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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event
Reported) June 28, 1996
FINANCIAL ASSET SECURITIES CORP. (as depositor under the Pooling
and Servicing Agreement, dated as of June 17, 1996, which forms
FASCO Auto Trust 1996-1, which will issue the FASCO Auto Trust
1996-1 Asset Backed Certificates).
FINANCIAL ASSET SECURITIES CORP.
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(Exact name of registrant as specified in its charter)
Delaware 333-1548 06-1442101
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
600 Steamboat Road
Greenwich, Connecticut 06830
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(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (203) 625-2700
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<PAGE>
Item 5. Other Events.
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On June 28, 1996 Financial Asset Securities Corp. (the "Company")
entered into a Pooling and Servicing Agreement dated as of June 17, 1996 (the
"Pooling and Servicing Agreement"), by and among the Company, as depositor,
Consumer Portfolio Services, Inc., as originator and servicer, and Norwest
Bank Minnesota, National Association, as trustee. The Pooling and Servicing
Agreement is annexed hereto as Exhibit 1.
2
<PAGE>
Item 7. Financial Statements, Pro Forma Financial
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Information and Exhibits.
------------------------
(a) Not applicable.
(b) Not applicable.
(c) Exhibit:
1. Pooling and Servicing Agreement
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FINANCIAL ASSET SECURITIES CORP.
By: /s/ Brian Bernard
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Brian Bernard
Dated: June 28, 1996
4
<PAGE>
Exhibit Index
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Exhibit Page
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1. Pooling and Servicing Agreement
5
<PAGE>
EXHIBIT 1
6
<PAGE>
(EXECUTION COPY)
FINANCIAL ASSET SECURITIES CORP.
Depositor
and
CONSUMER PORTFOLIO SERVICES, INC.
Originator and Servicer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Trustee and Standby Servicer
POOLING AND SERVICING AGREEMENT
Dated as of June 17, 1996
$88,900,750.37
FASCO Auto Trust 1996-1
$84,455,712.85 6.65% Class A Certificates
$4,445,037.52 10.00% Class B Certificates
<PAGE>
TABLE OF CONTENTS
Section Page
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ARTICLE I
Definitions
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Usage of Terms . . . . . . . . . . . . . . . . . . . . . . . . 20
1.3. Section References . . . . . . . . . . . . . . . . . . . . . . 20
1.4. Limitation on Trust Fund Activities . . . . . . . . . . . . . . 20
1.5. Calculations . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.6. Action by or Consent of Certificateholders . . . . . . . . . . 21
1.7. Material Adverse Effect . . . . . . . . . . . . . . . . . . . . 21
ARTICLE II
The Trust and Trust Property
2.1. Creation of Trust . . . . . . . . . . . . . . . . . . . . . . . 21
2.2. Conveyance of Receivables . . . . . . . . . . . . . . . . . . . 21
2.3. Transfer Intended as Sale; Precautionary
Security Interest . . . . . . . . . . . . . . . . . . . . . . 23
2.4. Acceptance by Trustee . . . . . . . . . . . . . . . . . . . . . 23
2.5. Assignment by Depositor . . . . . . . . . . . . . . . . . . . . 23
2.6. (Reserved) . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.7. Delivery of Receivable Files . . . . . . . . . . . . . . . . . 23
2.8. Acceptance of Receivable Files by Trustee . . . . . . . . . . . 24
2.9. Access to Receivable Files . . . . . . . . . . . . . . . . . . 25
ARTICLE III
Administration and Servicing of Receivables
3.1. Duties of Servicer . . . . . . . . . . . . . . . . . . . . . . 26
3.2. Collection and Allocation of Receivable Payments . . . . . . . 27
3.3. Realization Upon Receivables . . . . . . . . . . . . . . . . . 28
3.4. Physical Damage Insurance; Other Insurance . . . . . . . . . . 28
3.5. Maintenance of Security Interests in Financed Vehicles . . . . 29
3.6. Additional Covenants of Servicer . . . . . . . . . . . . . . . 30
3.7. Purchase of Receivables Upon Breach . . . . . . . . . . . . . . 30
3.8. Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.9. Servicer's Certificate . . . . . . . . . . . . . . . . . . . . 31
3.10. Annual Statement as to Compliance: Notice of
Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.11. Annual Independent Certified Public
Accountant's Report . . . . . . . . . . . . . . . . . . . . . 32
<PAGE>
Section Page
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3.12. Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.13. Servicer Expenses . . . . . . . . . . . . . . . . . . . . . . . 33
3.14. Retention and Termination of Servicer . . . . . . . . . . . . . 33
3.15. Access to Certain Documentation and
Information Regarding Receivables . . . . . . . . . . . . . . 34
3.16. Verification of Servicer's Certificate . . . . . . . . . . . . 34
3.17. Fidelity Bond . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.18. Delegation of Duties . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE IV
Distributions, Spread Account;
Statements to Certificateholders
4.1. Accounts; Post-Office Box . . . . . . . . . . . . . . . . . . . 37
4.2. Collections . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.3. Application of Collections . . . . . . . . . . . . . . . . . . 39
4.4. Payaheads . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.5. Additional Deposits . . . . . . . . . . . . . . . . . . . . . . 40
4.6. Distributions; Policy Claims . . . . . . . . . . . . . . . . . 40
4.7. Withdrawals from Spread Account . . . . . . . . . . . . . . . . 44
4.8. Statements to Certificateholders; Tax Returns . . . . . . . . . 45
4.9. Policy Payments; Subrogation . . . . . . . . . . . . . . . . . 47
4.10. Reliance on Information from the Servicer . . . . . . . . . . . 48
4.11. Optional Deposits by the Certificate Insurer . . . . . . . . . 48
ARTICLE V
Reserved.
ARTICLE VI
The Certificates
6.1. The Certificates . . . . . . . . . . . . . . . . . . . . . . . 49
6.2A. Appointment of Paying Agent . . . . . . . . . . . . . . . . . . 49
6.2B. Authenticating Agent . . . . . . . . . . . . . . . . . . . . . 50
6.2. Authentication of Certificates . . . . . . . . . . . . . . . . 51
6.3. Registration of Transfer and Exchange of Certificates . . . . . 52
6.4. Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . 57
6.5. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . 57
6.6. Access to List of Certificateholders' Names
and Addresses . . . . . . . . . . . . . . . . . . . . . . . . 57
6.7. Maintenance of Office or Agency . . . . . . . . . . . . . . . . 58
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Section Page
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ARTICLE VII
The Depositor
7.1. Representations of Depositor . . . . . . . . . . . . . . . . . 58
7.2. Liability of Depositor; Indemnities . . . . . . . . . . . . . . 60
7.3. Merger or Consolidation of, or Assumption of
the Obligations of, Depositor . . . . . . . . . . . . . . . . 61
7.4. Limitation on Liability of Depositor and Others . . . . . . . . 61
7.5. Depositor May Own Certificates . . . . . . . . . . . . . . . . 62
ARTICLE VIII
The Servicer
8.1. Representations of Servicer . . . . . . . . . . . . . . . . . . 62
8.2. Indemnities of Servicer . . . . . . . . . . . . . . . . . . . . 64
8.3. Merger or Consolidation of, or Assumption of
the Obligations of, Servicer or Standby
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . 66
8.4. Limitation on Liability of Servicer and Others . . . . . . . . 66
8.5. Servicer and Standby Servicer Not to Resign . . . . . . . . . . 67
ARTICLE IX
Default
9.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . 68
9.2. Appointment of Successor . . . . . . . . . . . . . . . . . . . 71
9.3. Reserved. . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.4. Notification to Certificateholders . . . . . . . . . . . . . . 72
9.5. Direction of Insolvency Proceedings by
Certificate Insurer . . . . . . . . . . . . . . . . . . . . . 72
9.6. Action Upon Certain Failures of the Servicer . . . . . . . . . 74
ARTICLE X
The Trustee
10.1. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . 74
10.2. Trustee's Certificate . . . . . . . . . . . . . . . . . . . . . 76
10.3. Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.4. Certain Matters Affecting Trustee . . . . . . . . . . . . . . . 77
10.5. Trustee Not Liable for Certificates or
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.6. Trustee May Own Certificates . . . . . . . . . . . . . . . . . 80
10.7. Indemnity of Trustee . . . . . . . . . . . . . . . . . . . . . 80
10.8. Eligibility Requirements for Trustee . . . . . . . . . . . . . 80
10.9. Resignation or Removal of Trustee . . . . . . . . . . . . . . . 81
10.10. Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . 82
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<PAGE>
Section Page
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10.11. Merger or Consolidation of Trustee . . . . . . . . . . . . . . 82
10.12. Co-Trustee; Separate Trustee . . . . . . . . . . . . . . . . . 83
10.13. Representations and Warranties of Trustee . . . . . . . . . . . 84
10.14. No Bankruptcy Petition . . . . . . . . . . . . . . . . . . . . 85
10.15. Trustee May Enforce Claims Without Possession
of Certificates . . . . . . . . . . . . . . . . . . . . . . . 85
10.16. Rights of Certificate Insurer to Direct
Trustee; Class B Certificateholder's Right
of First Refusal . . . . . . . . . . . . . . . . . . . . . . 85
ARTICLE XI
Termination
11.1. Termination of the Trust . . . . . . . . . . . . . . . . . . . 86
11.2. Optional Purchase of All Receivables . . . . . . . . . . . . . 87
ARTICLE XII
Miscellaneous Provisions
12.1. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
12.2. Protection of Title to Trust . . . . . . . . . . . . . . . . . 89
12.3. Limitation on Rights of Certificateholders . . . . . . . . . . 92
12.4. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 93
12.5. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
12.6. Severability of Provisions . . . . . . . . . . . . . . . . . . 94
12.7. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . 94
12.8. Certificates Nonassessable and Fully Paid . . . . . . . . . . . 94
12.9. Nonpetition Covenant . . . . . . . . . . . . . . . . . . . . . 94
12.10. Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . 95
12.11. Financial Security as Controlling Party . . . . . . . . . . . . 95
12.12. Rule 144A Information . . . . . . . . . . . . . . . . . . . . . 96
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<PAGE>
EXHIBITS
Exhibit A Form of Class A Certificate
Exhibit B Form of Class B Certificate
Exhibit C-1 Form of Trustee's Certificate
Exhibit C-2 Form of Trustee's Certificate
Exhibit D Form of Monthly Certificateholder Statement
Exhibit E-1 Form of Trust Receipt
Exhibit E-2 Form of Servicing Officer's Certificate
Exhibit F Form of Transferee Certificate
SCHEDULES
Schedule A Schedule of Receivables
Schedule B Location of Receivables
Schedule C Delivery Requirements
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<PAGE>
POOLING AND SERVICING AGREEMENT dated as of June 17, 1996 (the
"Agreement") among Financial Asset Securities Corp., a Delaware corporation,
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as depositor (the "Depositor"), Consumer Portfolio Services, Inc., a
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California corporation, as originator of the receivables ("CPS"), and as
---
servicer (in such capacity, the "Servicer"), and Norwest Bank Minnesota,
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National Association, a national banking association, as trustee and standby
servicer (the "Trustee" and "Standby Servicer", respectively).
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In consideration of the premises and of the mutual agreements herein
contained, and other good and valuable consideration, the receipt of which
is acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE I
Definitions
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SECTION 1.1. Definitions. Whenever used in this Agreement, the
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following words and phrases, unless the context otherwise requires, whenever
capitalized shall have the following meanings:
"Affiliate" of any Person means any Person who directly or indirectly
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controls, is controlled by, or is under direct or indirect common control
with such Person. For purposes of this definition of "Affiliate", the term
"control" (including the terms "controlling", "controlled by" and "under
common control with") means the possession, directly or indirectly, of the
power to direct or cause a direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Aggregate Pass-Through Rate" means the sum of the Class A Pass-Through
---------------------------
Rate and the Class B Pass-Through Rate.
"Aggregate Prepayment Reduction Amount" means for any Distribution Date,
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the sum of the Prepayment Reduction Amounts for all Simple Interest
Receivables which were paid in full during the related Collection Period.
"Agreement" means this Pooling and Servicing Agreement, as the same may
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be amended and supplemented from time to time.
"AMN Vehicle" means a motor vehicle indirectly purchased by CPS from
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Auto Marketing Network Inc.
"Amount Financed" with respect to a Receivable means the aggregate
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amount originally advanced under the Receivable toward the purchase price of
the Financed Vehicle and any related costs.
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<PAGE>
"Annual Percentage Rate" or "APR" of a Receivable means the annual rate
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of finance charges stated in the Receivable.
"Authenticating Agent" has the meaning assigned to such term in Section
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6.2B.
"Basic Documents" means this Pooling and Servicing Agreement, the
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Purchase Agreement, the Insurance Agreement, the Indemnification Agreement,
the Indemnification and Contribution Agreement dated June 28, 1996, among the
Depositor, Greenwich Capital Markets, Inc. and CPS, the Master Assignment
Agreement dated June 17, 1996, between CPS and the Trustee, the Premium Side
Letter, the Spread Account Agreement and the Series 1996-2 Supplement
thereto, the Lock-Box Agreement, and the Servicing Assumption Agreement.
"Book-Entry Certificate" means any Class A Certificate registered in the
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name of the Depository or its nominee, ownership of which is reflected on the
books of the Depository or on the books of a person maintaining an account
with such Depository (directly or as an indirect participant in accordance
with the rules of such Depository).
"Business Day" means any day other than a Saturday, a Sunday or a day
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on which banking institutions in the City of New York, the State in which the
Corporate Trust Office is located, the State in which the executive offices
of the Servicer are located or the State in which the principal place of
business of the Certificate Insurer is located shall be authorized or
obligated by law, executive order, or governmental decree to be closed.
"Casualty" means, with respect to a Financed Vehicle, the total loss or
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destruction of such Financed Vehicle.
"Certificate" means any one of the certificates executed by the Trustee
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on behalf of the Trust and authenticated by the Trustee in substantially the
form set forth in Exhibit A or Exhibit B hereto.
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"Certificate Account" means the account designated as such, established
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and maintained pursuant to Section 4.1.
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"Certificate Balance" as of any day, means the sum of the Class A
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Certificate Balance on such day and the Class B Certificate Balance on such
day.
"Certificate 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.
"Certificate Insurer Optional Deposit" means, with respect to any
------------------------------------
Determination Date and the related Distribution Date, any
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<PAGE>
amount delivered by the Certificate Insurer to the Trustee in accordance with
Section 4.11.
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"Certificate Register" and "Certificate Registrar" mean, respectively,
-------------------- ---------------------
the register maintained and the Certificate Registrar appointed pursuant to
Section 6.3.
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"Certificate Owner" means, with respect to any Book-Entry Certificate,
-----------------
the Person who is the beneficial owner of such Book-Entry Certificate on the
books of the Depository, and, with respect to any Definitive Certificate, the
Certificateholder.
"Certificateholder" or "Holder" means the Person in whose name a
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Certificate shall be registered in the Certificate Register, except that so
long as any Certificates are outstanding, solely for the purposes of giving
any consent, waiver, request or demand pursuant to this Agreement, the
interest evidenced by any Certificate registered in the name of the
Depositor, CPS, the Servicer or any of their Affiliates, shall not be taken
into account in determining whether the requisite percentage necessary to
effect any such consent, waiver, request or demand shall have been obtained.
"Certificates" means the Class A Certificates and the Class B
------------
Certificates.
"Class A Certificate" means any one of the 6.65% Class A Certificates,
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executed by the Trustee on behalf of the Trust and authenticated by the
Trustee in substantially the form set forth in Exhibit A hereto.
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"Class A Certificate Balance" shall equal, initially, the Class A
---------------------------
Percentage of the Original Pool Balance and, thereafter, shall equal the
initial Class A Certificate Balance, reduced by all amounts previously
distributed to Class A Certificateholders and allocable to principal.
"Class A Certificateholder" means the Person in whose name a Class A
-------------------------
Certificate shall be registered in the Certificate Register.
"Class A Distributable Amount" means, for any Distribution Date, an
----------------------------
amount equal to the sum of the Class A Principal Distributable Amount for
such Distribution Date and the Class A Interest Distributable Amount for such
Distribution Date.
"Class A Guaranteed Distribution Amount" means, with respect to each
--------------------------------------
Distribution Date, the sum of the Class A Interest Distributable Amount for
such Distribution Date and the Class A Principal Distributable Amount for
such Distribution Date, in each case in accordance with the original terms of
the Class A Certificates when issued and without regard to any amendment or
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<PAGE>
modification of the Certificates or the Agreement which has not been consented
to by the Certificate Insurer; provided, however, the Class A Guaranteed
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Distribution Amount shall not include, nor shall coverage be provided under the
Policy in respect of, any taxes, withholding or other charge imposed with
respect to any Class A Certificateholder by any governmental authority.
"Class A Interest Carryover Shortfall" means, as of the close of any
------------------------------------
Distribution Date on which an Insurer Default is continuing, the excess of
the Class A Interest Distributable Amount for such Distribution Date and any
outstanding Class A Interest Carryover Shortfall from the preceding
Distribution Date plus interest on such outstanding Class A Interest
Carryover Shortfall, to the extent permitted by law, at the Class A Pass-
Through Rate from such preceding Distribution Date through the current
Distribution Date (calculated on the basis of a 360-day year consisting of
twelve 30-day months), over the amount of interest that the Holders of the
Class A Certificates actually received on such current Distribution Date.
"Class A Interest Distributable Amount" means, for any Distribution
-------------------------------------
Date, an amount equal to thirty (30) days of interest at the Class A Pass-
Through Rate on the Class A Certificate Balance as of the close of business
on the last day of the related Collection Period (calculated on the basis of
a 360-day year consisting of twelve 30-day months); provided, however, that
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on the first Distribution Date, the Class A Interest Distributable Amount
will equal interest at the Class A Pass-Through Rate on the Class A
Certificate Balance from and including the Cutoff Date through and including
July 14, 1996.
"Class A Pass-Through Rate" means 10.00% per annum.
-------------------------
"Class A Percentage" shall be ninety-five percent (95%).
------------------
"Class A Pool Factor" means, as of a Distribution Date, a seven-digit
-------------------
decimal figure equal to the Class A Certificate Balance as of the close of
business on such Distribution Date divided by the initial Class A Certificate
Balance. The Class A Pool Factor will be 1.0000000 as of the Closing Date;
thereafter, the Class A Pool Factor will decline to reflect reductions in the
Class A Certificate Balance.
"Class A Principal Carryover Shortfall" means, as of the close of any
-------------------------------------
Distribution Date on which an Insurer Default is continuing, the excess of
the Class A Principal Distributable Amount and any outstanding Class A
Principal Carryover Shortfall from the preceding Distribution Date, over the
amount of principal that the Holders of the Class A Certificates actually
received on such current Distribution Date.
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<PAGE>
"Class A Principal Distributable Amount" means, with respect to any
--------------------------------------
Distribution Date other than the Final Scheduled Distribution Date, the sum
of (a) the Class A Percentage of the sum of the following amounts: (i) the
principal portion as calculated in accordance with Section 4.3 of all
-----------
Scheduled Payments due during the preceding Collection Period and all prior
Collection Periods received during the preceding Collection Period on Rule
of 78's Receivables (excluding Recoveries) and all payments of principal
received on Simple Interest Receivables during such Collection Period
(including amounts transferred from the Payahead Account to the Certificate
Account to be applied to the principal portion of Scheduled Payments);
(ii) the principal portion of all prepayments in full received during the
preceding Collection Period (including prepayments in full resulting from
collections with respect to a Receivable received during the preceding
Collection Period plus the transfer of the Payahead Balance with respect to
such Receivable to the Certificate Account pursuant to Section 4.6(a)(ii))
------------------
(without duplication of amounts included in clause (i) above and clause (iv)
below); (iii) the portion of the Purchase Amount allocable to principal of
each Receivable that became a Purchased Receivable as of the last day of the
preceding Collection Period and, at the option of the Certificate 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
clauses (i) and (ii) above); (iv) the Principal Balance of each Receivable
that first became a Liquidated Receivable during the preceding Collection
Period (without duplication of the amounts included in clauses (i) and (ii)
above); and (v) the aggregate amount of Cram Down Losses with respect to the
Receivables that have occurred during the preceding Collection Period; plus
(b) the portion of the Certificate Insurer Optional Deposit pursuant to
Section 4.11(ii), if any, allocable to principal for such Distribution Date.
- ----------------
In addition, on the Final Scheduled Distribution Date, the Class A Principal
Distributable Amount will equal the Class A Certificate Balance as of the
Final Scheduled Distribution Date.
"Class B Certificate" means any one of the 10.00% Class B Certificates,
-------------------
executed by the Trustee on behalf of the Trust and authenticated by the
Trustee in substantially the form set forth in Exhibit B hereto.
---------
"Class B Certificate Balance" shall equal, initially, the Class B
---------------------------
Percentage of the Original Pool Balance and, thereafter, shall equal the
initial Class B Certificate Balance, reduced by all amounts previously
distributed to Class B Certificateholders and allocable to principal.
"Class B Certificateholder" means the Person in whose name a Class B
-------------------------
Certificate shall be registered in the Certificate Register.
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<PAGE>
"Class B Deficiency" shall have the meaning specified in Section 4.7(c).
------------------ --------------
"Class B Distributable Amount" means, for any Distribution Date, the sum
----------------------------
of the Class B Principal Distributable Amount and the Class B Interest
Distributable Amount.
"Class B Interest Distributable Amount" means, for any Distribution
-------------------------------------
Date, an amount equal to thirty (30) days of interest at the Class B Pass-
Through Rate on the Class B Certificate Balance as of the close of business
on the last day of the related Collection Period (calculated on the basis of
a 360-day year consisting of twelve 30-day months); provided, however, that
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on the first Distribution Date, the Class B Interest Distributable Amount
will equal interest at the Class B Pass-Through Rate on the Class B
Certificate Balance from and including the Cutoff Date through and including
July 14, 1996.
"Class B Interest Carryover Shortfall" means, as of the close of any
------------------------------------
Distribution Date, the excess of the Class B Interest Distributable Amount
for such Distribution Date and any outstanding Class B Interest Carryover
Shortfall from the preceding Distribution Date, plus interest on such
outstanding Class B Interest Carryover Shortfall, to the extent permitted by
law, at the Class B Pass-Through Rate from such preceding Distribution Date
through the current Distribution Date (calculated on the basis of a 360-day
year consisting of twelve 30-day months), over the amount of interest that
the Holders of the Class B Certificates actually received pursuant to Section
-------
4.6(c)(vi) on such current Distribution Date.
- ----------
"Class B Pass-Through Rate" means 10.00% per annum.
-------------------------
"Class B Percentage" shall be five percent (5%).
------------------
"Class B Pool Factor" means, as of a Distribution Date, a seven-digit
-------------------
decimal figure equal to the Class B Certificate Balance as of the close of
business on such Distribution Date divided by the initial Class B Certificate
Balance. The Class B Pool Factor will be 1.0000000 as of the Closing Date;
thereafter, the Class B Pool Factor will decline to reflect reductions in the
Class B Certificate Balance.
"Class B Principal Carryover Shortfall" means, as of the close of any
-------------------------------------
Distribution Date, the excess of the Class B Principal Distributable Amount
and any outstanding Class B Principal Carryover Shortfall from the preceding
Distribution Date, over the amount of principal that the Holders of the Class
B Certificates actually received on such current Distribution Date.
-6-
<PAGE>
"Class B Principal Distributable Amount" means, with respect to any
--------------------------------------
Distribution Date, the Class B Percentage of the sum of the following
amounts: (i) the principal portion as calculated in accordance with Section
-------
4.3 of all Scheduled Payments due during the preceding Collection Period and
- ---
all prior Collection Periods received during the preceding Collection Period
on Rule of 78's Receivables (excluding Recoveries) and all payments of
principal received on Simple Interest Receivables during such Collection
Period (including amounts transferred from the Payahead Account to the
Certificate Account to be applied to the principal portion of Scheduled
Payments); (ii) the principal portion of all prepayments in full received
during the preceding Collection Period (including prepayments in full
resulting from collections with respect to a Receivable received during the
preceding Collection Period plus the transfer of the Payahead Balance with
respect to such Receivable to the Certificate Account pursuant to Section
-------
4.6(a)(ii)) (without duplication of amounts included in clause (i) above and
- ----------
clause (iv) below); (iii) the portion of the Purchase Amount allocable to
principal of each Receivable that became a Purchased Receivable as of the
last day of the preceding Collection Period and, at the option of the
Certificate 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 clauses (i) and (ii) above); (iv) the Principal
Balance of each Receivable that first became a Liquidated Receivable during
the preceding Collection Period (without duplication of the amounts included
in clause (i) and (ii) above); and (v) the aggregate amount of Cram Down
Losses with respect to the Receivables that have occurred during the
preceding Collection Period. In addition, on the Final Scheduled
Distribution Date, the Class B Principal Distributable Amount will equal the
Class B Certificate Balance as of the Final Scheduled Distribution Date.
"Closing Date" means June 28, 1996.
------------
"Code" shall have the meaning specified in Section 2.6.
---- -----------
"Collateral Agent" means, the Collateral Agent named in the Spread
----------------
Account Agreement, and any successor thereto pursuant to the terms of the
Spread Account Agreement.
"Collection Account" means the account designated as such, established
------------------
and maintained pursuant to Section 4.1.
-----------
"Collection Period" means each calendar month during the term of this
-----------------
Agreement or, in the case of the initial Collection Period, the period from
and excluding the Cutoff Date to and including the last day of the month in
which the Cutoff Date occurred. 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
-7-
<PAGE>
such last day: (1) all applications of collections, (2) all current and
previous Payaheads, (3) all applications of Payahead Balances and (4) all
distributions.
"Confidential Information" means, in relation to any Person, any written
------------------------
information delivered or made available by or on behalf of CPS or the
Depositor to such Person in connection with or pursuant to this Agreement or
the transactions contemplated hereby which is proprietary in nature and
clearly marked or identified as being confidential information, other than
information (i) which was publicly known, or otherwise known to such Person,
at the time of disclosure (except pursuant to disclosure in connection with
this Agreement), (ii) which subsequently becomes publicly known through no
act or omission by such Person, or (iii) which otherwise becomes known to
such Person other than through disclosure by CPS or the Depositor.
"Corporate Trust Office" means the office of the Trustee at which its
----------------------
corporate trust business shall be administered, which office at the date of
this Agreement is located at Sixth Street and Marquette Avenue, Minneapolis,
Minnesota 55479-0069.
"CPS" means Consumer Portfolio Services, Inc., a California corporation
---
and its successors.
"Cram Down Loss" means, with respect to a Receivable, if a court of
--------------
appropriate jurisdiction in an insolvency proceeding shall have issued an
order reducing the amount owed on a Receivable or otherwise modifying or
restructuring Scheduled Payments to be made on a Receivable, an amount equal
to such reduction in Principal Balance of such Receivable or the reduction
in the net present value (using as the discount rate the lower of the
contract rate or the rate of interest specified by the court in such order)
of the Scheduled Payments as so modified or restructured. A "Cram Down Loss"
shall be deemed to have occurred on the date such order is entered.
"Cutoff Date" means June 17, 1996.
-----------
"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 Depositor.
"Deficiency Claim Amount" shall have the meaning specified in Section
----------------------- -------
4.7(a).
- ------
"Deficiency Claim Date" means, with respect to any Distribution Date,
---------------------
the fourth Business Day preceding such Distribution Date.
-8-
<PAGE>
"Deficiency Notice" shall have the meaning specified in Section 4.7(a).
----------------- --------------
"Definitive Certificate" shall have the meaning specified in Section
---------------------- -------
6.3(d).
- ------
"Depositor" means Financial Asset Securities Corp. as the seller of the
---------
Receivables under this Agreement, and each of its successors pursuant to
Section 7.3.
- -----------
"Depository" means the initial Depository, The Depository Trust Company,
----------
the nominee of which is Cede & Co., as the registered Holder of the
denomination specified herein, and any permitted successor depository. The
Depository shall at all times be a "clearing corporation" as defined in
Section 8-102(3) of the Uniform Commercial Code of the State of New York.
"Depository Participant" means a broker, dealer, bank or other financial
----------------------
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Determination Date" means the earlier of (i) the seventh Business Day
------------------
of each calendar month and (ii) the fifth Business Day preceding the related
Distribution Date.
"Distribution Date" means, for each Collection Period, the 15th day of
-----------------
the following month, or if the 15th day is not a Business Day, the next
following Business Day, commencing July 15, 1996.
"Eligible Account" means (i) a segregated trust account that is
----------------
maintained with a depository institution acceptable to the Certificate
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 Ratings Group and "P-1"
by Moody's Investors Service, Inc. and (so long as an Insurer Default shall
not have occurred and be continuing) acceptable to the Certificate Insurer.
