
(b) Any successor Servicer shall be entitled to receive the
compensation set forth in Section 5.7(a)(ii), (iii), (ix) and (xii).
67
Notification to Securityholders. Upon any termination of, or
appointment of a successor to, the Servicer, the Trustee shall give prompt
written notice thereof to each Securityholder, the Owner Trustee and to the
Rating Agencies.
Waiver of Past Defaults. The Controlling Party may waive any default by
the Servicer in the performance of its obligations under this Agreement and the
consequences thereof (except a default in making any required deposits to or
payments from any of the Trust Accounts in accordance with the terms of this
Agreement). Upon any such waiver of a past default, such default shall cease to
exist, and any Servicer Termination Event arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement). No such waiver shall
extend to any subsequent or other default or impair any right consequent
thereto.
Action Upon Certain Failures of the Servicer. In the event that a
Responsible Officer of the Trustee shall have actual knowledge of any failure of
the Servicer specified in Section 10.1 which would give rise to a right of
termination under such Section upon the Servicer's failure to remedy the same
after notice, the Trustee shall give notice thereof to the Servicer and the Note
Insurer. For all purposes of this Agreement (including, without limitation,
Section 6.2(b) and this Section 10.6), the Trustee shall not be deemed to have
knowledge of any failure of the Servicer as specified in Sections 10.1(c)
through (i) unless notified thereof in writing by the Servicer, the Note Insurer
or by a Securityholder. The Trustee shall be under no duty or obligation to
investigate or inquire as to any potential failure of the Servicer specified in
Section 10.1.
ARTICLE XI
----------
TERMINATION
Optional Purchase of All Receivables.
(a) On any Payment Date on or after the last day of any
Collection Period as of which the Collateral Balance shall be less than or equal
to 10% of the Original Collateral Balance, the Servicer shall have the option to
purchase the Owner Trust Estate, other than the Trust Accounts (with the consent
of the Note Insurer if such purchase would result in a claim on the Note Policy
or would result in any amount owing under the Insurance Agreement remaining
unpaid). To exercise such option, the Servicer shall (subject to the proviso
below) deposit in the Collection Account pursuant to Section 5.6 an amount equal
to the fair market value of the Receivables (including Liquidated Receivables)
as of such date, plus the appraised value of any other property held by the
Trust, such value to be determined by an appraiser mutually agreed upon by the
Servicer, the Note Insurer and the Trustee, and shall succeed to all interests
in and to the Trust; provided, however, that the amount to be paid for such
purchase shall be sufficient to pay the (i) the aggregate outstanding Note
Balance, (ii) the outstanding Residual Certificate Notional Balance, (iii)
accrued and unpaid interest on the Notes, (iv) any accrued and unpaid Residual
Certificate Interest Distributable Amount, (v) any unpaid Supplemental Residual
Certificate Distribution, and (vi) the unpaid expenses of the Trust and the Note
Insurer (and any expense reimbursements due to any Person under the Insurance
Agreement), including without limitation expenses incurred by the Trust and the
Note Insurer in connection with the exercise of such repurchase option. Upon
receipt of an amount equal to the fair market value of the Receivables and
written instructions from the Servicer, the Trustee shall release to CPS or its
designee the related Receivables Files and shall execute and deliver all
reasonable instruments of transfer or assignment, without recourse, as are
prepared by the Seller and delivered to the Trustee and necessary to vest in CPS
or such designee title to the Receivables including a Trustee's Certificate in
the form of Exhibit F-2. To the extent such option to purchase the Owner Trust
Estate is rescinded pursuant to Section 10.1 of the Indenture, the
Securityholders shall on the related Payment Date receive the payments of
interest and principal that would be due to the Securityholders on such Payment
Date as if such option to purchase the Owner Trust Estate had never been
exercised.
(b) Notice of any termination of the Trust shall be given by
the Servicer, which notice shall include, among other things, the items
specified in Section 9.1(c) of the Trust Agreement, to
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the Owner Trustee, the Trustee, the Note Insurer and the Rating Agencies as soon
as practicable after the Servicer has received notice thereof.
(c) Following the satisfaction and discharge of the Indenture
and the payment in full of the principal of and interest on the Notes, the
Residual Certificateholders will succeed to the rights of the Noteholders
hereunder and the Owner Trustee will succeed to the rights of, and assume the
obligations of, the Trustee under this Agreement.