"Eligible Investments" mean book-entry securities, negotiable
--------------------
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully guaranteed as to
the full and timely payment by, the United States of America;
-9-
<PAGE>
(b) demand deposits, time deposits or certificates of deposit of
any depository institution or trust company incorporated under the laws of
the United States of America or any State thereof (or any domestic branch of
a foreign bank) and subject to supervision and examination by Federal or
State banking or depository institution authorities; provided, however, that
-------- -------
at the time of the investment or contractual commitment to invest therein,
the commercial paper or other short-term unsecured debt obligations (other
than such obligations the rating of which is based on the credit of a Person
other than such depository institution or trust company) thereof shall be
rated "A-1+" by Standard & Poor's and "P-1" by Moody's;
(c) commercial paper that, at the time of the investment or
contractual commitment to invest therein, is rated "A-1+" by Standard &
Poor's and "P-1" by Moody's;
(d) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above;
(e) repurchase obligations with respect to any security that is
a direct obligation of, or fully guaranteed as to the full and timely payment
by, the United States of America or any agency or instrumentality thereof the
obligations of which are backed by the full faith and credit of the United
States of America, in either case entered into with (i) a depository
institution or trust company (acting as principal) described in clause (b)
or (ii) a depository institution or trust company whose commercial paper or
other short term unsecured debt obligations are rated "A-1+" by Standard &
Poor's and "P-1" by Moody's and long term unsecured debt obligations are
rated "AAA" by Standard & Poor's and "Aaa" by Moody's;
(f) with the prior written consent of the Certificate Insurer,
money market mutual funds registered under the Investment Company Act of
1940, as amended, having a rating, at the time of such investment, from each
of the Rating Agencies in the highest investment category granted thereby;
and
(g) any other investment as may be acceptable to the Certificate
Insurer, as evidenced by a writing to that effect, as may from time to time
be confirmed in writing to the Trustee by the Certificate Insurer.
Any Eligible Investments may be purchased by or through the Trustee or
any of its Affiliates.
"ERISA" shall have the meaning specified in Section 2.6.
----- -----------
"Event of Default" means an event specified in Section 9.1.
---------------- -----------
-10-
<PAGE>
"Final Scheduled Distribution Date" shall be the November 15, 2001
---------------------------------
Distribution 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.
"Insolvency Proceeding" shall have the meaning specified in Section
---------------------
9.5(b).
"Insurance Agreement" means the Insurance and Indemnity Agreement among
-------------------
CPS, CPS Receivables Corp., the Depositor and the Certificate Insurer, dated
as of June 17, 1996.
"Insurance Agreement Event of Default" means an Event of Default as
------------------------------------
defined in the Insurance Agreement.
"Insurer Default" shall mean any one of the following events shall have
---------------
occurred and be continuing:
(i) the Certificate Insurer fails to make a payment required
under the Policy in accordance with its terms;
(ii) the Certificate 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, the New York
Department of Insurance or other competent regulatory authority
enters a final and nonappealable order, judgment or decree (A)
appointing a custodian, trustee, agent or receiver for the
Certificate 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 Certificate Insurer (or the
taking of possession of all or any material portion of the property
of the Certificate Insurer).
"Lien" means a security interest, lien, charge, pledge, equity or
----
encumbrance of any kind, other than tax liens,
-11-
<PAGE>
mechanics' liens, and any liens that may attach to a Financed Vehicle by
operation of law.
"Liquidated Receivable" means any Receivable (i) which has been
---------------------
liquidated by the Servicer through the sale of the Financed Vehicle or
(ii) for which the related Financed Vehicle has been repossessed and 90 days
have elapsed since the date of such repossession or (iii) as to which an
Obligor has failed to make more than 90% of a Scheduled Payment of more than
ten dollars for 120 or more days as of the end of a Collection Period or
(iv) with respect to which proceeds have been received which, in the
Servicer's judgment, constitute the final amounts recoverable in respect of
such Receivable.
"Liquidation Proceeds" means, with respect to a Liquidated Receivable,
--------------------
the monies collected from whatever source during the Collection Period in
which such Receivable became a Liquidated Receivable, net of the reasonable
costs of liquidation, including reasonable expenses of the Servicer in
connection with such liquidation, plus any amounts required by law to be
remitted to the Obligor.
"Lock-Box Account" means the segregated account designated as such,
----------------
established and maintained pursuant to Section 4.1.
-----------
"Lock-Box Agreement" means the Tri-Party Remittance Processing
------------------
Agreement, dated the Closing Date, among the Servicer, the Lock-Box Processor
and the Trustee, as amended, modified or supplemented from time to time,
unless such Agreement shall be terminated in accordance with its terms or the
terms hereof, in which event "Lock-Box Agreement" shall mean such other
------------------
agreement, in form and substance acceptable to the Certificate Insurer, among
the Servicer, the Lock-Box Processor and the Trustee.
"Lock-Box Bank" means, as of any date, a depository institution named
-------------
by the Servicer and acceptable to the Certificate Insurer at which the Lock-
Box Account is established and maintained as of such date.
"Lock-Box Processor" means initially Cash Flex, L.P. and its successors
------------------
or any replacement Lock-Box Processor acceptable to the Certificate Insurer
under the Lock-Box Agreement.
"Moody's" means Moody's Investors Service, Inc., and any successors
-------
thereof.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
-------
related Financed Vehicle or any other Person who owes or may be liable for
payments under such Receivable.
"Officer's Certificate" means a certificate signed by the chairman of
---------------------
the board, the president, any vice chairman of the
-12-
<PAGE>
board, any vice president, the treasurer, the controller or any assistant
treasurer or any assistant controller of CPS, the Depositor, or the Servicer,
as appropriate.
"Opinion of Counsel" means a written opinion of counsel who may but need
------------------
not be counsel to the Depositor or Servicer, which counsel shall be
acceptable to the Trustee and the Certificate Insurer and which opinion shall
be acceptable to the Trustee and the Certificate Insurer in form and
substance.
"Optional Purchase Percentage" means 10%.
----------------------------
"Original Pool Balance" means $88,900,750.37.
---------------------
"Originator" means CPS, as originator of the Receivables.
----------
"Payahead" on a Rule of 78's Receivable means the amount, as of the
--------
close of business on the last day of a Collection Period, determined in
accordance with Section 4.3 with respect to such Rule of 78's Receivable.
-----------
"Payahead Account" means the account designated as such, established and
----------------
maintained pursuant to Section 4.1. The Payahead Account shall be held by
-----------
the Trustee but shall be primarily for the benefit of the Obligors of Rule
of 78's Receivables and shall not be part of the Trust.
"Payahead Balance" on a Rule of 78's Receivable means the sum, as of the
----------------
close of business on the last day of a Collection Period, of all Payaheads
made by or on behalf of the Obligor with respect to such Rule of 78's
Receivable, as reduced by applications of previous Payaheads with respect to
such Rule of 78's Receivable, pursuant to Sections 4.3 and 4.4.
-------- ---
"Paying Agent" has the meaning assigned to such term in Section 6.2A.
------------ ------------
"Person" means any individual, corporation, limited liability company,
------
estate, partnership, joint venture, association, joint stock company, trust,
unincorporated organization, or government or any agency or political
subdivision thereof.
"Policy" means the Financial Guaranty Insurance Policy No. 50482-N
------
issued by the Certificate Insurer for the benefit of the Holders of the Class
A Certificates issued hereunder, including any endorsements thereto.
"Policy Claim Amount" with respect to a Distribution Date, means the sum
-------------------
of: (I) the lesser of (i) the amount required to be distributed pursuant to
Section 4.6(c)(v), and (ii) the excess of the sum of the amounts required to
- -----------------
be distributed pursuant to
-13-
<PAGE>
Section 4.6(c)(i) through (v) over the sum of the Total Distribution Amount
- -----------------
and the amount distributed (or available to be distributed pursuant to the
Spread Account Agreement) in respect of the Deficiency Claim Amount, plus
(II) the lesser of (i) the amount required to be distributed pursuant to
Section 4.6(c)(vii), and (ii) the excess of the sum of the amounts required
- -------------------
to be distributed pursuant to Section 4.6(c)(i) through (vii) over the sum
----------------- -----
of the Total Distribution Amount and the amount distributed (or available to
be distributed pursuant to the Spread Account Agreement) in respect of the
Deficiency Claim Amount.
"Policy Payments Account" means the segregated trust account created by
-----------------------
the Servicer under Section 4.1.
-----------
"Pool Balance" as of the close of business on the last day of a
------------
Collection Period means the aggregate Principal Balance of the Receivables
(excluding Liquidated and Purchased Receivables).
"Post-Office Box" means the separate post-office box in the name of the
---------------
Trustee for the benefit of the Certificateholders and the Certificate
Insurer, established and maintained pursuant to Section 4.1.
-----------
"Preference Claim" shall have the meaning specified in Section 9.5(b).
---------------- --------------
"Premium" has the meaning specified in the Premium Side Letter.
-------
"Premium Side Letter" means the letter agreement among CPS, the Trustee
-------------------
and the Certificate Insurer referring to payment of the Premium.
"Prepayment Reduction Amount" means with respect to any Simple Interest
---------------------------
Receivable which has been paid in full during any Collection Period, an
amount equal to one twelfth of the excess of (a) the product of (i) the
Aggregate Pass-Through Rate and (ii) the Principal Balance of such Simple
Interest Receivable as of the first day of such Collection Period over (b)
the product of (i) a fraction (A) the numerator of which is the number of
days from and including the first day of such Collection Period to but
excluding the date on which such Simple Interest Receivable is paid in full
and (B) the denominator of which is 30 and (ii) the Aggregate Pass-Through
Rate and (iii) the Principal Balance of such Simple Interest Receivable as
of the first day of such Collection Period.
"Principal Balance" of a Receivable, as of the close of business on the
-----------------
last day of a Collection Period means the Amount Financed minus the sum of
the following amounts without duplication: (i) in the case of a Rule of 78's
Receivable, that
-14-
<PAGE>
portion of all Scheduled Payments actually received on or prior to such day
allocable to principal using the actuarial or constant yield method; (ii) in
the case of a Simple Interest Receivable, that portion of all Scheduled
Payments actually received on or prior to such day allocable to principal
using the Simple Interest Method; (iii) any payment of the Purchase Amount
with respect to the Receivable allocable to principal; (iv) any Cram Down
Loss in respect of such Receivable; and (v) any prepayment in full or any
partial prepayment applied to reduce the Principal Balance of the Receivable.
"Purchase Agreement" means the Purchase Agreement dated as of June 17,
------------------
1996, by and between the Depositor and CPS, as amended, modified or
supplemented from time to time, relating to the purchase of the Receivables
by the Depositor from CPS.
"Purchase Amount" means, with respect to a Receivable, the amount, as
---------------
of the close of business on the last day of a Collection Period, required to
prepay in full such Receivable under the terms thereof including interest
thereon to the end of the month of purchase.
"Purchased Receivable" means a Receivable purchased as of the close of
--------------------
business on the last day of a Collection Period by the Servicer pursuant to
Section 3.7 or by CPS pursuant to Section 2.8.
- ----------- -----------
"Rating Agency" means Standard & Poor's Ratings Group, Inc. and Moody's
-------------
Investors Service, Inc. and any successors thereof. If such organization or
successor is no longer in existence, "Rating Agency" shall be such nationally
recognized statistical rating organization or other comparable Person
designated by the Certificate Insurer, notice of which designation shall be
given to the Trustee and the Servicer.
"Receivable" means each retail installment sale contract for a Financed
----------
Vehicle which shall appear on Schedule A to this Agreement (which Schedule A
may be in the form of microfiche) and all rights and obligations thereunder
except for Receivables that shall have become Purchased Receivables.
"Receivable Files" means the documents specified in Section 2.7.
---------------- -----------
"Record Date" means, with respect to any Distribution Date, the Business
-----------
Day immediately preceding such Distribution Date.
"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
-15-
<PAGE>
liquidation plus any amounts required by law to be remitted to the Obligor.
"Reimbursement Obligations" means, with respect to each Distribution
-------------------------
Date, any amounts due to the Certificate Insurer under the terms hereof or
under the Insurance Agreement and with respect to which the Certificate
Insurer has not been previously paid.
"Rule of 78's Receivable" means any Receivable under which the portion
-----------------------
of a payment allocable to earned interest (which may be referred to in the
related retail installment sale contract as an add-on finance charge) and the
portion allocable to the Amount Financed is determined according to the
method commonly referred to as the "Rule of 78's" method or the "sum of the
months' digits" method or any equivalent method.
"Scheduled Payment" means, for any Collection Period for any Receivable,
-----------------
the amount indicated in such Receivable as required to be paid by the Obligor
in such Collection Period (without giving effect to deferments of payments
pursuant to Section 3.2 or any rescheduling of payments in any insolvency or
-----------
similar proceedings).
"Securities Act" shall have the meaning specified in Section 6.3(f).
-------------- --------------
"Servicer" means CPS as the servicer of the Receivables which were
--------
purchased by the Depositor, and each successor to CPS (in the same capacity)
pursuant to Section 8.3(a) or 9.2.
-------------- ---
"Servicer's Certificate" means a certificate completed and executed by
----------------------
a Servicing Officer pursuant to Section 3.9, substantially in the form of
-----------
Exhibit E-2.
- -----------
"Servicing Assumption Agreement" means the Servicing Assumption
------------------------------
Agreement, dated as of June 17, 1996, among CPS, the Standby Servicer and the
Trustee, as the same may be amended or supplemented in accordance with its
terms.
"Servicing Fee" means the fee payable to the Servicer for services
-------------
rendered during the respective Collection Period, determined pursuant to
Section 3.8.
- -----------
"Servicing Officer" means any person whose name appears on a list of
-----------------
Servicing Officers delivered to the Trustee and the Certificate Insurer, as
the same may be amended from time to time.
"Servicing Rate" shall be 2.12% per annum, payable monthly, provided,
-------------- --------
however, that if the Standby Servicer becomes the successor Servicer, the
- -------
"Servicing Rate" shall be equal to a
--------------
-16-
<PAGE>
percentage per annum determined pursuant to the Servicing Assumption
Agreement not to exceed 3.00% per annum.
"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 any Receivable under which the
--------------------------
portion of a payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
"Spread Account" means, with respect to the Trust and similar trusts to
--------------
be established by CPS, the Spread Account established and maintained pursuant
to the Spread Account Agreement. The Spread Account shall be held by the
Collateral Agent and shall in no event be deemed part of the Trust.
"Spread Account Agreement" means the Master Spread Account Agreement
------------------------
among CPS, the Certificate Insurer, the Collateral Agent and the Trustee, as
amended and restated as of June 17, 1996, as the same may be amended,
supplemented or otherwise modified in accordance with the terms thereof.
"Standard & Poor's" means Standard & Poor's Ratings Service, Inc. and
-----------------
any successors thereof.
"Standby Fee" means the fee payable to the Standby Servicer so long as
-----------
CPS is the Servicer calculated in the same manner, on the same basis and for
the same period as the Servicing Fee is calculated pursuant to Section 3.8
-----------
based on a rate of 0.08% per annum rather than the Servicing Rate.
"Standby Servicer" means Norwest Bank Minnesota, National Association,
----------------
in its capacity as Standby Servicer pursuant to the terms of the Servicing
Assumption Agreement or such Person as shall have been appointed Standby
Servicer pursuant to Section 9.2(c).
--------------
"State" means any State of the United States of America, or the District
-----
of Columbia.
"Total Distribution Amount" shall mean, for each Distribution Date, the
-------------------------
sum of the following amounts with respect to the preceding Collection Period:
(i) all collections on Receivables (including amounts transferred from the
Payahead
-17-
<PAGE>
Account to the Certificate Account pursuant to Section 4.6(a)(ii) but
------------------
excluding amounts deposited into the Payahead Account); (ii) Liquidation
Proceeds received during the Collection Period with respect to Receivables
that became Liquidated Receivables during the Collection Period in accordance
with the Servicer's customary servicing procedures; (iii) proceeds from
Recoveries with respect to Liquidated Receivables; (iv) the Purchase Amount
of each Receivable that became a Purchased Receivable as of the last day of
the Collection Period, and (v) the amount of any Certificate Insurer Optional
Deposit into the Collection Account pursuant to Section 4.11(iii) with
-----------------
respect to such Distribution Date, and any earnings on investments of funds
in the Collection Account and the Payahead Account pursuant to Section
-------
4.1(a).
- ------
"Trust" means the trust created by this Agreement, the estate of which
-----
shall consist of the Trust Assets.
"Trust Assets" means that property set forth in items (i) through (viii)
------------
in Section 2.2 and the Policy for the benefit of the Class A
-----------
Certificateholders.
"Trustee" means the Person acting as Trustee under this Agreement, its
-------
successor in interest, and any successor trustee pursuant to Section 10.11.
-------------
"Trustee Fee" means the monthly fee payable on each Distribution Date
-----------
to the Trustee for services rendered during the preceding Collection Period
in an amount equal to the product of (i) one-twelfth of 0.015% and (ii) the
Pool Balance of the last day of the second preceding Collection Period,
distributed in accordance with Section 4.6(c); provided, however, that with
-------------- -------- -------
respect to the initial Distribution Date, such monthly fee shall be an amount
equal to the product of (i) one-twelfth of 0.015% and (ii) the Original Pool
Balance.
"Trustee Officer" means 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.
"Trustee's Certificate" means a certificate completed and executed for
---------------------
the Trustee by a Trustee Officer pursuant to Section 10.2, substantially in
------------
the form of, in the case of an assignment to CPS, Exhibit C-1 and in the case
-----------
of an assignment to the Servicer, Exhibit C-2.
-----------
"UCC" means the Uniform Commercial Code as in effect in the respective
---
jurisdiction.
-18-
<PAGE>
SECTION 1.2. Usage of Terms. With respect to all terms in this
--------------
Agreement, the singular includes the plural and the plural the singular;
words importing any gender include the other genders; references to "writing"
include printing, typing, lithography, and other means of reproducing words
in a visible form; references to agreements and other contractual instruments
include all subsequent amendments thereto or changes therein entered into in
accordance with their respective terms and not prohibited by this Agreement;
references to Persons include their permitted successors and assigns; and the
term "including" means "including without limitation."
SECTION 1.3. Section References. All section references shall be to
------------------
Sections in this Agreement.
SECTION 1.4. Limitation on Trust Fund Activities. Notwithstanding any
-----------------------------------
other provision in this Agreement to the contrary, the Trustee shall have no
power to vary the investment of the Certificateholders within the meaning of
Treasury Department Regulation Section 301.7701-4(c) or to engage in business
unless the Trustee and the Certificate Insurer shall have received an Opinion
of Counsel that such activity shall not cause the Trust to be an association
taxable as a corporation for federal income tax purposes.
SECTION 1.5. Calculations. All calculations of the amount of interest
------------
accrued on the Certificates and all calculations of the amount of the
Servicing Fee and the Trustee Fee shall be made on the basis of a 360-day
year consisting of twelve 30-day months. All references to the Principal
Balance of a Receivable as of the last day of a Collection Period shall refer
to the close of business on such day.
SECTION 1.6. Action by or Consent of Certificateholders. Whenever any
------------------------------------------
provision of this Agreement refers to action to be taken, or consented to,
by Certificateholders, such provision shall be deemed to refer to
Certificateholders of record as of the Record Date immediately preceding the
date on which such action is to be taken, or consent given, by
Certificateholders. Solely for the purposes of any action to be taken, or
consented to, by Certificateholders, any Certificate registered in the name
of the Depositor, CPS, the Servicer or any Affiliate thereof shall be deemed
not to be outstanding and shall not be taken into account in determining
whether the requisite interest necessary to effect any such action or consent
has been obtained; provided, however, that, solely for the purpose of
-------- -------
determining whether the Trustee is entitled to rely upon any such action or
consent, only Certificates which the Trustee knows to be so owned shall be
so disregarded.
SECTION 1.7. Material Adverse Effect. Whenever a determination is to
-----------------------
be made under this Agreement as to whether a
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<PAGE>
given event, action, course of conduct or set of facts or circumstances could
or would have a material adverse effect on the Trust or the Certificateholders
(or any similar or analogous determination), such determination shall be made
without taking into account the insurance provided by the Policy.
ARTICLE II
The Trust and Trust Property
----------------------------
SECTION 2.1. Creation of Trust. Upon the execution of this Agreement
-----------------
by the parties hereto, there is hereby created the FASCO Auto Trust 1996-1.
SECTION 2.2. Conveyance of Receivables. In consideration of the
-------------------------
Trustee's delivery of Certificates in an aggregate principal amount equal to
the Original Pool Balance to or upon the written order of the Depositor, the
Depositor does hereby sell, transfer, assign, set over and otherwise convey
to the Trustee, in trust for the benefit of the Certificateholders, without
recourse:
(i) all right, title and interest of the Depositor in and to
the Receivables listed in Schedule A hereto and, with respect to Rule of
78's Receivables, all monies due or to become due thereon after the Cutoff
Date (including Scheduled Payments due after the Cutoff Date (including
principal prepayments relating to such Scheduled Payments) but received by
the Depositor or CPS before the Cutoff Date) and, with respect to Simple
Interest Receivables, all monies received thereunder after the Cutoff Date
and all Liquidation Proceeds and Recoveries received with respect to such
Receivables;
(ii) all right, title and interest of the Depositor in and to
the security interests in the Financed Vehicles granted by Obligors
pursuant to the Receivables and any other interest of the Depositor in
such Financed Vehicles, including, without limitation, the certificates of
title or, with respect to such Financed Vehicles in the State of Michigan,
all other evidence of ownership with respect to such Financed Vehicles;
(iii) all right, title and interest of the Depositor in and to
any proceeds from claims on any physical damage, credit life and credit
accident and health insurance policies or certificates relating to the
Financed Vehicles or the Obligors;
(iv) all right, title and interest of the Depositor in and to
the Purchase Agreement, including a
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<PAGE>
direct right to cause CPS to purchase Receivables from the Trust under
certain circumstances;
(v) all right, title and interest of the Depositor in and to
refunds for the costs of extended service contracts with respect to
Financed Vehicles, refunds of unearned premiums with respect to credit
life and credit accident and health insurance policies or certificates
covering an Obligor or Financed Vehicle or his or her obligations with
respect to a Financed Vehicle and any recourse to Dealers for any of the
foregoing;
(vi) the Receivable File related to each Receivable;
(vii) all amounts and property from time to time held in or
credited to the Collection Account, the Lock-Box Account, the Policy
Payments Account or the Certificate Account;
(viii) all right, title, and interest of the Depositor in any
recourse against the Dealers with respect to the sale of the Receivables;
and
(ix) the proceeds of any and all of the foregoing.
In addition, the Depositor shall cause the Policy to be issued to and
delivered to the Trust for the benefit of the Class A Certificateholders.
SECTION 2.3. Transfer Intended as Sale; Precautionary Security
-------------------------------------------------
Interest. The conveyance to the Trust of the property set forth in Section
- --------
2.2 above is intended as a sale free and clear of all Liens, and it is
intended that the property of the Trust shall not be part of the Depositor's
estate in the event of the filing of a bankruptcy petition by or against the
Depositor under any bankruptcy law. In the event, however, that
notwithstanding the intent of CPS, the Depositor and the Trustee, the
transfer under this Agreement is held not to be a sale, this Agreement shall
constitute a grant of a security interest in the property described in
Section 2.2 above, for the benefit of the Certificateholders and the
- -----------
Certificate Insurer as their interests may appear herein.
SECTION 2.4. Acceptance by Trustee. The Trustee does hereby accept all
---------------------
consideration conveyed by the Depositor pursuant to Section 2.2, and declares
-----------
that the Trustee shall hold such consideration upon the trusts herein set
forth for the benefit of all present and future Certificateholders, subject
to the terms and provisions of this Agreement.
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<PAGE>
SECTION 2.5. Assignment by Depositor. The Depositor does hereby
-----------------------
transfer, assign and otherwise convey unto the Trustee, for the benefit of
the Certificateholders, its right to any recourse to CPS resulting from the
occurrence of a breach of any of CPS' representations and warranties
contained in Section 3.2 of the Purchase Agreement. The provisions of this
-----------
Section 2.5 are intended to grant the Trustee a direct right against CPS to
- -----------
demand performance under the terms of the Purchase Agreement.
SECTION 2.6. (Reserved).
----------
SECTION 2.7. Delivery of Receivable Files. On or prior to the Closing
----------------------------
Date, the Depositor shall transfer and deliver to the Trustee at the offices
specified in Schedule B to this Agreement with respect to each Receivable the
----------
following:
(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.
The Servicer shall hold all other documents with respect to the Receivables
as custodian for the Trust.
SECTION 2.8. Acceptance of Receivable Files by Trustee. The Trustee
-----------------------------------------
acknowledges receipt of files which the Depositor has represented are the
Receivable Files. The Trustee has reviewed the Receivable Files and has
determined that it has received a file for each Receivable identified in
Schedule A to this Agreement. The Trustee declares that it holds and will
continue to hold such files and any amendments, replacements or supplements
thereto and all other Trust Assets as Trustee in trust for the use and
benefit of all present and future Certificateholders. The Trustee agrees to
review each file delivered to it no later than 45 days after the Closing Date
to determine whether such Receivable Files contain the documents referred to
in Section 2.7(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 2.7(i) or (ii) are not contained in a
-------------- ----
Receivable File, the Trustee shall inform CPS, the Depositor, the Standby
Servicer and the Certificate 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
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<PAGE>
to CPS as the Depositor's designee any file unrelated to a Receivable
identified in Schedule A to this Agreement (it being understood that the
----------
Trustee's obligation to review the contents of any Receivable File shall be
limited as set forth in the preceding sentence). Unless such defect with
respect to such Receivable File shall have been cured by the last day of the
second Collection Period following discovery thereof by the Trustee, CPS shall
repurchase any such Receivable as of such last day. In consideration of the
purchase of the Receivable, CPS shall remit the Purchase Amount, in the
manner specified in Section 4.5. The sole remedy of the Trustee, the Trust,
-----------
or the Certificateholders with respect to a breach pursuant to this Section
-------
2.8 shall be to require CPS to purchase the Receivables pursuant to this
- ---
Section 2.8. 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
CPS and delivered to the Trustee and are necessary to vest in CPS or such
designee title to the Receivable. 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 State of Michigan, a copy of an original certificate of title, 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 and the
Certificate Insurer. On the date which is 180 days following the Closing Date
or the next succeeding Business Day, the Trustee shall inform CPS and the
other parties to this Agreement and the Certificate 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
State of Michigan, for which the related Receivable File on such date does
not include a copy of an original certificate of title, and CPS shall
repurchase any such Receivable as of the last day of the current Collection
Period. The Depositor shall have no obligation to repurchase any Receivable
upon a breach pursuant to this Section 2.8. The Depositor shall have no
-----------
liability for any action taken or omitted to be taken by CPS pursuant to this
Section 2.8.
- -----------
SECTION 2.9. Access to Receivable Files. The Trustee shall permit the
--------------------------
Servicer, the Depositor, any Certificateholder and the Certificate Insurer
access to the Receivable Files at all reasonable times during the Trustee's
normal business hours; provided, however, that the Trustee shall provide such
-------- -------
access to any Certificateholder only (i) in such cases where the Trustee is
required by applicable statutes or regulations (whether applicable to the
Trustee, the Servicer or to such Certificateholder) to permit such
Certificateholder to review the Receivable Files or (ii) if an Insurer
Default shall have occurred and be continuing. In addition, the Trustee
shall provide such access to any Certificateholder at all reasonable
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<PAGE>
times during the Trustee's normal business hours if an Event of Default shall
have occurred and be continuing. In each case, such access shall be afforded
without charge but only upon reasonable request. Each Certificateholder
shall be deemed to have agreed by its acceptance of a Certificate to use its
best efforts to hold in confidence all Confidential Information in accordance
with its then customary procedures; provided that nothing herein shall
--------
prevent any Certificateholder from delivering copies of any financial
statements and other documents whether or not constituting Confidential
Information, and disclosing other information, whether or not Confidential
Information, to (i) its directors, officers, employees, agents and
professional consultants, (ii) any other institutional investor that holds
Certificates, (iii) any prospective institutional investor transferee in
connection with the contemplated transfer of a Certificate or any part
thereof or participation therein who is subject to confidentiality
arrangements at least substantially similar hereto, (iv) any governmental
authority, (v) the National Association of Insurance Commissioners or any
similar organization, (vi) any nationally recognized rating agency in
connection with the rating of the Class A Certificates by such agency or
(vii) any other Person to which such delivery or disclosure may be necessary
or appropriate (a) in compliance with any applicable law, rule, regulation
or order, (b) in response to any subpoena or other legal process, (c) in
connection with any litigation to which such Certificateholder is a party,
or (d) in order to protect or enforce such Person's investment in any
Certificate. The Trustee shall, within two Business Days of the request of
the Servicer or the Certificate Insurer, execute such documents and
instruments as are prepared by the Servicer or the Certificate Insurer and
delivered to the Trustee, as the Servicer or the Certificate Insurer deems
necessary to permit the Servicer, in accordance with its customary servicing
procedures, to enforce the Receivable on behalf of the Trust and any related
insurance policies covering the Obligor, the Receivable or Financed Vehicle
so long as such execution in the Trustee's sole discretion does not conflict
with this Agreement and will not cause it undue risk or liability. The
Trustee shall not be obligated to release any document from any Receivable
File unless it receives a trust receipt signed by a Servicing Officer in the
form of Exhibit E-1 hereto (the "Trust Receipt"). Such Trust Receipt shall
-----------
obligate the Servicer to return such document(s) to the Trustee when the need
therefor no longer exists unless the Receivable shall be liquidated, in which
case, upon receipt of a certificate of a Servicing Officer substantially in
the form of Exhibit E-2 hereto to the effect that all amounts required to be
-----------
deposited in the Collection Account with respect to such Receivable have been
so deposited, the Trust Receipt shall be released by the Trustee to the
Servicer.