ARTICLE XII
-----------
ADMINISTRATIVE DUTIES OF THE SERVICER
Administrative Duties.
(a) Duties with Respect to the Indenture. The Servicer shall
perform all its duties and the duties of the Issuer under the Indenture. In
addition, the Servicer shall consult with the Owner Trustee as the Servicer
deems appropriate regarding the duties of the Issuer under the Indenture. The
Servicer shall monitor the performance of the Issuer and shall advise the Owner
Trustee when action is necessary to comply with the Issuer's duties under the
Indenture. The Servicer shall prepare for execution by the Issuer or shall cause
the preparation by other appropriate Persons of all such documents, reports,
filings, instruments, certificates and opinions as it shall be the duty of the
Issuer to prepare, file or deliver pursuant to the Indenture. In furtherance of
the foregoing, the Servicer shall take all necessary action that is the duty of
the Issuer to take pursuant to the Indenture, including, without limitation,
pursuant to Sections 2.7, 3.5, 3.6, 3.7, 3.9, 3.17, 5.1(b), 7.3, 8.3, 9.2, 9.3,
11.1 and 11.15 of the Indenture.
(b) Duties with Respect to the Issuer.
(i) In addition to the duties of the Servicer set
forth in this Agreement or any of the Basic Documents, the Servicer
shall perform such calculations and shall prepare for execution by the
Issuer or the Owner Trustee or shall cause the preparation by other
appropriate Persons of all such documents, reports, filings,
instruments, certificates and opinions as it shall be the duty of the
Issuer or the Owner Trustee to prepare, file or deliver pursuant to
this Agreement or any of the Basic Documents or under State and Federal
tax and securities laws, and at the request of the Owner Trustee shall
take all appropriate action that it is the duty of the Issuer to take
pursuant to this Agreement or any of the Basic Documents, including,
without limitation, pursuant to Sections 2.6 and 2.10 of the Trust
Agreement. In accordance with the directions of the Issuer or the Owner
Trustee, the Servicer shall administer, perform or supervise the
performance of such other activities in connection with the Collateral
(including the Basic Documents) as are not covered by any of the
foregoing provisions and as are expressly requested by the Issuer or
the Owner Trustee and are reasonably within the capability of the
Servicer. The Servicer shall perform its administrative duties with
respect to the Issuer in accordance with the requirements enumerated in
Section 6.7 of the Trust Agreement. The Servicer shall monitor the
activities of the Issuer to assure compliance by the Issuer with the
requirements of Section 6.7 of the Trust Agreement. The Servicer shall
promptly take such action as may be required to correct any
noncompliance by the Issuer with the requirements of Section 6.7 of the
Trust Agreement.
(ii) Notwithstanding anything in this Agreement or
any of the Basic Documents to the contrary, the Servicer shall be
responsible for promptly notifying the Owner Trustee and the Trustee in
the event that any withholding tax is imposed on the Issuer's payments
(or allocations of income) to a Noteholder as contemplated by this
Agreement. Any such notice shall be in writing and specify the amount
of any withholding tax required to be withheld by the Owner Trustee or
the Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or
the Basic Documents to the contrary, the Servicer shall be responsible
for performance of the duties of the Issuer or the Seller set forth in
Section 5.1 of the Trust Agreement with respect to, among other things,
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accounting and reports to Residual Certificateholders; provided,
however, that, once prepared by the Servicer, the Owner Trustee shall
retain responsibility for the distribution of any such reports or
accounting actually provided to the Owner Trustee and necessary to
enable each Residual Certificateholder to prepare its Federal and State
income tax returns.
(iv) The Servicer shall perform the duties of the
Servicer specified in Section 10.2 of the Trust Agreement required to
be performed in connection with the resignation or removal of the Owner
Trustee, and any other duties expressly required to be performed by the
Servicer under this Agreement or any of the Basic Documents.
(v) In carrying out the foregoing duties or any of
its other obligations under this Agreement, the Servicer may enter into
transactions with or otherwise deal with any of its Affiliates;
provided, however, that the terms of any such transactions or dealings
shall be in accordance with any directions received from the Issuer and
shall be, in the Servicer's opinion, no less favorable to the Issuer in
any material respect.
(c) Tax Matters. The Servicer shall prepare and file, on
behalf of the Seller, all tax returns, tax elections, financial statements and
such annual or other reports of the Issuer as are necessary for preparation of
tax reports as provided in Article V of the Trust Agreement, including without
limitation, Internal Revenue Service Form 1099. All tax returns will be signed
by the person required or authorized to sign such returns under applicable law.
(d) Non-Ministerial Matters. With respect to matters that in
the reasonable judgment of the Servicer are non-ministerial, the Servicer shall
not take any action pursuant to this Article XII unless within a reasonable time
before the taking of such action, the Servicer shall have notified the Owner
Trustee and the Trustee of the proposed action and the Owner Trustee and, with
respect to items (i), (ii), (iii) and (iv) below, the Trustee shall not have
withheld consent or provided an alternative direction. For the purpose of the
preceding sentence, "non-ministerial matters" shall include:
(i) the amendment of or any supplement to the
Indenture;
(ii) the initiation of any claim or lawsuit by the
Issuer and the compromise of any action, claim or lawsuit brought by or
against the Issuer (other than in connection with the collection of the
Receivables);
(iii) the amendment, change or modification of this
Agreement or any of the Basic Documents;
(iv) the appointment of successor Note Registrars,
successor Paying Agents and successor Trustees pursuant to the
Indenture or the appointment of successor Servicers or the consent to
the assignment by the Note Registrar, Paying Agent or Trustee of its
obligations under the Indenture; and
(v) the removal of the Trustee.
(e) Exceptions. Notwithstanding anything to the contrary in
this Agreement except as expressly provided herein or in the other Basic
Documents, the Servicer, in its capacity as such hereunder, shall not be
obligated to, and shall not, (1) make any payments to the Securityholders under
the Basic Documents, (2) sell the Owner Trust Estate pursuant to Section 5.3 of
the Indenture, (3) take any other action that the Issuer directs the Servicer
not to take on its behalf or (4) in connection with its duties hereunder assume
any indemnification obligation of any other Person.
(f) Limitation of Successor Servicer's Obligations. The
successor Servicer shall not be responsible for any obligations or duties of the
Servicer under this Section 12.1.
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Records. The Servicer shall maintain appropriate books of account and
records relating to services performed under this Agreement, which books of
account and records shall be accessible for inspection by the Issuer, the
Trustee and the Note Insurer at any time during normal business hours.
Additional Information to be Furnished to the Issuer. The Servicer
shall furnish to the Issuer from time to time such additional information
regarding the Collateral as the Issuer shall reasonably request.
ARTICLE XIII
------------
MISCELLANEOUS PROVISIONS
Amendment.
(a) This Agreement may be amended from time to time by the
parties hereto, with the consent of the Trustee (which consent may not be
unreasonably withheld), with the prior written consent of the Note Insurer (so
long as no Insurer Default has occurred and is continuing) but without the
consent of any of the Securityholders, to cure any ambiguity, to correct or
supplement any provisions in this Agreement, to comply with any changes in the
Code, or to make any other provisions with respect to matters or questions
arising under this Agreement which shall not be inconsistent with the provisions
of this Agreement or the Insurance Agreement; provided, however, that such
action shall not, as evidenced by an Opinion of Counsel delivered to the Owner
Trustee, the Note Insurer and the Trustee, adversely affect in any material
respect the interests of any Securityholder; provided further that if an Insurer
Default has occurred and is continuing, such action shall not materially and
adversely affect the interests of the Note Insurer. Any such amendment shall be
deemed to not adversely affect in any material respect the interests of any
Securityholder if the Rating Agency Condition is satisfied.
This Agreement may also be amended from time to time by the parties
hereto, with the consent of the Note Insurer (so long as no Insurer Default has
occurred and is continuing) and the Trustee, or, if an Insurer Default has
occurred and is continuing, with the consent of a Note Majority, the Majority
Certificateholders and the Trustee, for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of the Securityholders; provided,
however, that no such amendment shall (a) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on
Receivables or distributions that shall be required to be made for the benefit
of the Securityholders or (b) reduce the aforesaid percentage of the Note
Balance of any Class or the Percentage Interest, the Holders of which are
required to consent to any such amendment, without the consent of the Holders of
all the outstanding Notes affected thereby and the Holders of all of the
outstanding Residual Pass-through Certificates affected thereby; provided
further, that if an Insurer Default has occurred and is continuing, such action
shall not materially adversely affect the interests of the Note Insurer. Any
such amendment shall not be deemed to adversely affect in any material respect
the interests of any Securityholder if the Rating Agency Condition has been
satisfied.