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<PAGE>
ARTICLE III
Administration and Servicing of Receivables
-------------------------------------------
SECTION 3.1. Duties of Servicer. The Servicer, as agent for the Trust,
------------------
the Certificateholders and the Certificate Insurer (to the extent provided
herein) shall manage, service, administer and make collections on the
Receivables with reasonable care, using that degree of skill and attention
customary and usual for institutions which service motor vehicle retail
installment contracts similar to the Receivables and, to the extent more
exacting, that the Servicer exercises with respect to all comparable
automotive receivables that it services for itself or others. The Servicer's
duties shall include collection and posting of all payments, responding to
inquiries of Obligors on such Receivables, investigating delinquencies,
sending payment statements to Obligors, reporting tax information to
Obligors, accounting for collections, furnishing monthly and annual
statements to the Trustee and the Certificate 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 Trustee to execute and deliver, on behalf of
itself, the Trust, the Certificateholders or any of them, 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 State of
Michigan, other evidence of ownership with respect to such Financed Vehicles.
If the Servicer shall commence a legal proceeding to enforce a Receivable,
the Trustee 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 Trustee 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
Certificateholders. The Servicer shall prepare and furnish and the Trustee
shall execute, any powers of attorney and other documents reasonably
necessary or appropriate to enable the Servicer to carry out its servicing
and administrative duties hereunder.
SECTION 3.2. Collection and Allocation of Receivable Payments.
------------------------------------------------
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
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<PAGE>
with respect to all comparable automotive receivables that it services for
itself or others; provided, however, that the Servicer shall notify each
-------- -------
Obligor to make all payments with respect to the Receivables to the Post-
Office Box. The Servicer will provide each Obligor with a monthly statement
in order to notify such Obligors to make payments directly to the Post-Office
Box. The Servicer shall allocate collections between principal and interest
in accordance with the customary servicing procedures it follows with respect
to all comparable automotive receivables that it services for itself or
others and in accordance with the terms of this Agreement. Except as
provided below, the Servicer, for so long as CPS is the Servicer, may grant
extensions on a Receivable; provided, however, that the Servicer may not
-------- -------
grant more than one extension per calendar year with respect to a Receivable
or grant an extension with respect to a Receivable for more than one calendar
month or grant more than three extensions in the aggregate with respect to
a Receivable without the prior written consent of the Certificate Insurer and
provided, further, that if the Servicer extends the date for final payment
by the Obligor of any Receivable beyond the last day of the penultimate
Collection Period preceding the Final Scheduled Distribution Date, it shall
promptly purchase the Receivable from the Trust in accordance with the terms
of Section 3.7 hereof (and for purposes thereof, the Receivable shall be
-----------
deemed to be materially and adversely affected by such breach). If the
Servicer is not CPS, the Servicer may not make any extension on a Receivable
without the prior written consent of the Certificate 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 (i) to any alteration of the interest rate on any Receivable or of
the amount of any Scheduled Payment on Receivables, and (ii) shall not agree
to any modification that would result in a "deemed exchange" of a receivable
under Section 1001 of the Internal Revenue Code of 1986, as amended, or would
constitute reinvestment adversely affecting the status of the Trust as not
an association taxable as a corporation for Federal income tax purposes.
SECTION 3.3. Realization Upon Receivables. On behalf of the Trust, the
----------------------------
Certificateholders and the Certificate Insurer, the Servicer shall use its
best efforts, consistent with the servicing procedures set forth herein, to
repossess or otherwise convert the ownership of the Financed Vehicle securing
any Receivable as to which the Servicer shall have determined eventual
payment in full is unlikely. The Servicer shall commence efforts to
repossess or otherwise convert the ownership of a Financed Vehicle on or
prior to the date that an Obligor has failed to make more than 90% of a
Scheduled 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
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<PAGE>
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 3.2, which may
-----------
include reasonable efforts to realize upon any recourse to Dealers and
selling the Financed Vehicle at public or private sale. The foregoing shall
be subject to the provision that, in any case in which the Financed Vehicle
shall have suffered damage, the Servicer shall not expend funds in connection
with the repair or the repossession of such Financed Vehicle unless it shall
determine in its discretion that such repair and/or repossession will
increase the proceeds ultimately recoverable with respect to such Receivable
by an amount greater than the amount of such expenses.
SECTION 3.4. Physical Damage Insurance; Other 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 3.4(a) which, but for the actions of the Servicer,
--------------
would have been covered thereunder. The Servicer, on behalf of the Trustee,
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 pursuant to Section 4.2. The Servicer shall cause to
-----------
be maintained in respect of each Financed Vehicle the insurance or insurance
reserves referred to in Section 3.4(a)(i) above.
-----------------
SECTION 3.5. Maintenance of Security Interests in Financed Vehicles.
------------------------------------------------------
(a) Consistent with the policies and procedures required by this Agreement,
the Servicer shall take such steps as are necessary to maintain perfection
of the security interest
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<PAGE>
created by each Receivable in the related Financed Vehicle including but not
limited to obtaining the execution by the Obligors and the recording,
registering, filing, re-recording, re-registering and refiling of all
security agreements, financing statements and continuation statements or
instruments as are necessary to maintain the security interest granted by
Obligors under the respective Receivables. The Trustee hereby authorizes the
Servicer to take such steps as are necessary to re-perfect or continue the
perfection of such security interest on behalf of the Trust in the event of
the relocation of a Financed Vehicle or for any other reason.
(b) Upon the occurrence of an Insurance Agreement Event of Default, the
Certificate Insurer may (so long as an Insurer Default shall not have
occurred and be continuing) instruct the Trustee and the Servicer to take or
cause to be taken, or, if an Insurer Default shall have occurred, upon the
occurrence of an Event of Default, 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 reperfect the security interests in the Financed Vehicles
securing the Receivables in the name of the Trustee on behalf 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 Certificate Insurer
or the Trustee (as applicable), 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 reperfection and to take all action
necessary therefor. In addition, prior to the occurrence of an Insurance
Agreement Event of Default, the Certificate Insurer may (unless an Insurer
Default shall have occurred and be continuing) instruct the Trustee and the
Servicer to take or cause to be taken such action as may, in the opinion of
counsel to the Certificate Insurer, be necessary to perfect or reperfect the
security interest in the Financed Vehicles securing the Receivables in the
name of the Trustee on behalf 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 Certificate Insurer, be necessary or
prudent; provided, however, that if the Certificate Insurer requests (unless
--------- -------
an Insurer Default shall have occurred and be continuing) 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 Certificate Insurer.
SECTION 3.6. Additional Covenants of Servicer. The Servicer shall not
--------------------------------
release the Financed Vehicle securing each Receivable from the security
interest granted by such Receivable in whole or in part except in the event
of payment in full by the
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<PAGE>
Obligor thereunder or repossession, nor shall the Servicer impair the rights
of the Certificateholders in such Receivables, nor shall the Servicer amend
a Receivable, except that extensions may be granted in accordance with
Section 3.2.
- -----------
SECTION 3.7. Purchase of Receivables Upon Breach. The Servicer or the
-----------------------------------
Trustee shall inform the other party and the Certificate Insurer promptly,
in writing, upon the discovery of any breach of Section 3.2, 3.4, 3.5 or 3.6;
----------- --- --- ---
provided, however, that the failure to give such notice shall not affect any
- -------- -------
obligation of the Servicer hereunder. Unless the breach shall have been
cured by the last day of the second Collection Period following such
discovery (or, at the Servicer's election, the last day of the first
following Collection Period), the Servicer shall purchase any Receivable
materially and adversely affected by such breach. In consideration of the
purchase of such Receivable, the Servicer shall remit the Purchase Amount in
the manner specified in Section 4.5. The sole remedy of the Trustee, the
-----------
Trust, the Certificate Insurer or the Certificateholders with respect to a
breach of Section 3.2, 3.4, 3.5 or 3.6 shall be to require the Servicer to
----------- --- --- ---
repurchase Receivables pursuant to this Section 3.7; provided, however, that
----------- -------- -------
the Servicer shall indemnify the Trustee, the Standby Servicer, the
Collateral Agent, the Certificate Insurer, the Trust and the
Certificateholders 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 Sections 3.2, 3.4, 3.5 or 3.6 if not
------------ --- --- ---
otherwise such a breach. The Depositor shall have no obligation to
repurchase the Receivables upon a breach of Section 3.2, 3.4, 3.5 or 3.6.
----------- --- --- ---
The Depositor shall have no liability for actions taken or omitted to be
taken by the Servicer pursuant to this Section 3.7.
-----------
SECTION 3.8. Servicing Fee. The Servicing Fee for the initial
-------------
Distribution Date shall equal the product of (a) one twelfth of the Servicing
Rate and (b) the Original Pool Balance. Thereafter, the Servicing Fee for
a Distribution Date shall equal the product of (i) one twelfth of the
Servicing Rate and (ii) the Pool Balance as of the last day of the second
preceding Collection Period. The Servicing Fee shall also include all late
fees, prepayment charges including, in the case of a Rule of 78's Receivable
that is prepaid in full, to the extent not required by law to be remitted to
the related Obligor, the difference between the Principal Balance of such
Rule of 78's Receivable (plus accrued interest to the date of prepayment) and
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<PAGE>
the principal balance of such Receivable computed according to the "Rule of
78's", and other administrative fees or similar charges allowed by applicable
law with respect to Receivables, collected (from whatever source) on the
Receivables. The Servicing Fee for a Distribution Date shall be reduced by
an amount equal to the Aggregate Prepayment Reduction Amount for such
Distribution Date.
SECTION 3.9. Servicer's Certificate. By 10:00 a.m., Minneapolis time,
----------------------
on each Determination Date, the Servicer shall deliver to the Trustee, the
Depositor, the Certificate Insurer and the Rating Agencies, a Servicer's
Certificate containing all information necessary to make the distributions
pursuant to Section 4.6 (including, if required, withdrawals from or deposits
-----------
to the Payahead Account and withdrawals from the Spread Account) for the
Collection Period preceding the date of such Servicer's Certificate and all
information necessary for the Trustee to send statements to
Certificateholders and the Certificate Insurer pursuant to Section 4.8.
-----------
Receivables to be purchased by the Servicer or to be purchased by CPS shall
be identified by the Servicer by account number with respect to such
Receivable (as specified in Schedule A).
----------
SECTION 3.10. Annual Statement as to Compliance: Notice of Default.
----------------------------------------------------
(a) The Servicer shall deliver to the Trustee, the Depositor and the
Certificate Insurer, on or before July 31 of each year beginning July 31,
1997, an Officer's Certificate, dated as of March 31 of such year, stating
that (i) a review of the activities of the Servicer during the preceding 12-
month period (or, in the case of the first such certificate, the period from
the Cutoff Date to June 30, 1997) and of its performance under this Agreement
has been made under such officer's supervision and (ii) to the best of such
officer's knowledge, based on such review, the Servicer has fulfilled all its
obligations under this Agreement throughout such year (or, in the case of the
first such certificate, such shorter period), or, if there has been a default
in the fulfillment of any such obligation, specifying each such default known
to such officer and the nature and status thereof. The Trustee shall send
a copy of such certificate and the report referred to in Section 3.11 to the
------------
Rating Agencies. The Trustee shall forward a copy of such certificate as
well as the report referred to in Section 3.11 to each Certificateholder.
------------
(b) The Servicer shall deliver to the Trustee, the Depositor, the
Certificate Insurer and the Rating Agencies, promptly after having obtained
knowledge thereof, but in no event later than 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 an Event of Default under
Section 9.1.
- -----------
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The Servicer shall deliver to the Trustee, the Depositor, the
Certificate Insurer and the Rating Agencies, promptly after having obtained
knowledge thereof, but in no event later than 5 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 an Event of Default under
clause (ii) of Section 9.1.
-----------
The Trustee shall deliver to each Certificateholder a copy of each
notice delivered to it by the Servicer or the Depositor pursuant to this
Section 3.10(b).
- ---------------
SECTION 3.11. Annual Independent Certified Public Accountant's Report.
-------------------------------------------------------
The Servicer shall cause a firm of nationally recognized independent
certified public accountants, who may also render other services to the
Servicer or to the Depositor, to deliver to the Trustee, the
Certificateholders and the Certificate Insurer on or before July 31 of each
year beginning July 31, 1997, a report dated as of June 30 of such year and
reviewing the Servicer's activities during the preceding 12-month period (or,
in the case of the first such report, the period from the Cutoff Date to June
30, 1997), addressed to the Board of Directors of the Servicer, and to the
Trustee, the Depositor, and the Certificate 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 Audit Program for Mortgage Bankers (the "Program"), to the extent the
procedures in the Program are applicable to the servicing obligations set
forth in this Agreement; (3) included an examination of the delinquency and
loss statistics relating to the Servicer's portfolio of automobile and light
truck installment sales contracts; and (4) except as described in the report,
disclosed no exceptions or errors in the records relating to automobile and
light truck loans serviced for others that, in the firm's opinion, paragraph
four of the Program requires such firm to report. The accountant's report
shall further state that (1) a review in accordance with agreed upon
procedures was made of three randomly selected Servicer Certificates; (2)
except as disclosed in the report, no exceptions or errors in the Servicer
Certificates were found; and (3) the delinquency and loss information,
relating to the Receivables contained in the Servicer Certificates were found
to be accurate.
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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SECTION 3.12. Reserved.
--------
SECTION 3.13. Servicer Expenses. The Servicer shall be required to pay
-----------------
all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of independent accountants, taxes imposed
on the Servicer, and expenses incurred in connection with distributions and
reports to Certificateholders.
SECTION 3.14. Retention and Termination of Servicer. The Servicer
-------------------------------------
hereby covenants and agrees to act as such under this Agreement for an
initial term of ninety (90) days, commencing on the Closing Date, which term
shall be automatically extended by the Certificate Insurer for successive
terms of ninety (90) days each as specified in a writing delivered by the
Certificate Insurer prior to the expiration of each current term to the
Servicer, the Depositor and the Trustee which provides that the Servicer will
be automatically extended for a succeeding ninety (90) day term unless an
Event of Default shall have occurred and be continuing, in which case the
Certificate Insurer may extend the Servicer in its sole discretion (or, at
the discretion of the Certificate Insurer exercised pursuant to revocable
written standing instructions from time to time to the Servicer, the
Depositor and the Trustee, for any specified number of terms greater than
one), until the termination of the Trust. Each such notice (including each
notice pursuant to standing instructions, which shall be deemed delivered at
successive ninety (90) day intervals for so long as such instructions are in
effect) (a "Servicer Extension Notice") shall be delivered by the Certificate
Insurer to the Trustee, the Depositor 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. At such time as the
Class A Certificates have been paid in full and all outstanding Reimbursement
Obligations and other amounts owed to the Certificate Insurer have been paid
in full, the term of the Servicer's appointment hereunder shall be deemed to
have been extended until the termination of the Trust (unless such
appointment is terminated sooner in accordance with the terms of this
Agreement).
SECTION 3.15. Access to Certain Documentation and Information Regarding
---------------------------------------------------------
Receivables. The Servicer shall provide to representatives of the Trustee,
- -----------
the Depositor, the Certificateholders and the Certificate Insurer reasonable
access to documentation and computer systems and information regarding the
Receivables. The Servicer shall provide such access to any Certificateholder
only (i) in such cases where the Servicer is required by applicable statutes
or regulations (whether applicable to the Servicer or to such
Certificateholder) to
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permit such Certificateholder to review such materials and (ii) if an Insurer
Default shall have occurred and be continuing. In each case, such access shall
be afforded without charge but only upon reasonable request and during normal
business hours. Nothing in this Section 3.15 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 3.15 as a result of
------------
such obligation shall not constitute a breach of this Section 3.15.
------------
SECTION 3.16. Verification of Servicer's Certificate. (a) On or before
--------------------------------------
the fifth calendar day of each month, the Servicer will deliver to the
Trustee and the Standby Servicer a computer diskette (or other electronic
transmission) in a format acceptable to the Trustee and the Standby Servicer
containing information with respect to the Receivables as of the close of
business on the last day of the preceding Collection Period which information
is necessary for preparation of the Servicer's Certificate. The Standby
Servicer shall use such computer diskette (or other electronic transmission)
to verify certain information specified in Section 3.16(b) contained in the
---------------
Servicer's Certificate delivered by the Servicer, and the Standby Servicer
shall notify the Servicer and the Certificate Insurer of any discrepancies
on or before the second Business Day following the Determination Date. In
the event that the Standby Servicer reports any discrepancies, the Servicer
and the Standby Servicer shall attempt to reconcile such discrepancies prior
to the second Business Day prior to the related Distribution 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
Distribution Date. In the event that the Standby Servicer and the Servicer
are unable to reconcile discrepancies with respect to a Servicer's
Certificate by the related Distribution Date, the Servicer shall cause a firm
of independent certified public accountants, at the Servicer's expense, to
audit the Servicer's Certificate and, prior to the fifth calendar day of the
following month, reconcile the discrepancies. The effect, if any, of such
reconciliation shall be reflected in the Servicer's Certificate for such next
succeeding Determination Date. Other than the duties specifically set forth
in this Agreement, the Standby Servicer shall have no obligations hereunder,
including, without limitation, to supervise, verify, monitor or administer
the performance of the Servicer. The Standby Servicer shall have no
liability for any actions taken or omitted by the Servicer. The duties and
obligations of the Standby Servicer shall be determined solely by the express
provisions of this Agreement and no implied covenants or obligations shall
be read into this Agreement against the Standby Servicer.
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(b) The Standby Servicer shall review each Servicer's Certificate
delivered pursuant to Section 3.16(a) and shall:
---------------
(i) confirm that such Servicer's Certificate is complete on
its face;
(ii) load the computer diskette (which shall be in a format
acceptable to the Standby Servicer) received from the Servicer pursuant to
Section 3.16(a) hereof, confirm that such computer diskette is in a
---------------
readable form and calculate and confirm the Principal Balance of each
Receivable for the most recent Distribution Date;
(iii) confirm that the Total Distribution Amount, the Class A
Distributable Amount, the Class A Principal Distributable Amount, the
Class A Interest Distributable Amount, the Class B Distributable Amount,
the Class B Interest Distributable Amount, the Class B Principal
Distributable Amount, the Standby Fee, the Servicing Fee, the Trustee Fee,
the amount on deposit in the Spread Account, and the Premium in the
Servicer's Certificate are accurate based solely on the recalculation of
the Servicer's Certificate; and
(iv) confirm the calculation of the performance tests set
forth in the Spread Account Agreement.
SECTION 3.17. 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 3.18. 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 12.11 and (unless
-------------
an Insurance Agreement Event of Default shall have occurred and be continuing
or Norwest Bank Minnesota, National Association shall then be the Servicer)
the Holders of Class B Certificates evidencing at least 51% of the Class B
Certificate Balance; 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; and provided further, that the
-------- -------
consent of the Holders of the requisite percentage of the Class B Certificate
Balance shall not be unreasonably withheld or delayed and shall be deemed to
have been given unless, on or before the Objection Date, the Trustee shall
have received Objection Notices from Holders of Class B Certificates
representing more than 49% of the Class B Certificate Balance. Upon written
request of the Servicer, the Trustee shall deliver to each Class B
Certificateholder of record as of the most recent Record Date a notice (a
"Delegation
----------
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Notice") prepared by the Servicer (i) specifying the duties the Servicer
- ------
proposes to delegate, (ii) identifying the sub-contractor to whom it proposes
to delegate such duties and (iii) informing such Class B Certificateholder
that if it wishes to object to the proposed delegation of duties, it must
deliver a written notice of objection (specifying in reasonable detail the
reasons for its objection; such notice of objection an "Objection Notice")
----------------
on or before the date specified in such Delegation Notice (the "Objection
---------
Date"), which Objection Date shall be a date which is not more than 10
- ----
Business Days after the date the Servicer delivers such Delegation Notice to
the Trustee.
ARTICLE IV
Distributions, Spread Account;
------------------------------
Statements to Certificateholders
--------------------------------
SECTION 4.1. Accounts; Post-Office Box. (a) The Trustee shall
-------------------------
establish the Lock-Box Account in the name of the Trustee for the benefit of
the Certificateholders, provided that pursuant to the Lock-Box Agreement, the
--------
Lock-Box Processor and no other person, save the Trustee, has authority to
direct disposition of funds on deposit in the Lock-Box Account consistent
with the provisions of this Agreement and the Lock-Box Agreement. The
Trustee shall have no liability or responsibility with respect to the Lock-
Box Processor's directions or activities as set forth in the preceding
sentence. The Lock-Box Account shall be established pursuant to and
maintained in accordance with the Lock-Box Agreement and shall be a demand
deposit account initially established and maintained with Bank of America,
or at the request of the Certificate 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
Certificate Insurer in the location of the Lock-Box Account. The Trustee
shall establish and maintain the Post-Office Box at a United States Post
Office Branch in the name of the Trustee for the benefit of the
Certificateholders and the Certificate Insurer.
In the event the Servicer shall for any reason no longer be acting as
such, the Standby Servicer or a successor Servicer shall thereupon assume all
of the rights and obligations of the outgoing Servicer under the Lock-Box
Agreement. 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 Lock-Box Agreement to the same extent
as if such Lock-Box 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 Lock-Box
Bank under such
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<PAGE>
Lock-Box 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 Lock-Box
Agreement and an accounting of amounts collected and held by the Lock-Box
Bank and otherwise use its best efforts to effect the orderly and efficient
transfer of any Lock-Box Agreement to the successor Servicer. In the event
that the Certificate Insurer (so long as an Insurer Default shall not have
occurred and be continuing) or Holders of Certificates evidencing more than
50% of the Class A Certificate Balance (if an Insurer Default shall have
occurred and be continuing) shall elect to change the identity of the Lock-
Box Bank, the Servicer, at its expense, shall cause the Lock-Box Bank to
deliver, at the direction of the Certificate Insurer (so long as an Insurer
Default shall not have occurred and be continuing) or Holders of Certificates
evidencing more than 50% of the Class A Certificate Balance (if an Insurer
Default shall have occurred and be continuing) to the Trustee or a successor
Lock-Box Bank, all documents and records relating to the Receivables and all
amounts held (or thereafter received) by the Lock-Box Bank (together with an
accounting of such amounts) and shall otherwise use its best efforts to
effect the orderly and efficient transfer of the lock-box arrangements.
In addition, the Trustee shall establish, with itself, the Collection
Account, the Policy Payments Account, and the Certificate Account in the name
of the Trustee for the benefit of the Certificateholders. In addition, the
Trustee shall establish with itself the Payahead Account in the name of the
Trustee for the benefit of Obligors of Rule of 78's Receivables who make
payments thereon in excess of Scheduled Payments and applicable late fees and
for the benefit, to the extent of earnings on investments of funds in the
Payahead Account, of the Certificateholders. The Payahead Account shall not
be included in the Trust. Any amounts held on deposit in the Payahead
Account and any investment earnings thereon are owned by, and will be taxable
to, CPS Receivables for federal income tax purposes. The Collection Account,
the Policy Payments Account, the Certificate Account and the Payahead Account
shall be Eligible Accounts initially established with the Trustee; provided,
--------
however, if any of such accounts shall cease to be an Eligible Account, the
- -------
Servicer, with the consent of the Certificate Insurer, within 5 Business Days
shall, cause such accounts to be moved to an institution so that such account
meets the definition of Eligible Account. The Servicer shall promptly notify
the Rating Agencies and the Depositor of any change in the location of any
of the aforementioned accounts.
All amounts held in the Collection Account and the Payahead Account
shall be invested by the Trustee at the written direction of the Servicer in
Eligible Investments in the name of the Trustee as trustee of the Trust and
shall mature no later than
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one Business Day immediately preceding the Distribution Date next succeeding
the date of such investment. Such written direction shall certify that any
such investment is authorized by this Section. No investment may be sold
prior to its maturity. Amounts in the Policy Payments Account and the
Certificate Account shall not be invested. The amount of earnings on
investments of funds in the Collection and Payahead Accounts during the
Collection Period related to each Distribution Date shall be deposited into
the Certificate Account, on each Distribution Date, and shall be available
for distribution pursuant to Section 4.6(c). For purposes of this paragraph,
--------------
the Trustee will take delivery of the Eligible Investments in accordance with
Schedule C.
(b) The Trustee shall on or prior to each Distribution Date (and prior
to the transfer from the Collection Account to the Certificate Account
described in Section 4.6(a)) transfer from the Collection Account to the
---------------
Payahead Account all Payaheads as described in Section 4.3 received by the
-----------
Servicer during the Collection Period.
SECTION 4.2. Collections. On each Business Day, pursuant to the Lock
-----------
Box Agreement, the Lock-Box Processor will transfer any payments from
Obligors received in the Post-Office Box to the Lock-Box Account. Within two
Business Days of receipt of funds into the Lock-Box Account, the Servicer
shall cause the Lock-Box Bank to transfer funds from the Lock-Box 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 Lock-Box Account or the Collection
Account.
SECTION 4.3. 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 hereunder, in the
case of a Rule of 78's Receivable, first, to the Scheduled Payment of such
Rule of 78's Receivable, with the principal portion of the Scheduled Payment
being allocated on an actuarial basis, and, second, to any late fees accrued
with respect to such Rule of 78's Receivable and, in the case of a Simple
Interest Receivable, to interest and principal in accordance with the Simple
Interest Method. With respect to any Rule of 78's Receivable, any remaining
excess shall be added to the Payahead Balance, and shall be applied to prepay
the Rule of 78's Receivable, but only if the sum of such excess and the
previous Payahead Balance shall be sufficient to prepay the Rule
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of 78's Receivable in full. Otherwise, any such remaining excess payments
with respect to a Rule of 78's Receivable shall constitute a Payahead, and
shall increase the Payahead Balance.
SECTION 4.4. Payaheads. As of the close of business on the last day
---------
of each Collection Period, if the payments by or on behalf of the Obligor on
a Rule of 78's Receivable (other than a Purchased Receivable) shall be less
than the Scheduled Payment and accrued late fees with respect to such
Receivable, the Payahead Balance of an Obligor shall be applied by the
Servicer to the extent of the shortfall and such Payahead Balance shall be
reduced accordingly.
SECTION 4.5. 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 the
Servicer shall deposit therein all amounts to be paid under Section 11.2.
------------
All such deposits shall be made, in immediately available funds, on the
Business Day preceding the Determination Date. On or before the third
Business Day preceding each Distribution Date, the Trustee shall remit to the
Collection Account any amounts delivered to the Trustee by the Collateral
Agent pursuant to Section 4.7.
-----------
SECTION 4.6. Distributions; Policy Claims. (a) On each Distribution
----------------------------
Date, the Trustee shall cause to be made the following transfers and
distributions based solely on the amounts set forth in the Servicer's
Certificate for the related Distribution Date:
(i) From the Collection Account to the Certificate Account,
in immediately available funds, those funds that were deposited in the
Collection Account, plus earnings on investments of funds in the
Collection Account pursuant to Section 4.1(a), for the Collection Period
--------------
related to such Distribution Date.
(ii) From the Payahead Account, to the Certificate Account,
in immediately available funds, the aggregate previous Payaheads to be
applied to Scheduled Payments on Rule of 78's Receivables or prepayments
for the related Collection Period pursuant to Sections 4.3 and 4.4, plus
------------ ---
earnings on investments of funds in the Payahead Account, for the related
Collection Period, pursuant to Section 4.1 (a).