Promptly after the execution of any such amendment or consent, the
Trustee shall furnish written notification of the substance of such amendment or
consent to each Securityholder and the Rating Agencies.
It shall not be necessary for the consent of Securityholders pursuant
to this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents (and any other consents of
Securityholders provided for in this Agreement) and of evidencing the
authorization of any action by Securityholders shall be subject to such
reasonable requirements as the Trustee or the Owner Trustee, as applicable, may
prescribe.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee and the Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or permitted
by this Agreement and the Opinion of Counsel referred to in Section 13.2(i)(i)
has been delivered. The Owner Trustee, the Backup Servicer and the Trustee may,
but shall not
71
be obligated to, enter into any such amendment which affects the Issuer's, the
Owner Trustee's, the Backup Servicer's or the Trustee's, as applicable, own
rights, duties or immunities under this Agreement or otherwise.
(b) Notwithstanding anything to the contrary contained in
Section 13.1(a) above, the provisions of this Agreement relating to (i) the
Master Spread Account Agreement, the Series 2007-C Spread Account, the Specified
Spread Account Requisite Amount, a Trigger Event or any component definition of
a Trigger Event and (ii) any additional sources of funds which may be added to
the Series 2007-C Spread Account or uses of funds on deposit in the Series
2007-C Spread Account may be amended in any respect by the Seller, the Servicer,
the Note Insurer and the Collateral Agent (the consent of which shall not be
withheld or delayed with respect to any amendment that does not adversely affect
the Collateral Agent) without the consent of, or notice to, the Securityholders;
provided that any such amendment satisfies the Rating Agency Condition and the
Servicer shall provide copies of any such amendment to the Residual
Certificateholders.
(c) Notwithstanding the foregoing, no amendment shall be made
that would cause the Trust to fail to be classified as a Grantor Trust or a
United States Person (as such terms are defined under the Trust Agreement).
Protection of Title to Trust.
(a) The Seller or Servicer or both shall authorize and file
such financing statements and cause to be authorized and filed such continuation
statements, all in such manner and in such places as may be required by law
fully to preserve, maintain and protect the interest of the Issuer and the
interests of the Trustee in the Receivables and in the proceeds thereof. The
Seller shall deliver (or cause to be delivered) to the Note Insurer, the Owner
Trustee and the Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing.
(b) Neither the Seller nor the Servicer shall change its name,
identity, jurisdiction of organization, 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 Note Insurer, the Owner Trustee and the Trustee at least five
days' prior written notice thereof and shall have promptly filed appropriate
amendments to all previously filed financing statements or continuation
statements. Promptly upon such filing, the Seller or the Servicer, as the case
may be, shall deliver an Opinion of Counsel to the Issuer, the Owner Trustee,
the Trustee and the Note Insurer, in form and substance reasonably satisfactory
to the Note Insurer, stating either (A) all financing statements and
continuation statements have been authorized and filed that are necessary fully
to preserve and protect the interest of the Trust and the Trustee in the
Receivables, and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (B) no such action shall
be necessary to preserve and protect such interest.
(c) Each of the Seller and the Servicer shall have an
obligation to give the Note Insurer, the Owner Trustee and the Trustee at least
60 days' prior written notice of any change in its jurisdiction of organization
if, as a result of such change, the applicable provisions of the UCC would
require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement and shall promptly file
any such amendment or new financing statement. The Servicer shall at all times
maintain its jurisdiction of organization within the United States of America.
Each of the Seller and Servicer shall at all times be organized solely under the
laws of one State.
(d) The Servicer shall maintain accounts and records as to
each Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Receivable, including payments
and recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection Account
in respect of such Receivable.
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(e) The Servicer shall maintain its computer systems so that,
from and after the time of sale under this Agreement of the Receivables to the
Issuer, the Servicer's master computer records (including any backup archives)
that refer to a Receivable shall indicate clearly the interest of the Trust in
such Receivable and that such Receivable is owned by the Trust. Indication of
the Trust's interest in a Receivable shall be deleted from or modified on the
Servicer's computer systems when, and only when, the related Receivable shall
have been paid in full or repurchased.
(f) If at any time the Seller or the Servicer shall propose to
sell, grant a security interest in or otherwise transfer any interest in
automotive receivables to any prospective purchaser, lender or other transferee,
the Servicer shall give to such prospective purchaser, lender or other
transferee computer tapes, records or printouts (including any restored from
backup archives) that, if they shall refer in any manner whatsoever to any
Receivable, shall indicate clearly that such Receivable has been sold and is
owned by the Trust.
(g) The Servicer shall permit the Trustee, the Backup Servicer
and the Note Insurer and its agents at any time during normal business hours to
inspect, audit, and make copies of and abstracts from the Servicer's records
regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Note
Insurer, the Owner Trustee or to the Trustee, within five Business Days, a list
of all Receivables (by contract number and name of Obligor) then held as part of
the Owner Trust Estate, 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 Owner Trust
Estate.
(i) The Servicer shall deliver to the Note Insurer, the Owner
Trustee and the Trustee:
(i) promptly after the execution and delivery of this
Agreement and, if required pursuant to Section 13.1, of each amendment
waiver or consent, an Opinion of Counsel, in form and substance
satisfactory to the Note Insurer, stating that, in the opinion of such
counsel, either (A) all financing statements and continuation
statements have been authorized and filed that are necessary fully to
preserve and protect the interest of the Trust and the Trustee in the
Receivables, and reciting the details of such filings or referring to
prior Opinions of Counsel in which such details are given, or (B) no
such action shall be necessary to preserve and protect such interest;
and
(ii) within 90 days after the beginning of each
calendar year beginning with the first calendar year beginning more
than three months after the Cutoff Date, an Opinion of Counsel, dated
as of a date during such 90-day period, stating that, in the opinion of
such counsel, either (A) all financing statements and continuation
statements have been authorized and filed that are necessary fully to
preserve and protect the interest of the Trust and the Trustee in the
Receivables, and reciting the details of such filings or referring to
prior Opinions of Counsel in which such details are given, or (B) no
such action shall be necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (i) or (ii) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
Notices. All demands, notices and communications upon or to the Seller,
the Servicer, the Owner Trustee, the Trustee or the Rating Agencies under this
Agreement shall be in writing, personally delivered, electronically delivered,
or mailed by certified mail, return receipt requested, and shall be deemed to
have been duly given upon receipt (a) in the case of the Seller to CPS
Receivables Corp., βββββ� ββββββ ββββββ, ββββββ, ββ βββββ�, (b) in the case of the
Servicer to Consumer Portfolio Services, Inc., βββββ� ββββββ ββββββ, ββββββ, ββ
βββββ�, Attention: General Counsel, (c) in the case of the Issuer or the Owner
Trustee, at the Corporate Trust Office of the Owner Trustee, (d) in the case of
the Trustee or the Backup Servicer, at the Corporate Trust Office, (e) in the
case of the Note Insurer, to Financial Security Assurance Inc., 31
ββ
ββββ ββββ ββββββ, βββ� ββββ, βββ� ββββ βββββ�-ββββ, Attention: Transaction
Oversight Department, Re: Policy No. 51881-N (Telecopy: (βββ�) βββ�-ββββ or (212)
339-3529, Confirmation: (βββ�) βββ�-ββββ; (f) in the case of Moody's, to βββββ�'β�
Investors Service, Inc., ABS Monitoring Department, ββ ββββββ ββββββ, βββ� ββββ,
βββ� ββββ βββββ�; and (g) in the case of Standard & Poor's, via electronic
delivery to ββββββββ_βββββββ@βββββ�.βββ�; for any information not available in
electronic format, send hard copies to: Standard & Poor's Ratings Services, ββ
βββββ� ββββββ, ββββ βββββ�, βββ� ββββ, βββ� ββββ βββββ�-ββββ, Attention: ABS
Surveillance Group. Any notice required or permitted to be mailed to a
Securityholder shall be given by first class mail, postage prepaid, at the
address of such Securityholder as shown in the Certificate Register or Note
Register, as applicable. Any notice so mailed within the time prescribed in the
Agreement shall be conclusively presumed to have been duly given, whether or not
the Securityholder shall receive such notice.
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 8.5 and 9.3 and as provided in the provisions of this Agreement
concerning the resignation of the Servicer, this Agreement may not be assigned
by the Seller or the Servicer without the prior written consent of the Owner
Trustee, the Trustee, the Backup Servicer, the Trustee and the Note Insurer (or
if an Insurer Default shall have occurred and be continuing, the Holders of
Notes evidencing not less than 66% of the Aggregate Note Balance), and prompt
written notice to the Rating Agencies.