---------------
(b) Prior to each Distribution Date, the Servicer shall on the related
Determination Date calculate the Total Distribution Amount, the Class A
Distributable Amount, the Class A Interest Distributable Amount, the Class
A Principal Distributable Amount, the Class B Interest Distributable Amount
and the Class B Principal Distributable Amount, and, based on the Total
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Distribution Amount, and the other distributions to be made on such
Distribution Date, determine the amount distributable to the
Certificateholders of each class.
(c) On each Distribution Date, the Trustee (based on the information
contained in the Servicer's Certificate delivered on the related
Determination Date pursuant to Section 3.9) shall, subject to subsection (d)
-----------
hereof, make the following distributions in the following order of priority:
(i) to the Servicer, from the Total Distribution Amount, any
amount deposited into the Collection Account pursuant to Section 4.7(a),
--------------
and any amount deposited into the Collection Account pursuant to Section
-------
4.11(i) in respect of Servicing Fees, the Servicing Fee and all unpaid
-------
Servicing Fees from prior Collection Periods; provided, however, that as
-------- -------
long as CPS is the Servicer and Norwest Bank Minnesota, National
Association, is the Standby Servicer, the Trustee shall first pay to the
Standby Servicer out of the Servicing Fee otherwise payable to CPS an
amount equal to the Standby Fee;
(ii) in the event the Standby Servicer becomes the successor
Servicer, to the Standby Servicer, from the Total Distribution Amount (as
such Total Distribution Amount has been reduced by payments pursuant to
clause (i) above) and any amount deposited into the Collection Account
pursuant to Section 4.7(a), to the extent not previously paid by the
--------------
predecessor Servicer pursuant to Section 9.2, reasonable transition
-----------
expenses (up to a maximum of $50,000) incurred in acting as successor
Servicer;
(iii) to the Trustee, 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 into the Collection
Account pursuant to Section 4.7(a), and any amount deposited into the
--------------
Collection Account pursuant to Section 4.11(i) in respect of Trustee Fees
---------------
and reasonable out-of-pocket expenses of the Trustee, the Trustee Fee and
all reasonable out-of-pocket expenses (including counsel fees and
expenses) and all unpaid Trustee Fees and all unpaid reasonable out-of-
pocket expenses (including counsel fees and expenses) from prior
Collection Periods; provided, however, that unless an Event of Default
-------- -------
shall have occurred and be continuing, expenses payable to the Trustee
pursuant to this clause (iii) and expenses payable to the Collateral Agent
pursuant to clause (iv) below, shall be limited to $50,000 per annum;
(iv) to the Collateral Agent, from the Total Distribution
Amount (as such Total Distribution Amount has been reduced by payments
pursuant to clauses (i) through
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(iii) above), any amount deposited into the Collection Account pursuant
to Section 4.7(a), and any amount deposited into the Collection Account
--------------
pursuant to Section 4.11(i) in respect of fees and expenses of the
---------------
Collateral Agent, all fees and expenses payable to the Collateral Agent
with respect to such Distribution Date pursuant to the Spread Account
Agreement;
(v) to the Class A Certificateholders, 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 into the Collection Account pursuant to Section 4.7(a) and
--------------
4.11(iii), an amount equal to the sum of the Class A Interest
---------
Distributable Amount and any Class A Interest Carryover Shortfall as of
the close of the preceding Distribution Date;
(vi) to the Class B Certificateholders, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced by
payments pursuant to clauses (i) through (v) above) and any amount
deposited into the Collection Account pursuant to Sections 4.7(c) and
---------------
(d), an amount equal to the sum of the Class B Interest Distributable
---
Amount and any Class B Interest Carryover Shortfall as of the close of the
preceding Distribution Date;
(vii) to the Class A Certificateholders, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced by
payments pursuant to clauses (i) through (vi) above), any amount deposited
into the Collection Account pursuant to Section 4.7(a), and any amount
--------------
deposited into the Collection Account pursuant to Section 4.11(ii)
----------------
or (iii), an amount equal to the sum of the Class A Principal
-----
Distributable Amount and any Class A Principal Carryover Shortfall as of
the close of the preceding Distribution Date with respect to each
Distribution Date;
(viii) to the Certificate 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 into the Collection Account pursuant to Section 4.7(a), an
--------------
amount equal to the Reimbursement Obligations;
(ix) to any successor Servicer, from the Total Distribution
Amount (as such Total Distribution Amount has been reduced by payments
pursuant to clauses (i) through (viii) above) and any amount deposited
into the Collection Account pursuant to Section 4.7(a), to the extent
--------------
not previously paid by the predecessor Servicer pursuant to Section 9.2,
-----------
or in the case of the Standby Servicer, pursuant to clause (ii) above,
reasonable transition
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expenses (up to a maximum of $50,000) incurred in acting as successor
Servicer;
(x) to the Class B Certificateholders, from the Total
Distribution Amount (as such Total Distribution Amount has been reduced by
payments pursuant to clauses (i) through (ix) above) and any amount
deposited into the Collection Account pursuant to Sections 4.7(c) and
---------------
(d), an amount equal to the sum of the Class B Principal Distributable
---
Amount and any Class B Principal Carryover Shortfall as of the close of
the preceding Distribution Date; and
(xi) to the Collateral Agent, for deposit into the Spread
Account, the remaining Total Distribution Amount, if any.
(d) The rights of the Class B Certificateholders to receive
distributions in respect of the Class B Certificates pursuant to Section
-------
4.6(c)(vi) on a Distribution Date shall be and hereby are subordinated to the
- ----------
payment of the amounts distributable pursuant to Sections 4.6(c)(i) through
------------------
(v). The rights of the Class B Certificateholders to receive distributions
- ---
in respect of the Class B Certificates pursuant to Section 4.6(c)(x) on a
-----------------
Distribution Date shall be and hereby are subordinated to the payment of the
amounts distributable pursuant to Sections 4.6(c)(i) through (ix). At such
------------------ ----
time as the Class A Certificates are paid in full and the Certificate Insurer
has received payment in full for all outstanding Reimbursement Obligations
and any other amounts owed to the Certificate Insurer, the Class B
Certificateholders shall be entitled to exercise all rights granted to the
Class A Certificateholders under this Agreement to the extent that the
exercise of such rights does not conflict with the provisions of the Spread
Account Agreement.
(e) (i) In the event that the Trustee has delivered a Deficiency
Notice with respect to any Determination Date pursuant to Section
-------
4.7(a), the Trustee shall determine on the third Business Day (the "Draw
------
Date") preceding the related Distribution Date the Policy Claim Amount, if
any, for such Distribution Date. Amounts paid by the Certificate Insurer
pursuant to a claim submitted under this Section 4.6(e)(i) shall be
-----------------
deposited by the Trustee into the Policy Payments Account and thereafter
into the Certificate Account for payment to Class A Certificateholders in
respect of the Class A Guaranteed Distribution Amount on the related
Distribution Date.
(ii) Any notice delivered by the Trustee to the Certificate Insurer
pursuant to subsection 4.6(e)(i) shall specify the Policy Claim amount
claimed under the Policy and shall constitute a "Notice of Claim" under
the Policy. In
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accordance with the provisions of the Policy, the Certificate Insurer
is required to pay to the Trustee the Policy Claim Amount properly claimed
thereunder by 12:00 noon, New York City time, on the later of (1) the
third Business Day following receipt on a Business Day of the Notice of
Claim, and (2) the applicable Distribution Date. Notwithstanding the
provisions of Section 4.6(c), any payment made by the Certificate
--------------
Insurer under the Policy shall be applied solely to the payment of the
Class A Certificates and for no other purpose.
(iii) The Trustee shall (i) receive as attorney-in-fact of each
Class A Certificateholder any Policy Claim Amount from the Certificate
Insurer and (ii) deposit the same in the Certificate Account for
disbursement to the Class A Certificateholders as set forth in clauses (v)
and (vii) of subsection 4.6(c). Any and all Policy Claim Amounts
disbursed by the Trustee from claims made under the Policy shall not be
considered payment by the Trustee or from the Spread Account with respect
to such Class A Certificates, and shall not discharge the obligations of
the Trust with respect thereto.
(iv) The Trustee shall be entitled to enforce on behalf of the
Class A Certificateholders the obligations of the Certificate Insurer
under the Policy. Notwithstanding any other provision of this Agreement,
the Class A Certificateholders are not entitled to institute proceedings
directly against the Certificate Insurer.
(f) Subject to Section 11.1 respecting the final payment upon
------------
retirement of each Certificate, the Servicer shall on each Distribution Date
instruct the Trustee to distribute to each Certificateholder of record on the
preceding Record Date either (i) by wire transfer, in immediately available
funds to the account of such Holder at a bank or other entity having
appropriate facilities therefor, if such Certificateholder is the Depository
or such Holder's Certificates in the aggregate evidence an original principal
balance of at least $1,000,000, and if such Certificateholder shall have
provided to the Trustee appropriate instructions prior to the Record Date for
such Distribution Date, or (ii) by check mailed to such Certificateholder at
the address of such Holder appearing in the Certificate Register, the amounts
to be distributed to such Certificateholder pursuant to such Holder's
Certificates.
SECTION 4.7. Withdrawals from Spread Account. (a) In the event that
-------------------------------
the Servicer's Certificate with respect to any Determination Date shall state
that the Total Distribution Amount with respect to such Determination Date
is insufficient (taking into account the application of the Total
Distribution Amount to the payment required to be made on the related
Distribution Date
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pursuant to Section 4.6(c)(vi)) to make the payments required to be made on
-------------------
the related Distribution Date pursuant to Section 4.6(c)(i), (ii), (iii),
----------------- ---- -----
(iv), (v), (vii), (viii) or (ix) (such deficiency being a "Deficiency Claim
- ---- --- ----- ----- ---- ----------------
Amount"), then on the fourth Business Day immediately preceding the related
- ------
Distribution Date, the Trustee shall deliver to the Collateral Agent, the
Certificate Insurer, the Depositor and the Servicer, by hand delivery, telex
or facsimile transmission, a written notice (a "Deficiency Notice")
-----------------
specifying the Deficiency Claim Amount for such Distribution Date. Such
Deficiency Notice shall direct the Collateral Agent to remit such Deficiency
Claim Amount (to the extent of the funds available to be distributed pursuant
to the Spread Account Agreement) to the Trustee for deposit in the Collection
Account and distribution pursuant to Sections 4.6(c)(i), (ii), (iii), (iv),
------------------ ---- ----- ----
(v), (vii), (viii) and/or (ix), as applicable.
- --- ----- ------ ----
(b) Any Deficiency Notice shall be delivered by 10:00 a.m., New York
City time, on the fourth Business Day preceding such Distribution 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 4.5.
-----------
(c) 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 Distribution Date pursuant to
Section 4.6(c)(vi) or (x) (such deficiency being a "Class B Deficiency"),
- ------------------ --- ------------------
then on the fourth Business Day immediately preceding the related
Distribution Date, the Trustee shall deliver to the Collateral Agent, the
Servicer and the Depositor, by hand delivery, telex or facsimile
transmission, a written notice specifying the amount of the Class B
Deficiency for such Distribution Date. Such notice shall direct the
Collateral Agent to remit to the Trustee an amount equal to such Class B
Deficiency (but only to the extent that, pursuant to the Spread Account
Agreement, funds are required to be released from the Spread Account to CPS
on the related Distribution Date) for deposit into the Collection Account and
distribution pursuant to Section 4.6(c)(vi) and/or Section 4.6(c)(x), as
------------------ -----------------
applicable, and any funds so remitted to the Trustee shall be deemed to have
been released to CPS and paid to the Trustee at the direction of CPS.
SECTION 4.8. Statements to Certificateholders; Tax Returns. (a) With
---------------------------------------------
each distribution from the Certificate Account to the Certificateholders made
on a Distribution Date, the Servicer shall provide to the Certificate
Insurer, the Depositor, and to the Trustee for the Trustee to forward to each
Certificateholder of record a statement (prepared by the Servicer)
substantially in
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the form of Exhibit D hereto setting forth at least the following information
---------
as to the Certificates to the extent applicable:
(i) the amount of such distribution allocable to principal of the
Class A Certificates and the Class B Certificates, respectively;
(ii) the amount of such distribution allocable to interest on the
Class A Certificates and the Class B Certificates, respectively;
(iii) the Pool Balance, the Class A Pool Factor and the Class B Pool
Factor as of the close of business on the last day of the preceding
Collection Period;
(iv) the Class A Certificate Balance and the Class B Certificate
Balance as of the close of business on the last day of the preceding
Collection Period, after giving effect to payments allocated to principal
reported under (i) above;
(v) the amount of the Servicing Fee (inclusive of the Standby Fee
paid to the Standby Servicer) paid to the Servicer with respect to the
related Collection Period, the Class A Percentage of the Servicing Fee
(inclusive of the Standby Fee), the Class B Percentage of the Servicing
Fee (inclusive of the Standby Fee) and the amount of any unpaid Servicing
Fees (inclusive of the Standby Fee) and the change in such amount from
that of the prior Distribution Date;
(vi) the amount of the Class A Interest Carryover Shortfall, if
applicable, on such Distribution Date and the Class A Principal Carryover
Shortfall, if applicable, on such Distribution Date, and the change in
such amounts from the prior Distribution Date;
(vii) the amount of the Class B Interest Carryover Shortfall, if
applicable, on such Distribution Date and the amount of the Class B
Principal Carryover Shortfall, if applicable, on such Distribution Date,
and the change in such amounts from the prior Distribution Date;
(viii) the amount paid, if any, to Class A Certificateholders from
funds received under the Policy for such Distribution Date;
(ix) the amount distributable to the Certificate Insurer on such
Distribution Date;
(x) the aggregate amount in each of the Payahead Account and the
Spread Account and the change in each such amount from the preceding
Distribution Date;
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(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
payments between 31 and 59 days and 60 days or more;
(xii) the number and the aggregate Purchase Amount of Receivables
that became Purchased Receivables during the related Collection Period and
summary information as to losses and delinquencies with respect to the
Receivables; and
(xiii) the cumulative amount of Liquidated Receivables, net of
Recoveries, since the Cutoff Date to the last day of the related
Collection Period.
Each amount set forth pursuant to subclauses (i), (ii), (v), (vi) and (vii)
-------------- ---- --- ---- -----
above shall be expressed as a dollar amount per $1,000 of original principal
balance of a Certificate.
(b) Within thirty days after the end of each calendar year, the Trustee
shall, provided it has received the necessary information from the Servicer,
furnish to each Person who at any time during such calendar year was a
Certificateholder of record and received any payment thereon (a) a report
(prepared by the Servicer) as to the aggregate of amounts reported pursuant
to (i), (ii) and (v) of this Section 4.8 for such calendar year or applicable
--- ---- --- -----------
portion thereof during which such person was a Certificateholder, and (b)
such information as may be reasonably requested by the Certificateholders or
required by the Internal Revenue Code and regulations thereunder, to enable
such Holders to prepare their Federal and State income tax returns. The
obligation of the Trustee set forth in this paragraph shall be deemed to have
been satisfied to the extent that substantially comparable information shall
be provided by the Servicer pursuant to any requirements of the Code.
(c) The Servicer, at its own expense, shall cause a firm of nationally
recognized accountants to prepare any tax returns required to be filed by the
Trust, and the Trustee shall execute and file such returns if requested to
do so by the Servicer. The Trustee, upon request, will furnish the Servicer
with all such information known to the Trustee as may be reasonably required
in connection with the preparation of all tax returns of the Trust.
SECTION 4.9. Policy Payments; Subrogation. (a) The Trustee shall keep
----------------------------
a complete and accurate record of the amount of insurance payments made in
reduction of the Class A Certificate Balance and in payment of the Class A
Interest Distributable Amount and Class A Principal Distributable Amount
pursuant to the Policy. The Certificate Insurer shall have the right to
inspect
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<PAGE>
such records at reasonable times upon one Business Day's prior notice to the
Trustee.
(b) Subject to and conditioned upon payment of any interest or
principal with respect to the Class A Certificates by or on behalf of the
Certificate Insurer, the Trustee on behalf of the Class A Certificateholders
shall assign, and the Class A Certificateholders, by reason of their
acquisition and holding of the Class A Certificates, are hereby deemed to
have assigned to the Certificate Insurer all rights to the payment of the
Class A Interest Distributable Amount and Class A Principal Distributable
Amount which are then due for payment to the extent of all payments made by
the Certificate Insurer. The Certificate Insurer (for so long as no Insurer
Default shall have occurred and be continuing) may exercise any option, vote,
right, power or the like with respect to the Class A Certificates to the
extent it has made a principal payment pursuant to the Policy. The Trustee
and the Class A Certificateholders, by reason of their acquisition and
holding of the Class A Certificates, agree that the Certificate Insurer shall
be subrogated to all of the rights to payment of the Class A
Certificateholders or in relation thereto to the extent that any payment of
principal or interest was made to such Class A Certificateholders with
payments made under the Policy by the Certificate Insurer in accordance with
the provisions hereof.
SECTION 4.10. Reliance on Information from the Servicer.
-----------------------------------------
Notwithstanding anything to the contrary contained in this Agreement, all
distributions from any of the accounts described in this Article IV and any
transfer of amounts between such accounts shall be made by the Trustee in
reliance on information provided to the Trustee by the Servicer in writing,
whether by way of a Servicer's Certificate or otherwise.
SECTION 4.11. Optional Deposits by the Certificate Insurer. The
--------------------------------------------
Certificate Insurer shall at any time, and from time to time, with respect
to a Distribution Date, have the option (but shall not be required, except
as provided in Section 4.6(e)) 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 Distribution Date, (ii) to
distribute as a component of the Class A Principal Distributable Amount to
the extent that the Class A Certificate Balance as of the Determination Date
preceding such Distribution Date exceeds the Class A Percentage of the Pool
Balance as of such Determination Date, or (iii) to include such amount as
part of the Total Distribution Amount for such Distribution Date to the
extent that without such amount a draw would be required to be made on the
Policy.
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<PAGE>
If the Certificate Insurer waives the satisfaction of any of the
events that might trigger an event of default under the Insurance Agreement
and so notifies the Trustee in writing pursuant to Section 5.02(d) of the
---------------
Insurance Agreement, the Trustee shall notify Moody's of such waiver.
ARTICLE V
Reserved.
---------
ARTICLE VI
The Certificates
----------------
SECTION 6.1. The Certificates. The Trustee shall, upon written order
----------------
or request signed in the name of the Depositor by one of its officers
authorized to do so and delivered to a Trustee Officer, execute on behalf of
the Trust, authenticate and deliver the Certificates to or upon the order of
the Depositor in the aggregate principal amount and denominations as set
forth in such written order or request. The Class A Certificates shall be
issuable in minimum denominations of twenty thousand dollars ($20,000) and
integral multiples of one thousand ($1,000) in excess thereof. The Class B
Certificates shall be issuable in minimum denominations of one thousand
dollars ($1,000) and integral multiples thereof. The Class A Certificates
shall be issued in fully registered book-entry form. The Class B
Certificates shall be issued in fully registered definitive form. The
Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of a Trustee Officer of the Trustee. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures shall have been affixed, authorized to sign on behalf of the
Trustee, shall be valid and binding obligations of the Trust, notwithstanding
that such individuals or any of them shall have ceased to be so authorized
prior to the authentication and delivery of such Certificates or did not hold
such offices at the date of such Certificates.
SECTION 6.2A. Appointment of Paying Agent. The Trustee may act as or
---------------------------
appoint one or more paying agents (each, a "Paying Agent"). The Paying Agent
shall make distributions to Certificateholders from amounts delivered by the
Trustee to the Paying Agent from amounts on deposit in the Certificate
Account pursuant to Article IV. Either the Trustee or the Certificate
----------
Insurer may remove the Paying Agent if such Person determines in its sole
discretion that the Paying Agent shall have failed to perform its obligations
under this Agreement in any material respect. The Paying Agent shall
initially be the Trustee. A co-paying agent may be chosen by the Trustee.
Any co-paying agent
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<PAGE>
or any successor Paying Agent shall be permitted to resign as Paying Agent,
co-paying agent or successor Paying Agent, as the case may be, upon 30 days'
written notice to the Trustee, the Depositor and the Certificate Insurer.
In the event that the Trustee, any co-paying agent or any successor Paying
Agent shall no longer be the Paying Agent, co-paying agent or successor
Paying Agent, as the case may be, the Trustee, with the Certificate Insurer's
reasonable consent, shall appoint a successor to act as Paying Agent or co-
paying agent. The Trustee shall cause each Paying Agent and each successor
Paying Agent or any additional Paying Agent appointed by the Trustee (other
than the Trustee, which hereby agrees) to execute and deliver to the Trustee
an instrument in which such Paying Agent, successor Paying Agent or
additional Paying Agent shall agree with the Trustee that, as Paying Agent,
such Paying Agent, successor Paying Agent or additional Paying Agent will
hold all sums, if any, held by it for payment to the Certificateholders in
trust for the benefit of the Certificateholders entitled thereto in an
Eligible Account (which may be maintained with such Paying Agent) until such
sums shall be paid to such Certificateholders and shall promptly notify the
Trustee of any default in making such payment. The Paying Agent shall return
all unclaimed funds to the Trustee and upon removal of a Paying Agent shall
also return all funds in its possession to the Trustee. The provisions of
Sections 10.4 and 10.5 shall apply to each Paying Agent in its role as Paying
- ------------- ----
Agent. The fees of any Paying Agent or co-paying agent shall be paid by the
Trustee. Each Paying Agent and co-paying agent must be acceptable to the
Depositor.
SECTION 6.2B. Authenticating Agent. (a) The Trustee may appoint one
--------------------
or more authenticating agents with respect to the Certificates which shall
be authorized to act on behalf of the Trustee in authenticating the
Certificates in connection with the issuance, delivery, registration of
transfer, exchange or repayment of the Certificates (the "Authenticating
Agent"). Whenever reference is made in this Agreement to the authentication
of Certificates by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication by
an Authenticating Agent and a certificate of authentication executed on
behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent
must be acceptable to the Depositor and the Certificate Insurer. The Trustee
is hereby appointed as the initial Authenticating Agent.
(b) Any institution succeeding to the corporate agency business of an
Authenticating Agent shall continue to be an Authenticating Agent without the
execution or filing of any paper or any further act on the part of the
Trustee or such Authenticating Agent.
(c) Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the
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Depositor. The Trustee may at any time terminate the agency of an
Authenticating Agent by giving notice of termination to such Authenticating
Agent and to the Depositor. Upon receiving such a notice of resignation or
upon such a termination, or in case at any time an Authenticating Agent shall
cease to be acceptable to the Trustee or the Depositor or the Certificate
Insurer, the Trustee may appoint a successor Authenticating Agent. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless acceptable to the
Trustee, the Depositor and the Certificate Insurer.
(d) The Trustee agrees to pay to each Authenticating Agent from its own
funds from time to time reasonable compensation for its services under this
Section 6.2B.
- ------------
(e) The provisions of Sections 10.4 and 10.5 shall be applicable to any
------------- ----
Authenticating Agent.
(f) Pursuant to an appointment made under this Section 6.2B, the
------------
Certificates may have endorsed thereon, in lieu of the Trustee's certificate
of authentication, an alternate certificate of authentication in
substantially the following form:
This is one of the Certificates described in the Pooling and Servicing
Agreement.
( )
as Authenticating Agent for the Trustee,
By
--------------------------------------------
Authorized Signatory
SECTION 6.2. Authentication of Certificates. The Trustee shall cause
------------------------------
the Certificates to be executed on behalf of the Trust, authenticated, and
delivered to or upon the written order of the Depositor, signed by its
chairman of the board, its president, or any vice president, without further
corporate action by the Depositor, in authorized denominations, pursuant to
this Agreement. No Certificate shall entitle its Holder to any benefit under
this Agreement, or shall be valid for any purpose, unless there shall appear
on such Certificate a certificate of authentication substantially in the form
set forth in Exhibit A or Exhibit B hereto or in Section 6.2B, as the case
--------- --------- ------------
may be, executed by the Trustee by manual signature; such authentication
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<PAGE>
shall constitute conclusive evidence that such Certificate shall have been
duly authenticated and delivered hereunder. All Certificates issued on the
Closing Date shall be dated the Closing Date. All Certificates issued upon
transfer or exchange thereafter shall be dated the date of their
authentication.
SECTION 6.3. Registration of Transfer and Exchange of Certificates.
-----------------------------------------------------
(a) The Certificate Registrar shall keep or cause to be kept, at the office
or agency maintained pursuant to Section 6.7, a Certificate Register in
-----------
which, subject to such reasonable regulations as it may prescribe, the
Trustee shall provide for the registration of Certificates and of transfers
and exchanges of Certificates as herein provided. The Trustee shall be the
initial Certificate Registrar.
(b) Except as provided in paragraph (c) below, the Book-Entry
Certificates shall at all times remain registered in the name of the
Depository or its nominee and at all times: (i) registration of the Book-
Entry Certificates may not be transferred by the Trustee except to a
successor depository designated pursuant to Section 6.3(c); (ii) the
--------------
Depository shall maintain book-entry records with respect to the Certificate
Owners and with respect to ownership and transfers of such Certificates;
(iii) ownership and transfers of registration of the Book-Entry Certificates
on the books of the Depository shall be governed by applicable rules
established by the Depository; (iv) the Depository may collect its usual and
customary fees, charges and expenses from its Depository Participants; (v)
the Trustee shall deal with the Depository, Depository Participants and
indirect participating firms as representatives of the Certificate Owners of
the Certificates for purposes of exercising the rights of Holders under this
Agreement (and requests and directions for and votes of such representatives
shall not be deemed to be inconsistent if they are made with respect to
different Certificate Owners); and (vi) the Trustee may rely and shall be
fully protected in relying upon information furnished by the Depository
Participants with respect to indirect participating firms and persons shown
on the books of such indirect participating firms as direct or indirect
Certificate Owners.
(c) If the Depository advises the Depositor and the Trustee in writing
that the Depository is no longer willing or able properly to discharge its
duties as Depository, the Trustee shall so notify the Depository and demand
the return of all Certificates held by the Depository. The Certificate
Registrar shall thereupon register the transfer of such Certificates to a
successor Depository named by the Depositor and acceptable to CPS and the
Trustee.
(d) If (x)(i) the Depository advises the Depositor and the Trustee in
writing that the Depository is no longer willing or
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able properly to discharge its responsibilities as Depository, and (ii) the
Trustee or the Depositor is unable to locate a qualified successor, (y) the
Depositor advises the Trustee in writing that it elects to terminate the
book-entry system through the Depository, or (z) upon the occurrence of an
Event of Default, Certificate Owners having a beneficial interest in the
Class A Certificates at least equal to 51% of the Class A Certificate Balance
and Certificate Owners having a beneficial interest in the Class B
Certificates at least equal to 51% of the Class B Certificate Balance advise
the Depositor and the Trustee through the Depository that the continuation
of a book-entry system is no longer in the best interests of the Certificate
Owners, the Trustee shall notify all Certificate Owners, through the
Depository, of the occurrence of any such event and of the availability of
definitive, fully registered Certificates (the "Definitive Certificates") to
Certificate Owners requesting the same. Upon surrender to the Trustee of the
Certificates by the Depository, accompanied by registration instructions from
the Depository for registration, the Trustee shall issue the Definitive
Certificates in accordance with such instructions. Neither the Depositor nor
the Trustee shall be liable for any delay in delivery of such instructions
and may conclusively rely on, and shall be protected in relying on, such
instructions. The Depositor shall pay all expenses incurred in connection
with the notification of Certificate Owners and the issuance of Definitive
Certificates hereunder. Upon the issuance of Definitive Certificates the
Trustee shall recognize the Holders of the Definitive Certificates as
Certificateholders hereunder.
(e) On or prior to the Closing Date, there shall be delivered to the
Trustee, as custodian for the Depository, one certificate representing the
Book-Entry Certificate in registered form, registered in the name of the
Depository's nominee, Cede & Co., the total face amount of which represents
(together with a single certificate evidencing the remainder of the Original
Pool Balance that is not an integral multiple of $1,000) 100% of the Original
Pool Balance. If, however, the aggregate principal amount of the
Certificates exceeds $200,000,000, one Certificate will be issued with
respect to each $200,000,000 of principal amount and an additional
Certificate will be issued with respect to any remaining principal amount.
Each such Certificate registered in the name of the Depository's nominee
shall bear the following legend:
"Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation
("DTC"), to the Trustee or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name
of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such
other entity as is requested by an authorized
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representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein."
(f) No transfer of a Class B Certificate shall be made unless (i) the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and any applicable State securities laws are complied
with, (ii) such transfer is exempt from the registration requirements under
said Securities Act and laws or (iii) such transfer is made to a Person who
the transferor reasonably believes is a "qualified institutional buyer" (as
defined in Rule 144A of the Securities Act) that is purchasing such Class B
Certificate for its own account or the account of a qualified institutional
buyer to whom notice is given that the transfer is being made in reliance on
said Rule 144A. In the event that a transfer is to be made in reliance upon
clause (ii) above, the Class B Certificateholder desiring to effect such
transfer and such Certificateholder's prospective transferee must each
(x) certify in writing to the Trustee the facts surrounding such transfer and
(y) provide the Trustee with a written opinion of counsel in form and
substance satisfactory to the Depositor and the Trustee that such transfer
may be made pursuant to an exemption from the Securities Act or laws, which
Opinion of Counsel shall not be an expense of the Depositor or the Trustee.
In the event that a transfer is to be made in reliance upon clause (iii)
above, the prospective transferee shall have furnished to the Trustee and the
Depositor a Transferee Certificate, signed by such transferee, in the form
of Exhibit F. Neither the Depositor nor the Trustee is under any obligation
---------
to register the Class B Certificates under said Securities Act or any other
securities law. The Certificate Registrar may request and shall receive in
connection with any transfer signature guarantees satisfactory to it in its
sole discretion.
In no event shall a Class B Certificate be transferred to an employee
benefit plan, trust annuity or account subject to ERISA or a plan described
in Section 4975(e)(1) of the Code (any such plan, trust or account including
------------------
any Keogh (HR-10) plans, individual retirement accounts or annuities and
other employee benefit plans subject to Section 406 of ERISA or Section 4975
----------- ------------
of the Code being referred to in this Section 6.3 as an "Employee Plan"), a
-----------
trustee of any Employee Plan, or an entity, account or other pooled
investment fund the underlying assets of which include or are deemed to
include Employee Plan assets by reason of an Employee Plan's investment in
the entity, account or other pooled investment fund. The foregoing
restriction on sale or transfer to an employee benefit plan shall not apply
to prevent the initial issuance or sale or subsequent transfer of the Class
B Certificates to an insurance company, insurance service, or
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insurance organization qualified to do business in a State that purchases
Class B Certificates with funds held in one or more of its general accounts
which is eligible for the exemptive relief afforded under Section III of
Prohibited Transaction Class Exemption 95-60. The Depositor, CPS, the
Servicer, the Trustee, the Certificate Insurer and the Standby Servicer shall
not be responsible for confirming or otherwise investigating whether a
proposed purchaser is an employee benefit plan, trust or account subject to
ERISA, or described in Section 4975(e)(1) of the Code.
------------------
(g) Each Holder of Class B Certificates, by virtue of the acquisition
and holding thereof, will be deemed to have represented and agreed as
follows:
(i) It is a qualified institutional buyer as defined in Rule
144A or a sophisticated, experienced, professional investor and is an
institutional accredited investor as defined in Regulation D promulgated
under the Securities Act and is acquiring the Certificates for its own
institutional account or for the account of a qualified institutional
buyer or an institutional accredited investor.
(ii) It understands that the Class B Certificates have been
offered in a transaction not involving any public offering within the
meaning of the Securities Act, and that, if in the future it decides to
resell, pledge or otherwise transfer any Class B Certificates, such Class
B Certificates may be resold, pledged or transferred only (a) to a person
whom the transferor reasonably believes is a qualified institutional buyer
(as defined in Rule 144A under the Securities Act) that purchases for its
own account or for the account of a qualified institutional buyer to whom
notice is given that the resale, pledge or transfer is being made in
reliance on Rule 144A, (b) pursuant to an effective registration statement
under the Securities Act or (c) in reliance on another exemption under the
Securities Act.
(iii) It understands that the Class B Certificates will bear
a legend substantially to the following effect:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING
THIS SECURITY, AGREES THAT THIS SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY (1) SO LONG AS THIS SECURITY IS ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A, TO A PERSON WHOM THE TRANSFEROR REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE
144A UNDER THE SECURITIES ACT, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT
THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, AND SUBJECT TO THE RECEIPT BY THE
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TRUSTEE AND THE DEPOSITOR OF A CERTIFICATION OF THE TRANSFEREE, (2)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR (3) IN RELIANCE ON ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND SUBJECT TO THE RECEIPT BY THE TRUSTEE OF A
CERTIFICATION OF THE TRANSFEREE (SATISFACTORY TO THE TRUSTEE) AND AN
OPINION OF COUNSEL (SATISFACTORY TO THE TRUSTEE AND THE DEPOSITOR) TO THE
EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, IN
EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES AND IN COMPLIANCE WITH THE TRANSFER REQUIREMENTS SET
FORTH IN SECTION 6.3 OF THE AGREEMENT.
-----------
IN NO EVENT SHALL THIS SECURITY BE TRANSFERRED TO AN EMPLOYEE
BENEFIT PLAN, TRUST ANNUITY OR ACCOUNT SUBJECT TO ERISA OR A PLAN
DESCRIBED IN SECTION 4975(E)(1) OF THE CODE, (ANY SUCH PLAN, TRUST OR
ACCOUNT BEING REFERRED TO AS AN "EMPLOYEE PLAN"), A TRUSTEE OF ANY
EMPLOYEE PLAN, OR AN ENTITY, ACCOUNT OR OTHER POOLED INVESTMENT FUND THE
UNDERLYING ASSETS OF WHICH INCLUDE OR ARE DEEMED TO INCLUDE EMPLOYEE PLAN
ASSETS BY REASON OF AN EMPLOYEE PLAN'S INVESTMENT IN THE ENTITY, ACCOUNT
OR OTHER POOLED INVESTMENT FUND. INCLUDED WITHIN THE DEFINITION OF
"EMPLOYEE PLANS" ARE, WITHOUT LIMITATION, KEOGH (HR-10) PLANS, IRA'S
(INDIVIDUAL RETIREMENT ACCOUNTS OR ANNUITIES) AND OTHER EMPLOYEE BENEFIT
PLANS, SUBJECT TO SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE. THE
FOREGOING RESTRICTION ON SALE OR TRANSFER TO AN EMPLOYEE BENEFIT PLAN
SHALL NOT APPLY TO PREVENT THE INITIAL ISSUANCE OR SALE OR SUBSEQUENT
TRANSFER OF THIS SECURITY TO AN INSURANCE COMPANY, INSURANCE SERVICE, OR
INSURANCE ORGANIZATION THAT IS QUALIFIED TO DO BUSINESS IN A STATE IF SUCH
INSURANCE COMPANY PURCHASES THIS SECURITY WITH FUNDS HELD IN ONE OR MORE
OF ITS GENERAL ACCOUNTS WHICH IS ELIGIBLE FOR THE EXEMPTIVE RELIEF
AFFORDED UNDER SECTION III OF PROHIBITED TRANSACTION CLASS EXEMPTION
95-60.
(h) Upon surrender for registration of transfer of any Certificate at
the Corporate Trust Office, the Trustee shall execute, authenticate and the
Trustee shall deliver, in the name of the designated transferee or
transferees, one or more new Certificates in authorized denominations of a
like aggregate amount dated the date of authentication. At the option of a
Holder, Certificates may be exchanged for other Certificates in authorized
denominations of a like aggregate amount upon surrender of the Certificates
to be exchanged at the Corporate Trust Office.
(i) Every Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer
in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the Holder or his attorney duly authorized in writing. Each
Certificate
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<PAGE>
surrendered for registration of transfer and exchange shall be canceled and
subsequently disposed of by the Trustee in accordance with its customary
procedures.
(j) No service charge shall be made for any registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
SECTION 6.4. Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
-------------------------------------------------
any mutilated Certificate shall be surrendered to the Certificate Registrar,
or if the Certificate Registrar shall receive evidence to its satisfaction
of the destruction, loss, or theft of any Certificate and (b) there shall be
delivered to the Certificate Registrar, the Trustee and the Certificate
Insurer such security or indemnity as may be required by them to save each
of them harmless, then in the absence of notice that such Certificate shall
have been acquired by a bona fide purchaser, the Trustee on behalf of the
Trust shall execute, authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a new Certificate
of like tenor and denomination. In connection with the issuance of any new
Certificate under this Section 6.4, the Trustee and the Certificate Registrar
-----------
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any
duplicate Certificate issued pursuant to this Section 6.4 shall constitute
-----------
conclusive evidence of ownership in the Trust, as if originally issued,
whether or not the lost, stolen, or destroyed Certificate shall be found at
any time.
SECTION 6.5. Persons Deemed Owners. Prior to due presentation of a
---------------------
Certificate for registration of transfer, the Trustee or the Certificate
Registrar may treat the Person in whose name any Certificate shall be
registered as the owner of such Certificate for the purpose of receiving
distributions pursuant to Section 4.6 and for all other purposes whatsoever,
-----------
and neither the Trustee nor the Certificate Registrar shall be bound by any
notice to the contrary.
SECTION 6.6. Access to List of Certificateholders' Names and Addresses.
---------------------------------------------------------
The Trustee shall furnish or cause to be furnished to the Servicer or the
Certificate Insurer, at the expense of the Trust, within 15 days after
receipt by the Trustee of a request therefor from the Servicer or the
Certificate Insurer, as the case may be, in writing, a list of the names and
addresses of the Certificateholders as of the most recent Record Date. If
three or more Class A Certificateholders, or one or more Holders of Class A
Certificates evidencing not less than 25% of the Class A Certificate Balance
apply in writing to the Trustee, and such application states that the
applicants desire
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to communicate with other Certificateholders with respect to their rights
under this Agreement or under the Certificates and such application shall be
accompanied by a copy of the communication that such applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt
for such application, afford such applicants access during normal business
hours to the current list of Certificateholders. Each Holder, by receiving
and holding a Certificate, shall be deemed to have agreed to hold none of the
Servicer, the Certificate Insurer or the Trustee accountable by reason of the
disclosure of its name and address, regardless of the source from which such
information was derived.
SECTION 6.7. Maintenance of Office or Agency. The Trustee shall
-------------------------------
maintain in Minneapolis, Minnesota, an office or offices or agency or
agencies where Certificates may be surrendered for registration of transfer
or exchange and where notices and demands to or upon the Trustee in respect
of the Certificates and this Agreement may be served. The Trustee initially
designates its office located at Sixth Street and Marquette Avenue,
Minneapolis, Minnesota 55479-0069, as its office for such purposes. The
Trustee shall give prompt written notice to the Servicer and to
Certificateholders of any change in the location of the Certificate Register
or any such office or agency.
ARTICLE VII
The Depositor
-------------
SECTION 7.1. Representations of Depositor. The Depositor makes the
----------------------------
following representations to the Certificate Insurer and the Trustee, on
which the Certificate Insurer relied in executing and delivering the Policy
and on which the Trustee on behalf of itself and the Certificateholders
relied in accepting the Receivables in trust and executing and authenticating
the Certificates. The representations speak as of the execution and delivery
of this Agreement and shall survive the sale of the Receivables to the
Trustee.
(i) Organization and Good Standing. The Depositor has been
------------------------------
duly organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware, with power and authority to
execute, deliver and perform its obligations under this Agreement.
(ii) Due Qualification. The Depositor is duly qualified to
-----------------
do business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals in all jurisdictions material to the
performance of its obligations under this Agreement.
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<PAGE>
(iii) Power and Authority. The Depositor has the power and
-------------------
authority to execute and deliver this Agreement and to carry out its
terms; the Depositor has full power and authority to sell and assign the
property sold and assigned to and deposited with the Trustee as part of
the Trust and has duly authorized such sale and assignment to the Trustee
by all necessary corporate action; and the execution, delivery, and
performance of this Agreement has been duly authorized by the Depositor by
all necessary corporate action.
(iv) Valid Sale; Binding Obligation. This Agreement effects
------------------------------
a valid sale, transfer and assignment of the Receivables and the other
property conveyed to the Trust pursuant to Section 2.2, enforceable
-----------
against creditors of and purchasers from the Depositor; and this Agreement
shall constitute a legal, valid and binding obligation of the Depositor
enforceable in accordance with its 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 a proceeding in equity or at
law.
(v) No Violation. The execution, delivery and performance
------------
by the Depositor of this Agreement and the consummation of the
transactions contemplated hereby and the fulfillment of the terms hereof
do not conflict with, result in any breach of any of the terms and
provisions of, nor constitute (with or without notice or lapse of time) a
default under, the certificate of incorporation or by-laws of the
Depositor, or any material indenture, agreement, mortgage, deed of trust,
or other instrument to which the Depositor is a party or by which it is
bound or any of its properties are subject; nor result in the creation or
imposition of any material lien upon any of its properties pursuant to the
terms of any such indenture, agreement, mortgage, deed of trust, or other
instrument (other than this Agreement); nor violate any law, order, rule,
or regulation applicable to the Depositor of any court or of any Federal
or State regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Depositor or its properties.
(vi) No Proceedings. There are no proceedings or
--------------
investigations pending, or to the Depositor's best knowledge, threatened,
before any court, regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over the Depositor or its
properties: (A) asserting the invalidity of this Agreement or the
Certificates, (B) seeking to prevent the issuance of the
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<PAGE>
Certificates or the consummation of any of the transactions contemplated
by this Agreement, (C) seeking any determination or ruling that might
materially and adversely affect the performance by the Depositor of its
obligations under, or the validity or enforceability of, this Agreement or
the Certificates, or (D) relating to the Depositor and which might
adversely affect the Federal or State income, excise, franchise or similar
tax attributes of the Certificates.
(vii) 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 Certificates or the consummation
of the other transactions contemplated by this Agreement, except such as
have been duly made or obtained.
(viii) The Depositor hereby represents and warrants to the
Trustee that the Depositor'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: 600 Steamboat Road, Greenwich,
Connecticut 06830.
SECTION 7.2. Liability of Depositor; Indemnities. The Depositor shall
-----------------------------------
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Depositor under this Agreement and the
representations made by the Depositor in this Agreement. The Depositor shall
indemnify, defend, and hold harmless the Trustee and the Standby Servicer
from and against any loss, liability or expense incurred by reason of (a) the
Depositor'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 or (b) the Depositor's violation
of Federal or State securities laws in connection with the sale of the
Certificates.
Indemnification under this Section 7.2 shall include, without
-----------
limitation, reasonable fees and expenses of counsel and expenses of
litigation. If the Depositor shall have made any indemnity payments to the
Trustee or the Standby Servicer pursuant to this Section and the Trustee or
the Standby Servicer thereafter shall collect any of such amounts from
others, the Trustee or the Standby Servicer shall repay such amounts to the
Depositor, without interest.
SECTION 7.3. Merger or Consolidation of, or Assumption of the
------------------------------------------------
Obligations of, Depositor. Any Person (a) into which the Depositor may be
- -------------------------
merged or consolidated, (b) which may result from any merger or consolidation
to which the Depositor shall be a party, or (c) which may succeed to the
properties and assets of
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<PAGE>
the Depositor substantially as a whole, which person in any of the foregoing
cases executes an agreement of assumption to perform every obligation of the
Depositor under this Agreement, shall be the successor to the Depositor
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)
-------- -------
immediately after giving effect to such transaction, no event that, after
notice or lapse of time, or both, would become an Event of Default shall have
happened and be continuing, (ii) the Depositor shall have delivered to the
Certificate Insurer and the Trustee an Officer's Certificate and an Opinion
of Counsel each stating that such consolidation, merger, or succession and
such agreement or assumption comply with this Section 7.3 and that all
-----------
conditions precedent, if any, provided for in this Agreement relating to such
transaction have been complied with, (iii) the Depositor shall have delivered
to the Certificate Insurer and the Trustee an Opinion of Counsel either (A)
stating that, in the opinion of such counsel, all financing statements and
continuation statements and amendments thereto have been executed and filed
that are necessary fully to preserve and protect the interest of the Trustee
in the Receivables, and reciting the details of such filings, or (B) stating
that, in the opinion of such counsel, no such action shall be necessary to
preserve and protect such interest and (iv) immediately after giving effect
to such transaction, no Insurance Agreement Event of Default and no event
that, after notice or lapse of time, or both, would become an Insurance
Agreement Event of Default shall have happened and be continuing. The
Depositor shall provide notice of any merger, consolidation or succession
pursuant to this Section 7.3 to each Rating Agency and shall have received
-----------
confirmation from each Rating Agency that the then current rating of the
Class A Certificates or the Class B Certificates will not be downgraded as
a result of such merger, consolidation or succession. Notwithstanding
anything herein to the contrary, the execution of the foregoing agreement of
assumption and compliance with clause (i), (ii), (iii) or (iv) above shall
be conditions to the consummation of the transactions referred to in clause
(a), (b) or (c) above.
SECTION 7.4. Limitation on Liability of Depositor and Others. The
-----------------------------------------------
Depositor and any director or officer or employee or agent of the Depositor
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 hereunder. The Depositor shall not be under any
obligation to appear in, prosecute, or defend any legal action that shall not
be incidental to its obligations under this Agreement, and that in its
opinion may involve it in any expense or liability.
SECTION 7.5. Depositor May Own Certificates. The Depositor and any
------------------------------
Person controlling, controlled by, or under common
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control with the Depositor may in its individual or any other capacity become
the owner or pledgee of Certificates with the same rights as it would have
if it were not the Depositor or an affiliate thereof, except as otherwise
provided in the definition of "Certificateholder" specified in Section 1.1
-----------
and in Section 1.6. Certificates so owned by or pledged to the Depositor or
------------
such controlling or commonly controlled Person shall have an equal and
proportionate benefit under the provisions of this Agreement, without
preference, priority, or distinction as among all of the Certificates except
as otherwise provided herein or by the definition of Certificateholder.
ARTICLE VIII
The Servicer
------------
SECTION 8.1. Representations of Servicer. The Servicer makes the
---------------------------
following representations to the Depositor, the Certificate Insurer and the
Trustee, on which the Depositor relies in executing and delivering this
Agreement, on which the Certificate Insurer relies in executing and
delivering the Policy, and on which the Trustee on behalf of itself and the
Certificateholders relies in accepting the Receivables in trust and executing
and authenticating the Certificates. The representations speak as of the
execution and delivery of this Agreement and shall survive the sale of the
Receivables to the Trustee.
(i) Organization and Good Standing. The Servicer has been
------------------------------
duly organized and is validly existing as a corporation in good standing
under the laws of the State of California, with power and authority to own
its properties and to conduct its business as such properties shall be
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.
(ii) 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) shall
require such qualifications.
(iii) Power and Authority. The Servicer has the power and
-------------------
authority to execute and deliver this Agreement and to carry out its
terms; and the execution, delivery, and performance of this Agreement has
been duly authorized by the Servicer by all necessary corporate action.
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<PAGE>
(iv) Binding Obligation. This Agreement constitutes a legal,
------------------
valid and binding obligation of the Servicer enforceable in accordance
with its terms.
(v) No Violation. The execution, delivery and performance
------------
by the Servicer of this Agreement and the consummation of the transactions
contemplated hereby and the fulfillment of the terms hereof do not
conflict with, result in any breach of any of the terms and provisions of,
nor constitute (with or without notice or lapse of time) a default under,
the articles of incorporation or by-laws 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; nor result in the creation or imposition of any
lien upon any of its properties pursuant to the terms of any indenture,
agreement, mortgage, deed of trust, or other instrument (other than this
Agreement); nor 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 its properties.
(vi) No Proceedings. There are no proceedings or
--------------
investigations pending, or to the Servicer's best knowledge, threatened,
before any court, regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over the Servicer or its
properties: (A) asserting the invalidity of this Agreement or the
Certificates, (B) seeking to prevent the issuance of the Certificates or
the consummation of any of the transactions contemplated by this
Agreement, (C) seeking any determination or ruling that might materially
and adversely affect the performance by the Servicer of its obligations
under, or the validity or enforceability of, this Agreement or the
Certificates, or (D) relating to the Servicer and which might adversely
affect the Federal or State income, excise, franchise or similar tax
attributes of the Certificates.
(vii) 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 Certificates or the consummation
of the other transactions contemplated by this Agreement, except such as
have been duly made or obtained.
(viii) Taxes. The Servicer has filed on a timely basis all tax
-----
returns required to be filed by it and paid all taxes, to the extent that
such taxes have become due.
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(ix) 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: 2 Ada, Suite 100,
Irvine, California.
SECTION 8.2. Indemnities of Servicer. (a) The Servicer shall be liable
-----------------------
in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement and the representations made
by the Servicer herein.
(i) The Servicer shall defend, indemnify, and hold harmless
the Trustee, the Standby Servicer, the Collateral Agent, the Trust, the
Certificate Insurer, the Certificateholders and the Depositor, from and
against any and all costs, expenses, losses, damages, claims, and
liabilities, arising out of or resulting from the use, ownership, or
operation by the Servicer or any affiliate thereof of a Financed Vehicle.
(ii) The Servicer shall indemnify, defend and hold harmless
the Trustee, the Standby Servicer, the Collateral Agent, the Trust, the
Certificate Insurer and the Depositor from and against any taxes that may
at any time be asserted against the Trustee, the Standby Servicer, the
Collateral Agent, the Trust, the Certificate Insurer or the Depositor,
with respect to the transactions contemplated herein including, without
limitation, any sales, gross receipts, general corporation, tangible
personal property, privilege, or license taxes and costs and expenses in
defending against the same.
(iii) The Servicer shall indemnify, defend, and hold harmless
the Trustee, the Standby Servicer, the Collateral Agent, the Depositor,
the Certificate Insurer, the Trust and the Certificateholders 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 Trustee, the Standby
Servicer, the Collateral Agent, the Depositor, the Trust or the
Certificateholders through, the negligence, willful misfeasance, or bad
faith of the Servicer in the performance of its duties under this
Agreement or by reason of reckless disregard of its obligations and duties
under this Agreement.
(iv) The Servicer shall indemnify, defend, and hold harmless
the Trustee, the Standby Servicer, the Depositor, 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, if
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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 Standby
Servicer, the Depositor or Collateral Agent, as applicable; (b) relates to
any tax other than the taxes with respect to which the Servicer shall be
required to indemnify the Trustee, the Standby Servicer, the Depositor or
the Collateral Agent; or (c) shall arise from the Trustee's breach of any
of its representations or warranties set forth in Section 10.13.
-------------
(v) Notwithstanding the foregoing, the Servicer shall not be
obligated to defend, indemnify, and hold harmless any Certificateholder
for any losses, claims, damages or liabilities incurred by any
Certificateholders 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 Certificate by such
Certificateholder with the assets of a plan subject to such provisions of
ERISA or the Code or the servicing, management and operation of the Trust.
(b) For purposes of this Section, in the event of the termination of
the rights and obligations of a Servicer (or any successor thereto pursuant
to Section 8.3) as Servicer pursuant to Section 9.1, 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 9.2.
-----------
The provisions of this Section 8.2(b) shall in no way affect the survival
--------------
pursuant to Section 8.2(c) of the indemnification by the outgoing Servicer
--------------
provided by Section 8.2(a).
--------------
(c) Indemnification under this Section 8.2 shall survive the
-----------
termination of this Agreement and any resignation or removal of CPS as
Servicer and shall include reasonable fees and expenses of counsel and
expenses of litigation. If the Servicer shall have made any indemnity
payments pursuant to this Section and the recipient thereafter collects any
of such amounts from others, the recipient shall promptly repay such amounts
to the Servicer, without interest.
SECTION 8.3. Merger or Consolidation of, or Assumption of the
------------------------------------------------
Obligations of, Servicer or Standby Servicer. (a) Any Person (a) into which
- --------------------------------------------
the Servicer may be merged or consolidated, (b) which may result from any
merger or consolidation to which the Servicer shall be a party, or (c) which
may succeed to the properties and assets of the Servicer substantially as a
whole, shall execute an agreement of assumption to perform every obligation
of the Servicer hereunder, and whether or not such assumption agreement is
executed, shall be the successor to the Servicer under this Agreement without
further act on the part of
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any of the parties to this Agreement; provided, however, that (i) immediately
-------- -------
after giving effect to such transaction, no Event of Default, and no event
which, after notice or lapse of time, or both, would become an Event of
Default shall have happened and be continuing, (ii) the Servicer shall have
delivered to the Trustee and the Certificate Insurer an Officer's Certificate
and an Opinion of Counsel each stating that such consolidation, merger or
succession and such agreement of assumption comply with this Section 8.3 and
-----------
that all conditions precedent provided for in this Agreement relating to such
transaction have been complied with, (iii) the Servicer shall have delivered
to the Trustee and the Certificate Insurer an Opinion of Counsel either (A)
stating that, in the opinion of such counsel, all financing statements and
continuation statements and amendments thereto have been executed and filed
that are necessary fully to preserve and protect the interest of the Trustee
in the Receivables and reciting the details of such filings, or (B) stating
that, in the opinion of such counsel, no such action shall be necessary to
preserve and protect such interest and (iv) nothing herein shall be deemed
to release the Servicer from any obligation. Notwithstanding anything herein
to the contrary, the execution of the foregoing agreement of assumption and
compliance with clauses (i), (ii) or (iii) above shall be conditions to the
consummation of the transactions referred to in clause (a), (b) or (c) above.
(b) Any Person (a) into which the Standby Servicer may be merged or
consolidated, (b) which may result from any merger or consolidation to which
the Standby Servicer shall be a party, or (c) which may succeed to the
properties and assets of the Standby Servicer substantially as a whole, shall
execute an agreement of assumption to perform every obligation of the
Servicer hereunder, and whether or not such assumption agreement is executed,
shall be the successor to the Standby Servicer under this Agreement without
further act on the part of any of the parties to this Agreement; provided,
--------
however, that nothing herein shall be deemed to release the Standby Servicer
- -------
from any obligation.
SECTION 8.4. Limitation on Liability of Servicer and Others. Neither
----------------------------------------------
the Servicer nor any of the directors or officers or employees or agents of
the Servicer shall be under any liability to the Trust or the
Certificateholders, except as provided under 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 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 or by reason of reckless
disregard of obligations and duties under this Agreement. The Servicer and
any director or officer or employee or agent of the Servicer may rely in good
faith on any document of any kind prima facie
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<PAGE>
properly executed and submitted by any Person respecting any matters arising
under this Agreement.
Except as provided in this Agreement, the Servicer shall not be under
any obligation to appear in, prosecute, or defend any legal action that shall
not be incidental to its duties to service the Receivables in accordance with
this Agreement, and that in its opinion may involve it in any expense or
liability.
SECTION 8.5. Servicer and Standby Servicer Not to Resign. Subject to
-------------------------------------------
the provisions of Section 8.3, neither the Servicer nor the Standby Servicer
-----------
may resign from the obligations and duties hereby imposed on it as Servicer
or Standby Servicer, as the case may be, under this Agreement except upon
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 result in a
material adverse effect on the Servicer or the Standby Servicer, as the case
may be, and the Certificate Insurer does not elect to waive the obligations
of the Servicer or the Standby Servicer, as the case may be, to perform the
duties which render it legally unable to act or does not elect to delegate
those duties to another Person. Notice of any such determination permitting
the resignation of the Servicer or the Standby Servicer, as the case may be,
shall be communicated to the Depositor, the Trustee and the Certificate
Insurer at the earliest practicable time (and, if such communication is not
in writing, shall be confirmed in writing at the earliest practicable time)
and any such determination shall be evidenced by an Opinion of Counsel to
such effect delivered to and satisfactory to the Depositor, the Trustee and
the Certificate Insurer concurrently with or promptly after such notice. No
such resignation of the Servicer shall become effective until a successor
servicer shall have assumed the responsibilities and obligations of CPS in
accordance with Section 9.2 and the Servicing Assumption Agreement, if
-----------
applicable. No such resignation of the Standby Servicer shall become
effective until an entity acceptable to the Certificate Insurer shall have
assumed the responsibilities and obligations of the Standby Servicer;
provided, however, that if no such entity shall have assumed such
- -------- -------
responsibilities and obligations of the Standby Servicer within 60 days of
the resignation of the Standby Servicer, the Standby Servicer may petition
a court of competent jurisdiction for the appointment of a successor to the
Standby Servicer.