Limitations on Rights of Others. The provisions of this Agreement are
solely for the benefit of the parties hereto and for the benefit of the Owner
Trustee, the Residual Certificateholders (including the Seller), the Trustee,
the Noteholders and the Cayman Indenture Trustee, as third-party beneficiaries.
The Note Insurer and its successors and assigns shall be a third-party
beneficiary to the provisions of this Agreement, and shall be entitled to rely
upon and directly enforce such provisions of this Agreement, so long as no
Insurer Default shall have occurred and be continuing. Except as expressly
stated otherwise, any right of the Note Insurer to direct, appoint, consent to,
approve of, or take any action under this Agreement, shall be a right exercised
by the Note Insurer in its sole and absolute discretion. The Note Insurer may
disclaim any of its rights and powers under this Agreement (but not its duties
and obligations under the Note Policy) upon delivery of a written notice to the
Owner Trustee and the Trustee. Nothing in this Agreement, whether express or
implied, shall be construed to give to any other Person any legal or equitable
right, remedy or claim in the Owner Trust Estate or under or in respect of this
Agreement or any covenants, conditions or provisions contained herein.
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.
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.
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.
Governing Law. EXCEPT AS PROVIDED OTHERWISE IN SECTION 13.17, THIS
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND THIS AGREEMENT AND ALL
MATTERS ARISING OUT OF OR RELATING IN ANY WAY TO THIS AGREEMENT SHALL BE
GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES.
Assignment to Trustee. The Seller hereby acknowledges and consents to
any mortgage, pledge, assignment and grant of a security interest by the Issuer
to the Trustee pursuant to the Indenture for the benefit of the Issuer Secured
Parties of all right, title and interest of the Issuer in, to and under the
74
Receivables and Other Conveyed Property and/or the assignment of any or all of
the Issuer's rights and obligations hereunder to the Trustee.
Nonpetition Covenants.
(a) Notwithstanding any prior termination of this Agreement,
none of the Servicer, the Seller or the Backup Servicer shall, prior to the date
which is one year and one day after the termination of this Agreement with
respect to the Issuer, acquiesce, petition or otherwise invoke or cause the
Issuer to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Issuer under any Federal
or State bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Issuer or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Issuer.
(b) Notwithstanding any prior termination of this Agreement,
none of the Servicer or the Backup Servicer shall, prior to the date that is one
year and one day after the termination of this Agreement in accordance with
Article XI, with respect to the Seller, acquiesce to, petition or otherwise
invoke or cause the Seller to invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the Seller
under any Federal or State bankruptcy, insolvency or similar law, appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator, or other
similar official of the Seller or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Seller.
Limitation of Liability of Owner Trustee and Trustee.
----------------------------------------------------
(a) Notwithstanding anything contained herein to the contrary,
this Agreement has been countersigned by Wilmington Trust Company not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Wilmington Trust Company in its individual capacity or,
except as expressly provided in the Trust Agreement, as Owner Trustee have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Issuer hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto, as to all of which recourse shall be had
solely to the assets of the Issuer. For all purposes of this Agreement, in the
performance of its duties or obligations hereunder or in the performance of any
duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary,
this Agreement has been executed and delivered by βββββ� Fargo Bank, National
Association, not in its individual capacity but solely as Trustee and Backup
Servicer and in no event shall βββββ� Fargo Bank, National Association, have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Issuer hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto, as to all of which recourse shall be had
solely to the assets of the Issuer.
(c) In no event shall βββββ� Fargo Bank, National Association,
in any of its capacities hereunder, be deemed to have assumed any duties of the
Owner Trustee under the Delaware Statutory Trust Statute, common law, or the
Trust Agreement.
Independence of the Servicer. For all purposes of this Agreement, the
Servicer shall be an independent contractor and shall not be subject to the
supervision of the Issuer, the Trustee and Backup Servicer or the Owner Trustee
with respect to the manner in which it accomplishes the performance of its
obligations hereunder. Unless expressly authorized by this Agreement, the
Servicer shall have no authority to act for or represent the Issuer or the Owner
Trustee in any way and shall not otherwise be deemed an agent of the Issuer or
the Owner Trustee.