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ARTICLE IX
Default
-------
SECTION 9.1. Events of Default. If any one of the following events
-----------------
("Events of Default") shall occur and be continuing:
-----------------
(i) Any failure by the Servicer to deliver to the Trustee for
distribution to Certificateholders any proceeds or payment required to be
so delivered under the terms of the Certificates and this Agreement that
shall continue unremedied for a period of two Business Days (or, in the
case of a payment or deposit to be made no later than a Distribution Date,
the failure to make such payment or deposit by such Distribution Date); or
the certificate required by Section 3.9, the statement required by Section
----------- -------
3.10, or the report required by Section 3.11 shall not have been
---- ------------
delivered within five (5) days after the date such certificates or
statements or reports, as the case may be, are required to be delivered;
or
(ii) Failure on the part of CPS, the Servicer, or the
Depositor, as the case may be, duly to observe or to perform in any
material respect any other covenants or agreements of CPS, the Servicer or
the Depositor (as the case may be) set forth in the Certificates, the
Purchase Agreement or in this Agreement, which failure shall continue
unremedied for a period of 30 days after the date on which written notice
of such failure requiring the same to be remedied, shall have been given
(1) to CPS, the Servicer or the Depositor (as the case may be), by the
Certificate Insurer or the Trustee, or (2) to CPS, the Servicer or the
Depositor, (as the case may be), and to the Trustee and the Certificate
Insurer by the Holders of Class A Certificates evidencing not less than
25% of the Class A Certificate Balance or, after the Class A Certificates
have been paid in full and all outstanding Reimbursement Obligations and
other amounts due to the Certificate Insurer have been paid in full, by
the Holders of Class B Certificates evidencing not less than 25% of the
Class B Certificate Balance; or
(iii) The entry of a decree or order by a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a conservator, receiver, or liquidator for CPS or the
Servicer (or, so long as CPS is Servicer, any of the Servicer's
Affiliates) in any bankruptcy, insolvency, readjustment of debt,
marshalling of assets and liabilities, or similar proceedings, or for the
winding up or liquidation of its affairs, and the continuance of any such
decree or order unstayed and in effect for a period of 60 consecutive
days; or
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(iv) The consent by CPS or the Servicer (or, so long as CPS
is Servicer, any of the Servicer's Affiliates) to the appointment of a
conservator, trustee, receiver or liquidator in any bankruptcy,
insolvency, readjustment of debt, marshalling of assets and liabilities,
or similar proceedings of or relating to CPS or the Servicer (or, so long
as CPS is Servicer, any of the Servicer's Affiliates) of or relating to
substantially all of its property; or CPS or the Servicer (or, so long as
CPS is Servicer, any of the Servicer's Affiliates) shall admit in writing
its inability to pay its debts generally as they become due, file a
petition to take advantage of any applicable insolvency or reorganization
statute, make an assignment for the benefit of its creditors, or
voluntarily suspend payment of its obligations; or
(v) The occurrence of an Insurance Agreement Event of
Default;
then, and in each and every case, so long as an Event of Default shall not
have been remedied, provided (i) no Insurer Default shall have occurred and
be continuing, the Certificate Insurer in its sole and absolute discretion,
or (ii) if an Insurer Default shall have occurred and be continuing, then
either the Trustee or the Holders of Class A Certificates evidencing not less
than 25% of the Class A Certificate Balance or (iii) if the Class A
Certificates have been paid in full and either (A) all outstanding
Reimbursement Obligations and other amounts due to the Certificate Insurer
have been paid in full or (B) an Insurer Default shall have occurred and be
continuing, then either the Trustee or the Holders of Class B Certificates
evidencing not less than 25% of the Class B Certificate Balance, by notice
then given in writing to the Servicer (and to the Trustee if given by the
Certificate Insurer or by the Certificateholders) 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,
all authority and power of the Servicer under this Agreement, whether with
respect to the Certificates or the Receivables or otherwise, shall, without
further action, pass to and be vested in (i) the Standby Servicer or (ii)
such successor Servicer as may be appointed under Section 9.2; provided,
-----------
however, that the successor Servicer shall have no liability with respect to
any obligation which was required to be performed by the predecessor Servicer
prior to the date the successor Servicer becomes the Servicer or any claim
of a third party (including a Certificateholder) based on any alleged action
or inaction of the predecessor Servicer as Servicer; and, without limitation,
the Trustee is hereby authorized and empowered to execute and deliver, on
behalf of the predecessor Servicer, as attorney-in-
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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 related documents, or otherwise. The
predecessor Servicer shall cooperate with the successor Servicer and the
Trustee in effecting the termination of the responsibilities and rights of
the predecessor Servicer under this Agreement, including the transfer to the
successor Servicer for administration by it of all cash amounts that shall
at the time be held or should have been held by the predecessor Servicer for
deposit, or shall thereafter be received with respect to a Receivable and the
delivery to the successor Servicer of all files and records concerning the
Receivables and a computer tape in readable form containing all information
necessary to enable the successor Servicer to service the Receivables and the
other property of the Trust. All reasonable costs and expenses (including
attorneys' fees) incurred in connection with transferring the Receivable
Files to the successor Servicer and amending this Agreement to reflect such
succession as Servicer pursuant to this Section 9.1 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 4.6(c)
--------------
hereof. Upon receipt of notice of the occurrence of an Event of Default, the
Trustee shall give notice thereof to the Rating Agencies and the Depositor.
The predecessor Servicer shall grant the Depositor, the Trustee, the Standby
Servicer and the Certificate Insurer reasonable access to the predecessor
Servicer's premises at the predecessor Servicer's expense. If requested by
the Certificate Insurer, the Standby Servicer or successor Servicer shall
terminate any arrangements relating to (i) the Lock-Box Account with the
Lock-Box Bank, (ii) the Post-Office Box or (iii) the Lock-Box Agreement, and
direct the Obligors to make all payments under the Receivables directly to
the Servicer at the predecessor Servicer's expense (in which event the
successor Servicer shall process such payments directly, or, through a Lock-
Box Account with a Lock-Box Bank at the direction of the Certificate
Insurer).
SECTION 9.2. Appointment of Successor. (a) Upon the Servicer's receipt
------------------------
of notice of termination pursuant to Section 9.1, the Servicer's resignation
-----------
in accordance with the terms of this Agreement or expiration or non-renewal
of the term of the Servicer hereunder in accordance with Section 3.14, 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
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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, Norwest Bank Minnesota, National
Association, as Standby Servicer, shall assume the obligations of Servicer
hereunder on the date specified in such written notice (the Assumption Date")
pursuant to the Servicing Assumption Agreement or, in the event that the
Certificate Insurer shall have determined that a Person other than the
Standby Servicer shall be the successor Servicer in accordance with Section
-------
9.2(c), on the date of the execution of a written assumption agreement by
- ------
such Person to serve as successor Servicer. Notwithstanding the Standby
Servicer's assumption of, and its agreement to perform and observe, all
duties, responsibilities and obligations of CPS as Servicer under this
Agreement arising on and after the Assumption Date, the Standby Servicer
shall not be deemed to have assumed or to become liable for, or otherwise
have any liability for, any duties, responsibilities, obligations or
liabilities of CPS or any predecessor Servicer arising on or before the
Assumption Date, whether provided for by the terms of this Agreement, arising
by operation of law or otherwise, including, without limitation, any
liability for, any duties, responsibilities, obligations or liabilities of
CPS or any predecessor Servicer arising on or before the Assumption Date
under Sections 3.7, 4.4 or 8.2 of this Agreement, regardless of when the
------------ --- ---
liability, duty, responsibility or obligation of CPS or any predecessor
Servicer therefore arose, whether provided by the terms of this Agreement,
arising by operation of law or otherwise. In addition, if the Standby
Servicer shall be legally unable to act as Servicer and an Insurer Default
shall have occurred and be continuing, the Standby Servicer, the Trustee or
Class A Certificateholders holding Class A Certificates evidencing not less
than 66 2/3% of the Class A Certificate Balance (or, if the Class A
Certificates have been paid in full, Class B Certificateholders holding Class
B Certificates evidencing not less than 51% of the Class B Certificate
Balance) may petition a court of competent jurisdiction to appoint any
successor to the Servicer. Pending appointment pursuant to the preceding
sentence, the Standby Servicer shall act as successor Servicer unless it is
legally unable to do so, in which event the predecessor Servicer shall
continue to act as Servicer until a successor has been appointed and accepted
such appointment. In the event that a successor Servicer has not been
appointed at the time when the predecessor Servicer has ceased to act as
Servicer in accordance with this Section 9.2, then the Certificate
-----------
Insurer, in accordance with Section 9.2(c) shall appoint, or
--------------
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petition a court of competent jurisdiction to appoint a successor to the
Servicer under this Agreement.
(b) Upon appointment, the successor Servicer shall be the successor in
all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties, and liabilities arising thereafter relating thereto
placed on the predecessor Servicer, and shall be entitled to the Servicing
Fee and all of the rights granted to the predecessor Servicer, by the terms
and provisions of this Agreement.
(c) Subject to Section 12.11, the Certificate Insurer may exercise at
-------------
any time its right to appoint as Standby Servicer or as successor Servicer
a Person other than the Person serving as Standby Servicer at the time, and
shall have no liability to the Trustee, CPS, the Depositor, the Person then
serving as Standby Servicer, any Certificateholder or any other person if it
does so. Subject to Section 8.5, no provision of this Agreement shall be
-----------
construed as relieving the Standby Servicer of its obligation to succeed as
successor Servicer upon the termination of the Servicer pursuant to Section
-------
9.1 or resignation of the Servicer pursuant to Section 8.5. If upon any such
- --- -----------
resignation or termination, the Certificate Insurer appoints a successor
Servicer other than the Standby Servicer, the Standby Servicer shall not be
relieved of its duties as Standby Servicer hereunder.
SECTION 9.3. Reserved.
--------
SECTION 9.4. Notification to Certificateholders. Upon any termination
----------------------------------
of, or appointment of a successor to, the Servicer pursuant to this Article
IX, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register and to each of the Rating Agencies.
SECTION 9.5. Direction of Insolvency Proceedings by Certificate
--------------------------------------------------
Insurer. (a) In the event that the Trustee has received a certified copy of
- -------
an order of the appropriate court that any Class A Guaranteed Distribution
Amount paid on a Class A Certificate has been avoided in whole or in part as
a preference payment under applicable bankruptcy law, the Trustee shall so
notify the Certificate Insurer, shall comply with the provisions of the
Policy to obtain payment by the Certificate Insurer of such avoided Class A
Guaranteed Distribution Amount payment, and shall, at the time it provides
notice to the Certificate Insurer, notify Holders of the Class A Certificates
by mail that, in the event that any Class A Certificateholder's payment is
so recoverable, such Class A Certificateholder will be entitled to payment
pursuant to the terms of the Policy. Pursuant to the terms of the Policy,
the Certificate Insurer will make such payment on behalf of the Class A
Certificateholder to the
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receiver, conservator, debtor-in-possession or trustee in bankruptcy named in
the Order (as defined in the Policy) and not to the Trustee or any Class A
Certificateholder directly (unless a Class A Certificateholder has previously
paid such payment to the receiver, conservator, debtor-in-possession or
trustee in bankruptcy, in which case the Certificate Insurer will make such
payment to the Trustee for distribution to such Class A Certificateholder
upon proof of such payment reasonably satisfactory to the Certificate
Insurer).
(b) Upon knowledge of any of the following events, the Trustee shall
promptly notify the Depositor and the Certificate Insurer of (i) the
commencement of any of the events or proceedings described in Section 9.1
-----------
(iii) or (iv) in respect of CPS or the Servicer or any such event or
- ----- ----
proceedings applicable to an Obligor under a Receivable (any such event or
proceedings, an "Insolvency Proceeding") and (ii) the making of any claim in
---------------------
connection with any Insolvency Proceeding seeking the avoidance as a
preferential transfer (a "Preference Claim") with regard to any payment of
----------------
principal of, or interest on a Class A Certificate. Each Class A
Certificateholder, by its purchase of Class A Certificates, and the Trustee
hereby agree that, the Certificate Insurer may, provided an Insurer Default
has not occurred, at any time during the continuation of an Insolvency
Proceeding direct all matters relating to such Insolvency Proceeding,
including, without limitation, (i) all matters relating to any Preference
Claim, (ii) the direction of any appeal of any order relating to any
Preference Claim and (iii) the posting of any surety, supersedeas or
performance bond pending any such appeal at the expense of the Certificate
Insurer, but subject to reimbursement as provided in the Insurance Agreement.
In addition, and without limitation of the foregoing, as set forth in Section
-------
4.9, the Certificate Insurer shall be subrogated to, and each Class A
- ---
Certificateholder and the Trustee hereby delegate and assign, to the fullest
extent permitted by law, the rights of the Trustee and each Class A
Certificateholder in the conduct of any proceeding with respect to a
Preference Claim, including, without limitation, all rights of any party to
an adversary proceeding action with respect to any court order issued in
connection with any such Preference Claim.
SECTION 9.6. Action Upon Certain Failures of the Servicer. In the
--------------------------------------------
event that the Trustee shall have knowledge of any failure of the Servicer
specified in Section 9.1 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 Depositor, the Servicer
and the Certificate Insurer. For all purposes of this Agreement, the Trustee
shall not be deemed to have knowledge of any failure of the Servicer as
specified in Section 9.1 unless notified thereof in writing by
-----------
the Depositor, the Servicer, the Certificate Insurer or by a
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Certificateholder. The Trustee shall be under no duty or obligation to
investigate or inquire as to any potential failure of the Servicer specified
in Section 9.1.
-----------
ARTICLE X
The Trustee
-----------
SECTION 10.1. Duties of Trustee. The Trustee, both prior to the
-----------------
occurrence of an Event of Default and after an Event of Default shall have
been cured or waived, shall undertake to perform such duties and only such
duties as are specifically set forth in this Agreement. If an Event of
Default shall have occurred and shall not have been cured or waived, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement and shall use the same degree of care and skill in their exercise,
as a prudent man would exercise or use under the circumstances in the conduct
of his own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that shall be specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.
The Trustee shall take and maintain custody of the Receivable Files
(except as otherwise provided herein) and the Schedule of Receivables
included as an exhibit to this Agreement and shall retain copies of all
Servicer's Certificates prepared hereunder.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent
failure to act, or its own bad faith; provided, however, that:
-------- -------
(i) Prior to the occurrence of an Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred, the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Agreement, the Trustee shall not
be liable except for the performance of such duties and obligations as
shall be specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and, in
the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely on the truth of the statements and the correctness of
the opinions expressed in any certificates or opinions furnished to the
Trustee and conforming to the requirements of this Agreement;
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(ii) The Trustee shall not be liable for an error of judgment
made in good faith by a Trustee Officer, unless it shall be proved that
the Trustee shall have been negligent in ascertaining the pertinent facts;
(iii) The Trustee shall not be liable with respect to any
action taken, suffered, or omitted to be taken in good faith in accordance
with this Agreement or at the direction of the Certificate Insurer or,
after an Insurer Default, the Holders of Class A Certificates evidencing
not less than 25% of the Class A Certificate Balance or, after the Class A
Certificates have been paid in full and either (A) all outstanding
Reimbursement Obligations and other amounts due to the Certificate Insurer
have been paid in full or (B) an Insurer Default shall have occurred and
be continuing, the Holders of Class B Certificates evidencing not less
than 25% of the Class B Certificate Balance, relating to the time, method,
and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee,
under this Agreement;
(iv) The Trustee shall not be charged with knowledge of any
Event of Default, unless a Trustee Officer assigned to the Trustee's
Corporate Trust Office receives written notice of such Event of Default
from the Servicer or the Depositor, as the case may be, the Certificate
Insurer or, after an Insurer Default, the Holders of Class A Certificates
evidencing not less than 25% of the Class A Certificate Balance or, after
the Class A Certificates have been paid in full and either (A) all
outstanding Reimbursement Obligations and other amounts due to the
Certificate Insurer have been paid in full or (B) an Insurer Default shall
have occurred and be continuing, the Holders of Class B Certificates
evidencing not less than 25% of the Class B Certificate Balance (such
notice shall constitute actual knowledge of an Event of Default by the
Trustee); and
(v) The Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and reasonably believed by it to
be authorized or within the discretion or rights or powers conferred upon
it by this Agreement.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there shall
be reasonable grounds for believing that the repayment of such funds or
adequate indemnity against such risk or liability shall not be reasonably
assured to it, and none of the provisions contained in this Agreement shall in
any event require the Trustee to perform, or be responsible
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for the manner of performance of, any of the obligations of the Servicer under
this Agreement except during such time, if any, as the Trustee, in its capacity
as Standby Servicer, shall be the successor to, and be vested with the rights,
duties, powers, and privileges of, the Servicer in accordance with the terms of
this Agreement.
Except for actions expressly authorized by this Agreement, the Trustee
shall take no action reasonably likely to impair the security interests
created or existing under any Receivable or Financed Vehicle or to impair the
value of any Receivable or Financed Vehicle.
All information obtained by the Trustee regarding the Obligors and the
Receivables, whether upon the exercise of its rights under this Agreement or
otherwise, shall be maintained by the Trustee in confidence and shall not be
disclosed to any other Person, unless such disclosure is required by this
Agreement or any applicable law or regulation.
SECTION 10.2. Trustee's Certificate. On or as soon as practicable
---------------------
after each Distribution Date on which Receivables shall be assigned to CPS
or the Servicer, as applicable, pursuant to this Agreement, based on amounts
deposited to the Collection Account, notices received pursuant to this
Agreement and the information contained in the Servicer's Certificate for the
related Collection Period, identifying the Receivables purchased by CPS
pursuant to Section 2.8 or purchased by the Servicer pursuant to Section 3.7
----------- -----------
or 11.2, the Trustee shall execute a Trustee's Certificate (in the form of
----
Exhibit C-1 or C-2, as applicable), and shall deliver such Trustee's
- ----------- ---
Certificate, accompanied by a copy of the Servicer's Certificate for such
Collection Period to CPS or the Servicer, as the case may be. The Trustee's
Certificate submitted with respect to such Distribution Date shall operate,
as of such Distribution Date, as an assignment, without recourse,
representation, or warranty, to CPS or the Servicer, as the case may be, of
all the Trustee's right, title, and interest in and to such repurchased
Receivable, and all security and documents relating thereto, such assignment
being an assignment outright and not for security.
SECTION 10.3. Reserved.
--------
SECTION 10.4. Certain Matters Affecting Trustee. Except as otherwise
---------------------------------
provided in Section 10.1:
------------
(i) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate,
Servicer's Certificate, certificate of auditors, or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond, or other paper or document believed
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by it to be genuine and to have been signed or presented by the proper
party or parties.
(ii) The Trustee may consult with counsel, and any Opinion of
Counsel shall be full and complete authorization and protection in respect
of any action taken or suffered or omitted by it under this Agreement in
good faith and in accordance with such Opinion of Counsel.
(iii) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement, or to institute,
conduct, or defend any litigation under this Agreement or in relation to
this Agreement, at the request, order or direction of any of the
Certificateholders or the Certificate Insurer pursuant to the provisions
of this Agreement, unless such Certificateholders or the Certificate
Insurer shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses, and liabilities that may be incurred therein
or thereby; nothing contained in this Agreement, however, shall relieve
the Trustee of the obligations, upon the occurrence of an Event of Default
(that shall not have been cured or waived), to exercise such of the rights
and powers vested in it by this Agreement, and to use the same degree of
care and skill in their exercise as a prudent man would exercise or use
under the circumstances in the conduct of his own affairs.
(iv) Prior to the occurrence of an Event of Default and after
the curing or waiving of all Events of Default that may have occurred, the
Trustee shall not be bound to make any investigation into the facts of
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond, or other
paper or document (other than for its duties pursuant to Section 2.8),
-----------
unless requested in writing to do so by the Certificate Insurer, the
Depositor or Holders of Class A Certificates evidencing not less than 25%
of the Class A Certificate Balance or, after the Class A Certificates have
been paid in full and either (A) all outstanding Reimbursement Obligations
and other amounts due to the Certificate Insurer have been paid in full or
(B) an Insurer Default shall have occurred and be continuing, the Holders
of Class B Certificates evidencing not less that 25% of the Class B
Certificate Balance; provided, however, that if the payment within a
-------- -------
reasonable time to the Trustee of the costs, expenses, or liabilities
likely to be incurred by it in the making of such investigation shall be,
in the opinion of the Trustee, not reasonably assured to the Trustee by
the security afforded to it by the terms of this Agreement, the Trustee
may require reasonable indemnity against such cost, expense, or
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liability as a condition to so proceeding. The reasonable expense of
every such examination shall be paid by the Person making such request or,
if paid by the Trustee, shall be reimbursed by the Person making such
request upon demand. Nothing in this clause (iv) shall affect the
obligation of the Servicer to observe any applicable law prohibiting
disclosure of information regarding the Obligors.
(v) The Trustee may execute any of the trusts or powers
hereunder or perform any duties under this Agreement either directly or by
or through agents or attorneys or a custodian. The Trustee shall not be
responsible for any misconduct or negligence of any such agent or
custodian appointed with due care by it hereunder or of the Servicer in
its capacity as Servicer or custodian.
(vi) Except as may be required by Sections 2.8 and 10.1,
------------ ----
subsequent to the sale of the Receivables by the Depositor to the Trust,
the Trustee shall have no duty of independent inquiry, and the Trustee may
rely upon the representations and warranties and covenants of the
Depositor and the Servicer contained in this Agreement with respect to the
Receivables and the Receivable Files.
(vii) The Trustee may rely, as to factual matters relating to the
Depositor or the Servicer, on an Officer's Certificate of the Depositor
or Servicer, respectively.
(viii) The Trustee shall not be required to take any action or
refrain from taking any action under this Agreement, or any related
documents referred to herein, nor shall any provision of this Agreement,
or any such related document be deemed to impose a duty on the Trustee to
take action, if the Trustee shall have been advised by counsel that such
action is contrary to (i) the terms of this Agreement, (ii) any such
related document or (iii) law.
SECTION 10.5. Trustee Not Liable for Certificates or Receivables. The
--------------------------------------------------
recitals contained herein and in the Certificates (other than the certificate
of authentication on the Certificates) shall be taken as the statements of
the Depositor or the Servicer, as the case may be, and the Trustee assumes
no responsibility for the correctness thereof. The Trustee shall make no
representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the certificate of authentication on the
Certificates), or of any Receivable or related document. The Trustee shall
at no time have any responsibility or liability for or with respect to the
legality, validity, and enforceability of any security interest in any Financed
Vehicle or any Receivable, or the perfection and priority of such a security
interest or the maintenance of any such perfection and priority, or for or with
respect to the
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efficacy of the Trust or its ability to generate the payments to be distributed
to Certificateholders under this Agreement, including, without limitation: the
existence, condition, location, and ownership of any Financed Vehicle; the
existence and enforceability of any physical damage insurance thereon; except
as required by Section 2.8, the existence, contents and completeness of any
-----------
Receivable or any Receivable File or any computer or other record thereof; the
validity of the assignment of any Receivable to the Trust or of any intervening
assignment; except as required by Section 2.8, the performance or enforcement
-----------
of any Receivable; the compliance by the Depositor or the Servicer with any
warranty or representation made under this Agreement or in any related document
and the accuracy of any such warranty or representation prior to the Trustee's
receipt of notice or other discovery of any noncompliance therewith or any
breach thereof; any investment of monies by or at the direction of the
Servicer or the Certificate Insurer or any loss resulting therefrom (it being
understood that the Trustee shall remain responsible for any Trust Property
that it may hold); the acts or omissions of the Depositor, the Servicer, or
any Obligor; any action of the Servicer taken in the name of the Trustee; or
any action by the Trustee taken at the instruction of the Servicer; provided,
--------
however, that the foregoing shall not relieve the Trustee of its obligation
- -------
to perform its duties under this Agreement. Except with respect to a claim
based on the failure of the Trustee to perform its duties under this
Agreement or based on the Trustee's negligence or willful misconduct, no
recourse shall be had for any claim based on any provision of this Agreement,
the Certificates, or any Receivable or assignment thereof against the Trustee
in its individual capacity, the Trustee shall not have any personal
obligation, liability, or duty whatsoever to any Certificateholder or any
other Person with respect to any such claim, and any such claim shall be
asserted solely against the Trust or any indemnitor who shall furnish
indemnity as provided in this Agreement. The Trustee shall not be
accountable for the use or application by the Depositor of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Servicer in respect of the Receivables.
The Depositor hereby certifies to the Trustee that the Rating Agencies rating
the Class A Certificates are Standard & Poor's and Moody's and the rating
agency rating the Class B Certificates is Standard & Poor's and that their
addresses are as set forth in Section 12.5. The Trustee may rely on the
------------
accuracy of such certification until it receives from the Depositor an
Officer's Certificate superseding such certification.
SECTION 10.6. Trustee May Own Certificates. The Trustee in its
----------------------------
individual or any other capacity may become the owner or pledgee of
Certificates and may deal with the Depositor and the Servicer in banking
transactions with the same rights as it would have if it were not Trustee.
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SECTION 10.7. Indemnity of Trustee. The Servicer shall indemnify the
--------------------
Trustee for, and hold it harmless against any loss, liability, or expense
incurred without willful misfeasance, negligence, or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
Trust, including the costs and expenses of defending itself against any claim
or liability in connection with the exercise or performance of any of its
powers or duties under this Agreement. Additionally the Depositor, pursuant
to Section 7.2, shall indemnify the Trustee with respect to certain matters,
-----------
the Servicer, pursuant to Section 8.2, shall indemnify the Trustee with
-----------
respect to certain matters, and Certificateholders, pursuant to Section 10.4
------------
shall, upon the circumstances therein set forth, indemnify the Trustee under
certain circumstances. The provisions of this Section 10.7 shall survive the
------------
termination of this Agreement or any resignation or removal of CPS as
Servicer.
SECTION 10.8. Eligibility Requirements for Trustee. The Trustee under
------------------------------------
this Agreement shall at all times be organized and doing business under the
laws of the United States of America; authorized under such laws to exercise
corporate trust powers; having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by Federal or State
authorities; and having a rating, both with respect to long-term and short-
term unsecured obligations, of not less than investment grade by the Rating
Agencies. If such corporation shall publish reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising
or examining authority, then for the purpose of this Section 10.8, the
------------
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 10.8, the Trustee
------------
shall resign immediately in the manner and with the effect specified in
Section 10.9.
- ------------
SECTION 10.9. Resignation or Removal of Trustee. The Trustee may at
---------------------------------
any time resign and be discharged from the trusts hereby created by giving
30 days' prior written notice thereof to the Servicer. Upon receiving such
notice of resignation, with the prior written consent of (a) the Certificate
Insurer and the Holders of Class A Certificates evidencing not less than 66
2/3% of the Class A Certificate Balance or (b) if the Class A Certificates
have been paid in full and all outstanding Reimbursement Obligations and
other amounts owing to the Certificate Insurer have been paid in full, with
the prior written consent of the Holders of Class B Certificates evidencing
not less than 51% of the Class B Certificate Balance, the Servicer shall
promptly appoint a successor Trustee by written instrument, in duplicate, one
copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor
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Trustee. If no successor Trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee. The Trustee may be
removed at any time by written demand of the Certificate Insurer delivered to
the Trustee and the Servicer.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 10.8 and shall fail to resign after written request
------------
therefor by the Servicer, or if at any time the Trustee shall be legally
unable to act, or shall be adjudged bankrupt or insolvent, or a receiver,
conservator or liquidator of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee
or of its property or affairs for the purpose of rehabilitation, conservation
or liquidation, then the Servicer may remove the Trustee. If the Servicer
shall remove the Trustee under the authority of the immediately preceding
sentence, the Servicer shall promptly appoint a successor Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to
the Trustee so removed and one copy to the successor Trustee, and pay all
fees and expenses owed to the outgoing Trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 10.9 shall not
------------
become effective until acceptance of appointment by the successor Trustee
pursuant to Section 10.10 and payment of all fees and expenses owed to the
-------------
outgoing Trustee. The Servicer shall provide notice of such resignation or
removal of the Trustee to each of the Rating Agencies and the Depositor.
SECTION 10.10. Successor Trustee. Any successor Trustee appointed
-----------------
pursuant to Section 10.9 shall execute, acknowledge, and deliver to the
------------
Depositor, the Servicer, the Certificate Insurer and to its predecessor
Trustee an instrument accepting such appointment under this Agreement, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties,
and obligations of its predecessor under this Agreement, with like effect as
if originally named as Trustee. The predecessor Trustee shall upon payment
of its fees and expenses deliver to the successor Trustee all documents and
statements and monies held by it under this Agreement; and the Servicer, the
Certificate Insurer and the predecessor Trustee shall execute and deliver
such instruments and do such other things as may reasonably be required for
fully and certainly vesting and confirming in the successor Trustee all such
rights, powers, duties, and obligations.
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No successor Trustee shall accept appointment as provided in this
Section 10.10 unless at the time of such acceptance such successor Trustee
- -------------
shall be eligible pursuant to Section 10.8.
------------
Upon acceptance of appointment by a successor Trustee pursuant to this
Section 10.10, the Servicer shall mail notice of the successor of such
- -------------
Trustee under this Agreement to all Holders of Certificates at their
addresses as shown in the Certificate Register, the Depositor, and to the
Rating Agencies. If the Servicer shall fail to mail such notice within 10
days after acceptance of appointment by the successor Trustee, the successor
Trustee shall cause such notice to be mailed at the expense of the Servicer.
SECTION 10.11. Merger or Consolidation of Trustee. Any corporation
----------------------------------
into which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be eligible pursuant to Section 10.8, without the execution
------------
or filing of any instrument or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding; provided
--------
further that the Trustee shall mail notice of such merger or consolidation
- -------
to the Rating Agencies and the Depositor.
SECTION 10.12. Co-Trustee; Separate Trustee. Notwithstanding any other
----------------------------
provisions of this Agreement, at any time, for the purpose of meeting any
legal requirements of any jurisdiction in which any part of the Trust or any
Financed Vehicle may at the time be located, the Servicer, the Certificate
Insurer (provided an Insurer Default shall not have occurred and be
continuing) and the Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more persons approved
by the Trustee to act as co-trustee, jointly with the Trustee, or separate
trustee or separate trustees, of all or any part of the Trust, and to vest
in such Person, in such capacity and for the benefit of the
Certificateholders, such title to the Trust, or any part thereof, and,
subject to the other provisions of this Section 10.12, such powers, duties,
-------------
obligations, rights, and trusts as the Servicer, the Certificate Insurer and
the Trustee may consider necessary or desirable. If the Servicer and the
Certificate Insurer shall not have joined in such appointment within 15 days
after the receipt by it of a request so to do, or in the case an Event of
Default shall have occurred and be continuing, the Trustee alone shall
have the power to make such appointment. No co-trustee or separate trustee
under this Agreement shall be required to meet the terms of eligibility as
a successor trustee pursuant to Section 10.8, except that the co-trustee or
------------
its parent shall
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comply with the rating requirements set forth therein, and no notice of a
successor trustee pursuant to Section 10.10 and no notice to
-------------
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required pursuant to Section 10.10.
-------------
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties, and obligations conferred or
imposed upon the Trustee shall be conferred upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee under this
Agreement or, in its capacity as Standby Servicer, as successor to the
Servicer under this Agreement), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties, and obligations (including the holding of title to the
Trust or any portion thereof in any such jurisdiction) shall be exercised
and performed singly by such separate trustee or co-trustee, but solely at
the direction of the Trustee;
(ii) No trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under this
Agreement; and
(iii) Provided no Insurer Default shall have occurred and be
continuing, the Certificate Insurer may, and, in the event an Insurer
Default shall have occurred and be continuing, then, the Servicer and the
Trustee acting jointly may, at any time accept the resignation of or
remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the other then separate trustees and co-
trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article X. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Each such instrument shall be filed with the
Trustee and a copy thereof given to the Servicer.
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Any separate trustee or co-trustee may at any time appoint the Trustee,
its agent or attorney-in-fact with full power and authority, to the extent
not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-
trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 10.13. Representations and Warranties of Trustee. The Trustee
-----------------------------------------
shall make the following representations and warranties on which the
Depositor, the Certificate Insurer and Certificateholders shall rely:
(i) The Trustee is a banking corporation duly organized,
validly existing, and in good standing under the laws of its place of
incorporation.
(ii) The Trustee has full corporate power authority and legal
right to execute, deliver, and perform this Agreement and shall have taken
all necessary action to authorize the execution, delivery and performance
by it of this Agreement.
(iii) This Agreement shall have been duly executed and
delivered by the Trustee and this Agreement constitutes a legal, valid and
binding obligation of the Trustee enforceable in accordance with its
terms, subject to (x) applicable bankruptcy, insolvency, reorganization,
moratorium, and other similar laws affecting creditor's rights generally
and (y) general principles of equity.
SECTION 10.14. No Bankruptcy Petition. The Trustee covenants and
----------------------
agrees that prior to the date which is one year and one day after the payment
in full of all securities issued by the Depositor or by a trust for which the
Depositor was the depositor it will not institute against, or join any other
Person in instituting against, the Depositor or the Trust any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any Federal or State bankruptcy or similar law.
SECTION 10.15. Trustee May Enforce Claims Without Possession of
------------------------------------------------
Certificates. All rights of action and claims under this Agreement or the
- ------------
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as Trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the
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Trustee, its agents and counsel, be for the ratable benefit of the
Certificateholders in respect of which such judgment has been obtained.
SECTION 10.16. Rights of Certificate Insurer to Direct Trustee; Class
------------------------------------------------------
B Certificateholder's Right of First Refusal. (a) The Certificate Insurer,
- --------------------------------------------
after giving written notice to the Trustee, shall have the right to direct
the time, method and place at or by which the Trustee conducts any proceeding
for any remedy available to the Trustee, or exercises any such trust or power
conferred upon the Trustee.
(b) If in the exercise of its rights, powers and remedies under
Subsection (a) above, the Certificate Insurer directs the Trustee to
liquidate Receivables with an aggregate Principal Balance exceeding 25% of
the aggregate Principal Balance of all Receivables by selling such
Receivables to one or more third parties in one or more substantially
contemporaneous sales, the Certificate Insurer shall notify the Rating
Agencies thereof and shall direct the Trustee, prior to contracting to sell
any such Receivables to a third party, to notify any Holder of Class B
Certificates evidencing in the aggregate more than 50% of the Class B
Certificate Balance of its intent to sell such Receivables and of the amount
of the highest bid the Trustee has received to purchase such Receivables (the
"Strike Bid"). The Class B Certificateholders or their designee shall have
ten (10) Business Days from the date of notification to submit a bid equal
to or greater than the Strike Bid. If the Trustee has not received a bid
from such Class B Certificateholders or their designee within such ten (10)
Business Day period, the Certificate Insurer shall be entitled to direct the
Trustee to consummate the purchase at the Strike Bid. If the Trustee
receives a bid equal to or greater than the Strike Bid from the Class B
Certificateholders or their designee within such ten (10) Business Day period
the Certificate Insurer shall direct the Trustee to accept such bid of the
Class B Certificateholders or their designee.
(c) Notwithstanding anything to the contrary contained in subsections
(a) or (b) above, the Trustee shall have the right to decline to follow any
such direction of the Certificate Insurer if the Trustee, being advised by
counsel, determines that the action so directed may not lawfully be taken,
or if the Trustee in good faith shall, by a responsible officer of the
Trustee, determine that the proceedings so directed would be illegal or
involve it in personal liability or be unduly prejudicial to the rights of
Certificateholders; provided, that nothing in this Agreement shall impair the
--------
right of the Trustee to take any action deemed proper by the Trustee and which
is not inconsistent with such direction of the Certificate Insurer.
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ARTICLE XI
Termination
-----------
SECTION 11.1. Termination of the Trust. The respective obligations and
------------------------
responsibilities of CPS, the Depositor, the Servicer and the Trustee created
hereby and the Trust created by this Agreement shall terminate upon the
payment to Certificateholders of all amounts required to be paid to them
pursuant to this Agreement or the Policy (including all amounts required to
reduce the Class A Certificate Balance to zero and to pay in full any unpaid
Class A Interest Distributable Amount), satisfaction of all Reimbursement
Obligations, and the expiration of any preference period related thereto and
the disposition of all property held as part of the Trust; provided, however,
-------- -------
that in no event shall the trust created by this Agreement continue beyond
the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late ambassador of the United States
of America to the Court of St. James, living on the date of this Agreement.
The Servicer shall promptly notify the Trustee, the Depositor and the
Certificate Insurer of any prospective termination pursuant to this Section
-------
11.1.
- ----
Notice of any termination, specifying the Distribution Date upon which
the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be given promptly
by the Trustee by letter to Certificateholders mailed not earlier than the
15th day and not later than the 25th day of the month next preceding the
specified Distribution Date stating (A) the Distribution Date upon which
final payment of the Certificates shall be made upon presentation and
surrender of the Certificates at the office of the Trustee therein
designated, (B) the amount of any such final payment, and (C) if applicable,
that the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office of the Trustee therein specified. The Trustee
shall give such notice to the Depositor and the Certificate Registrar (if
other than the Trustee) at the time such notice is given to
Certificateholders. Upon presentation and surrender of the Certificates, the
Trustee shall cause to be distributed to Certificateholders amounts
distributable on such Distribution Date pursuant to Section 4.6.
-----------
In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date specified
in the above-mentioned written notice, the Trustee shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If
within one year after the second notice all the
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Certificates shall not have been surrendered for cancellation, the Trustee
shall take appropriate steps, or may appoint an agent to take appropriate
steps, to contact the remaining Certificateholders concerning surrender of
their Certificates, and the cost thereof shall be paid out of the funds and
other assets that shall remain subject to this Agreement or, if none, from CPS.
Any funds remaining in the Trust after exhaustion of such remedies shall be
distributed by the Trustee to the American Red Cross.
SECTION 11.2. Optional Purchase of All Receivables. On the last day
------------------------------------
of any Collection Period as of which the Pool Balance shall be less than or
equal to the Optional Purchase Percentage multiplied by the Original Pool
Balance, the Servicer shall have the option to purchase the corpus of the
Trust (with the consent of the Certificate Insurer, if such purchase would
result in a claim on the Policy or would result in any amount owing to the
Certificate Insurer or to the Holders of the Class A Certificates remaining
unpaid); provided, however, that the Servicer may not effect any such
-------- -------
purchase unless the Trustee shall have received an Opinion of Counsel to the
effect that such purchase would not constitute a fraudulent conveyance. To
exercise such option the Servicer (or the Certificate Insurer, if applicable)
shall deposit pursuant to Section 4.5 in the Collection Account an amount
-----------
equal to the aggregate Purchase Amount for the Receivables (including
defaulted Receivables), plus the appraised value of any other property held
by the Trust, such value to be determined by an appraiser mutually agreed
upon by the Servicer, the Certificate Insurer and the Trustee, and shall
succeed to all interests in and to the Trust. For purposes of this Section,
the Purchase Amount shall not be less than the sum of the Class A Certificate
Balance and the Class B Certificate Balance.
ARTICLE XII
Miscellaneous Provisions
------------------------
SECTION 12.1. Amendment. This Agreement may be amended from time to
---------
time by the Depositor, the Servicer, and the Trustee with the consent of the
Certificate Insurer and with the consent (which consent of any Holder of a
Certificate given pursuant to this Section or pursuant to any other provision
of this Agreement shall be conclusive and binding on such Holder and on all
future Holders of such Certificate and of any Certificate issued upon the
transfer thereof or in exchange thereof or in lieu thereof whether or not
notation of such consent is made upon the Certificate) of the Holders of Class
A Certificates evidencing not less than 66 2/3% of the Class A Certificate
Balance and the Holders of Class B Certificates evidencing not less than
66 2/3% of the Class B Certificate Balance for the purpose of adding any
provisions to or changing in any manner or eliminating any of the
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provisions of this Agreement, or of modifying in any manner the rights of the
Holders of Certificates; provided, however, that no such amendment shall (a)
-------- -------
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, or change the allocation or priority of, collections of payments on
Receivables or distributions that shall be required to be made on any
Certificate or change the Class A Pass-Through Rate or the Class B Pass-Through
Rate without the consent of each Certificateholder affected thereby, (b) reduce
the aforesaid percentage of the Class A Certificate Balance or Class B
Certificate Balance required to consent to any such amendment, without the
consent of the Holders of all Certificates of the applicable class then
outstanding, (c) result in a downgrade or withdrawal of the then current rating
of the Class A Certificates by either of the Rating Agencies without the
consent of all the Class A Certificateholders or (d) result in a downgrade or
withdrawal of the then current rating of the Class B Certificates by either of
the Rating Agencies without the consent of all the Class B Certificateholders.
Promptly after the execution of any such amendment or consent, the
Trustee shall furnish a copy of such amendment or consent to each
Certificateholder and each of the Rating Agencies.
Prior to the execution of any amendment to this Agreement, 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 12.2(i)(1). The Trustee
------------------
may, but shall not be obligated to, enter into any such amendment which
affects the Trustee's own rights, duties or immunities under this Agreement
or otherwise.
SECTION 12.2. Protection of Title to Trust. (a) Each of the Depositor,
----------------------------
as to itself, and the Servicer, as to itself, shall execute and file such
financing statements and cause to be executed and filed such continuation
statements, all in such manner and in such places as may be required by law
fully to preserve, maintain, and protect the interest of the
Certificateholders and the Trustee in its interest in the Receivables and the
other Trust Assets and in the proceeds thereof. Each of the Depositor, as
to itself, and the Servicer, as to itself, shall deliver (or cause to be
delivered) to 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 Depositor nor the Servicer shall change its name,
identity, 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
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misleading within the meaning of Section 9-402(7) of the UCC, unless it shall
have given the Trustee and the Certificate Insurer at least five days' prior
written notice thereof, shall have promptly filed appropriate amendments to all
previously filed financing statements or continuation statements and shall have
delivered an Opinion of Counsel (A) stating that, in the opinion of such
counsel, all amendments to all previously filed financing statements and
continuation statements have been executed and filed that are necessary fully
to preserve and protect the interest of the Trustee in the Receivables and the
other Trust Assets, and reciting the details of such filings, or (B) stating
that, in the opinion of such counsel, no such action shall be necessary to
preserve and protect such interest.
(c) Each of the Depositor and the Servicer shall have an obligation to
give the Trustee and the Certificate Insurer at least 5 days' prior written
notice of any relocation of its principal executive office if, as a result
of such relocation, 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, shall promptly file any such
amendment and shall deliver an Opinion of Counsel (A) stating that, in the
opinion of such counsel, all amendments to all previously filed financing
statements and continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Trustee in the
Receivables, and reciting the details of such filings, or (B) stating that,
in the opinion of such counsel, no such action shall be necessary to preserve
and protect such interest. The Servicer shall at all times maintain each
office from which it shall service Receivables, and its principal executive
office, within the United States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Receivable, including payments
and recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Certificate
Account and Payahead Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables to the
Trustee, the Servicer's master computer records (including any back-up
archives) that refer to a Receivable shall indicate clearly the interest of
FASCO Auto Trust 1996-1 in such Receivable and that such Receivable is owned by
the Trust. Indication of the Trust's ownership of a Receivable shall be
deleted from or modified on the Servicer's computer systems when, and only
when, such Receivable shall have been paid in full or repurchased.
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(f) If at any time the Depositor 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 back-up archives) that, if they shall refer in any manner
whatsoever to any Receivable, shall indicate clearly that such Receivable has
been sold to and is owned by the Trust.
(g) The Servicer shall permit the Depositor, the Trustee, the Standby
Servicer and the Certificate 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 Depositor, the
Trustee, the Standby Servicer or to the Certificate Insurer, within five
Business Days, a list of all Receivables (by contract number and name of
Obligor) then held as part of the Trust, together with a reconciliation of
such list to the Schedule of Receivables and to each of the Servicer's
Certificates furnished before such request indicating removal of Receivables
from the Trust.
(i) The Servicer shall deliver to the Trustee and the Certificate
Insurer:
(1) promptly after the execution and delivery of this Agreement and
of each amendment hereto and after the execution and delivery of each
amendment to any financing statement, an Opinion of Counsel either (A)
stating that, in the opinion of such counsel, all financing statements and
continuation statements have been executed and filed that are necessary
fully to preserve and protect the interest of 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) stating
that, in the opinion of such counsel, no such action shall be necessary to
preserve and protect such interest; and
(2) 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 either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the
interest of 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) stating that, in the opinion of such
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counsel, no such action shall be necessary to preserve and protect such
interest.
Each Opinion of Counsel referred to in clause (i) (1) or (i) (2) 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.
(j) For the purpose of facilitating the execution of this Agreement and
for other purposes, this Agreement may be executed simultaneously in any
number of counterparts, each of which counterparts shall be deemed to be an
original, and all of which counterparts shall constitute but one and the same
instrument.
(k) In the event any of the events described in Section 9.1 (iii) or
-----------
(iv) shall have occurred, or in the event CPS shall have been removed or
replaced as Servicer for any reason, then CPS and/or the Servicer shall
immediately cause each Certificate of Title for a Financed Vehicle to be
marked to reflect the security interest of the Trustee in the Financed
Vehicle, and CPS hereby appoints the Trustee its attorney-in-fact to effect
such marking, and the Trustee hereby accepts such appointment. The
appointment of the Trustee hereunder shall not operate to relieve CPS and/or
the Servicer of its obligations to mark each Certificate of Title under this
provision. CPS shall be liable for all costs, fees and expenses incurred
under this Section 12.2(k).
---------------
SECTION 12.3. Limitation on Rights of Certificateholders. The death or
------------------------------------------
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the
Trust, nor otherwise affect the rights, obligations and liabilities of the
parties to this Agreement or any of them.
No Certificateholder shall have any right to vote (except as
specifically provided herein including in Section 12.1) or in any manner
------------
otherwise control the operation and management of the Trust, or the
obligations of the parties to this Agreement, nor shall anything in this
Agreement set forth, or contained in the terms of the Certificates, be
construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be
under any liability to any third person by reason of any action taken
pursuant to any provision of this Agreement.
No Class A Certificateholder shall have any right by virtue or by
availing itself of any provisions of this Agreement to institute any suit,
action, or proceeding in equity or at law upon or under or with respect to
this Agreement, unless such Holder previously shall have given to the Trustee
a written
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notice of default and of the continuance thereof, and unless also the Holders
of Class A Certificates evidencing not less than 25% of the Class A Certificate
Balance shall have made written request upon the Trustee to institute such
action, suit or proceeding in its own name as Trustee under this Agreement and
shall have offered to the Trustee such reasonable indemnity as it may require
against the costs, expenses, and liabilities to be incurred therein or thereby
and the Trustee, for 30 days after its receipt of such notice, request, and
offer of indemnity, shall have neglected or refused to institute any such
action, suit or proceeding and during such 30-day period no request or waiver
inconsistent with such written request has been given to the Trustee pursuant
to this Section or Section 9.5; no one or more Holders of Class A Certificates
-----------
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb, or prejudice
the rights of the Holders of any other of the Class A Certificates, or to
obtain or seek to obtain priority over or preference to any other such Holder,
or to enforce any right, under this Agreement except in the manner provided in
this Agreement and for the equal, ratable, and common benefit of all Class A
Certificateholders. For the protection and enforcement of the provisions of
this Section 12.3, each Class A Certificateholder and the Trustee shall be
------------
entitled to such relief as can be given either at law or in equity. Nothing
in this Agreement shall be construed as giving the Class A Certificateholders
any direct right to make a claim on the Policy.
No Class B Certificateholder shall have any right by virtue or by
availing itself of any provisions of the Agreement to institute any suit,
action, proceeding in equity or at law upon or under or with respect to the
Agreement, unless it has the prior written consent of the Certificate Insurer
and, if any Class A Certificate shall remain outstanding, the prior written
consent of the Holders of Class A Certificates evidencing not less than 66
2/3% of the Class A Certificate Balance; provided that, this sentence shall
--------
be inoperative from and after such time as the Class A Certificates have been
paid in full and all outstanding Reimbursement Obligations and other amounts
due to the Certificate Insurer have been paid in full.
SECTION 12.4. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS,
RIGHTS, AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
SECTION 12.5. Notices. All demands, notices, and communications upon
-------
or to the Depositor, the Servicer, the Trustee, the Certificate Insurer,
Standard & Poor's or Moody's under this Agreement shall be in writing, and
delivered (a)
-90-
<PAGE>
personally, (b) by certified mail, return receipt requested, (c) by Federal
Express or similar overnight courier service or (d) by telecopy, and shall be
deemed to have been duly given upon receipt (a) in the case of the Depositor,
to the agent for service as specified in this Agreement, at the following
address: 600 Steamboat Road, Greenwich, Connecticut 06830 (Telecopy:
203-629-4640), or at such other address as shall be designated by the Depositor
in a written notice to the Trustee, (b) in the case of the Servicer, to
Secretary, 2 Ada, Suite 100, Irvine, California 92718 (Telecopy: 714-753-6805),
(c) in the case of the Trustee, at the Corporate Trust Office (Telecopy:
(612) 667-9825), (d) in the case of Standard & Poor's Ratings Service, at the
following address: Standard & Poor's Ratings Service, 26 Broadway, 15th Floor,
New York, New York 10004, Attention: Asset Backed Surveillance Department, (e)
in the case of Moody's Investors Service, Inc., at the following address: 99
Church Street, New York, New York 10007, Attention: Structured Surveillance
Department and (f) in the case of Financial Security Assurance Inc., at the
following address: 350 Park Avenue, New York, New York 10022, Attention: Senior
Vice President, Surveillance. Any notice required or permitted to be mailed to
a Certificateholder shall be given by Federal Express or similar overnight
courier service, postage prepaid, at the address of such Holder as shown in
the Certificate Register. Any notice so mailed within the time prescribed
in this Agreement shall be conclusively presumed to have been duly given,
whether or not the Certificateholder shall receive such notice.
The Trustee shall give prompt written notice to each of the Depositor,
the Rating Agencies and each Class A Certificateholder of (i) any amendments
to the Insurance Agreement or the Policy (upon receipt of written notice of
any such amendments from CPS or the Servicer), (ii) any change in the
identity of the Paying Agent and (iii) any failure to make payment under the
Policy.
SECTION 12.6. Severability of Provisions. If any one or more of the
--------------------------
covenants, agreements, provisions, or terms of this Agreement shall be for
any reason whatsoever held invalid, then such covenants, agreements,
provisions, or terms shall be deemed severable from the remaining covenants,
agreements, provisions, or terms of this Agreement and shall in no way affect
the validity or enforceability of the other provisions of this Agreement or
of the Certificates or the rights of the Holders thereof.
SECTION 12.7. Assignment. Notwithstanding anything to the contrary
----------
contained herein, except as provided in Sections 7.3 and 8.3 and as provided
------------ ---
in the provisions of this Agreement concerning the resignation of the
Servicer, this Agreement may not be assigned by the Depositor or the Servicer
without the prior written consent of the Certificate Insurer, CPS, the
Trustee and the Holders of Certificates evidencing not less than
-91-
<PAGE>
51% of the Pool Balance, the Holders of Class A Certificates evidencing not
less than 66 2/3% of the Class A Certificate Balance and the Holders of Class B
Certificates evidencing not less than 51% of the Class B Certificate Balance.
SECTION 12.8. Certificates Nonassessable and Fully Paid.
-----------------------------------------
Certificateholders shall not be personally liable for obligations of the
Trust. The interests represented by the Certificates shall be nonassessable
for any losses or expenses of the Trust or for any reason whatsoever, and
upon authentication thereof by the Trustee pursuant to Section 6.2 or 6.3,
----------- ---
Certificates shall be deemed fully paid.
SECTION 12.9. Nonpetition Covenant. (a) None of the Depositor, the
--------------------
Servicer, the Trustee, the Standby Servicer or CPS shall petition or
otherwise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Trust or the Depositor
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 Trust or the Depositor or any substantial
part of its property, or ordering the winding up or liquidation of the
affairs of the Trust or the Depositor.
(b) The Servicer shall not, nor cause the Depositor to, petition or
otherwise invoke the process of commencing or sustaining a case against the
Depositor 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 Depositor or any substantial
part of its property, or ordering the winding up or liquidation of the
affairs of the Depositor.
SECTION 12.10. Third Party Beneficiaries. Except as otherwise
-------------------------
specifically provided herein with respect to Certificateholders, the parties
to this Agreement hereby manifest their intent that no third party other than
the Certificate Insurer and the Collateral Agent with respect to the
indemnification provisions set forth herein, shall be deemed a third party
beneficiary of this Agreement, and specifically that the Obligors are not
third party beneficiaries of this Agreement.
SECTION 12.11. Financial Security as Controlling Party. Each
---------------------------------------
Certificateholder by purchase of the Certificates held by it acknowledges
that the Trustee, as partial consideration of the issuance of the Policy, has
agreed that the Certificate Insurer shall have certain rights hereunder for so
long as no Insurer Default shall have occurred and be continuing. So long as
an Insurer Default has occurred and is continuing, any provision giving the
Certificate 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
-92-
<PAGE>
and such right shall instead vest in the Trustee acting at the direction of the
Holders of Class A Certificates evidencing, unless otherwise specified, not
less than 66 2/3% of the Class A Certificate Balance. From and after such
time as the Class A Certificates have been paid in full and all outstanding
Reimbursement Obligations and other amounts due to the Certificate Insurer
have been paid in full, any provision giving the Certificate Insurer or the
Class A Certificateholders the right to direct, appoint or consent to,
approve of, or take any action under this Agreement shall be inoperative and
such right shall instead vest in the Trustee acting at the direction of the
Holders of Class B Certificates evidencing, unless otherwise specified, not
less than 51% of the Class B Certificate Balance. The Certificate Insurer may
disclaim any of its rights and powers under this Agreement (but not its
duties and obligations under the Policy) upon delivery of a written notice
to the Trustee. The Certificate Insurer may give or withhold any consent
hereunder in its sole and absolute discretion.
SECTION 12.12. Rule 144A Information. For so long as any of the
---------------------
Certificates are "restricted securities" within the meaning of Rule 144(a)
(3) under the Securities Act, each of CPS, the Depositor, the Trustee and the
Servicer agrees to cooperate with each other to provide to any
Certificateholder and to any prospective purchaser of Certificates designated
by such a Certificateholder, upon the request of such Certificateholder or
prospective purchaser, any information required to be provided to such holder
or prospective purchaser to satisfy the condition set forth in Rule 144A(d)
(4) under the Securities Act.
-93-
<PAGE>
IN WITNESS WHEREOF, the Depositor, CPS, the Servicer, the Trustee and
the Standby Servicer have caused this Pooling and Servicing Agreement to be
duly executed by their respective officers as of the day and year first above
written.
FINANCIAL ASSET SECURITIES CORP.,
as Depositor
By:
----------------------------------------------
Name:
Title:
CONSUMER PORTFOLIO SERVICES, INC.,
as Originator and Servicer
By:
----------------------------------------------
Name: Charles E. Bradley, Jr.
Title: President
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee and Standby Servicer
By:
----------------------------------------------
Name:
Title:
<PAGE>
EXHIBIT A: FORM OF CLASS A CERTIFICATE SEE REVERSE FOR
CERTAIN
DEFINITIONS
FASCO AUTO TRUST 1996-1
6.65% ASSET BACKED CERTIFICATE
CLASS A
evidencing a beneficial ownership interest in the Trust, as defined below,
the property of which includes a pool of retail installment sale contracts
secured by new and used automobiles, light trucks, vans and minivans and
sold to the Trust by Financial Asset Securities Corp.
(This Certificate does not represent an interest in or obligation of
Financial Asset Securities Corp., Consumer Portfolio Services, Inc., the
Trustee or any of their respective affiliates, except to the extent
described below.)
NUMBER R-___________ CUSIP No. 311843 AA4
$________________ (of Final Scheduled
$______________ issued) Distribution Date:
November 15, 2001
Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation
("DTC"), to the Trustee or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such
other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co.,
has an interest herein.
THIS CERTIFIES THAT ____________ is the registered owner of a
__________________________________________ dollars nonassessable, fully-paid,
beneficial ownership interest in the FASCO Auto Trust 1996-1 (the
"Trust") formed by Financial Asset Securities Corp., a Delaware
corporation (the "Depositor"). The Trust was created pursuant to a
Pooling and Servicing Agreement dated as of June 17, 1996 (the
"Agreement") among the Depositor, Consumer Portfolio Services, Inc., as
originator and as servicer (the "Servicer"), and Norwest Bank Minnesota,
National Association, as trustee (the "Trustee") and Standby Servicer, a
summary of certain of the pertinent provisions of which is set
A-1
<PAGE>
forth below. To the extent not otherwise defined herein, the capitalized
terms used herein have the meanings assigned to them in the Agreement.
This Certificate is one of the duly authorized Certificates designated as
"95% Asset Backed Certificates, Class A" (herein called the "Class A
Certificates"). Also issued under the Agreement are Certificates
designated as "10.00% Asset Backed Certificates, Class B" (the "Class B
Certificates"). The Class B Certificates and the Class A Certificates are
hereinafter collectively called the "Certificates". The aggregate
beneficial ownership interests in the Trust evidenced by all Class A
Certificates is 95%. This Class A Certificate is issued under and is
subject to the terms, provisions, and conditions of the Agreement, to
which Agreement the Holder of this Class A Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound. The property
of the Trust includes (i) a pool of retail installment sale contracts for
new and used automobiles, light trucks, vans and minivans (the
"Receivables"), with respect to Rule of 78's Receivables, all monies due
or to become due thereon after June 17, 1996 (the "Cutoff Date") and, with
respect to Simple Interest Receivables, all amounts received with respect
thereto after the Cutoff Date, security interests in the vehicles financed
thereby, proceeds from claims on certain insurance policies and certain
other rights under the Agreement, certain bank accounts and the proceeds
thereof, all right, title and interest of the Depositor in and to the
Purchase Agreement, all right, title and interest of the Depositor in and
to certain refunds, the Receivable File related to each Receivable and the
proceeds of any or all of the foregoing; and (ii) a Financial Guaranty
Insurance Policy issued for the benefit of the Class A Certificateholders
by Financial Security Assurance Inc. (the "Policy").