No ΐΦΜμΜΓappΟΒΤΨt Venture. Nothing contained in this Agreement (i) shall
constitute the Servicer and either of the Issuer or the Owner Trustee as members
of any partnership, joint venture, association, syndicate,
75
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.
Note Insurer as Controlling Party.
(a) Each Noteholder and Residual Certificateholder by purchase
of the Notes or Residual Certificates held by it acknowledges that the Trustee,
as partial consideration of the issuance of the Note Policy, has agreed that the
Note Insurer shall have certain rights hereunder for so long as no Insurer
Default shall have occurred and be continuing. So long as no Insurer Default has
occurred and is continuing whenever Noteholder or Residual Certificateholder
action, consent or approval is required under this Agreement, such action,
consent or approval shall be deemed taken or given on behalf of, and shall be
binding upon, all Noteholders and Residual Certificateholder if the Note Insurer
agrees to take such action or give such consent or approval. So long as an
Insurer Default has occurred and is continuing, any provision giving the Note
Insurer the right to direct, appoint or consent to, approve of, or take any
action under this Agreement shall be inoperative during the period of such
Insurer Default and such right shall instead vest in the Trustee acting, unless
otherwise specified, at the direction of a Note Majority. From and after such
time as the Notes have been paid in full and no amounts are owing to the Note
Insurer under the Insurance Agreement, any provision giving the Note Insurer or
the Noteholders the right to direct, appoint or consent to, approve of, or take
any action under this Agreement shall be inoperative and such right shall
instead vest in the Trustee acting at the direction of the Residual
Certificateholders, unless otherwise specified. The Note Insurer may disclaim
any of its rights and powers under this Agreement (but not its duties and
obligations under the Note Policy) upon delivery of a written notice to the
Trustee. The Note Insurer may give or withhold any consent hereunder in its sole
and absolute discretion. In exercising its rights as Controlling Party, the Note
Insurer (or the Trustee acting at the direction of Noteholders) shall have no
duty to the Residual Certificateholders or any other Issuer Secured Party, and
the Trustee shall be fully protected in acting upon the direction of the Note
Insurer as Controlling Party (or in acting as Controlling Party at the direction
of Noteholders) without regard to the interests of the Residual
Certificateholders.
(b) Each Residual Certificateholder, by its acceptance of a
Residual Certificate, agrees that it shall not (and hereby waives any right to)
contest or support any other Person in contesting, in any proceeding, the
validity or enforceability of the Notes or this Indenture.
(c) No right of the Note Insurer (or the Trustee acting at the
direction of Noteholders) as Controlling Party shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Issuer or
by any act or failure to act, in good faith, by the Controlling Party, or by any
non-compliance by the Issuer with the terms, provisions and covenants of this
Agreement, regardless of any knowledge thereof that the Note Insurer or the
Trustee may have or be otherwise charged with.
(d) So long as the Note Insurer (or the Trustee acting at the
direction of Noteholders) is the Controlling Party:
(i) no Residual Certificateholder shall have any
right to (A) ask, demand, βββ� for, take or receive, or retain, from the
Issuer or any other Person, by setoff or in any other manner, payment
or prepayment of all or any part of the obligations due to the Residual
Certificateholders, except in strict accordance with Section 5.7 of the
Sale and Servicing Agreement or Section 5.6 of the Indenture, as
applicable; (B) ask, demand or receive any security (other than the
Collateral) for the Residual Certificate Secured Obligations; (C)
exercise or seek to exercise any rights or remedies (including setoff)
with respect to any Collateral or institute any action or proceeding
with respect to such rights or remedies (including any action of
foreclosure); (D) contest, protest or object to any foreclosure
proceeding or action brought by the Trustee or any other exercise by
the Trustee of any rights and remedies relating to the Collateral; or
(E) object to
76
the forbearance by the Trustee from bringing or pursuing any
foreclosure proceeding or action or any other exercise of any rights or
remedies relating to the Collateral;
(ii) the Controlling Party shall, except as otherwise
expressly provided herein, have the exclusive right to direct the
Trustee with respect to enforcing rights, exercising remedies
(including setoff and the right to credit bid their debt) and making
determinations regarding the release, disposition, or restrictions with
respect to the Collateral without any consultation with or the consent
of any Residual Certificateholder.