Under the Agreement, there will be distributed on the 15th day of
each month or, if such 15th day is not a Business Day, the next Business
Day (the "Distribution Date"), commencing on July 15, 1996, to the person
in whose name this Class A Certificate is registered at the close of
business on the Business Day preceding such Distribution Date (the "Record
Date"), such Class A Certificateholder's percentage interest (determined
by dividing the denominations of this Class A Certificate by the aggregate
original denomination of all Class A Certificates) in the amounts
distributed to Class A Certificateholders pursuant to the Agreement.
Full and complete payment of the Class A Distributable Amount on each
Distribution Date is unconditionally and irrevocably guaranteed pursuant
to the Policy.
Distributions on this Class A Certificate will be made by the Trustee
by (i) wire transfer, in immediately available funds to the account of
such Class A Certificateholder at a bank or other entity having
appropriate facilities therefor, if such Class A Certificateholder is the
Depository or such Class A
A-2
<PAGE>
Certificateholder's Class A Certificates in the aggregate evidence a
denomination of at least $1,000,000, and, if such Class A
Certificateholder shall have provided to the Trustee appropriate
instructions prior to such Distribution Date, or (ii) by check mailed to
the Class A Certificateholder of record in the Certificate Register
without the presentation or surrender of this Class A Certificate or the
making of any notation hereon. Except as otherwise provided in the
Agreement and notwithstanding the above, the final distribution on this
Class A Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of
this Class A Certificate at the office or agency maintained for that
purpose by the Trustee specified in such notice.
Under the Agreement, the Trustee and Certificateholders agree that
the Certificate Insurer shall be subrogated to all of the rights to
payment of the Class A Certificateholders or in relation thereto to the
extent that any payment of principal or interest was made to such Class A
Certificateholders with payments made under the Policy by the Certificate
Insurer.
Reference is hereby made to the further provisions of this Class A
Certificate set forth on the reverse hereof, which further provisions
shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Trustee, by manual signature,
this Class A Certificate shall not entitle the Holder hereof to any
benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class A Certificate to be duly
executed.
FASCO AUTO TRUST 1996-1
By: NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual capacity but
solely in its capacity as Trustee
By: ______________________________
Authorized Signatory
Dated: June 28, 1996
A-3
<PAGE>
This is one of the Class A Certificates referred to
in the within-mentioned Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual capacity but
solely in its capacity as Trustee
By: ___________________________
Authorized Signatory
A-4
<PAGE>
(REVERSE OF CERTIFICATE)
The Certificates do not represent an obligation of, or an interest
in, the Depositor, CPS, the Servicer, the Trustee or any affiliate of any
of them. The Certificates are limited in right of payment to certain
collections and recoveries respecting the Receivables and claims made
under the Policy, all as more specifically set forth in the Agreement. A
copy of the Agreement may be examined during normal business hours at the
principal office of the Depositor, and at such other places, if any,
designated by the Depositor, by any Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of
the Depositor and the rights of the Certificateholders under the Agreement
at any time by the Depositor, the Servicer and the Trustee with the
consent of the Certificate Insurer and with the consent of the Holders of
Certificates evidencing not less than 66 2/3% of the Class A Certificate
Balance and 66 2/3% of the Class B Certificate Balance. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such
Holder and on all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate.
As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies maintained by the Trustee in its
capacity as Certificate Registrar, or by any successor Certificate
Registrar, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by
the Holder hereof or such Holder's attorney duly authorized in writing,
and thereupon one or more new Certificates of authorized denominations
evidencing the same aggregate interest in the Trust will be issued to the
designated transferee.
The Class A Certificates are issuable only as registered Certificates
without coupons in minimum denominations of $1,000 and integral multiples
thereof. As provided in the Agreement and subject to certain limitations
set forth therein, Certificates are exchangeable for new Certificates of
authorized denominations evidencing the same aggregate denomination, as
requested by the Holder surrendering the same. No service charge will be
made for any such registration of transfer or exchange, but the Trustee
may require payment of a sum sufficient to cover any tax or governmental
charges payable in connection therewith.
A-5
<PAGE>
The Trustee, the Certificate Registrar, and any agent of the Trustee
or the Authenticating Agent may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and
neither the Trustee, the Certificate Registrar, nor any such agent shall
be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to
the Agreement, the payment of all Reimbursement Obligations, and the
expiration of any preference period with respect thereto and the
disposition of all property held as part of the Trust. The Servicer of
the Receivables may at its option purchase the corpus of the Trust at a
price specified in the Agreement, and such purchase of the Receivables and
other property of the Trust will effect early retirement of the
Certificates; however, such right of purchase is exercisable only as of
the last day of any Collection Period as of which the Pool Balance is less
than or equal to 10% of the original aggregate principal balance of the
Receivables.
A-6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
_________________________________________________________________
(Please print or typewrite name and address, including postal zip code, of
assignee)
_________________________________________________________________
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
__________________________________________ Attorney to transfer said
Certificate on the books of the Certificate Registrar, with full power of
substitution in the premises.
Dated:
__________________________________*
__________________________________*
* NOTICE: The signature to this assignment must correspond with the
name as it appears upon the face of the within Certificate in every
particular, without alteration, enlargement or any change whatever.
A-7
<PAGE>
EXHIBIT B: FORM OF CLASS B CERTIFICATE SEE REVERSE FOR
CERTAIN
DEFINITIONS
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING
THIS SECURITY, AGREES THAT THIS SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY (1) SO LONG AS THIS SECURITY IS ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A, TO A PERSON WHOM THE TRANSFEROR REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE
144A UNDER THE SECURITIES ACT, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT
THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, AND SUBJECT TO THE RECEIPT BY THE TRUSTEE AND THE DEPOSITOR OF A
CERTIFICATION OF THE TRANSFEREE, (2) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR (3) IN RELIANCE ON ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUBJECT TO
THE RECEIPT BY THE TRUSTEE, OF A CERTIFICATION OF THE TRANSFEREE
(SATISFACTORY TO THE TRUSTEE) AND AN OPINION OF COUNSEL (SATISFACTORY TO
THE TRUSTEE AND THE DEPOSITOR) TO THE EFFECT THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND IN
COMPLIANCE WITH THE TRANSFER REQUIREMENTS SET FORTH IN SECTION 6.3 OF THE
AGREEMENT.
IN NO EVENT SHALL THIS SECURITY BE TRANSFERRED TO AN EMPLOYEE BENEFIT
PLAN, TRUST ANNUITY OR ACCOUNT SUBJECT TO ERISA OR A PLAN DESCRIBED IN
SECTION 4975(E)(1) OF THE CODE, (ANY SUCH PLAN, TRUST OR ACCOUNT BEING
REFERRED TO AS AN "EMPLOYEE PLAN"), A TRUSTEE OF ANY EMPLOYEE PLAN, OR AN
ENTITY, ACCOUNT OR OTHER POOLED INVESTMENT FUND THE UNDERLYING ASSETS OF
WHICH INCLUDE OR ARE DEEMED TO INCLUDE EMPLOYEE PLAN ASSETS BY REASON OF
AN EMPLOYEE PLAN'S INVESTMENT IN THE ENTITY, ACCOUNT OR OTHER POOLED
INVESTMENT FUND. INCLUDED WITHIN THE DEFINITION OF "EMPLOYEE PLANS" ARE,
WITHOUT LIMITATION, KEOGH (HR-10) PLANS, IRA'S (INDIVIDUAL RETIREMENT
ACCOUNTS OR ANNUITIES) AND OTHER EMPLOYEE BENEFIT PLANS, SUBJECT TO
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE. THE FOREGOING
RESTRICTION ON SALE OR TRANSFER TO AN EMPLOYEE BENEFIT PLAN SHALL NOT
APPLY TO PREVENT THE INITIAL ISSUANCE OR SALE OR SUBSEQUENT TRANSFER OF
THIS SECURITY TO AN INSURANCE COMPANY, INSURANCE SERVICE, OR INSURANCE
ORGANIZATION THAT IS QUALIFIED TO DO BUSINESS IN A STATE IF SUCH INSURANCE
COMPANY PURCHASES THIS SECURITY WITH FUNDS HELD IN ONE OR MORE OF ITS
GENERAL ACCOUNTS WHICH IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AFFORDED UNDER
SECTION III OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60.
FASCO AUTO TRUST 1996-1
10.00% ASSET BACKED CERTIFICATE
CLASS B
evidencing a beneficial ownership interest in the Trust, as defined below,
the property of which includes a pool of retail installment sale contracts
secured by new and used automobiles, light trucks, vans and minivans and
sold to the Trust by Financial Asset Securities Corp.
A-8
<PAGE>
(This Certificate does not represent an interest in or obligation of
Financial Asset Securities Corp., Consumer Portfolio Services, Inc., the
Trustee or any of their respective affiliates, except to the extent
described below.)
NUMBER R-___________ CUSIP No. 311843 AB2
$________________ (of Final Scheduled
$______________ issued) Distribution Date:
November 15, 2001
THIS CERTIFIES THAT ________________________________ is the
registered owner of a ________________________________________ dollars
nonassessable, fully-paid, beneficial ownership interest in the FASCO Auto
Trust 1996-1 (the "Trust") formed by Financial Asset Securities Corp., a
Delaware corporation (the "Depositor"). The Trust was created pursuant to
a Pooling and Servicing Agreement dated as of June 17, 1996 (the
"Agreement") among the Depositor, Consumer Portfolio Services, Inc., as
originator and as servicer (the "Servicer"), and Norwest Bank Minnesota,
National Association, as trustee (the "Trustee") and Standby Servicer, a
summary of certain of the pertinent provisions of which is set forth
below. To the extent not otherwise defined herein, the capitalized terms
used herein have the meanings assigned to them in the Agreement. This
Certificate is one of the duly authorized Certificates designated as "5%
Asset Backed Certificates, Class B" (herein called the "Class B
Certificates"). Also issued under the Agreement are Certificates
designated as "6.65% Asset Backed Certificates, Class A" (the "Class A
Certificates"). The Class A Certificates and the Class B Certificates are
hereinafter collectively called the "Certificates." The aggregate
beneficial ownership interests in the Trust evidenced by all Class B
Certificates is 5%. This Class B Certificate is issued under and is
subject to the terms, provisions, and conditions of the Agreement, to
which Agreement the Holder of this Class B Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound. The property
of the Trust includes (i) a pool of retail installment sale contracts for
new and used automobiles, light trucks, vans and minivans (the
"Receivables"), with respect to Rule of 78's Receivables, all monies due
or to become due thereon after June 17, 1996 (the "Cutoff Date") and, with
respect to Simple Interest Receivables, all amounts received with respect
thereto after the Cutoff Date, security interests in the vehicles financed
thereby, proceeds from claims on certain insurance policies and certain
other rights under the Agreement, certain bank accounts and the proceeds
thereof, all right, title and interest of the Depositor in and to the
Purchase Agreement, all right, title and interest of the Depositor in and
to certain refunds, the Receivable File related to each Receivable and the
proceeds of any or all of the foregoing; and (ii) a Financial Guaranty
Insurance Policy issued
A-9
<PAGE>
for the benefit of the Class A Certificateholders by Financial Security
Assurance Inc. (the "Policy").
Under the Agreement, the rights of the Class B Certificateholders to
receive distributions of interest in respect of the Class B Certificates
on a Distribution Date are subordinated to the payment of the amounts due
to the Servicer, the Trustee, the Standby Servicer, the Collateral Agent
and the Class A Certificateholders, distributable pursuant to Sections
4.6(c)(i) through (v) of the Agreement, except as otherwise set forth in
the Agreement. The rights of the Class B Certificateholders to receive
distributions of principal in respect of the Class B Certificates on a
Distribution Date are subordinated to the Payment of amounts due to the
Certificate Insurer and any successor servicer distributable pursuant to
Section 4.6(c)(i) through (ix), except as otherwise set forth in the
Agreement. At such time as the Class A Certificates are paid in full and
the Certificate Insurer has received payment in full for any outstanding
Reimbursement Obligations or any other amounts owed to the Certificate
Insurer, the Class B Certificateholders shall be entitled to exercise all
rights granted to the Class A Certificateholders under the Agreement to
the extent that the exercise of such rights does not conflict with the
provisions of the Spread Account Agreement.
Under the Agreement, there will be distributed on the 15th day of
each month or, if such 15th day is not a Business Day, the next Business
Day (the "Distribution Date"), commencing on July 15, 1996, to the person
in whose name this Class B Certificate is registered at the close of
business on the Business Day preceding such Distribution Date (the "Record
Date"), such Class B Certificateholder's percentage interest (determined
by dividing the denominations of this Class B Certificate by the aggregate
original denomination of all Class B Certificates) in the amounts
distributed to Class B Certificateholders pursuant to the Agreement. Any
distributions on this Class B Certificate will be made by the Trustee (i)
wire transfer, in immediately available funds to the account of such Class
B Certificateholder at a bank or other entity having appropriate
facilities therefor, if such Class B Certificateholder is the Depository
or such Class B Certificateholder's Class B Certificates in the aggregate
evidence a denomination of at least $1,000,000, and, if such Class B
Certificateholder shall have provided to the Trustee appropriate
instructions prior to such Distribution Date, or (ii) by check mailed to
the Class B Certificateholder of record in the Certificate Register
without the presentation or surrender of this Class B Certificate or the
making of any notation hereon. Except as otherwise provided in the
Agreement and notwithstanding the above, the final distribution on this
Class B Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of
A-10
<PAGE>
this Class B Certificate at the office or agency maintained for that
purpose by the Trustee specified in such notice.
Reference is hereby made to the further provisions of this Class B
Certificate set forth on the reverse hereof, which further provisions
shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Trustee, by manual signature,
this Class B Certificate shall not entitle the Holder hereof to any
benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class B Certificate to be duly
executed.
FASCO AUTO TRUST 1996-1
By: NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual capacity but
solely in its capacity as Trustee
By: ___________________________
Authorized Signatory
Dated: June 28, 1996
A-11
<PAGE>
This is one of the Class B Certificates referred to
in the within-mentioned Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual capacity but
solely in its capacity as Trustee
By: ________________________
Authorized Signatory
A-12
<PAGE>
(REVERSE OF CERTIFICATE)
The Certificates do not represent an obligation of, or an interest
in, the Depositor, the Servicer, the Trustee or any affiliate of any of
them. The Certificates are limited in right of payment to certain
collections and recoveries respecting the Receivables and claims made
under the Policy, all as more specifically set forth in the Agreement. A
copy of the Agreement may be examined during normal business hours at the
principal office of the Depositor, and at such other places, if any,
designated by the Depositor, by any Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of
the Depositor and the rights of the Certificateholders under the Agreement
at any time by the Depositor, the Servicer and the Trustee with the
consent of the Certificate Insurer and with the consent of the Holders of
Certificates evidencing not less than 66 2/3% of the Class B Certificate
Balance and 66 2/3% of the Class A Certificate Balance. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such
Holder and on all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate.
As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies maintained by the Trustee in its
capacity as Certificate Registrar, or by any successor Certificate
Registrar, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by
the Holder hereof or such Holder's attorney duly authorized in writing,
and thereupon one or more new Certificates of authorized denominations
evidencing the same aggregate interest in the Trust will be issued to the
designated transferee.
The Class B Certificates are issuable only as registered Certificates
without coupons in minimum denominations of $1,000 and integral multiples
thereof. As provided in the Agreement and subject to certain limitations
set forth therein.
Certificates are exchangeable for new Certificates of authorized
denominations evidencing the same aggregate denomination, as requested by
the Holder surrendering the same. No service charge will be made for any
such registration of transfer or exchange, but the Trustee may require
payment of a
A-13
<PAGE>
sum sufficient to cover any tax or governmental charges payable in
connection therewith.
The Trustee, the Certificate Registrar, and any agent of the Trustee
or the Authenticating Agent may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and
neither the Trustee, the Certificate Registrar, nor any such agent shall
be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to
the Agreement, the payment of all Reimbursement Obligations, and the
expiration of any preference period with respect thereto and the
disposition of all property held as part of the Trust. The Servicer of
the Receivables may at its option purchase the corpus of the Trust at a
price specified in the Agreement, and such purchase of the Receivables and
other property of the Trust will effect early retirement of the
Certificates; however, such right of purchase is exercisable only as of
the last day of any Collection Period as of which the Pool Balance is less
than or equal to 10% of the original aggregate principal balance of the
Receivables.
The Certificates are subject to restrictions on transfer as set forth
in Section 6.3 of the Agreement.
Each Holder of the Class B Certificates, by virtue of the acquisition
and holding thereof, hereby represents and agrees as follows:
a. It is a qualified institutional buyer as defined in Rule
144A or a sophisticated, experienced professional investor and is an
institutional "accredited investor" as defined in Regulation D promulgated
under the Securities Act and is acquiring the Class B Certificates for its
own institutional account or for the account of a qualified institutional
buyer or an institutional accredited investor.
b. It understands that the Class B Certificates have been
offered in a transaction not involving any public offering within the
meaning of the Securities Act, and that, if in the future it decides to
resell, pledge or otherwise transfer any Class B Certificates, such Class
B Certificates may be resold, pledged or transferred only (a) to a person
whom the transferor reasonably believes is a qualified institutional buyer
(as defined in Rule 144A under the Securities Act) that purchases for its
own account or for the account of a qualified institutional buyer to whom
notice is given that the resale, pledge or transfer is being made in
reliance on Rule 144A, (b) pursuant to an effective
A-14
<PAGE>
registration statement under the Securities Act or (c) in reliance on
another exemption under the Securities Act.
c. It understands that the rights of the Class B
Certificateholders to receive distributions in respect of the Class B
Certificates pursuant to Section 4.6(c)(vi) of the Agreement on a
Distribution Date are subordinated to the payment of the amounts due to
the Servicer, the Trustee, the Standby Servicer, the Collateral Agent and
the Class A Certificateholders distributable pursuant to Sections
4.6(c)(i) through (v) of the Agreement, except as otherwise provided in
the Agreement. The rights of the Class B Certificateholders to receive
distributions of principal in respect of the Class B Certificate pursuant
to Sections 4.6(c)(x) on a Distribution Date shall be and hereby are
subordinated to the payment of the amounts distributable pursuant to
Sections 4.6(c)(i) through (ix), except as otherwise provided in the
Agreement. At such time as the Class A Certificates are paid in full and
the Certificate Insurer has received payment in full for any outstanding
Reimbursement Obligations or any other amounts owed to the Certificate
Insurer, the Class B Certificateholders shall be entitled to exercise all
rights granted to the Class A Certificateholders under this Agreement to
the extent that the exercise of such rights do not conflict with the
provisions of the Spread Account Agreement.
d. If the Holder is an insurance company, insurance service or
insurance organization qualified to do business in a state, it represents
that the source of funds from which its investment is to be made is either
(i) a general account of an insurance company which is eligible for the
exemptive relief afforded under Section III of Prohibited Transaction
Class Exemption 95-60 or (ii) an account which does not include plan
assets of any plan subject to Title I of ERISA or Section 4975 of the
Code.
A-15
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
_______________________________________________________________________________
(Please print or typewrite name and address, including postal zip code, of
assignee)
_______________________________________________________________________________
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
__________________________________________ Attorney to transfer said
Certificate on the books of the Certificate Registrar, with full power of
substitution in the premises.
Dated:
__________________________________*
__________________________________*
* NOTICE: The signature to this assignment must correspond with the
name as it appears upon the face of the within Certificate in every
particular, without alteration, enlargement or any change whatever.
A-16
<PAGE>
Exhibit C-1
Trustee's Certificate
pursuant to Section 10.2
of the Pooling and Servicing
Agreement
Norwest Bank Minnesota, National Association, as trustee (the "Trustee")
of FASCO Auto Trust 1996-1 created pursuant to the Pooling and Servicing
Agreement (the "Agreement"), dated as of June 17, 1996 among Financial Asset
Securities Corp. (the "Depositor"), Consumer Portfolio Services, Inc., as
originator ("CPS") and as servicer and the Trustee, does hereby sell,
transfer, assign, and otherwise convey to CPS, without recourse,
representation, or warranty, all of the Trustee's right, title, and interest
in and to all of the Receivables (as defined in the Agreement) identified in
the attached Servicer's Certificate as "Purchased Receivables," which are to
be repurchased by CPS pursuant to Section 2.8, as the case may be, and all
security and documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this __ day of
________________, 199__.
____________________________
C-1
<PAGE>
Exhibit C-2
Trustee's Certificate
pursuant to Section 10.2
of the Pooling and Servicing
Agreement
Norwest Bank Minnesota, National Association, as trustee (the "Trustee")
of FASCO Auto Trust 1996-1 created pursuant to the Pooling and Servicing
Agreement (the "Agreement"), dated as of June 17, 1996 among Financial Asset
Securities Corp., Consumer Portfolio Services, Inc. as originator and as
Servicer (the "Servicer"), and the Trustee, does hereby sell, transfer,
assign, and otherwise convey to the Servicer, without recourse,
representation, or warranty, all of the Trustee's right, title, and interest
in and to all of the Receivables (as defined in the Agreement) identified in
the attached Servicer's Certificate as "Purchased Receivables," which are to
be purchased by the Servicer pursuant to Section 3.7 or 11.2, and all
security and documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this __ day of
________________, 199__.
____________________________
C-2
<PAGE>
EXHIBIT D
(To be attached)
D-1
<PAGE>
Exhibit E-1
TRUST RECEIPT
for Servicer of
FASCO Auto Trust 1996-1
Receivable Information
- ----------------------
Servicer
Loan No.:
-----------------------------------------------------------
Net Unpaid Amount
at ________________ __, 1996:
---------------------------------------
Collateral I.D. No.:
------------------------------------------------
The undersigned Servicer hereby acknowledges that it has received from
Norwest Bank Minnesota, National Association, as Trustee of FASCO Auto Trust
1996-1 (the "Trust") , the documents indicated below (the "Documents"). All
capitalized terms not otherwise defined in this Trust Receipt shall have the
meanings given them in the Pooling and Servicing Agreement dated as of June
17, 1996 among the Trustee, Financial Asset Securities Corp., as depositor,
and Consumer Portfolio Services, Inc., as originator and as servicer.
( ) Credit application dated ______________ __, 19__ of ______________,
as Obligor.
( ) Retail installment sale contract dated ______ __, 19__, between the
Obligor and ______________, the Dealer, assigned to the Trust.
( ) Certificate of title for the Financed Vehicle relating to the
Receivable.
( ) Other documents relating to the Receivable, the Obligor or the
Financed Vehicle:
( )
----------------------------------------------------------------
( )
----------------------------------------------------------------
( )
----------------------------------------------------------------
The undersigned Servicer hereby acknowledges and agrees as follows:
(1) The Servicer shall hold and retain possession of the Documents in
trust for the benefit of the Trustee, solely for the purposes provided in
this Agreement.
<PAGE>
(2) The Servicer shall not cause or knowingly permit the Documents to
become subject to, or encumbered by, any claim, liens, security interest,
charges, writs of attachment or other impositions nor shall the Servicer
assert or seek to assert any claims or rights of setoff to or against the
Documents or any proceeds thereof.
(3) The Servicer shall return each and every Document previously
requested from the Receivable File to the Trustee when the need therefor no
longer exists, unless the Receivable relating to the Documents has been
liquidated, all amounts required to be deposited in the Collection Account
with respect to the Receivable have been so deposited, the Servicer shall
have delivered a Servicing Officer's certificate to the Trustee substantially
in the form attached hereto and except as expressly provided in this
Agreement.
(4) The Documents and any proceeds thereof, including any proceeds of
proceeds, coming into the possession or control of the Servicer shall at all
times be appropriately noted as being for the account of the Trustee, and the
Servicer shall keep the Documents and any proceeds separate and distinct from
all other property in the Servicer's possession, custody or control.
SERVICER: ____________________
By: ____________________
Title: ____________________
Date: _________________, 19__
E-1-2
<PAGE>
Exhibit E-2
SERVICING OFFICER's CERTIFICATE
FASCO AUTO TRUST 1996-1
The undersigned, ______________, hereby certifies that he is a duly
elected and qualified officer of the Servicer, and hereby further certifies
as follows:
The Receivable described below has been fully liquidated and all amounts
required to be deposited in the Collection Account with respect to the
Receivable and the Obligor described below have been so deposited.
Servicer
Loan No.:
---------------------------------------
Obligor's Name:
---------------------------------------
Capitalized terms used herein which are not defined herein shall have
the meanings ascribed to them in the Pooling and Servicing Agreement dated
as of June 17, 1996 among Consumer Portfolio Services, Inc., as originator
and as servicer, Financial Asset Securities Corp., as depositor, and Norwest
Bank Minnesota, National Association, as trustee.
IN WITNESS WHEREOF, I have hereunto set my hand on and as of this ___
day of ______________, 19___.
_____________________________
Name:
Title:
<PAGE>
Exhibit F
FORM OF TRANSFEREE CERTIFICATE
------------------------------
In connection with the transfer of $_________________ aggregate
principal amount of FASCO Auto Trust 1996-1 ____% Asset Backed Certificates
(the "Transferred Certificates"), _________________________, the undersigned
------------------------
transferee (the "Transferee"), pursuant to Section 6.3(f) of the Pooling and
----------
Servicing Agreement, hereby notifies the Trustee and the Depositor and
certifies, represents and warrants to each of them that it is a "qualified
institutional buyer" (as defined in Rule 144A promulgated under the
Securities Act of 1933, as amended), that it is purchasing such Transferred
Certificates for its own account or the account of a qualified institutional
buyer to whom notice has been given that the transfer is to be made in
reliance on Rule 144A, and acknowledges that it has received such information
regarding the Trust and the Transferred Certificates as it has requested and
that it is aware that the transferor is relying upon the foregoing
certification to claim the exemption from registration provided by Rule 144A
and the Transferee represents and warrants that it has delivered an executed
copy of this certificate to the Trustee and the Depositor prior to the
transfer of any Transferred Certificates discussed herein.
In no event shall a Class B Certificate be transferred to an employee
benefit plan, trust annuity or account subject to ERISA or a plan described
in Section 4975(e)(1) of the Code, (any such plan, trust or account including
any Keogh (HR-10) plans, individual retirement accounts or annuities and
other employee benefit plans subject to Section 406 of ERISA or Section 4975
of the Code being referred to herein as an "Employee Plan"), a trustee of any
Employee Plan, or an entity, account or other pooled investment fund the
underlying assets of which include or are deemed to include Employee Plan
assets by reason of an Employee Plan's investment in the entity, account or
other pooled investment fund. The foregoing restriction on sale or transfer
to an employee benefit plan shall not apply to prevent the initial issuance
or sale of the Class B Certificates to an insurance company, insurance
service, or insurance organization qualified to do business in a state that
purchases Class B Certificates (a) with funds held in one or more of its
general accounts which is eligible for the exemptive relief afforded under
Section III of Prohibited Transaction Class Exemption 95-60 or (b) with funds
held in an account which does not include plan assets of any plan subject to
Title I of ERISA or Section 4975 of the Code. The Depositor, CPS, Servicer,
Trustee and Standby Servicer shall not be responsible for confirming or
otherwise investigating whether a proposed transferee
F-1
<PAGE>
is an employee benefit plan, trust or account subject to ERISA, or described
in Section 4975(e)(1) of the Code.
Terms used herein and not otherwise defined have the meanings assigned
to them in the Pooling and Servicing Agreement dated as of June 17, 1996,
among Financial Asset Securities Corp., as depositor (the "Depositor"),
Consumer Portfolio Services, Inc., as originator and as servicer, and Norwest
Bank Minnesota, National Association, as trustee (the "Trustee").
(TRANSFEREE)
______________________________
Name:
Title:
F-2
<PAGE>
Schedule A
Schedule of Receivables
<PAGE>
Schedule B
Location of Receivable Files
Norwest Bank Minnesota, N.A.
Sixth Street and Marquette Avenue
Norwest Center
Minneapolis, Minnesota 55479-0069
<PAGE>
Schedule C
The Trustee shall have sole control over each such investment and the
income thereon, and any certificate or other instrument evidencing any
such investment, if any shall, except of clearing corporation securities,
be delivered directly to the Trustee or its agent, together with each
document of transfer, if any, necessary to transfer title to such
investment to the Trustee in a manner that complies with this Agreement
and the requirements of the definition of Eligible Investments.