(e) So long as the Note Insurer (or the Trustee acting at the
direction of Noteholders) is the Controlling Party, each Residual
Certificateholder hereby waives any and all rights it may have as a junior lien
creditor or otherwise to object to the manner in which the Trustee seeks to
enforce or collect the Insurer Secured Obligations or the Trustee Secured
Obligations or the Liens granted in any of the Collateral, regardless of whether
any action or failure to act by or on behalf of the Trustee or the Controlling
Party is adverse to the interest of any Residual Certificateholder.
(f) So long as the Note Insurer (or the Trustee acting at the
direction of Noteholders) is the Controlling Party, to the extent that the
Residual Certificateholders shall be entitled to vote as a separate class with
respect to any plan of reorganization involving the Issuer, each Residual
Certificateholder agrees that (i) it will not take any action or vote in any way
which supports any plan of reorganization that is inconsistent with the terms of
this Agreement, (ii) it will vote any claims or interest it holds to accept any
such plan of reorganization that is supported by the Controlling Party and (iii)
it will vote any claims or interests it holds to reject any such plan of
reorganization that is not supported by the Controlling Party. Each Residual
Certificateholder hereby grants to the Trustee (acting at the direction of the
Controlling Party) a power of attorney to vote such Residual Certificateholder's
claims and interests, if any, in any such plan of reorganization in a manner
consistent with the foregoing so long as the Note Insurer (or the Trustee acting
at the direction of Noteholders) is the Controlling Party.
(g) So long as the Note Insurer (or the Trustee acting at the
direction of Noteholders) is the Controlling Party, each Residual
Certificateholder agrees that it shall not assert or finance, or support any
other person in asserting or financing, in any bankruptcy or insolvency
proceeding, any surcharge, lien, recovery or claim against any of the Collateral
under Section 506(c) of the United States Bankruptcy Code.
(h) So long as the Note Insurer (or the Trustee acting at the
direction of Noteholders) is the Controlling Party, each Residual
Certificateholder agrees that it shall not seek adequate protection on account
of any claim or interest it may have, or (to the extent it would otherwise have
a right to object) object to any financing provided by or supported by the
Controlling Party and that (to the extent its consent is necessary or desired)
it will consent to any sale of Collateral that is supported by the Controlling
Party.
(i) Each of the Trustee and the Controlling Party is each
hereby authorized to demand specific performance of the provisions of this
Section 13.15 at any time when any Residual Certificateholder shall have failed
to comply with any term or provision of this Section 13.15. Each Residual
Certificateholder hereby irrevocably waives any defense based on the adequacy of
a remedy at law that might be asserted as a bar to such remedy of specific
performance.
SECTION 13.16 Acknowledgment of Roles
The parties expressly acknowledge and consent to βββββ� Fargo Bank,
National Association acting in the multiple capacities of Backup Servicer,
Collateral Agent and Trustee and the Cayman Indenture Trustee under the Basic
Documents. The parties agree that βββββ� Fargo
77
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 βββββ� 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.
Intention of Parties Regarding Delaware Securitization Act. It is the
intention of the Seller and the Issuer that the transfer and assignment of the
Trust Property contemplated by Section 2.1 of this Agreement shall constitute a
sale of the Trust Property from the Seller to the Issuer, conveying good title
thereto free and clear of any liens, and the beneficial interest in and title to
the Trust Property shall not be part of the Seller's estate in the event of the
filing of a bankruptcy petition by or against the Seller under any bankruptcy 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 Issuer 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 Issuer pursuant to this
Agreement;
(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.
78
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective duly authorized officers as of
the day and the year first above written.
CPS AUTO RECEIVABLES TRUST 2007-C
By: WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as Owner
Trustee on behalf of the Trust
By: /s/ βββββ� ββββββ
-----------------
Title: Financial Services Officer
--------------------------
CPS RECEIVABLES CORP., as Seller
By: /s/ ββββ ββββββββ
-----------------
Title: Vice President
---------------
CONSUMER PORTFOLIO SERVICES, INC., in its
individual capacity
and in its capacity as Servicer
By: /s/ ββββββ β�. βββββ�
-------------------
Title: Sr. Vice President
βββββ� FARGO BANK, NATIONAL ASSOCIATION, not
in its individual capacity, but solely as
Backup Servicer and Trustee
By: /s/ ββββββββ β�. ββββββββ
------------------------
Title: Vice President
-----------------